E-commerce’s future holds many possibilities. Consumers today expect their goods to be available instantly, and these needs are fulfilled by eCommerce. Many debated conversations are going on about the same in many rooms in different corners of the world. As a business owner, you might wonder about the best possible prediction for your brand and customer.
Well, it’s time that you park your worries, as we are here with a solution. Xpresslane, as a checkout operating system, has always favored the success of eCommerce businesses. To extend our support for the growth of eCommerce businesses, here are our predictions for your brands and customers.
Let’s start with customers. First, let’s find out what customers expect from business owners.
Bricks-and-mortar retail is all but dead.
The retail industry had some difficulty with growth in the past ten years, and it was only partially because of the development of eCommerce. One of the primary reasons for the downfall of the brick-and-mortar retail market was the damaging rat race to expand the market space more than the customers required. All this effort to develop the brick and mortar stores at a fast pace will make the underway speedier for the brick and mortar stores.
Online shopping has transformed the dynamics; there are now covered costs, and people can earn money online, thereby slowly eroding retail concepts requiring expensive real estate and high staffing costs.
Customers enjoy going to the shop- they quite like the shops. But, the only problem is that the shops need to offer the price, comfort, shopping experience, and range of options available in the online shopping store. There will undoubtedly be big brands like John Lewis or Marks & Spencer for the consumers. Still, consumers will consider these second best when they receive exclusive digital offers tailored to their needs – making them feel like individuals.
Big platforms have got even more significant.
The best approach in the digital world is a platform. Big platforms are becoming increasingly significant with time; their primary reason is more choice, better service, faster fulfilment, and lower prices. In a way, the competition is between the best retail system rather than between the retailers. We will see big platforms gaining prominence worldwide.
In contrast, smaller brands will eventually merge. Zalando is seeking more brand partnerships to fend off Amazon. However, ASOS is increasing its product ranges and reducing its prices. So the big platforms will keep turning the virtuous cycle. Apart from that, no matter how much we try, we can’t conceive a possible scenario that can arrest development in this direction. Moreover, there are no political or legal barriers, and all the damages and crises are accelerating customer spending, accelerating this development.
At least everything boils down to the customer, who is always right. Customers are the king, who gets to choose, and the king doesn’t care about poor high-street shops in town or honest retailers who pay corporation tax. King cares about coupons and the best offers available on the big online platforms. Amazing offers are only available in small retail stores if they want to convert themselves.
The best retailers are technology companies.
So is becoming a platform a solution for every retailer? You might think that the answer to this question is a straightforward yes, but it is a big no. Sorry to break it to you this way, but there is no shortage of retailers who have told their investors that they have a platform strategy. But there might be better action plans because any retailer already has an existing platform. Secondly, the media is not created as a last resort. Online platforms are always made from a position of dominance. Any retailer with a department with solid central purchasing needs an online store for that department. It would help if you had IT firepower resonating accurate information technology. Proper tech.
Let’s look at some examples of large online retailers’ IT operations. Bol.com in Amsterdam and Zalando in Berlin are estimated to have a turnover of two to three million euros. So as per the thumb rule, an IT company that is making a turnover of more than one million euros by selling B2C will have 500 employees in IT and another 500 employees in the rest of the other work.
Why does this ratio matter? Because it explains why so many of the “digital transformations” declared by this or that particular high-street chain are doomed to failure: trying to catch up to Amazon with a tech team of 20? “But what about all those trendy start-ups in Kreuzberg and Shoreditch who revolutionize whole industries on a shoestring?” I hear them cry: “If they can manage it, surely we can, too!” The reason the answer is no is simple: mindset.
The big chains move slowly and don’t take risks. That’s fine – they’re big chains with thousands of staff and big-name investors, not eight twenty-somethings and a coffee machine. That means, however, that they need to make corresponding investments running into the millions – and make sure that their management gets behind the transformation and advocates it at all levels. Hmm.
This was a sneak peek into the customer mindset. Now let’s take a deeper look into where eCommerce brands are headed. Let’s embark on a journey to understand the secret spice needed in your brand to succeed in today’s eCommerce market.
So what about eCommerce brands?
In the sense that we know them today, high-street brands are set to disappear – most likely for good. Once again, that isn’t because people don’t like them or want to buy them, but because typical advertising space for the creation and maintenance of these brands will disappear; moreover, most established brands will find it challenging to keep their place in a global environment in which manufacturers are competing for rankings on marketplaces.
Think back to the last time you searched for a new frying pan, a pair of headphones, or an HDMI cable on an online marketplace: you will have noticed that hardly any of the first 20 or so results came from what you or I would call a “real brand”. Moreover, you may have noticed that you didn’t search for a brand.
Like most users, you probably typed in “non-stick pan” rather than “Tefal non-stick pan”; you might have a brand preference for headphones, but did you type in “Philips headphones” or just “headphones”? And what was your favorite brand of HDMI cable again? That, right there, is why the years and millions Tefal, Philips and all the others spent wining and dining the buyers from John Lewis and House of Fraser now count for nothing.
So, like in retail, the brands that win out will be those with the best IT capabilities. In the current situation, that means automatic marketplace reviews management, production of smaller customized batches, agile advertising strategies and a range of other things that, unfortunately for Tefal, don’t have much to do with manufacturing excellent non-stick pans.
New direct-to-consumer brands are here (not to stay).
A plethora of producers out there is riding on this wave and creating new brands which they promote on digital channels – often using the extensive reach of networks like Instagram; others are simply specializing in sourcing own-brand stuff from China in a more innovative, faster way and listing it on every marketplace going using automatic software solutions.
Essentially, these makes are flora and fauna of the marketplace ecosystem, and it is unlikely that they have the potential ever to be taken seriously as brands outside of it – i.e. to get beyond competing on price. Commentators often alight on brands like Anker, which made its name in consumer electronics by selling power banks on Amazon, to argue the contrary. Still, even a young, contemporary brand like Anker, with several hundred million Euros of turnover, faces a daily fight not to be dislodged from its place in the product listings by the (primarily Chinese) challenger du jour.
Then, of course, there are the celebrity and influencer brands, e.g. Kylie Cosmetics, which are currently a novelty. They are set to do better than many established brands lacking direct access to end consumers. In almost every conceivable category, expect to see plenty more of these in the next two or three years.
Direct access to customers is decisive.
This direct access to end consumers is going to be the crux of the coming years as, increasingly, manufacturers are faced with a stark choice: compete with the big platforms for access to the customer (via the website, WhatsApp, or other channels) on the one hand, or surrender to big marketplaces and become tethered suppliers for them – with all of the drawbacks this entails.
Any brand, any manufacturing business in full possession of its faculties will see that the only option is to devise a strategy to build up their contact with the most valuable element in the equation – the customer – and inspire lasting brand loyalty. Opting for the latter can only lead to manufacturers running out of their market in the medium-to-long term. It’s simple: the auction mechanism of big platforms only leaves space for some but the most prominent manufacturers to survive.
The peak of the Corona crisis provided an unexpected demonstration of the importance of direct customer contact when Amazon suddenly ranked all sorts of products down to free up capacity for what were considered “essential goods”; manufacturers whose online strategy consisted of selling stuff through Amazon were given an object lesson in how vulnerable this makes them.
People in charge of decision-making at eCommerce businesses have to wear many hats. They must be marketers, salespeople, and accountants. Regarding demand forecasting, you could also add soothsayers to the list.
E-commerce demand forecasting, after all, is all about predicting the future. Get it right, and you can tailor your operations to meet customer needs perfectly. It’s the kind of service that modern consumers demand.
Add to that that forecasting demand delivers a raft of other benefits, and you’ll see how essential it is. So now you know all you need about the process, it’s time for you to get started – no crystal ball required!
For more information about eCommerce and to excel in your eCommerce business, hit the links below:
15+ Brilliant Product Photography Tips for Ecommerce Store to Boost Sales
UPI for eCommerce businesses – 5 Things to keep in mind
A 3-Minute Guide To Handling RTO (Return To Origin) Packages