The retail industry has undergone massive transformation in recent years with the rise of digital technologies and evolving consumer preferences. Traditional brick-and-mortar retailers are now competing in a digital-first world where online shopping, social selling, and multichannel experiences hold more prominence than ever before.
In this blog, we will explore
how Digital Commerce through platforms like e-commerce websites, mobile apps, and social media are impacting various aspects of the retail business from supply chain to marketing.
We will understand how technologies are shaping new trends like omnichannel retailing and discuss the challenges faced by incumbent retailers from nimble digital-native brands. The objective is to analyze the ongoing disruption and gauge what the future of shopping might look like in this digital commerce era.
What is Digital Commerce?
Digital commerce refers to the use of digital technologies and online platforms to facilitate commercial transactions between businesses and consumers. It involves selling goods and services through electronic channels like websites, mobile apps, social media instead of traditional brick-and-mortar stores.
Key aspects of digital commerce include online shopping through company websites or marketplaces, mobile commerce apps that allow on-the-go purchases, digital and mobile wallets for easy payments, social selling via influencers and communities.
It also encompasses the backend operations like online order processing, digital inventory management, analytics of online customer data. In essence, digital commerce leverages internet, smartphones and connected devices to transform various aspects of the traditional commerce model – from marketing and sales to fulfillment and after-sales services – all with an aim to deliver enhanced shopping experiences and drive higher revenues.
Explore how digital commerce is impacting the retail industry
Here we are exploring how digital commerce is impacting the retail industry:
Rise of Online Shopping
The online marketplace has seen tremendous growth over the past decade. According to studies, the e-commerce market has grown at a compound annual growth rate of over 20% in many countries. Higher internet penetrations, advanced online payment options, faster deliveries have made online shopping very convenient for customers.
Many people now shop online for everything from groceries to consumer electronics to apparels. Customers find it easy to compare products, read reviews, get doorstep delivery while sitting comfortably at home. This has directly impacted store visits and sales of many big retailers. Customers are increasingly choosing online channels for research and purchasing, dealing a blow to retail store business models.
The pandemic has further accelerated this shift to online shopping. During lockdowns when stores had to close, e-commerce became a lifeline for customers to fulfill their needs and for retailers to drive business. Even as stores have reopened now, many customers have gotten used to the convenience of online shopping out of necessity developed during COVID times.
Retailers are realizing just how indispensable their online presence and omnichannel systems have become to adapt to this changed consumer behaviour. They are being forced to turbocharge their investments in digital technologies to keep pace with ever rising demand for online shopping options.
Omnichannel Retailing
With the rise of online shopping, customers expect a seamless experience while moving between online and offline channels. They no longer wish to segment their shopping behaviors – research online and purchase in-store or vice versa. To deliver consistency, retailers have started implementing omnichannel strategies.
This involves building interconnected inventories, order management and fulfillment systems to offer services like buy online pickup in store, item availability across stores, consistent pricing. Customers can now order online and choose whether to pick up in store or get it delivered.
They also have options like buy online return in store, check inventory availability online. All this provides a unified shopping experience and enables consumers fluid movement between digital and physical stores.
For retailers, omnichannel presents both challenges and opportunities. The complexity of inventory and order management increases multi-fold. Additionally, high infrastructure investments are needed to overhaul dated systems.
However, if implemented well, omnichannel drives higher cart values, boosted loyalty and retention of customers who spend more across channels. Several retailers have seen sales increases in digital as well as physical stores after successfully rolling out omnichannel platforms. It helps them leverage the strengths of online and offline worlds to stay relevant in the new digital era of retail.
Competition from Digital Native Brands
The e-commerce boom has allowed many digital native brands to disrupt traditional retail industries. Born on the internet without any physical stores, these brands understand online shopping and leverage digital tools to provide seamless experiences. Examples include companies like Amazon, Nykaa, Myntra etc.
Their strong online presence and focus on personalization through technologies like AI and predictive analytics have made them very successful. Customers find the convenience of researching, purchasing and delivery directly from these platforms difficult to resist. This has intensified competition for established retailers struggling to keep pace with changing demands. Digital natives continue to capture market share as they enhance their value propositions further.
Moreover, digital brands integrate verticals like content, community and commerce smoothly. For example, Amazon sparks product discoveries through reviews and recommendations. Native e-tailers in India like Nykaa and Myntra have thriving beauty and fashion blogs along with social selling.
Customers thus end up spending more time and money on these platforms which strengthens the brands. Traditional retailers will need to device innovative strategies to compete with the influence and brand loyalty that digital companies can instantly generate through their integrated customer engagement models.
Future of Retail
The retail sector has undergone massive disruption in recent times and the changes are set to accelerate further. Technologies like artificial intelligence, augmented reality, IoT, 3D printing will increasingly shape the future of shopping. Customers will be able to virtually try out products using AR mirrors in physical stores.
AI will enable hyper-personalization – offering tailored recommendations, personalized pricing. 3D printed merchandise will allow on-demand customizable designs. Analysing purchase patterns through IoT, retailers will be able to anticipate demand and lower inventories. This will elevate consumer experiences to new levels.
Furthermore, retailers are expected to increasingly adopt flexible store formats like mini fulfillment centers and robotic warehouses. Automation will be key to managing omnichannel operations efficiently. Many stores may transform into shared community spaces that host events. Same-day delivery through drones could also become a reality. The lines between e-commerce and brick-and-mortar are blurring continuously. To remain competitive, traditional retailers will have to be agile and innovative in adopting emerging technologies that redefine shopping trends and keep enhancing customer convenience. Those who adapt swiftly will thrive in the retail world of tomorrow.
Conclusion
Digital commerce has drastically changed consumer behaviors and retail industry dynamics. The expectations of seamless experiences across channels have increased multifold. While technologies provide opportunities to enhance engagement, they have also intensified competition.
Traditional retailers need to devise innovative strategies to compete in this environment and keep reinventing themselves. Those who integrate emerging technologies strategically while retaining the human touch are likely to succeed. Looking ahead, artificial intelligence, robotics, and customization will dominate future trends. How retailers adapt to remain relevant amid continuing disruption will determine the winners and losers in this transition towards digital-first commerce.
