With the onset of the COVID-19 global pandemic as well as continuous ecommerce innovation, it’s clear that the retail landscape has been rapidly changing and evolving. In particular, we’ve experienced a massive shift from traditional, offline bricks-and-mortar into the online space. The phrase ‘new normal’ has been widely coined to broadly describe the changes brought about by the Coronavirus pandemic, but what exactly does this mean for businesses? How exactly have brands been impacted by the lockdowns, and what strategies can they utilise in order to adapt to this ‘new normal’? Host speaker Dilyana Gramadarova – Head of Strategic Partnerships at Retail Without Borders – was joined by three guest speakers, who are also marketplace experts, in an exclusive webinar to shed some light on the effects of these unprecedented circumstances on the ecommerce industry, as well as which strategies and solutions brands can leverage to overcome the challenges.
Guest speakers included Pete Harris, Director of Managed Services at We Are Pentagon. Alongside Pete, Barney Willis (VP of Revenue at Arcade Retail) also provided his insights. Finally, the Managing Director of Storesome – Graham Broughton – also joined the conversation with his knowledge and predictions. Together, they discussed three important topics which are crucial for any business wanting to be successful in this climate. Firstly, what does the ‘new normal’ mean for online businesses? In addition, what are the current key issues, impacts and challenges for businesses in this ‘new normal’? Finally, what are some of the solutions and strategies that online businesses should consider in order to evolve and therefore thrive?
This article is a summary of a Retail Without borders webinar on the 08/12/2021.
What is the ‘New Normal’?
Pete began the discussion by immediately pointing out that “it’s not the ‘new normal’, it’s an evolution.” We’ve all heard the term ‘new normal’ being thrown around to describe a variety of changes to our day to day lives. But within eCommerce, this evolution was already there. According to Pete, “The past 9 or 10 months have massively accelerated the change that was already happening in traditional retailing.” So in a sense, this shift we’ve been experiencing from offline to online isn’t exactly ‘new’, rather it only seems to appear that way due to the breakneck speed that it has come about. That is to say, we’ve seen growth that would have happened in the next 5-10 years, happening in just a few months. Despite this, Pete believes there is “definitely still a place for bricks-and-mortar” in this ‘new normal’, where we are seeing a large switch to digital. Digital retailing is no longer just a support to physical retailing, it’s a foundation that all successful retail will be built on in the future.
Graham added that many traditional, physical retailers that have been endlessly strategising over this move to online have – to some extent – been left behind. He noted that although there is still an opportunity to embrace digital and take some market share, pure play retailers have a “phenomenal advantage” due to their investment in digital and agile nature. There were also some important statistics raised, such as over 50% of all online transactions globally last year happening on a marketplace. From this, it was concluded that as a business if you don’t sell on a marketplace or you don’t have a marketplace proposition, then “effectively you’re not addressing 50% of the online addressable market.”
When it comes to consumers, Barney had some great points about consumer behaviour. According to him, in this ‘new normal’ there’s going to be a lot more shopping done online, because the experience of outdoor shopping is quite “unpleasant”. This is due to factors such as wearing a mask, long queues and one-way traffic systems. Furthermore, there have even been changes in expectations solely within delivery itself. For example, Barney himself mentioned that although he has been using Sainsbury’s for years, recently he has had to switch to AmazonFresh due to a lack of availability of delivery slots, which has comparable prices and arrives faster. So, in this so-called ‘new normal’, “the demands from consumers are still going to be very high… and the winners will be those that really develop their eCommerce systems so they can deliver that high quality.”
New Normal – Key Issues, Impacts and Challenges
So, we’ve established what the ‘new normal’ is and what this means in the context of online businesses. But what are the main roadblocks that brands are facing in light of these circumstances? Although the challenges vary across different parts of the sector, Pete acknowledges that the biggest challenges are for “traditional retailers who still have large bricks-and-mortar estates.” As we know, footfall has been gradually falling for several years now, meaning the retail space was already facing difficulties. The pandemic has only exacerbated this effect, so the main issue facing physical retailers is what to do with their bricks-and-mortar space. Secondly, many brands are struggling to have a strong click and collect system in place. Only a very small number of retailers have accurate inventory in their stores, allowing consumers to order a product and be able to pick it up almost immediately. Other stores are finding it difficult to surface their store-based inventory in a way that makes that stock available to customers. In the event that they can, there’s often a 3 or 4 hour wait, which Pete accurately points out “is a long time in a digital world”. Therefore, the second current challenge for these brands is finding a quick and affordable way to evolve their complicated legacy systems in order to make their inventory available to click and collect quickly.
Barney took a slightly different angle, touching on the huge pressure on online retailers to have absolutely best practice in order to survive. It’s important to recognise that although eCommerce has become a lot more lucrative, it has also become much more competitive. Therefore, there is now no tolerance for the likes of poor listings, low quality product information, long shipping times or a lack of availability for click and collect. According to the VP of Revenue at Arcade Retail, “they need to be excellent” in all of those aspects “in order to compete”.
Graham pointed out issues around technology, in that it can be very expensive and time consuming to develop, but digitally native businesses have an advantage because they’re agile enough to push these projects out very quickly. Additionally, he mentions that some businesses are experiencing challenges with logistics. Many brands are not designed to be able to ship individual items – they’re geared around shipping huge amounts to wholesale, supermarkets and different distributors. Finally, Graham shared his thoughts around seeing these challenges as an opportunity, as it’s “forcing people to make tough decisions that they’ve been constantly putting off for years and years.”
Solutions and Strategies
Finally, after having established the difficulties that businesses are facing in light of the pandemic, our three ecommerce experts discussed the solutions and strategies that brands can use to overcome these challenges. For Pete, the key lies in taking advantage of marketplaces to make your products easily accessible to a wider audience. There aren’t many businesses with a lot of spare capital at the moment, so the problem is finding a strategy that is capital light, low risk and enables you to move quickly. According to Pete, marketplaces may be the solution to these problems – saying that “marketplaces have already done a lot of the work for you to establish a great customer base and a good platform”. So, rather than investing massively in trying to find a new customer base, there are already marketplaces there that you can use. In addition, it’s important to see this as an opportunity to drive acquisition and new customers as opposed to being worried that it will cannibalise your sales. Using a marketplace is relatively cheap, easy and low risk, as it’s very easy to pull back if you don’t like the results.
Graham also mentioned a great benefit to marketplaces, that being “the ROI is completely clear”. This is because you know the details in advance, such as which payment services provider will be used and what the marketplace fees will be. Therefore, it’s very easy to model the strategy and determine whether it is going to be worthwhile for you, before you even go live on a marketplace.
Barney also believes in marketplaces as an effective strategy, particularly merchant of record solutions. With this, a big advantage is that you are able to access all sorts of great marketplaces, allowing you to “tap into audiences you might not have considered before, which can be highly lucrative”. All in all, it’s a very low risk, light technical way to access new consumers and give you the data you need in order to create a more informed go-to-market strategy.
2021 and Beyond
In summary, we’ve seen the Coronavirus pandemic accelerate a change in retail that was already occurring – namely this big shift from traditional bricks-and-mortar into the online space. This has brought around several challenges both for online businesses, as well as physical retailers. For the latter, there are some questions surrounding how to utilise their existing bricks-and-mortar estates and evolve digitally. On the other hand, the former faces challenges such as a rise in consumer expectations, with shoppers demanding an increasingly comprehensive online experience. However, we’ve also established this is a great opportunity for brands to adapt and grow to the new circumstances we’re experiencing. Adopting marketplaces as a low-cost and effective way to access new audiences could be a great solution to allow brands to reach new markets – the key is to really evolve and move with the times, or risk being left behind.
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