The interesting feature of digital transformation is that unlike other technology adoptions that happen first in the corporate sector and then affect the work and life patterns of individuals, it is very different in the evolving world of retail. Here it is the early adoption of mobility and social media by the new generation of smart phone and computer users and the reluctance to go to brick outlets when one can simply click through to a purchase transaction that has created the revolution of E-Commerce and M-Commerce in the retail sector.
The surge in digital transformation with the adoption of pay-per-use software as a service in preference to CAPEX investments in Information Technology and the disappearance of “heavy iron” data centers into the infrastructure as a service model has been evident in the last couple of years worldwide. The rapid rise of start-up solutions in mobility and social media adoption by the corporate sector, supported by the development of trends and patterns trough big data analytics has also pushed retailers and many early movers in other sectors like manufacturing, banking and insurance to move their store-fronts to the internet. Globally this trend was highlighted by the fact that the famous Black Friday shopping surge that happens after Thanksgiving in the US has been eclipsed by the “Manic Monday” e-Commerce transactions. There is a growing conviction among global retailers that standard stores will soon evolve into round the year event venues for fashion shows and cooking contests, while most commerce happened from the comfort of an armchair at home.
Recent forecasts by Gartner and other analyst firms bear out this hypothesis. The e-commerce software market, which touched three billion US dollars in sales in 2012, is expected to grow at nearly fourteen percent CAGR in the next three years and over fifty percent of organizations which derive more than ten percent of their business online are expected to embrace e-commerce as a transformational initiative. This makes business analytics, e-commerce and customer experience the top three priorities for management teams for five-year technology investments.
The imperatives for a successful e-commerce foray are predictable but still important to emphasize. Discerning customers will demand a seamless multichannel user experience as they move from physical visits to the store to online browsing and purchasing through a range of devices. For the retailer or any firm which has e-Commerce as part of its strategy, the choice of technology is a non-trivial decision, since this will impact the future revenues of the brand. A recent study shows that Oracle’s ATG Commerce is the top choice, already bought by twenty-five of the top hundred retailers, followed closely by IBM WebSphere which boasts twenty percent share of the same market. It is also estimated that over thirty percent of the top ten thousand e-commerce sites globally and nearly forty percent of the top thousand run on Oracle Commerce. With SAP and other lesser known boutiques jostling for opportunity share, the technology wars can expect to be very hard fought in the years to come.
A case in point is a significant US retailer which embraced Oracle’s ATG Commerce last year and saw quarterly on-line sales jump nearly thirty percent. They deployed a combination of advanced search capabilities and mobile-friendly interactions, further enhanced with the implementation of a data management and business intelligence solution, Endear to create a perfect online shopping experience for consumers. The power of these technologies enables segmentation of customers based on their browsing and shopping behavior and investments in “ship-from-store” and in-store pickups for orders placed online, increasing the satisfaction levels for customers.
The online shopping movement has still to take off fully in India, contributing less than five percent to the four hundred and twenty billion dollar overall retail market last year. However the funding moves demonstrate the interest of global investors and the ability to access the billion plus consumers in all parts of the country shows that a revolution is waiting to happen in our country as well. Recent news reports of Flipkart raising a billion dollars in predominantly foreign capital, followed closely by global giant Amazon’s announcement of an additional two billion dollars investment in growing its India business. If the ban on foreign investment in on-line retailing is relaxed, the floodgates will truly open for retail e-Commerce.
It is important to note too that while E and M Commerce was once perceived as a development of importance only in Retail, customers of organizations in the manufacturing, insurance, banking and healthcare industries are also expecting similar web convenience. Organizations worldwide have begun to realize that disintermediation is the order of the day and interesting online investments could rapidly accelerate the direct interaction with and sale of products and services to their target segment.
For the IT Services industry in India, this means a rapid escalation of opportunities to move towards true solutions and create new channels of revenue generations for clients. New skills will be needed too because commerce sites are as much about aesthetics and usability as they are about technology and web development capabilities. For companies which are enabling E and M Commerce Transformation, the opportunities are huge !
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