The next e-commerce wave will be all about customer-first initiatives

Companies are significantly enhancing their e-commerce skills in light of the fact that e-commerce sales have doubled over the past five years, and markets are predicted to double once more by 2026. The issue is that many businesses are stuck on an old idea that e-commerce is an add-on to their core business. E-commerce approaches need significant updates built on a desire to go above and beyond for the customer by engaging with them on an exponentially deeper level, both online and offline. Businesses must place digitally driven commerce at the core of their operations to create experiences that live up to customers' ever-increasing expectations.

A deeper commitment to digitally driven commerce enables some large incumbent organizations to generate tens of millions of dollars in additional value quickly. However, many more are having trouble taking the plunge or are scared off because of costs or channel conflict issues.

A wave of change is putting enormous strain on traditional business structures, with rapidly changing consumer behavior and emerging new technology. By embracing digital to deliver experiences beyond simple transactions and address a much wider range of their customers' needs, successful organizations are becoming indispensable for their customers. Due to internal politics, channel conflict fears, and significant technology and capability gaps, many businesses delay making the difficult decisions they need to make, preventing them from realizing the full potential value at their disposal.

Customer-first initiatives are the name of the game

Most business leaders have inadequate perspectives on e-commerce. Many businesses are trying to improve current products, services, or procedures, asking themselves, "How can we improve our widget?" rather than "How can we better serve our customers?" Companies must have a fundamentally deeper and broader grasp of what their customers want and how to deliver it if they are to become indispensable to them.

Few will have missed the rapid expansion of channels (and variety within those channels) from live commerce to the emerging metaverse. By the end of 2021, B2B customers routinely completed their purchasing journeys over ten channels, up from just five in 2016.

When organizations launch additional channels in an effort to "catch up" with their customers, channel strategy can resemble a game of whack-a-mole as they attempt to manage a bewildering variety of channels, each with its own tech stack and data models. As a result, designing seamless and scalable customer experiences is severely constrained.

Forward-thinking e-commerce brands have adopted a "headless" channel strategy to service online and offline customers, in which no channel is preferred over another. In order to manage data and experience flows across channels and inventory locations based on customer preferences rather than how systems are set up, they have designed completely integrated customer, inventory, and order management systems.

Building on the advantages

Customers, data, and infrastructure are distinctive advantages incumbent enterprises frequently have. However, they frequently do poorly coming up with original ideas to capitalize on these advantages. As a result, they tend to focus on improving how well they sell a product rather than how to best assist their customers with all the issues that arise from using that product.

Changes in this direction are beginning to emerge. For example, automotive companies are evolving into mobility businesses, and shoemakers are now lifestyle brands. This change necessitates a complete reevaluation of customer experience to encompass the full spectrum of customer concerns and interests related to a company's main offering. Focus groups and data analysis are helpful, but thorough ethnographic research to comprehend every thought and action is essential and the key to becoming indispensable to customers.

The ultimate objective is the creation of a "loyalty loop,” a collection of controlled experiences that increases the ways businesses can serve their customers and improve their data advantage.

Becoming indispensable for customers requires their trust

Although businesses have always expanded into adjacent sectors, the next wave of e-commerce will create a larger range of market opportunities: tech companies will provide payment services, merchants banking services, and marketplaces media. This is a revolution that is already happening. Innova offers payment services, Amazon has one of the world's most popular media streaming services, and the examples continue. It takes a critical mass of customers, an in-depth understanding of their broader needs, and perhaps most importantly, a strong enough base of customer trust for this kind of move.

E-commerce company Flipkart, located in India, made significant investments to increase customer trust by making the online purchasing procedure as simple as possible. For instance, it was a pioneer in cash-on-delivery services since 60 to 70 percent of its target customers preferred cash payments. The company has quickly expanded into other industries like travel and healthcare thanks to this solid foundation of trust, which resulted from understanding the customers' needs. Businesses without the same size and scale advantages will need to establish alliances, partnerships, and even acquisitions to meet the wider variety of customer needs.

Transition to the new age of e-commerce

A long, hard look in the mirror and accepting certain difficult truths are the first steps in the transition to competing in the next wave of e-commerce. The most significant is that, despite their protestations, most businesses genuinely do not put the needs of their customers first. Stakeholder agendas, internal politics, channel conflict management, and short-term financial concerns are just a few of the forces that result in considerable compromises. Leaders determined to advance into the next era of commerce should start by unbiasedly assessing their current situation and providing important information.

Profitability blind spots

Any business that enters the e-commerce space does so to make money. However, many businesses choose to prioritize revenue over profitability or have hazy plans for translating volume into value at a later time. Executives continue to believe that e-commerce's function is to increase revenues rather than profits. This is a risky viewpoint, especially given the impending economic unpredictability. Brands need to be very practical and consider how to safeguard future e-commerce profitability.

Know what your customers value

Be aware of your unique selling points and what your customers value. Over the last five years, customer acquisition expenditures have increased by an average of 60%. Less paid marketing and more interaction are needed by businesses to address this problem. Unfortunately, many businesses have inaccurate, limited, or incomplete perceptions of what matters to their customers. This frequently happens due to deeply ingrained beliefs or motivations that only encourage employees to improve experiences within the strict confines of their own operational responsibilities.

This blind spot can be addressed by isolating table stakes from distinctive customer value sources that rivals will find difficult to imitate. Alibaba maintained market parity for delivery times (around 30 minutes) and prices when it launched its HeMa grocery operation. It set itself apart by finding important value indicators, including having the freshest seafood and providing young couples with ready-to-cook meals.

Finding this value often means employing technology to support sales and service personnel. For instance, when a customer phones about damaged kitchen equipment, a service representative should instantly consult a database to find the required item and ship it.

Operational efficiency

Logistics is one of the biggest expenses in e-commerce, and it can significantly reduce profit margins. For instance, fulfillment expenses might take up between 12 and 20 percent of e-commerce sales, reducing margins and making profitability harder. The majority of businesses, in reality, still need to plan out and implement cost-effective operations successfully. Businesses can frequently generate significant value by utilizing AI to methodically improve many aspects of operations, including pricing and assortment, single-trip productivity, order pooling, long-haul and last-mile delivery configuration, and order density, to name a few. Maximizing efficiency across every step is possible by adopting a Toyota manufacturing mentality and utilizing advanced analytics. Using an advanced analytics model, a US-based energy company saved $20 million annually by determining the underlying causes of frequent customer contacts. Quality of service and customer experience depends greatly on the stability of operations and logistics, among other factors.

Companies must initially concentrate on the largest pools of value given the costs. For instance, several businesses separate their customers, regions, and products to give the best options priority. Others will have to rely on partners, especially for delivery. Like partners who can give them a faster on-ramp to sophisticated capabilities, businesses should approach cloud service providers (CSPs) with their expanding array of options. Companies must implement a whole set of digital processes to provide the required connectivity to support this extensibility, ranging from APIs that interface to various systems to cyber procedures that secure data.

Hiring and empowering digital talents

The reason why many of the most promising e-commerce initiatives fail is that the industry as a whole is just not ready to adapt to changes. There are various causes, but many stem from a lack of digital knowledge and apprehension about changing the current quo.

Hiring an e-commerce or digital head is the natural tendency when dealing with talent challenges. However, organizations sometimes don't provide these leaders the power or funding they need to make the necessary changes, which causes many of them to leave after two to three years. Employers must commit to bringing on board enough supporting digital talent and digital leadership to generate a critical mass for change. The importance of having crucial "doer" attributes, such as a preference for action over study, an obsession with the customer, and the ability to test ideas fast with actual consumers, outweighs the necessity for key abilities in data science, cloud engineering, and design.

Becoming comfortable with failure makes experimenting simple and affordable

The rate of change will reward companies that learn and adapt quickly. Experimenting frequently is the best way to learn. That necessitates businesses learning to accept failure and make experimentation simple and affordable. That entails designating places specifically for testing ideas, then documenting and disseminating the lessons learned through open reporting and readily available, reusable code libraries. Making decisions is difficult and frequently slow without accurate data acceptable to everyone. Good data promotes alignment and helps leaders to act swiftly, even when such actions go against previous experience.

E-commerce goals should drive technology decisions

Businesses must function like digital natives, leveraging technology to test new ideas and rapidly bet on the most successful ones. However, IT at established businesses frequently hinders rather than helps with these initiatives. The most crucial thing to remember is that technological choices should be made based on commerce business goals rather than the other way around.

Antiquated systems prevent businesses from expanding quickly. Businesses must concentrate on building a service infrastructure to free them from their outdated systems. Thanks to microservices, businesses can quickly test and replace specific capabilities without affecting the entire system. These services can either be used as part of a CSP's offering or purchased together and installed directly. Businesses can give access to this range of services to data and algorithms locked in antiquated systems via APIs. For instance, Flipkart has depended significantly on APIs to enable systems within the company to communicate with one another and create comprehensive experiences.

Developing measures that make problems visible is the first step in creating the appropriate incentives. The strategy calls for precise IT objectives and key results (OKRs) linked to customer satisfaction and profitability, a collection of input data to swiftly detect the core source of errors and a system of stringent enforcement of those metrics.

The only way to combat slow progress and gradual improvements are to make a significant bet on creating a cloud-based architecture to address the most urgent issues, including customer experience.

Focusing on delivering the best customer experience

The new era of e-commerce necessitates a vast enterprise-wide coordination capability. This is because many business operations are required to deliver on the customer experience, including smooth and fast shipping, inventory availability, customized prices and promotions, consistent marketing, and knowledgeable sales. There must be teams that are responsible for assisting departments in better utilizing digital capabilities and collaborating with one another across functions on particular product initiatives.

The "middle office" capability has emerged in China to handle and serve varied company demands across sectors and customer-facing channels. It can coordinate efforts and uniformly push out features, such as personalization and content creation, to each vertical.

A significant change in performance management and incentives must accompany this organizational movement. Without goals and incentives to reward them for using digital channels, sales representatives will simply not urge customers to do so. The customer experience must be the focus of incentives for every department in the company.

You must commit to becoming indispensable to the customers to be successful in the upcoming e-commerce era. That implies difficult decisions and major changes. However, a few sizable businesses have demonstrated that making the leap is not only feasible but also successful and long-lasting.