A Digital Commerce World - a growing business reality

“Customers are indispensable business partners, so make their experiences great,”
— Barry Litwin, CEO, Global Industrial Co.

In the very digital world, we have all made use of eCommerce solutions at one point or another. The industry saw an exceptional boom during the COVID-19 pandemic.

When doors shuttered and shops closed more and more people had to depend upon the internet to fulfill their day-to-day needs. From purchasing groceries to buying clothes to going to the gym…

Every business was forced to rethink its strategy and use digital platforms in one way or another to facilitate customers and sell their goods or services.

The impact of digital commerce has been insane, to say the least!

In 2021, retail e-commerce sales amounted to approximately 4.9 trillion U.S. dollars worldwide. This figure is forecast to grow by 50 percent over the next four years, reaching about 7.4 trillion dollars by 2025. [1]

Why is eCommerce Gaining Popularity??

The COVID-19 pandemic may have been the push that sent businesses down the eCommerce labyrinth but it’s not the only reason…

eCommerce has created a win-win situation for both consumers and sellers.

For consumers, it offers many benefits, including convenience, 24/7 shopping, and lower prices. Also, it’s often easy to find reviews and compare prices before making a purchase.

For businesses, digital commerce can help to increase sales and reach new markets. It can also help to reduce costs and speed up the process of getting products to market. Digital commerce can provide customers with a better experience by offering them more choices and convenience.

Digital Commerce Trends to Consider…

As more and more competitors enter the market, there are a few things that you need to consider to deliver the best experience for the end user.

The e-commerce landscape is getting more competitive.

According to data from ShopperTrak in 2017, physical store traffic on Black Friday declined by 1% year over year, and the two-day Thanksgiving Black Friday period saw a 1.6% decline in traffic. Nearly 40% of sales on Black Friday came via a mobile device. The number is up by 10% from the previous year. It’s an indication that e-commerce is becoming m-commerce. [1]

Along with physical retail, e-commerce is transforming supply chain management practices among businesses, as distribution channels become increasingly digitized.

You need to make sure your website is secure and easy to use. Customers are more likely to abandon their purchases if they encounter any problems.

So, how can you navigate this aggressive landscape?

For starters, you need to have a strong online presence. That means…
Having a website optimized for search engines and mobile devices, as well as a social media presence.

The brands most reliant on short-term performance marketing will struggle the most in the increasingly saturated commerce space. It’s no wonder the world’s top companies have a brand building at the heart of their marketing strategies in 2022. [2]

The big challenge it presents…

Increasing Advertising Costs and Diminishing Campaign Effectiveness

eCommerce incumbents and new entrants are fighting for customers’ attention. It’s a bloodbath and one that’s going to amplify in the coming years.

Even when high upfront ad costs and granular targeting create short-term wins, they aren’t long-term profit drivers. Creating a sustainable customer base will require brands to build awareness and confidence with consumers who aren’t ready to buy, or who aren’t even in the market yet.

“As more businesses are online, it’s harder and harder to be found by new customers. Because it’s so easy to start online now, there are definitely rising costs of customer acquisition. Paid ads are getting really expensive, not to mention the Apple iOS 14 release, which has made it more difficult to track results in ad spend.”
—Mel Ho, Senior Product Marketing Lead, Shopify

The result is…

Increased costs of advertising and decreased return on ad spend (ROAS). Have a look at Facebook. Advertising on Facebook is already costing a hefty 47% more than the year before [2]

Interestingly, Apple’s new privacy updates in iOS 15.5 prohibit cross-app data sharing unless the user chooses to do so. This means that advertising across Facebook and Instagram will not be as effective as it used to be.

The Solution…

Boosting Your Customer Lifetime Value to Customer Acquisition Cost Ratio

With increasing advertisement costs, companies are exploring new and unsaturated platforms for client acquisition and retention. This explains the rise of social media platforms such as Snapchat and TikTok.

Retaining the attention of existing customers helps maintain profit margins for your business.

Propagate Your Unique Selling Point

You also need to offer something unique that sets you apart from the competition. Whether it’s a unique product or service, or a customer experience that’s second to none.

The big challenge it presents is understanding your target audience…

What are their needs and wants? What are they looking for? What motivates them to buy? Once you have a good understanding of your target audience, you can start to create a marketing strategy that will appeal to them.

Roberta Perry, the founder, and CEO of Scrubz Body Scrub Inc. found her unique selling point when she couldn’t get rid of her own skin problems.

Since no exfoliating product could help, she decided to make one herself…

“I couldn’t find the product I needed, so I made it myself”
— Roberta Perry, CEO Scrubz Body Scrub Inc.

The solution…

Leveraging the right digital marketing strategies.

With a tight marketing budget, it was hard to sell a product that Roberta knew could help many…

Email Marketing was her savior.

“My number one way to market then and now is through my weekly emails. I started collecting emails from events I did and then when we opened our store in 2011, collecting them one by one as people came in was easy. I integrated online opt-ins and kept it growing. I can see the returns I get with each campaign.” [3]

Conventional financing methods will take a back seat.

As e-commerce continues to evolve, businesses need to be proactive. They need to find the right financing solution to meet their business needs.

Many businesses opt for revenue-based financing and inventory financing. They prefer not to take loans or trade equity for investors’ money. This paradigm shift is for many reasons…

For one, applying for bank loans is a tedious task. Loan payments are fixed installments that are an added pressure on the company’s cash flow.

If you’re a small business then…

Merchant Cash Advances or MCA are a great option to access quick funding without giving up equity or taking on debt. It’s a flexible and affordable way to finance your e-commerce business.

The big challenge…

It’s not all roses and sunshine when it comes to alternative financing methods…

There are both pros and cons to this approach. As a business owner, you must familiarize yourself with the ins and outs of financing before making a decision.

For instance, RBF platforms share a fixed percentage of your company’s revenue until you’ve fully repaid the sum.

While the repayment is flexible, your business MUST yield regular profit to use revenue-based financing.

The solution…

Exploring Alternative Financing Solutions To Fuel Business Growth

Market research showed that in 2021 Q2 alone, funding acquired by e-commerce companies worldwide totaled US$16.8 billion. That is a five-time increase compared to the same period in the prior year. [4]

It is important for organizations to continue to explore alternative financial solutions. It will help businesses sustain and thrive, especially with a recession crunch looming on our heads.

Price Hike and Payment Methods

eCommerce has made it easy for customers to compare product or service prices before making a purchasing decision. Online price comparison tools make it even easier to compare prices across different websites

The big challenge…

Customers are skeptical about online purchases.

Even though buying online is becoming a norm, customers are still hesitant when purchasing online.

The solution…

Competitive Prices and Payment Visualization Tools.

Price is always one of the most important factors for consumers when they’re making a purchase.

To succeed in digital commerce, you need to offer competitive prices. This doesn’t mean that you have to be the cheapest, but you do need to offer value for money.

Another important factor is payment visualization tools. These can help you understand customer purchase patterns. They can also help you tailor your marketing efforts accordingly.

That is exactly what Ajay Anand, CEO of Rare Carat (An Online Diamond Marketplace) did for acquiring customers. He understood that his customers would have concerns about purchasing diamonds online.

After all, who purchased gemstones online?? Nobody!

Ajay noticed that the biggest obstacle was gaining trust. “Some of the biggest obstacles we’ve come across so far is trying to figure out the best way to gain the customer’s trust. Obviously, being an eCommerce site and not being able to view the diamonds in person, people are going to be hesitant.

Because of this, we offer a 30-day no-questions-asked return policy and allow anyone to get the help of a credentialed gemologist for feedback and pointers. This reinforces that we have the knowledge and ability to provide great service and products. We don’t recommend anything we wouldn’t tell our friend to buy.” [5]

More e-commerce businesses go global to overcome growth bottlenecks.

As the e-commerce landscape gets more competitive, many businesses are looking for new ways to fuel growth. One strategy that’s becoming increasingly popular is expanding into international markets.

This gives companies access to new customer bases and can help them overcome local market saturation.

Of course, going global isn’t without its challenges –

Funding is a major issue for most organizations when considering expansion. Market penetration and talent acquisition are also other big hurdles.

Businesses need to be aware of cultural differences and navigate complex regulatory landscapes. But for those who are up for the challenge, the rewards can be substantial.

The solution…

A well-thought-out executable Strategic Plan for Growth

A well-crafted strategic plan goes a long way. It can help an organization expand its wings and even soar in international markets.

Think carefully and ask yourself…

How will you do it? What resources will you need? How will you tackle the cultural difference? How will you acquire the right talent?

People are Looking for Human Experience even in the Digital World.

Another important factor for success is customer service. When everything is automated it’s easy to forget that your customer is a real human being.

Buying and selling take the ugly shape of numbers, profits and loss. Businesses often forget the value of human interaction.

Success in the digital commerce world heavily depends on providing excellent customer service.

This means…

Being responsive to customer queries and complaints and offering a hassle-free returns policy.

One of the great examples here would be Zappos, a leading online shoe store. The store offers a 365-days money-back guarantee, along with free shipping both ways, in case the customer wants to exchange or return the product.

No wonder, Zappos didn’t have to work hard to maintain its online presence. The customers are singing praise and recommending products to one another (good old-fashioned word-of-mouth marketing!).

Notice how they focus on what the customer wants and needs, not on what they want the customer to want or need.

What the Future Holds…

After enduring the COVID-19 pandemic, it’s time for companies to build on what they’ve learned. Future e-commerce leaders will be those that make the most of increased traction and smartly capture the evolving trends at the onset. Prioritizing business strategy, customer need, and current capability goes a long way when outpacing the competition.

Identify value pools to quantify the market size, define the target experience of the most valuable user journeys and conduct research to understand the feasibility and viability of change. Brands that understand where the best opportunities lie will drive the future.

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