Current trends and challenges in ecommerce

It's hard to imagine any online retailer, D2C brand, or ecommerce business in general that doesn't feel the pressure to constantly reinvent itself. Acquisition costs keep climbing but so do churn rates. At the same time, many, large ecommerce businesses aren't structurally equipped to pivot and adapt in the very short term to meet customer demand, or sudden shifts in KPIs. They don't always possess the agility to consistently engage their audience and try new things either. As such, they fail to differentiate themselves properly and see their CLTV fall. Why is this happening and why are companies struggling to keep up the pace?

Rising customer expectations

Digital technology has made things a lot easier and more immediate for consumers. It also has a tendency to cut the middlemen, to consolidate, and greatly accelerate the onset of new disruptive technologies. This ongoing trend has consumers feeling spoiled when they're out shopping on the world wide web. The moment they experience something neat for the first time, they expect every other platform or app to have it as well. And this puts a lot of pressure on businesses to keep up.

Increasingly fierce competition

Ecommerce sales are projected to make up 22% of all sales worldwide by 2023, the landscape is saturated by it. At the same time, the explosion of SaaS-companies has drastically lowered the barrier of entry for newcomers to sneak a piece of the pie. Think about it, anyone can set up a good-looking online store nowadays. People don't even need to manufacture anything anymore either, they can just dropship it. So how can you still stand out?

Lack of bandwidth to experiment

Companies are usually very aware of their surroundings, and subsequently there's no shortage of ideas to turn new disruptions into advantages. On the contrary, most companies have backlogs choc full of initiatives they can't seem to get to. In any case only a few items will get prioritized, choosing whatever they think will get them the furthest on the short term. But then what? Who's going to do the work? How quickly will you get results? And are you sure you've bet on the right horses?

The three pillars of continuous innovation in ecommerce

It's clear that recommending some random, hot-topic solutions isn't going to do the trick for you. Instead, we want to teach you how to adapt, so that you can make the right decisions and act on them efficiently. Keeping up means doing better every day, and here's how. In our opinion, enabling continuous innovation in ecommerce hinges on having the right combination of people, process, and technology in place.

Having the right ecommerce team structure and skills

Let's be real, traditional organizational structures are slow by design. Rigid, functional or divisional silos, inflexible roles and job descriptions, asset vulturism, office politics, tons of red tape… All of these entrenched behaviors and processes negatively affect your ability to bring the right people in the room together. What you need, is a multidisciplinary team. It houses a maximum of 8 people representing all the necessary expertise and skills to execute a project, initiative, or idea from start to finish. They run a tight ship, can dedicate full weeks or 'sprints’ to a single project.

Two developers, a designer, a product manager, and a strategist. Together with our client, a team of five was enough for us to go from a concept all the way to a launched product on the app stores in just 10 weeks. Read about the companion app we've built for Puppy+ right here.

Sticking to an agile innovation process

For many online businesses, it's clear that having an ongoing digital transformation is necessary for survival. You can probably guess you need something that's a little more agile. But how does one become agile? In a nutshell, being agile is about staying focused and creating momentum.

Staying focused through strategy and prioritization

• Everything starts with a strong digital strategy. It should contain a coherent set of analyses, arguments, and actions that respond to a significant goal, but remains open to change. Regardless, make sure your digital strategy revolves around the end user, your customers. Personalization is key. As the most viable way for you to stand out as a brand in ecommerce, is to focus most–if not all–your efforts on improving your online shopping experience.
• It’s equally important to acknowledge the level of uncertainty shrouding innovation projects, by taking it into account when you’re drafting roadmaps. By being explicit about variability in a project, you're allowing it to evolve as you learn, significantly improving your chances of success. This indirectly steers you towards committing to shorter iterations, rather than a vague, 2-year long roadmap that’s basically just a feature list.

Creating momentum through iterative, human-centric design

• One thing should be crystal clear in this regard: you want to be shipping product iterations constantly, as often as possible, with the sole purpose of learning and improving. Start as small as you can, and then expand and improve. This is how you materialize continuous innovation. Don’t use a straight feature list as a basis for each iteration either, but rather think about the problems or needs you’re addressing for your customers by doing so. Think in assumptions!
• Increasing your chances of success means building something that’s made for people. That sounds like the most obvious thing ever but you’d be surprised just how little empathy plays a role in product design decisions. Hence we’d advocate sticking by the 5 principles of design thinking. Additionally, don’t hold back to create prototypes and test them with real customers as soon as humanly possible. The faster you can validate those assumptions, the better.

We applied this way of working to help Edgard & Cooper establish themselves as a D2C brand over the course of several iterations. Using customer data and early qualitative user testing rounds, we we’re able to make effective choices, quickly. Read all about it, here.

Using a flexible technology stack

Naturally, everything we’ve mentioned so far falls flat without a flexible technology stack to keep you light on your feet. Luckily, recent trends in SaaS have opened up a new way to build scalable, flexible, omnichannel ecommerce platforms. These platforms are moving from being feature-driven, to being architecture-driven. What that means in practice, is having a flexible foundation which connects to third-party SaaS solutions; quickly expanding the functionality of your ecommerce platform without having to build everything from scratch. This is commonly referred to as a composable architecture. Other terms like composable commerce or the MACH principles refer to roughly the same idea.

So, all you need is an API-first platform in place–like Shopify–and simply connect the dots. Smart endpoints, dumb pipes. The industry is moving away from monolithic suites like SAP Hybris towards composable setups that prioritize flexibility and speed. This way, anything from a headless front end to a full-fledged customer portal becomes a much more attainable goal for a smaller team.

You might think it’s a bad idea to just attach a bunch of stuff you haven’t built yourself to your precious platform, but that’s hardly accurate. Because now you’ve got all these small SaaS companies offering niche ecommerce solutions that excel at doing one particular thing. From social media integrations to payment services. We refer to these as micro-services.

This approach allowed us to build a fully-featured ecommerce platform in just four weeks, for instance. Complete with site translations, smart search, and a recommendation engine. Read all about the ecommerce platform revamp we've done for Pharmabox here.

In summary

Continuous innovation is required for organizations to survive in the digital age, but their organizational structure and processes must allow for it. Especially in a heavily commoditized and saturated space like online shopping. Unfortunately, rigid organizational structures, inflexible architecture or just a lack of bandwidth are holding back many companies.

If you want to go both fast, and far, install a dedicated, multidisciplinary product team that operates independently from the business. Work in agile development cycles to validate assumption after assumption, explore new ideas, or just think outside the box. Be sure to know how you’ll measure success, and acknowledge the uncertainty that lies ahead. And don’t try to build everything yourself all the time, those days are over.

You'd be surprised how much you can achieve with so little. If you manage to stay true to a few core principles we shared with you here, you'll be able to jump ahead in no time.

Note: this article effectively a summary of our white paper “Jumping Ahead: How to Implement an Ecommerce Innovation Engine”. Go check it out if you want to read the full story!