Here's What Your E-Commerce Strategy Will Look Like By 2023

Here's What Your E-Commerce Strategy Will Look Like By 2023

As the retail industry continues to digitally transform, companies that want to keep up need to focus on solving consumers’ problems instead of merely selling them a product or competing on price, according to Gartner. 

Customers will be “supremely empowered” in the future, so the way organizations interact with them has to change, said Jason Daigler, senior director and analyst at Gartner. In return, customers will become more loyal and come back every time they need something.

Gartner's recent report “2019 Strategic Roadmap for Digital Commerce,” identifies the current state of digital commerce, the future of digital commerce, the gap that exists between the two, and what businesses need to do to close that gap.

Where Digital Commerce Stands Now

Currently, organizations have “wildly different maturity levels of digital commerce,” the report notes. For example, while 65% of B2B organizations either have an e-commerce site or plan to launch one by year-end, a large number have no strategy at all.

The reason why many companies still lack a digital commerce strategy is because of the complexity of multiple challenges that organizations face. Among them: Digital transformation often requires tying together disparate, legacy systems. According to the report, it’s not unusual for retailers to need to combine systems for data management, marketing, customer service and store operations, among others, which is easier said than done.

“In fact, it’s the integration with these systems that makes digital commerce so complex and time-consuming to implement and subsequently update,” the report states.

Retailers also are facing increased pressure from online marketplaces such as Amazon, eBay  and Alibaba, as well as from companies outside of the industry, according to Gartner’s report.

"Customers remember their last great experience online and frequently compare it to their current experience, even if the great experience was in a different market," the report states.

In addition, the study cites separate Gartner research that found delivering the right customer experience to be the top challenge facing most organizations' digital commerce efforts. With consumer spending on digital channels increasing at around 15% per year, “experience” has become a key component of revenue growth, the report points out.

Who is leading the charge? According to Gartner, ownership of the digital consumer experience has shifted from IT staff to the business units. In fact, in its Magic Quadrant customer reference survey, cited in the report, nearly three-quarters of respondents pointed to a role other than the CIO or CTO as the primary leader responsible for business, information, and technology related to digital commerce.

“The average business unit employee is more digital savvy; also, IT was so overwhelmed,” Daigler said.

In the most successful organizations, IT has taken on the role of architects of the cloud-based systems that business units are using to address new customer needs, organizing and securing the services as they are added. But as the report notes, not all enterprises have achieved that kind of cohesive strategy. Many are using technology platforms they built years ago, or older versions of outside vendor products, while at the same time trying to integrate recent technologies, such as artificial intelligence and voice.

“As a result, these organizations lack flexibility and the ability to move quickly and respond to market opportunities,” the report states.

Where Digital Commerce Needs To Go

Gartner has sketched out a vision of enterprise commerce it calls "Commerce to You," or C2U. This is a new framework to help retailers bridge the gap from where they are now to where they need to be, to be compete. The Gartner vision outlines four guiding principles to help digital merchants differentiate themselves, as well as four strategic pillars to guide them to optimize the digital experience to achieve those goals.

“Overall, the vision is you’re presenting solutions to the customer and you’re right in front of them when they need you,” Daigler said.

The four principles—be trustworthy, focus on outcomes, act continuously, and be anticipatory—are meant to encourage enterprises to anticipate and solve problems for customers and be ubiquitous when and where that customer would need help.

The four pillars that make up the building blocks of a digital plan are unlimited channels, technology accelerators, flexible and modular assets, and customer intelligence.

More specifically, enterprises are faced with a future where they will need to communicate across dozens of channels—ranging from traditional websites and mobile apps to IoT devices, smart speakers, and connected vehicles—so it may be impractical to have individual teams and plans for each, the report states. This will require flexible, multichannel management with an “internal methodology” in place to respond to new channel opportunities as they arise.

Now, what about leveraging all of that data coming from these multiple channels? According to the report, some commerce platforms are turning to artificial intelligence (AI) and machine learning (ML) to automate processes and draw insights from large pools of data.

“Embedded AI will be much more common in future digital commerce applications,” the report states.

Also ahead, Gartner sees a newer, more modular and flexible breed of commerce platform emerging that can be quickly updated in response to business needs, as opposed to today's reality of commerce platforms based entirely or partially on legacy systems. The same goes for the integration of new applications.

“Digital commerce will continue to be executed not through a single solution but instead through a commerce platform and a set of ecosystem applications,” according to the report.

In addition, the future of digital commerce will not be viewed as a single sales channel but as a crucial part of an organization's digital business strategy. Likewise, “digital commerce will no longer be the core of the digital business technology platform,” Gartner says. “Instead, it will be one key component of a much wider ecosystem that includes an API-first approach, with AI, IoT, and integration with partner ecosystems.”

An Agile Management Plan

What will it take to get from the current to future state of digital commerce? Among Gartner's recommendations: treating digital commerce as part of a broader strategy and not just a sales channel, developing a new strategy for prioritizing relevant digital channels, and investing in emerging technologies based on how they can help growth.

This is a 10-year project for many enterprises, according to Gartner, but they can’t wait that long to catch up. To jump-start the trajectory, the firm has laid out a four-year plan to get organizations on their way. 

The first step, taking companies through 2020, requires setting a foundation that will allow them future flexibility. Sometimes that may require “strangling the monolith” of legacy structures in small steps or completely replacing them, depending on the company’s position, Daigler said.

This new foundation will allow the company to maneuver around changes in the market by overhauling processes and organizational structure. Digital strategy has to focus on giving the company the ability to move quickly, and it should factor in how to work with online marketplaces, such as Amazon, which will continue to affect e-commerce going forward.  

“Don’t invest in solutions that are inflexible,” Daigler said. “Don’t invest in a solution that can’t change in the future.”

The second stage, which takes organizations into 2021, involves setting channel priorities that agree with business goals. That means not spreading themselves too thinly, and instead, choosing the right platforms, avoiding others, or even launching channels of their own. The proliferation of digital channels—from e-commerce sites to wearable devices—makes it impractical for most organizations to have dedicated teams and applications for each platform, the Gartner report noted. 

Organizations also have to create strategies to maintain a presence on the digital channels they choose, and for data collection, so that data is available across those channels. Data is what makes all the other steps possible, Daigler acknowledged.

In the longer term (and after those higher-priority steps are done), businesses should look at emerging technologies—think: wearables, voice, and augmented reality—and how they can layer them on their efforts to contribute to business growth, but only after they've addressed the more commonly used channels, according to Gartner.

The roadmap in the report is “foundational,” Daigler said. “The trick is, commerce means a lot of things to a lot of different companies.” he said.

A B2B manufacturer, for example, has different issues than a financial institution or B2C company, but they all need to address their digital presence, he added. “They need to come up with a strategy if one doesn’t exist,” Daigler said.

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