At NRF 2023, Jen Jones, CMO at commercetools, led a panel discussion with industry heavyweights: Omar Koncobo, IT Director, eCommerce and Digital Systems at Ulta Beauty; and Richard Spencer, CIO at Belk. They chatted about all things innovation, like risks and rewards, why cloud-based is best, the ROI of agility and more. Here are the most important pearls of wisdom they shared.
To begin the session, Jen asked the audience, "Does anyone here know what year the first eCommerce transaction took place?" No one raised their hand. Astoundingly, it turns out that the first transaction happened in 1994 for a Sting CD — at a time when only a few even had access to the internet and most people were still making mix tapes. No wonder no one in the audience knew the answer!
In the almost 30 years since, everything has changed. Now, the internet is the backbone of many businesses across the global economy. In fact, Harvard Business Review published a research paper last year that showed that the internet economy grew seven times faster than the US economy from 2017 to 2021, proving just how rapidly we've all become more and more reliant on the internet. Indeed, the internet economy in the US makes up a whopping 12% of its GDP — and with how things are going, it's sure to increase.
With the internet being such a cornerstone of the economy, it only makes sense to pick the minds of two leading experts on the topic of innovation in eCommerce — Omar and Richard — two industry veterans who have experienced the various iterations of eCommerce and continually monitor our growing digital economy.
Incremental innovation means you can fail fast and succeed faster
Jen started the discussion at NRF 2023 with the topic of taking an incremental approach to innovation and the risks and rewards of doing so. Richard shared his thoughts by answering, "The risk comes from making mistakes that have terrible consequences, but you have to take risks to get ahead. If you don't take risks, you're going to lose. So, you might as well put in the effort to take the risk.”
In Richard’s opinion, having really good technical support staff in place can mitigate risks associated with implementation and execution. This allows you to take more chances with business strategy instead. Richard said that the rewards of the "incremental approach help you in that you can quickly see some value and immediately change direction. You can quickly learn what works and you can make changes. That's why it's important to have an agile approach.”
At commercetools, we see the future of commerce being defined by agility. That's a word we use a lot, and something that we kind of hold as a guiding principle of what we want to provide for our customers. So the ability to simultaneously respond to economic changes and customer preferences while being able to align with preferred channels — we think that is paramount to everyone's success.
The biggest driver of innovation goes back to COVID-19
By now it's fair to say that we're all sick of (no pun intended) thinking about COVID-19. But there's no denying the impact it had on digital commerce — which is still being felt today. In fact, COVID-19 was probably one of the biggest drivers of innovation ever to have happened to a multitude of businesses.
For Ulta Beauty, Omar recalls how customer behavior radically shifted and how they needed to switch up their commerce solution to be nimble enough to react to these changes. "It pushed us to also look into changing how we deploy or what kind of platform we're running. So those are driving us into innovating and that's some of the processes that we have today — making sure we get the right technology in place to support our customer base and our business as well."
Omar continued, "I think it got to a point where we hit a ceiling in how flexible, how nimble, how quick we want to make changes to the current technology stack. With legacy platforms, with any change, you have to deploy the whole stack and you introduce a lot of risk at the moment when you want to be stable. During COVID-19, our stores were closed, but the eCommerce kept running and that was the face of the company."
It was too risky to innovate their eCommerce during that time. That's when Ulta Beauty decided to implement the composable approach of commercetools — so the business could enjoy the fast, agile deployment of new features without "breaking" the system and interrupting the customer purchasing journey. By doing so, the company could implement the right features, like social commerce and AI, to support the customer base and business goals.
Want to save time and money? Get in the cloud
Both Omar and Richard couldn’t praise the cloud enough. For Richard, moving to the cloud is invaluable in terms of reinvesting time to focus on business drivers. "With a cloud-based approach, you can scale your needs as required; otherwise you're making heavy investments in hardware and things that are not moving the needle towards your business. So, the technical approach really for us has been to move towards services-based approach because that allows you to iterate quickly within smaller areas. You can really focus on smaller aspects that drive the business."
Richard used the example of Belk's loyalty program to highlight the value of saving so much time when it comes to innovation. "For us, loyalty is a huge driver. I don't want to have to change my entire tech stack to make effective changes in loyalty because it costs time and effort…to spend a year making a set of changes so that I can enable a new feature within just the loyalty stack — that's a year lost that I can be doing other things to improve marketing initiatives."
Omar concurred: "commercetools was definitely one of the partners that we decided to go with, along with Google Cloud, to run our technology stack. With our old legacy platform, the big challenge we had is when the holiday season comes. That surge in traffic is totally different from what you run on a normal day to day. You either have to go buy additional hardware just to support the holiday, and then when the holidays are out, basically just run at half capacity. So, half the other capacity is just wasted resources and money sitting around."
Omar reflected on how using commercetools allowed Ulta Beauty to implement an eCommerce system that was very responsive. "We don't have to worry about implementing physical hardware with a lot of memory. That's a big savings for us. Instead of just spending millions on hardware, we don't have to do that anymore. We can rely on auto-scaling from commercetools and its partners," Omar concluded.
During the holidays, instead of being the war room monitoring, we should take a cruise ship to The Bahamas and just kick back and watch. Because that's how simple, how easy the deployment is, how easy the system runs. And the fact that you can just auto-scale without going to buy hardware and take three months to set it up and configure it — that's a big change for us compared to what we were doing before.
IT Director, eCommerce and Digital Systems at Ulta Beauty
Key learnings about implementing eCommerce innovation
Jen wound down the NRF 2023 conference by asking Omar and Richard what their biggest learnings were from the last year due to having the ability to innovate in eCommerce without limits. Here's what they said:
Richard: "The biggest lesson we learned was really how to focus on things which really affect the customer and, therefore, the business. What we saw during the pandemic was we had to do some things very, very quickly. And taking that approach was probably the number one guarantee of our survival during the pandemic. That's the honest truth."
Omar: "Make sure that you're always working for a leadership that's level-headed. Make sure you are always running physical and digital sales channels seamlessly. You can't separate them; they always have to go together. And finally, make sure that the manpower — those that actually help and make things happen — that you have redundancy and resiliency in place to help. Because those aspects have had big impacts and thankfully, we've been able to weather them out. So, those are some of the lessons learned.”
To learn more about how commercetools enables eCommerce innovation, read our blog post Why innovation-driven eCommerce is incompatible with monolithic platforms and our report on Commerce Innovation.