I wonder how eCommerce will evolve in the next 2/5/10 years. How will the future generations interact and purchase online? Also, will we surrender to a world with no privacy or, on the opposite side, will we finally “own” our data, carry it wherever we want, and use it at our own advantage, perhaps by leveraging the blockchain technology? Food for thoughts guys. Food for thoughts.

Five Tips for Growth, the “New” Declinations of eCommerce and What’s Next

How to build a better eCommerce plan and what you should be paying attention to (special focus: future tech and eCom Amazon and Alibaba ecosystems)

Disclaimer: please note this article is a collection of personal thoughts, data points and a few quotes from experts. All info is publicly available. The content hereby written does not reflect in anyway the position of the company I work for. Also, the below mentions on digital currencies and projects references an opinion and is for information and example purposes only. It is not intended to be investment advice.

Dear reader,

With this article about eCommerce and digital trends — some known and some other new — I would like to give you some insights and personal recommendations that could help building a better eCommerce plan. I hope you enjoy it.


Intro

Before diving deep into the five points, it is important that you understand the context you are playing, where you stand and what your competitors are doing. Being informed on what’s going within your organization (and around you) is helpful to identify the key actions that can help you drive further growth. It sounds easy, but when access to data is limited and there is no clear focus on the why, what and how, things become much more difficult. In such scenario, there is a high risk of wasting money, time and resources.

Also, you really need to stay focused. Focus on what exactly? What truly matters is the focus on the customer (or the consumer, in the case of CPG companies). As Jeff Bezos, founder of Amazon and now the richest man on the planet, explains[1]:

There are many ways to centre a business.
You can be competitor focused
You can be product focused
You can be technology focused
You can be business model focused
…and there are more.
But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.

The above is particularly challenging for companies that don’t have the customer obsession as leadership principle at their core. It requires a complete shift of mindset and culture — likely the hardest thing to achieve, especially in big corporations — and a long-term vision.

Jeff Bezos — Laughs compilation

The Five Tips For Growth

Having been that said, here I identified some key actions which would help your company to grow in the right direction for the forthcoming years:

  1. Build a balanced business model. Define how much you want to invest at Retailer.com, Pure Play (the likes of Amazon and Alibaba) and new Revenue Streams such as Direct-to-Consumer, or partnership with start-ups. Also, if you have business in multiple countries, focus efforts and investments between maturing and emerging markets, considering digital penetration and eCommerce readiness might differ significantly from one country/area to another
  2. Have an eCommerce Strategy. And the right people. Really, you need both. The eCommerce growth is going to be exponential in the forthcoming years. By 2022, Kantar Retail predicts eCommerce will account for 1 of every 5 in dollars spent[2]. This is something no company, at this point in time, should delay efforts and investments on. Every small or large companies should have a proper eCommerce strategy in place. How to? Build a plan starting from your vision and final ambition, then go backwards. What do you want your company to be five, ten years from now? What kind of levers and enablers do you need to make it happen? It is vital to hire the best talents for the job and to constantly train your employees, so they can know how to play with the different platforms and eco-systems
  3. Know the platforms very well. Invest disproportionate effort and resources to really understand how to play with eCommerce platforms. Especially with the big giants. As example, Amazon is commanding 37% of the eCommerce market[3] and projections tell us the company will be responsible for 50% online sales within the next three years where it’s present
  4. Get the “basics” right. Make sure you know how to build the perfect digital shelf, brilliant brand experiences online. Focus on content should be extremely high on your agenda, as this is part the foundations for a successful eCommerce business. Also, in the case of Amazon — mentioned several times in this article as it sets the example compared to any other eCommerce platform — having the right content in place make the fly wheel spinning. Fly… what? The flywheel works this way: a better customer experience increases traffic, which increases vendors and sellers, which increases selection and volume, which lower cost structure, which leads to more money to be re-invested in improving the customer experience. It’s a continuous loop. Better content means influencing the flywheel and selling even more orders. In fact, among the key factors that impact the Amazon search algorithm, SEO optimized content ranks first; ratings & reviews, conversion and sales rates, follow
  5. Act Lean and constantly learn. Act quickly, be nimble, and be willing to cut your losses. Do yourself and your company a favor and read the ‘Lean Start-up’, a best-selling book written by the world wide famous entrepreneur Eric Ries. You will get to understand the BMC cycle and what it means to build something, measure, learn from it. And repeat. Finally, be constantly learning. To achieve growth, you must continually update the knowledge of your employees and ask them to put things they learn into practice. The world of today (and tomorrow) is moving at incredible pace
Are you late to the game, or ahead of the curve?

The “New” Declinations of eCommerce and What’s Next

Following the five tips for eCommerce growth, I selected some topics that I believe will have strong impact in eCommerce in the future. Some in the short term, some other thinking more mid/long term. Here you find them point by point.

  • DTC AND ME COMMERCE. These days, barriers to entry business are lower than ever. Anyone can become an entrepreneur! Direct-to-Consumer (DTC) business models, as example, allows entrepreneurs to create companies that can truly build one-to-one everlasting relationship with the consumers, in an intimate way. Another big advantage of DTC is full ownership of data and the responsibility of the entire value chain. It is true that competition is fierce though. The declining costs associated to start-ups’ creation have basically democratized the ability to create. Global Venture Capitalist Scott Hartley said in far away 2012 that “the consequence is a disaggregation of the workforce, and a fragmentation of people, talent, and ideas. […] With access ubiquitous, consumers demand personalization”.[4] In fact, personalization is really one the key words of today. Shoppers expectations are higher than ever, as everyone wants to feel unique, special. This mentality is not just limited to people who buys products, but also to people who creates products to sell. Entrepreneurs of today are digital nomads, they want to work on their passions and decide and how to spend their work hours. This “personalization of jobs is driving disaggregation in the workforce, and the consequence of disaggregation is more start-ups. […] This is the rise of me-commerce, the personalization of commerce”, Hartley wrote

For a business to thrive, differentiation through access, price and a unique selling proposition is what a company should look at, matched with flawless execution at pace. At the end, it is not enough to have a solution for a problem to solve (Problem-Solution Fit), nor to have a market for your product (Product Market Fit). You need to deliver in the right context, at the right time, with the right message, to the right audience and… at speed, possibly before anyone else!

A piece of cake, right? :)

We have seen the democratization of consumer access and entrepreneurship: this is happening thanks to platforms like Indiegogo, Kickstarter, or Amazon Launchpad, which gives businesses the possibilities to test and learn through quick launches of minimum viable product (MVP). The next phase could be the democratization of manufacturing as well, through technologies such as 3D printing. Many talks about it since many years actually, but we have yet to see mass adoption.

  • MORE M&A. According to CBNC[5], a survey from OC&C Strategy Consultants found that merger and acquisition deals in the consumer goods industry last year increased by 45% versus previous year. CPG companies are acquiring companies for many reasons. As example, to fill: (A) a gap in portfolio (product expansion) or (B) for geographical expansion; (C) a digital gap, by acquiring start-ups with expertise as example in precision or performance marketing, IT or supply chain solutions or (D) a gap in the talent pool. Some companies are also buying in faster-growing regions, like emerging markets, or within on-trend categories, like organic food, or vegan personal care products
  • MUCH MORE FOCUS ON SUSTAINABILITY. Large and small companies are finally starting to realize the importance of creating businesses focused on sustainability. In this sense, investing hard in projects around circular economy, food and packaging waste reduction, give back to the community, nature preservation. The companies that are making sustainability as one of the most important pillars of their strategies will build trust with consumers, especially with millennials, which are particularly sensitive to this topic compared to previous generations. This is truly a competitive advantage. For example, according to a PR released early this year by Unilever[6], its most sustainable brands grew 46% faster than the rest of the business and delivered 70% of the turnover growth
  • LAST MILE DELIVERY THROUGH ROBOTICS. Adoption and expansion of drone delivery technologies, especially in high density urban locations, but in the countryside as well. I think we still have to figure out security via flights regulations (for sure nobody wants drones falling on our heads) and theft avoidance, but I predict we should be seeing resolution within the next ten years. Amazon is already experimenting with Prime Air to incorporate a ‘sense-and-avoid’ technology to spot and evade obstructions and, presumably, other drones[7]
  • SEAMLESS OFFLINE/ONLINE EXPERIENCE THROUGH TECHONOLGY. Geo expansion of new AI technologies that allow seamless online/offline experiences in store. This is already a reality with the Amazon Go Stores (in the U.S.) and the enhanced digital experience of grocery stores like HEMA (in China). Expect no more queues at the cashier, grab things and go, receive relevant information on your smartphones’ screens in relation to the product you touch and want to buy, hyper personalized promotions based on the recognition of your profile. Another good example of seamless recognition of profile in-store, could be Nucleus Vision (if they deliver what they promise). The company created a proprietary sensor technology that can uniquely identify users and detects temperature, pressure, motion, acceleration, and sound within its vicinity. Their IoT sensor technology is able to detect mobile phones as they pass through storefronts or any other location where a sensor is set up, enabling store owners to detect visitors’ phones and mobile ID data privately over blockchain[8]
  • AFFIRMATION AND EXPLOSION OF AI, AR, VR. Leverage of real time eCommerce, through AI, AR and VR, even in unexpected locations for reaching additional touch points. One thought that intrigues me: imagine the possibility to buy products or services in just a couple of clicks at crowded venues like festivals and clubs, or unlocking special promotions just by using a mobile device as augmented screen. There is an interesting point raised by YoKart Chef: “With growing popularity and use of BIG data in eCommerce, AI will change the whole notion of product discovery. […] The stores will automatically deduce the preferences of users and showcase the items more likeable to them. This will lead to a rise in predictive models and curated shopping. The key phrase is Instant Gratification”.[9]
  • AMAZON AND ALIBABA. These two deserve a dedicated section. Within FMCG eCommerce, two Pure Play players, Amazon and Alibaba, stand out. Together, Amazon and Alibaba have c. 900 million users (or about 20% of the world’s internet population). They are the top players in their home markets with 49.1% eCommerce market share for Amazon in the US[10] and 58% for Alibaba in China B2C market. Both companies also have big expansion’s ambitions. Amazon has the objective of reaching 100 markets in the next 24 months, whereas Alibaba is targeting increasing non-Chinese revenue from 10% to 50% of its business by 2035, seeing itself serving 2 billions customers, effectively becoming the world’s fifth largest economy. Alibaba’s strategy in fact is to focus internationally and on rural areas. Knowing how to play with the incredible variety of business models both ecosystems have is key for success. It is really time to realize that eCommerce is more than a sales channel: it’s a media platform and the first touchpoint for brands. In today’s and future’s world, Amazon and Alibaba are valid as platforms for product discovery as Google and Facebook.
  • BLOCKCHAIN IN ECOMMERCE. Mass adoption of blockchain — not a matter of if but when — particularly in the following fields related to eCommerce:

o Semi-decentralized eCommerce platforms, which will allow customers to buy cheaper products from brands and other customers in a secure way but will also finally allow companies to have access to customer data like shopper behaviors, the digital gold. Many companies complain with the likes of Amazon because they get limited access to data. The company invoke privacy reasons but really this is one of the strongest competitive advantage it has: knowing a lot about us. This could potentially be the Amazon killer, or the evolution of Amazon itself. This is a bold prediction I have

o Digital advertising, which will allow cutting the middle men between users, publishers and advertisers. A good example in this sense could be Basic Attention Token (BAT). BAT improves the efficiency of digital advertising by creating a new token that can be exchanged between publishers, advertisers and users. The utility of the token is based on user attention, which simply means a person’s focused mental engagement[11]

o Full transparency in Supply Chain, which will allow shoppers to be certain about the provenance of the products they buy online (and offline). A good example here could be Provenance. Building a sustainable supply chain is one of the top challenges for procurement managers. To solve this issue, Unilever has launched a one-year pilot project that leverages blockchain technology to manage transactions on its tea supply chain, by partnering with the technology start-ups to track tea farmers in Malawi, who supply tea for Sainsbury’s Supply Chain and Unilever brands. With the goal to reach up to 10,000 farmers, the project uses technology to maintain transparency on the supply chain, so to know the origins of product[12]. Other partners include the Department for International Development (DFID), Sappi and global banks Barclays, BNP Paribas and Standard Chartered[13]

o Digital identity, which will allow users to store all personal information safely and switch from one platform to another seamlessly, with zero possibility to counterfeit. An example, from China, could be TheKey, which is a decentralized ecosystem of identity verification tool using national big-data and blockchain. Another one with a similar name is SelfKey, which in fact “empowering individuals and organizations to find more freedom and privacy through the full ownership of their digital identity”, as their official website states.


That’s a wrap! What do you think about these tips and insights? I am looking forward to hear your opinions in the comment section below.


References:

[1] The difference between Day 1 and Day 2 has been explained by Jeff in the early days of Amazon: “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1”. Basically it means true focus on customer obsession, following principles like: bias for action, insist on the highest standards, embrace external trends, high velocity decision making, disagree and commit and so on

[2] Source: Kantar Retail, July 2017

[3] Projections as of Apr. 2018, compiled by Sellbrite. Source: www.shopify.com/enterprise/the-future-of-ecommerce

[4] Source: forbes.com/sites/scotthartley/2012/08/17/the-rise-of-me-commerce/

[5] Source: www-cnbc-com.cdn.ampproject.org/c/s/www.cnbc.com/amp/2018/07/05/ma-deals-for-consumer-goods-companies-reached-15-year-high-in-2017.html

[6] Source: Unilever Press Release (May 2018).

[7] Source: www.andrew-lucas.com/journal/drone-delivery-cusp-distribution-revolution/

[8] From the F.A.Q. Section of their official website

[9] Source: yo-kart.com/blog/ecommerce-past-present-future/

[10] Source: eMarketer, July 2018

[11] Source: https://basicattentiontoken.org/

[12] A couple of references coming from: www.supplychaindive.com/news/unilever-blockchain-tea/513365/

[13] Source: www.sustainablebrands.com/