The massive shift retailers made into digital commerce in 2020 has paved the way for revenue growth from these channels. Yet brands are not reaching their full revenue potential because of challenges to delivering seamless, differentiated omnichannel experiences.
New research from retail technology consultancy RSR Research, Retail eCommerce In Context: The Next Iteration, reveals more than half of large retailers have the opportunity to unlock significant revenue growth from digital channels. Over half the retail respondents say less than 20% their total revenue is currently from digital channels.
“We have seen a jolt forward in ecommerce growth this past year, but digital commerce as a whole is still in its infancy. And retailers are more aware than ever that improving shopper experiences is key to revenue growth,” says Deanna Traa, Chief Marketing Officer at Bold Commerce.
According to the research, the top two areas where retailers see opportunities to improve the online shopping experience are having a unified view of inventory availability (49%) and applying the same business rules across all customer touchpoints (44%).
Both opportunities indicate retailers’ desire to improve the omnichannel experience for shoppers. “Consumers are embracing hybrid shopping experiences that take place online across digital channels and in store, and they expect these worlds to connect seamlessly to one another. By establishing a complete omnichannel experience, retailers can marry relevance with convenience and be better positioned to engage and satisfy customers across all channels,” says Traa.
Innovation is a priority for customer acquisition and conversion
The majority of retailers are looking to explore innovative ways to reach customers across new channels and drive conversion rates, according to the research. In fact, 90% agree or strongly agree that the ability to continuously innovate and rapidly test new customer experiences would help them stay competitive, while 88% say adding new digital touchpoints would allow them to attract more customers. Additionally, 86% of respondents agree that more differentiated experiences would improve conversion rates and 81% agree the checkout is a priority area of focus.
Consumer demand is behind retailers’ desire for more innovation. Leading retailers in the research indicate their top three business challenges are shaped by customer needs. These include:
- Consumers demand more convenience in the shopping experience than before, otherwise, they are more likely to abandon their purchase (60%).
- Consumers expect a more seamless experience across digital and physical touchpoints than we are currently providing (58%).
- Market trends are prompting a look at new business models (eg subscriptions) to drive revenue growth (49%)
One new business model that’s growing six times faster than the S&P 500 is subscriptions. Gartner predicts that by 2023 more than 75% of organizations selling directly to consumers will offer subscription services and major enterprise brands, like Unilever, Walmart, and Procter & Gamble, looking into the subscription business model.
“The subscription model is so compelling because it creates value both for customers and brands,” says Traa. “Customers benefit from greater convenience, cost-savings, and a sense of belonging with customized offerings, while brands benefit from predictable recurring revenue, increased retention, and higher customer lifetime value — as much as 178% higher. In the end, a well-crafted subscription model turns a transactional purchase into a long-lasting relationship.”
Innovation is held up by inflexible technology and lack of resources
The growth and innovation opportunity in digital for retailers is held back by inflexible technology and a lack of resources the findings reveal. While 90% of retailers want to continuously innovate and rapidly test new customer experiences, the top two organizational inhibitors are that existing technologies are hard to change (49%), and the lack of resources available for innovation (43%).
“Modern, open technologies are critical to addressing unmet needs and driving digital innovation,” says AJ Ulloa, Director of Partnerships at Bold Commerce. “Retailers have been adopting frontend experience technologies, such as predictive search, content management, personalization, and loyalty management. Now they are turning to the commerce and backend operational layers of the technology stack, including checkout and order fulfillment. It’s these capabilities that will elevate the end to end shopper experiences across all channels.
In the post-pandemic period, retailers are poised to make additional technology investments to accelerate their digital commerce capabilities, however, approaches are mixed on where to invest. There is a relatively even split among retailers leaning towards investing in existing technologies (40%), or adding additional solutions (31%), versus fully replacing their commerce platform (29%).
“The research results suggest retailers’ strategies favor investing in current platforms and augmenting their existing tech stack with additional solutions versus undertaking major replatforming initiatives,” says Traa. ”This reflects the desire to innovate while managing costs, reducing risk and at the same time demonstrating ROI.”
As customer demands continue to evolve, commerce technology that creates agility and flexibility for retailers will put them in the best position to innovate and maximize revenue from new and emerging commerce channels.