Opinion: What does the future hold for modern commerce?

The world of commerce has evolved drastically over recent years, most notably with businesses adopting a shift towards eCommerce, and digital trends such as chatbots and artificial intelligence. With changing consumer preferences and digital disruption becoming more of a constant in the industry, it is vital for businesses to know what works for commerce in a modern era, and the key strategies they should bank on as they continue to evolve their marketing game plans.

Speaking to Marketing, John Menagh, commerce solution specialist of Greater Asia at Sitecore, shares the landscape of commerce in this era, lessons businesses can learn from the past, and strategies they should adopt.

Based in Australia, Menagh (pictured) has over 10 years of experience in the retail and eCommerce industry. According to his LinkedIn, he has held roles such as sales director and APAC regional sales manager at eCommerce companies eStar and ChannelAdvisor respectively before joining Sitecore.

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Watch Menagh's in-depth presentation on-demand at our "Modern Commerce in Asia Pacific" virtual summit archive. Available now until 25 August, this online resource for commerce, marketing and IT professionals features top-notch commerce experts from across the region, who discussed commerce and marketing success strategies for 2020 and beyond. Click here to check it out now. Sitecore's virtual summit is done in partnership with Marketing.

Marketing: What exactly is modern commerce?

Menagh: Well, this question is a problem. It is the kind of question you might get asked by a board member questioning an investment request, or from an old school manufacturing guy. Modern commerce is what it says: commerce in the modern era. It is not commerce conceived in the analogue decades, not commerce with a website, nor commerce with a marketplace play.

If we think of retail today, there are retail companies that started more than 100 years ago and there are those that started around 20 years ago. The older companies have had to adapt and change as consumer sentiment and shopping preferences changed. This is how they have survived so many economic ups and downs. Along the way, they have created processes and ways of working, and seem more recently to have lost agility and touch with the end consumer. They appear to be practising commerce based on “best practice” from decades ago.

By way of contrast, the more recent arrivals are not burdened with processes and “we’ve always done it this way” thinking.

Moreover, they probably started life around the dotcom bubble burst and/or went through the global financial crisis. These firms have been digital from the outset, have always been gathering and analysing customer data, have been continually adapting to the changes customers demand, and have used their agility to try different things quickly. In essence, this is modern commerce, using every asset and avenue available to meet your customers, on their terms, when and where they want. Digital, physical, virtual, voice, social: using any and every means to market with and sell to the new modern consumer.

Marketing: What are some of the lessons from the past that we can incorporate into the future which is still relatively unknown?

Menagh: “The more things change, the more they stay the same,” retorted a French journalist in the 1800s. Never has this been more true. Sticking to the theme of old companies versus the new, the old guard can teach valuable lessons about adaptability and customer focus.

Consider the old wholesale model. Import product X at a low landed cost, convince a number of resellers to buy product X in bulk, and try and sell X to new customers at a profit. This model worked well for years, but then too many resellers went head to head with the same generic product and their retail prices started to go down. They, in turn, demanded deeper discounts to take the product in bulk from wholesalers.

The end consumer soon realised they could buy product X from overseas for far less than they could locally (this is the beginning of the eCommerce revolution). This was bad news for the manufacturer whose fixed costs were fixed. To drive costs per unit down, the manufacturer had to produce more to take advantage of the economies of scale. By the time the product got to the end consumer, it had passed through many hands and now carried many mark-ups in its price.

Supermarkets and malls were a response to both the consumer demanding convenience and the manufacturers needing to get more products in front of consumers. Retail adapted to consumer demand and the manufacturers responded to pricing pressures with increased product volumes.

Let’s fast forward to today. The current modern consumer is moving even faster than before in preference and acquiring knowledge. They now know more about your product prior to going to a store, if they choose to go the physical retail route. They probably know where product X is made, whether it is ethically sourced and developed and, in some cases, what consumers in other markets are paying comparably.

Adaption: it is and always will be the catch cry of successful companies.

Even our new 20-year-old companies are facing unprecedented changes now, and how fast companies can pivot business models is the new hallmark of success and a predictor of longevity.

Marketing: Are there some key pillars of the customer experience that you think will remain, and that we can bank our strategies on?

Menagh: The customer experience (CX) has long been at the forefront of most businesses, but quite often viewed from an internal perspective, with a “how can we get them to use eCommerce rather than call-centre” thinking. In the current crisis, consumers’ choices are limited and we have come to see that consumers will take the path they choose, so businesses have to give multiple options and be ready to perfect these quickly. The advent of contactless click and collect is a good example.

CX has garnered a bad name at the executive level and has been relegated to tactical thinking about website layout or worse, colour of the “add to” cart button. This thinking must be abandoned as we emerge from the lockdown.

CX will now be about customer convenience, operating efficiency and all touch-points, in a newly merged digital and physical business environment.

Customer convenience refers to letting a consumer choose what they want, when they want it without overwhelming them with choices. That can come in the form of click and collect, home or office delivery, or artificial intelligence-driven chatbots instead of huge call centres, but having a human interaction if needed.

Perhaps having a better B2B portal, more intuitive store navigation (online and offline) or having less physical stores, but using the “dark store” concept of having a dedicated warehouse operation set up to fulfil online orders from a retailer’s website, to get stock closer to demand and cutting delivery times as well as costs. All of these ideas to better serve the customer on their terms, and differentiate from competitors.

Once upon a time, the phrase “operating efficiency” was all about the supply chain, pushing just-in-time delivery scenarios, minimal scheduled store replenishments, and generally getting to grips with minimising inventory levels, and therefore, locked up capital. Now it is going to have to extend the thinking to include how to get stock fastest to the end client, and how to have better utilisation of the physical footprint, with a distribution or channel strategy to be closer to the customer.

As businesses move to focus more directly on consumer needs, they will develop cost-effective, efficient methods and ideas. Businesses should also be cautious and must not become so locked into a process as to miss that the consumer has moved on, en masse, to a new demand.

The new world order is upon us, or nearly upon us. Digital is a glorious church with many ideas and upstarts. Some will come and go, some will take years to find maturity, but some are already here and can’t be ignored any longer.

Social media was ignored by many until the realisation that you can talk directly to your base, free of pesky interference. In the digital church, every touch-point must work in harmony with every other touch-point in a single client journey.

This gives rise to the discussion on personalisation. If every customer journey is different, but we want to deliver a single message, we need to co-ordinate across all channels. This means data, lots and lots of data, collected from all points, analysed as quickly as possible, and action taken fast. We see businesses starting to hire data scientists to manage data issues. Data is the new currency of efficiency and of decision making.

In summary, convenience, operating efficiency, and data-driven decisions are the central themes that begin a CX discussion.

 

Marketing: Given that Asia Pacific is made up of a mixed bag of developed and emerging economies, commerce can look vastly different across the region. How can different companies take the time now to brace for modern day commerce, regardless of the stages of their economy?

Menagh: Asia Pacific is the single most diverse region globally. We have the biggest population centres in the world, and the most diverse economies – emerging, developing and developed. The cultural and historical variances are enormous and nuanced. Vietnam is not Thailand and Australia is not New Zealand, nor is Singapore the same as Hong Kong.

That being said, the fundamentals of a good business model are the same, so strategies are likely the same in competitive markets. The difference is really at the customer level. In Australia most households have desktop or laptop computers, this is not a true statement in North Asian markets wherein the internet is experienced mobile-first. In China, the Alibaba group holds sway over the majority of eCommerce and has extended into the physical store. It is an amazing tech stack to serve and guide the consumer expectation and behavior, all in a very mass market.

In these big mass markets, a competitive advantage in the past few years has meant meeting the consumer on a plethora of channels. Now it is becoming an entry level requirement. The extreme focus on customers and the data requirements, business agility needs, and an embracing of all the digital means and offers, is universal across the region.

The local market dictates the channels or tactics to achieve a well thought-out strategy.

You can’t take an Australian-centric approach to Southeast Asia nor can you take a successful Southeast Asia campaign to China and expect or achieve the same outcomes. Businesses adapt to market conditions in each location based on data from that locale.

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