A new study by Incisiv commissioned by commercetools, Contentstack and Fluent Commerce, shows that despite the projected growth of 24.3% in digital assets and 19.7% in engagement channels, retailers remain unprepared to tackle rising digital complexity.
It’s rare for commerce experts to unanimously agree on anything these days — one exception is that digital operations have become increasingly complex. Indeed, rising complexity in the retail industry is fast becoming a common discussion topic among executives and for good reason, as less than 50% of retail executives feel prepared to manage their commerce growth in the next twelve months.
Less than 50% of retail executives feel prepared to manage their commerce growth in the next twelve months.
The executive survey “Digital Complexity: Thriving in Unpredictable Times”, completed by Incisiv, an industry insights firm, in collaboration with commercetools, Contentstack and Fluent Commerce, shed light on the rapid increase of digital complexity both online and in-store, along with the growing concerns of retailers as to how to effectively manage all aspects of operations.
To provide retailers with insights beyond the hard numbers as well as direction to help retailers thrive in today’s environment, Incisiv’s Chief Insights Officer, Gaurav Pant, hosted a webinar. Michael Scholz, VP of Product and Customer Marketing at commercetools, Nicolla Kinsella, SVP of Global Marketing at Fluent Commerce, and Jasmin Guthmann, Head of Corporate Communications at Contentstack, joined him for the lively discussion.
Diving deep into the gap
The once-in-a-generation growth in digital sales during the pandemic — between 3x-5x — led to a manifold increase in digital complexity; however, to date, only a few retailers have been able to effectively scale their capabilities to ensure they’re prepared for whatever the next disruption may be. For instance, 81% of executives believe product returns is a top growth area, yet only 46% say they can manage this surge. The same can be said about digital assets, with a chasm of 35% between expected growth and management effectiveness. While other items show less disparity, the void across key growth areas is troublesome.
Contentstack’s Jasmin Guthmann gave her perspective: "People expect a 25% more growth in the number of digital assets they’ll need to manage, but nobody will hire a 25% extra staff.” According to the survey, when it comes to top challenges retailers deal with, like making inventory levels accurate and visible, as well as enabling a seamless and personalized shopper experience — the actual tendency is for the gap between the top growth areas and effective management to widen.
People [at the survey] expect a 25% more growth in the number of digital assets they’ll need to manage, but nobody will hire a 25% extra staff.
Head of Corporate Communications, Contentstack
For instance, “66% of customers in the US and UK and 68% in Germany and 71% in Australia, check inventory before going to the store, even if they don’t buy online”, disclosed Fluent Commerce’s Nicolla Kinsella. “In the digital side of it, when you’re showing something as in stock when it’s not and selling it, you’re paying to wrap that order and the advertising that leads to your website. Then you send an email canceling the order and the customer is understandably upset about it. A really annoyed customer that [then] leaves you a bad review and impacts the customer service as well. It impacts a lot of different areas”, she concluded.
Retailers also face speed bumps when executing processes affecting shopper experiences. The survey unveiled it takes over three weeks to launch a new product line digitally for 56% of retailers, and a whopping 83% said it takes the same amount of time to launch a new marketing initiative.
Moving that slow in the commerce world doesn’t cut it anymore, said Jasmin. “You’re coming from an old world that takes three weeks to put a campaign to market. That is not going to work. And I think this is one of the main challenges people feel: Their technologies and processes are handcuffing them.”
Digital complexity will rise further. How can retailers thrive?
The survey also revealed that the underlying technology to make retailers thrive is not mainstream. Case in point: 42% of retailers reported their product catalog system won’t meet their needs, and 39% found their store fulfillment platform unsuitable to support their business requirements over the next twelve months.
Enabling retailers to thrive isn’t easy, especially with the unpredictability that permeates the retail industry. That’s why Michael Scholz, when asked about the evolution of eCommerce, responded rather candidly that he doesn’t know what the future will bring, conceding, “but what we do know is how to get prepared for anything that may happen or any of the merging channels that may pop up.” He pointed out that because Instagram, TikTok, shoppable TV and other channels can emerge suddenly, it’s critical retailers have a robust commerce engine running in the background; that way “they’re prepared for whatever life throws at you.”
We don’t know [what’s up next], but what we do know is how to get prepared for anything that may happen or any of the merging channels that may pop up.
VP Customer and Product Marketing, commercetools
The lively conversation ultimately arrived at the technology everybody is talking about: Composable commerce. Michael stressed that the maximum flexibility and agility of composable commerce is the answer to enabling retailers to leverage new opportunities under changing market conditions.
When asked about best practices to scale digital commerce in this unpredictable landscape, Michael explained the importance of “starting small, testing and failing fast” as the right environment to manage change. Two other pillars retailers should take note of are the use of cloud-native solutions to scale during seasonal events like Black Friday, and having a unified commerce engine that manages commerce functions like checkout across multiple frontends.
For retailers, the pressing question remains, “Isn’t it too complex to implement composable commerce? Jasmin refuted this concern perfectly: "It’s not easy moving to a composable architecture if you’re in a legacy system today, but it’s also not as complicated as you think.” Especially when balancing the benefits it provides (flexibility, agility and scale) against the low total cost of ownership (TCO) compared to legacy systems, leveraging composable commerce in 2023 is a no-brainer for retailers.
Somewhat unsurprisingly, everyone agreed on that.