Retail, Commerce, and Brands: An Unbundling Story

Chia Y. Chen
Jun 2, 2016 · 3 min read

In the pre-digital era, commerce was almost always embedded in a retail experience. Shopping was a synonym for purchasing. When you said, “I’m going shopping for ____,” you meant that you were going to buy that thing.

In the post-mobile-everything-is-digital world, commerce has become unbundled from retail. In other words, I will go to a store to shop — but I may buy from any number of sources, including the physical store, Amazon, a Facebook “tag sale” (which is just a slice of the vast amount of “dark commerce” — untracked peer-to-peer commerce — that ubiquitous mobile social networking has enabled), or any number of options that are available via my phone.

This unbundling of commerce from retail is the single most significant force driving the disruption of retail. Without really understanding that point, it’s impossible to “fix” retail businesses in a way that will succeed. But that’s a topic that has been covered ad nauseum elsewhere. What’s of interest for this post is how e-commerce is being unbundled as well and the significant implications that has for brands.

E-commerce can be regarded by brand marketers as another channel — a way for consumers to find, learn about, purchase and take delivery of products from the brand. This perspective is a direct translation of the physical retail model — including the mental model of e-commerce destinations, which are analogous to the physical store — an actual physical destination.

Except e-commerce isn’t just about monolithic shopping destinations like Amazon.com. It is quickly evolving into an ecosystem of product experiences, transaction functionality and logistics — where each purchase could be a bundle of these services dynamically integrated in a way that is transparent to the customer.

To put it another way, it would be most useful for brands to think about e-commerce as two distinct components that are typically integrated under a retail brand (e.g., Amazon), but don’t have to be: 1) e-commerce experience; and 2) e-commerce functionality.

The most significant implication for brands is that e-commerce can be a transparent feature, the way that credit card processing is a feature of a payment experience. It just happens — the customer doesn’t really know (or care) who does it. Another example: think about the feature on your phone that allows you to tap on a phone number in any text (web page, email, etc) and call that number. That’s what buying something can be like. Tap the link (which could be from any content) and, boom, your product shows up. And, in instances like Amazon Dash or using Amazon Echo, it already is.

It’s no coincidence that Amazon is leading the way in “embedded commerce.” They want to be the inevitable choice for providing the e-commerce functionality — just as they became the leading choice for cloud services, another enabling technology.

But brand marketers have a moment here to seize the initiative. As more and advertising dollars get poured into digital media, commerce can be embedded in all of that advertising. When a consumer taps the link to buy that next case of soft drink, it’s up to the brand to decide where that order goes to. The payment and fulfillment information is already stored in the consumer’s phone (Apple Wallet and Google Wallet) so there’s no need to take the consumer to an e-commerce destination to complete the purchase. It’s just see the product, tap to buy, confirm and, boom, the product shows up.

No, embedding commerce into advertising isn’t easy today. But neither was digital advertising 10 years ago. We are at a key moment where brands can invest to take back the leverage they’ve lost to their retail distribution channels. It’s worth the effort.

Chia Y. Chen

Written by

Strategy leader at Cognizant Digital Business. Student of how digital is changing all of us. Views are my own.