Competition stimulates business. It is often said casually. What pleases the customer poses new challenges for online trading that will have to be mastered in the future. What these are and how e-commerce will change in the future, explains Daniel Schmid, CPO of Cosmo Consult, in an interview with editor-in-chief Christiane Manow-Le Tuyet.
E-commerce has not only been on the road to success since the pandemic. But now, brick-and-mortar retail also seems to have discovered online sales and is busy opening online shops. How will this change e-commerce in the future?
Daniel Schmid: Both the range of goods and the number of competing companies will increase and with it the competition. To allow brick-and-mortar retail to enter online retail as quickly as possible, new platforms or channels with a large number of new automatisms will also be created, which among other things, enable more price comparisons and ensure an even greater volume of data. This gives rise to the quality and quantity of the data, what can be derived from it and how it can be used profitably. The competition rules in e-commerce, such as the best price, fastest delivery, excellent self-service options, and the best omnichannel user experience, increase the competitive pressure on retailers.
” The Price War Alone Will Not Advance A Retailer”
Many shop openings create more and more competition because customers are getting more and more alternatives to shop online. How can online retailers avoid customer churn?
More competition means more competition, and competitors have to come up with more ideas. First of all, the classic promotions that are also familiar from stationary retail can be used. Loyalty systems with rewards or discounts for longer customer loyalty or the collection of sales-related points combined with exchanging them for tips or cash are among these classics that can also be used online. In stationary retail, however, there are never five, ten, or more shoe stores next to each other, whereas online, I can visit a lot more.
The price war alone will not advance a retailer, but the different aspects of customer service and new service models are becoming more critical. The elimination of transport costs or a free addition such as – to stick to the example of the shoe retailer – customers could keep a shoe care product. Buying online and picking them up in the immediate vicinity would be a service concept that could be implemented through the networking and cooperation of several retailers. In short: online and classic customer experiences paired with creativity and innovative ideas and approaches are viral.
Tailor-Made Shopping Experiences And Customer Wishes Of The Future
Anyone who runs an online shop knows that they now have to offer their customers an incredible shopping experience to shop online. What options do online retailers have or will they have in the future to provide their customers a tailor-made shopping experience online?
Above all, retailers need to know their customers: who is my customer, their preferences, and their buying behavior? Are there price limits, which delivery times tolerate or prefer, does the pick-up location play a role? The retailer has to generate this knowledge from data that he has to collect accordingly. But only a small number of medium-sized companies systematically collect data to analyze and use it. Here too, however, the saying applies: data is the oil of the 21st century. In this context, the range is also essential. Too little visibility naturally leads to too few customer visits. However, this can be compensated for by listings in various marketplaces, where product data and price and delivery time are what count.
What customer requests will online retailers have to adapt to in the future, and how can they be satisfied?
This includes the elimination of delivery and returns costs. Better and more reliable size recognition for clothes and shoes to avoid costly returns and long waiting times, but greater flexibility will also be on the wish list, for example, pick-up options on the way to and from the workplace the next day. By tapping into marketplace sales channels like Amazon, retailers can best observe online trading rules to respond to customer needs. A separate webshop should not be missing, and stationary contact points crown the customer experience to have enough options for every type of customer.
Technologies Of E-Commerce In The Future
Which new technologies will play a role in e-commerce in the future?
A prerequisite for collecting and using data to predict customer behavior and improve customer experience is data lakes, systems in which data is stored in raw data format. This unprocessed primary data can easily be used for a wide variety of analyzes. Augmented Reality can give customers a more intense shopping experience. Networking the webshop with local dealers or the fact that drone shipping is already in the trial stage will significantly impact delivery times and customer-friendly pick-up options. Text robots and linked data can provide structured data that systems can connect and interpret. So-called purchase bots, which are only fed with parameters such as maximum price, delivery time, return costs, make the purchase according to the specifications without the customer’s involvement. So there will continue to be an enormous dynamic in this area. There are no limits to the imagination.
VR And AR In E-Commerce – The Importance Is Increasing
What role will AR and VR solutions play in e-commerce in the future?
The role of AR and VR systems is becoming more and more critical. Customers experience a much more intense buying experience than looking at a brochure, be it on glossy paper or electronically. The knowledge about customer behavior is detailed: What do people like and what was tried on virtually, how often and for how long? This not only increases customer satisfaction, but the return rate should also decrease significantly.
How will online advice develop in the coming years, and what role will stationary retail play in this?
The brick-and-mortar retail sector has a wealth of advisory skills based on its history, which it can also offer online, with 24/7 online opening hours. Combining both worlds, the online platform and branch retail cooperation can result in real added value.
Online retail will continue to play an essential role in shopping in the future – which, on the other hand, will brick-and-mortar retailers take on?
In addition to its traditional role, brick-and-mortar retail will also take on logistical functions in the future, for example, as a pick-up station. There is also an opportunity here to try on goods or to personally check them and in-depth advice from competent specialists. New business models with appropriate networking and cooperation are required. If the branch trade cooperates with e-commerce, one does not expect the inner cities to be orphaned.
Challenges Of The E-Commerce Of The Future
What technological challenges will online retail face in the coming years?
Automation, a high interface load, and redundancy are to be mentioned here. At Cosmo Consult, we recommend that you always rely on so-called hubs such as data brokers or data hubs. You should ensure that the ecosystem, i.e., the technology and community, is robust, rich, and comprehensive enough. This is how you can achieve investment security.
In your opinion, what are the most significant challenges online retailers will have to deal with in the future?
The information that retailers have to gain from qualitatively and quantitatively sufficient information is initially a challenge. The speed of decisions such as the selection of platform, channel, and networks are also essential.
What is your vision of the e-commerce of the future?
In the short to medium term, we will mainly have to deal with which Omni-channels can be served how, i.e., in the best possible way with the least likely effort.
In the medium term, when most retailers are represented online, further business models must follow, coupled with the technical possibilities of AR and VR. And finally, the issue of availability plays a role that should not be underestimated. The price can take a back seat when business models with online and branch retail establish themselves.