As consumer behavior adapts to new technologies and new expectations are established by the constant innovation of the online retailers, established ‘bricks and mortar’ retailers must either adapt or risk becoming a casualty of the digital revolution.
Online retailers have pioneered the use of drop shipping and marketplaces to vastly expand their online ranges, as well as developing integrated mobile applications to offer an enhanced and flexible customer experience. Indeed, the ubiquitous smartphone is rapidly becoming the device of choice for the modern shopper.
This creates the biggest opportunity for traditional retailers to enrich the customer experience. They are uniquely placed to lever their brands, their deep retail experience, their physical retail networks and their long standing customer relationships to create compelling, engaging and rewarding experiences for their customers.
Location based services are prime examples of such an opportunity. Real time availability information can be provided directly to customers’ smartphones allowing an item to be reserved in store. An appointment with a sales advisor can be scheduled to allow the customer to discuss their requirements, creating an opportunity to enhance the relationship, as well as upselling or cross-selling. An order can be placed for later collection. Promotions can be used to encourage the consumer to visit a nearby store or to visit the website to make a purchase.
However, although mobility continues to be an important trend, the key opportunity for traditional retailers is the creation of an omnichannel capability, bringing together their physical and digital channels to create enhanced value for their customers in a way that online retailers simply cannot compete with.
At the heart of these omnichannel innovations is the need for seamless access to data about customers, products, promotions and stock availability, which often resides in disparate, disconnected legacy systems. It’s at this point that the very assets that the traditional retailers have at their disposal, become the main constraints on their ability to rapidly implement the necessary changes to the customer experience.
Virtualstock (VS) provides a cloud-based platform that enables our customers to quickly establish interoperability between their systems, and with their suppliers / partners systems without disrupting their legacy platforms. This allows our customers to rapidly build new business models for omnichannel that integrate physical and digital channels, to offer their customers enhanced and integrated experiences across all channels and devices.
A central principle of the VS platform, The Edge, is that new business processes are built around data. The Edge rapidly and seamlessly consumes, validates and exposes data in any format within a defined workflow, while maintaining the integrity of that data within the source and destination systems.
Business agility is suddenly an operational reality rather than a bullet point on a consultant’s presentation. For example, product induction can be completed in days rather than months allowing retailers to expand their ranges quickly to respond to the ever-increasing pace of product introduction and end of life cycles. The ability to connect to third party systems to enable product information, inventory levels and order statuses to be shared in real-time between supplier, retailer and customer enables traditional suppliers to offer the depth of range and customer service required to compete with the online specialist retailers such as Amazon and eBay.
While many retailers have made significant progress in delivering some level of omnichannel capabilities, this has often been achieved by building separate business operations and systems, with limited points of integration or interoperability. This may have addressed some immediate consumer needs but it has done little to increase the ability of the retailer to continue to adapt at the speed the market is moving.
The speed of change is underlined by the growth in e-commerce revenue from 2.5% of revenue in 2007 to around 15% 2015. The sharp rise has caught many by surprise, and more than one retailer commented that stock shortages in their catalogues and online stores were major contributors to disappointing sales performance over the 2015 Christmas period.
As online shopping continues to expand, so do the opportunities for retailers to innovate. Drop shipping is increasingly being seen as an opportunity to quickly expand the online range at significantly reduced cost and risk to the traditional stocked model. It also presents the opportunity to test international markets without the capital intensity and business risk of opening physical retail networks.
This is revolutionary in retail and has changed the market completely, as can be seen in the success of the large online retailers. Not only has it changed the dynamics of the market but it has created a layer of companies that exist purely as online distributors with their suppliers or manufacturers holding all product inventory and fulfilling all online orders.
Until now, in order to build omnichannel solutions, retailers have only had a limited number of options:
• Wholesale legacy system replacement
• Bespoke software development
• Traditional systems integration
All of these options are risky, extremely expensive, and simply cannot be deployed quickly enough to adapt and change to consumer demands or respond to competitive threats.
Beyond omnichannel, successful retailers will need to constantly challenge and innovate if they are to remain relevant. Amazon, eBay etc. have led the way in innovation, offering compelling promotions, time limited offers, 1-hour delivery and user profiling, as well as investment in long-term innovation (eg. drone delivery and delivery to an individual at any location).
Therefore, retailers must embrace new, disruptive and agile technology to move at the pace required to remain competitive, otherwise they risk being subsumed into the big online marketplaces, with the inevitable brand, relationship and margin impact that implies.
The Edge from VS delivers an agile, cloud based platform, that allows our customers to be the disruptors, not the disrupted.