The retail sector can easily be divided into companies that invested early on in e-commerce and digital technologies to diversify their revenue streams and those that continued to rely on bricks and mortar – and have subsequently been labelled 'laggards' and are struggling to keep up with the pace of change in the market.
Whilst some companies now have multi-channel offerings, with personalised approaches, blended with their traditional stores others have just begun building their websites and mobile apps.
But what does the future of e-commerce look like for retailers? I had a conversation with SAP hybris' VP of commerce and cloud strategy, Stefan Schmidt during which we discussed whether or not the e-commerce experience could eventually become commoditised for retailers, once the market matures and shoppers' buying habits settle into predictable and familiar patterns.
My perception is that there are currently so many options available for retailers to pursue it is sometimes difficult to know which to pursue and where to start. There's click and collect, same day delivery, show rooming, in-store mapping technologies, personalisation tools for websites - the list goes on.
Schmidt said that in the future offerings provided by retailers could become a commodity and what is now viewed as a 'differentiator' could soon become standardised and business as usual.
However, Schmidt doesn't see all retailers offering the same set of solutions. He believes, quite rightly, that each business has its own value proposition and envisions a world where retailers have a core commerce system, to which they add standardised components that suit their business models.
If you ask me what's happening in five to ten years out, from a commerce point of view, I wouldn't be surprised if we start to see commerce become somewhat of a commodity. Today we wouldn't sell a cart technology anymore, cart technology is part of the whole thing. I think in a couple of years time, we will see that 'commerce' isn't really a differentiator anymore.
It's a facilitator and is a very important part of it – but commerce will play into how I engage and have a conversation with my customer through technology. How do I personalise this conversation, almost to the degree where we are talking to each other now.
Companies are different and they have a unique value proposition. And if all companies were the same, it would probably be much easier to commoditise everything. Rather than going somewhere and customising and spending a lot of time customising to the needs – it's more like, okay I want this service, I want that service, and I can activate them. By doing that, by configuring my solution, I get what is important to my business and makes it different to the other firm.
If you look on the consumer side, mobile phones, they're fairly standardised, they're pretty much the same. But how we install things on it, how we configure to our needs. That will differentiate.
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I was keen to ask Schmidt his views on the much touted idea of getting a '360 view' of the customer. Personally, I can't think of any examples of where retailers really know who I am and offer me services that are tailored to my needs. I take the view that customers are generally unpredictable and wary about what they share with companies. In that sense I see the notion of the 360 degree view as a myth that sells a lot of consulting and software but rarely produces an outcome that benefits the consumer or the retailer.
Schmidt argues that retailers aren't trying to get to know everything about their customers. Rather they are trying to know just enough to offer a better customer experience. He said:
Before the internet, if someone walked into your store every day, you built a relationship with that customer. But you don't know everything about them, you know bits and pieces. But those bits and pieces are actually quite helpful to build a private relationship with you. What we are trying to do with the internet is to replicate that on a larger scale, but without infringing on your privacy.
It's a very fine line. There's so much more to me than any company needs to know. I don't really like the term 360 view of the customer, I just want to know that in that moment I give you a better service and a better message than the moment before and I can help you with your decision. But for that I don't need to know everything about you.
Whilst I agree with Schmidt's comparison in principle, I argue that there's still a fundamental difference between the offline and online experiences that's very hard to achieve – specifically, gaining trust. In the offline world, if I go into a shop every day and get to know the shop owner, I don't mind trading some information with him/her, because you build up trust. I'm not sure how online retailers can do this without that human interaction.
Those debates aside, I also wanted to find out from Schmidt where, in his experience,retailers largely fall down when embarking on an e-commerce transformation journey. His advice: start small, gain some early successes and then use these to progress across the organisation. Schmidt said:
The biggest challenge, especially when you have been a laggard, is that they try to solve everything at the same time. Can I leap frog everyone else? That's doing too much, that's not usually a good idea. Our advice we give our customers is, find the area where you are having the biggest problem and find the thing that you really can make a difference. But don't try to solve everything right now. It's more of a step by step approach, instead of pulling everything out.
It really is about looking at every part of the journey that the customer is having with the organisation. You can make a difference, you can implement a process that is more focused on the customer, rather than the business, and that can make a difference. And when you see the success, and from the success you get the opportunity to move to the next stage. Don't have to try and compete with Amazon – focus on smooth customer experience, for example.
As ever, this isn't a technology problem. My perception is that this isn't about getting your website right, or your data technology – these things will become a commodity. What needs changing is a bit of internal reflection. Understanding how focusing on customer experiences is going to change things internally. Processes that are siloed and departments that operate without talking to each other and with different incentives will not see success by buying some shiny new kit.
Disclosure: SAP is a premier partner at time of writing.