I recently spoke to electronic retailing expert Michael Ross, chief scientist at eCommera, the software-as-a-service and big data company, about how e-commerce will evolve in the next decade. The changes will be subtle, but marked; here’s what he had to say:
1) Businesses will be built on micro decisions
Consumers and businesses create vast quantities of data, which companies are already attempting to extract, purify and process, but at the moment this information is messy and incomplete. The challenge over the next 10 years will be using this big data to make connected, intelligent business decisions faster.
Possessing a wealth of analytical information will also enable businesses to zoom in on aspects of their operations and strategies, which in turn will change the scale of decision being made.
Instead of giving overarching instructions to create a ‘perfect’ result, smaller but better choices will be made using the data available, such as how much do I spend on a keyword in the next 15 minutes? Who do I upgrade to next day delivery? To whom do I offer a promotion today?
2) Consumer shopping behavior will become more complex
Those in the retail industry will be familiar with the concept of ROPO – research online, purchase online – and increasingly free movement between channels will make the consumer journey even harder to understand.
Developing shopper trends include buy online, return in-store (BORIS), browse in-store on mobile, buy online (BIMBO) and high value offline, lapsed online.
It’s impossible to predict what complex patterns of behavior will emerge over the next decade so obtaining a 360 data view is imperative for businesses wanting to gain a comprehensive picture of customer activity and value.
3) Stock and order management optimization will pose a greater challenge
Cross-channel browsing and purchasing by consumers today and in the future will have a knock-on effect on the stock and fulfillment processes. The advent of online has removed shelf space restrictions, but has created new questions.
For instance, if I can offer infinite products online, what is the optimum range size to maximize profits without draining my marketing and order processing resources?
As businesses widen their operational and customer networks, products will be stored in a wider variety of locations. Orders will also be placed from multiple channels – often delivered to a different point from which the purchase was made – which makes timing and visibility critical for businesses that want to offer efficient customer service.
Companies who make store inventory available to ship will need to work out a “ship to store” algorithm to determine key decisions such as whether to ship from the store nearest the customer, the most over stocked, the cheapest, the most spare capacity and such like.
4) Metrics will be created around the consumer
Instead of location, location, location, today’s mantra is consumer, consumer, consumer, and this is changing the way in which business decisions are being made. Previously, firms segmented their customers to look at the value of each demographic to their business, but in the future they will use data to build a personal picture of each customer.
Individual consumer value will become the central metric for ecommerce companies’ strategic development; how much are they worth? How many customers at this value do I need to grow my business? What can I learn from my relationship with them and apply to other customers? A connected data view across all channels will be needed to facilitate this approach.
5) Businesses that deliver in the now will triumph
Consumers are becoming more demanding and businesses able to satisfy their appetite conveniently and efficiently are the ones who will flourish.
Services such as speedy delivery – same day or next day – at little or no additional charge and rapid, helpful response to customer enquiries will become even more important. The best answer for the customer is ‘yes’, and ecommerce firms who can’t deliver this answer in the now will fall behind.