Background:

At FINN Partners, I worked with BytePlus, the enterprise arm of ByteDance, to develop an article about the most significant challenges that retailers face in today's e-commerce market. As part of a full-funnel content marketing campaign for BytePlus' entry into the APAC e-commerce market, this piece sat at the awareness level and offered strategic solutions to retailers seeking to optimize their presence in the e-commerce market. I also developed a promotional social marketing copy to maximize reach and awareness.

Format: 

Blog article, social copy

Published August 2022 here

Navigating the 5 Challenges Retailers Face in the Evolving E-Commerce Space

The 5 key challenges retailers face in the evolving e-commerce space and how they can overcome them.

Retail sales in e-commerce channels are growing exponentially. Global e-commerce sales reached US$4.9 trillion in 2021, and is forecasted to grow by 50% to US$7.4 trillion by 2025. Users are also increasing — there were 2.4 billion digital buyers in 2021, and the number of global e-commerce users is set to hit 4.877 billion by 2025.

The rapid growth of e-commerce, along with the development of omnichannel approaches, is not without its challenges. Retailers must adapt to these challenges to take advantage of the market growth and meet customers’ expectations.

Here are the five key challenges retailers face in the evolving e-commerce space — and how they can overcome them:

1. Lack of Understanding Customer Behavior and Preferences

Modern consumers are looking for a tailored customer experience (CX) that takes into account their shopping histories and personal preferences. Retailers are aware of this trend, but often lack usable data insights to meet the need. As a result, shoppers have a varied, often dissatisfactory experience across online and physical channels. This drags sales volumes and ticket sizes down, ultimately affecting businesses' bottom line.

However, companies that get CX right with data driven insights are achieving significant business benefits. A study by McKinsey found that data-driven organizations are 23 times more likely to acquire customers, six times as likely to retain customers, and 19 times as likely to be profitable as a result.

Despite the clear benefits, retailers face major hurdles when it comes to updating their CX strategy, with 83% citing difficulty in linking business outcomes to real customer needs, and 77% citing insufficient technology platforms. Retailers need a platform that allows them to visualize their data and act on their insights immediately. The ideal platform empowers businesses to create experiments that improve their products, apps, and websites.

2. Sporadic Marketing

The omnichannel retail environment demands a consistent marketing approach across multiple touchpoints and channels. This is not always easy to achieve. A report revealed that 16.2% of marketers experience an inability to personalize CX across their channels; 13% are unable to map the customer journey to create tailored communications. The result is a “scattershot” approach to marketing that does not satisfy the expectations of consumers.

Sporadic marketing is costly. In fact, 37% of marketers report wasted marketing spend due to poor marketing strategies, with an estimated loss of 21 cents per media dollar spent. This translates to a US$1.2 to 16.5 million average annual loss for midsize and enterprise companies.

Retailers need to adopt analytical tools that allow them to understand channel performance. These tools should offer insights analysis, as well as the ability to create behavior-based workflows that convey the right message at the right time. Using the right tool can help businesses identify which marketing channels drive the highest engagement, conversion, and return of investment.

3. The Death of Third-Party Cookies

The deprecation of third-party cookies began with mounting concerns over consumer data privacy and legal regulations. But the fate of third-party cookies was not truly sealed until browsers — from the likes of Firefox, Safari, and even Google Chrome — opted to disable them by default.

With more and more browsers hopping on the trend, the challenge now for all industry players is to continue ensuring monetization through advertising while safeguarding user privacy. According to HubSpot and GetApp, 41% of marketers report that the inability to track the right data will be their biggest challenge moving forward; 44% foresee increased spending of up to 25% in 2022 to reach the same targets as 2021.

A big part of the challenge lies in understanding the customer journey. Businesses need to know where users are dropping off to visualize how consumers are behaving on their channels, segment users, and deliver personalized, user-centric experiences.

Moving forward, it is imperative for retailers to respond to the third-party cookie phase-out by adopting the right data processing and analytics technologies — or risk being left without useable data to drive personalization across their channels.

That's where recommendation engines such as BytePlus Recommend come in. Powered by sophisticated machine learning (ML) models, the algorithm is capable of not only adapting to user behavior in real time, but also supporting an unlimited amount of daily active users and queries per second. Such tools can help deliver hyper-personalized content and create user-centric experiences for consumers — with or without third-party cookies.

4. Adopting the Wrong Technology

All retailers use technology in some aspects of their business, but not all retailers embrace technology as a way of doing business. Many businesses remain opposed to adopting new technologies as the risk of disrupting established workflows is seen as too high. A KPMG report confirms this reluctance, revealing that the annual investment of retailers in innovation is very moderate, even in large organizations. However, there is an even greater risk that these companies do not always consider — the risk of adopting the wrong technology when their existing solutions suddenly fails or require upgrades without adequate time for research.

On the other hand, early adopters of the right technology are reaping substantial benefits. According to a KPMG report, such retailers are achieving better customer engagement, growth, and dominance in their market. Choosing the right technology partner is therefore critical to avoid disruption in current workflow processes. This partner will be fully committed to the entire service life cycle. They will evaluate client needs, address concerns, and offer the most appropriate products and solutions. Innovations in technology allow essential tools to be integrated in as little as 30 minutes, with options for codeless implementation to boot.

5. Security and Privacy

Retailers are maintaining more data than ever before, benefiting from using data analytics to inform decision-making. However, this has invited a string of cyber-attacks and data breaches. According to the 2022 SonicWall Cyber Threat Report, retail remains one of the most targeted sectors for cyber-attacks, with a 264% surge in ransomware attacks over the last 12 months. The average data security breach costs a company US$3.86 million and takes 280 days to contain. This is compounded by a loss of customer trust and a negative impact on the brand’s reputation.

Companies need to factor in privacy and security when they choose their technology partner. They require solutions with robust security infrastructures, multi-layered policies, and controls to protect customer data and security. Retailers and their technology partners must ensure that the infrastructure that stores customer data complies with global privacy and security regulations.

Navigating Future E-Commerce Challenges

Sales revenue in the retail sector may be increasing rapidly. However, unless retailers can overcome the challenges of e-commerce, they will not be able to take advantage of the opportunity.

Instead of forging ahead into the future of retail on their own, retailers would be wise to consider third-party technology partners in this endeavor. Aside from a ready set of products and services, the expertise that comes with technology partners can help to ensure a greater likelihood of success, thus bringing the organization closer to fulfilling its business goals.