The Future of Commerce IRCE 2017 Takeaways

Innovation
Mobile
Technology
14 June 2017

I was fortunate enough to attend the Internet Retailer Conference & Exhibition (IRCE) in Chicago during the week of June 7th. There were 9,000+ attendees from all over the world, along with hundreds of exhibits by technology companies and service providers. The focus was on digital commerce today, as the world moves toward fluid commerce channels that meet customer expectations.

In this post, I’ve put together a summary of my observations and key takeaways. I’ll be expanding on many of these topics in the near future, as they closely align with a Digital Commerce POV Rightpoint is taking into the market in 2018

As always, the IRCE focus was on digital commerce and how companies engage with their customers online and across other channels. When I first attended IRCE in 2006, companies were worried about customer acquisition, websites, creating product content, security,  conversion rates, bounce rates, and alternative payment methods. Google was where you started searching for products. Desktops computers were where most shopping was done. Online retail was less than 2% of total retail sales in the US. In contrast, in 2016 online sales represented 11.7%.

Today, responsive websites are table stakes. Amazon is the place most consumers start their shopping adventure. Retailers are focused on understanding their customers, their purchase path, content strategies, personalization, and identifying the best channels and methods to engage customers more frequently. Native apps, B2C CRM, AI, AR, microservice powered commerce, and cloud-based solutions are what technologists are talking about. Personalization, machine learning, AI, and augmented reality are being used to power growth in small and large retailers.

Amazon grew even more dominant in 2017, capturing $4 out of every $10 spent online for retail in the US. Amazon accounts for more than 80% of overall digital commerce growth, and 20% of total retail growth. WOW. (all statistics from Internet Retailer)

The retail industry saw record closings of physical stores in the past 12 months. Online retail channels for physical retailers grew more than in store sales across the board, but much more slowly than Amazon in all cases. As a result, Walmart acquired digital commerce expertise and customers in new markets through several purchases including Moosejaw.com and Jet.com.

Innovation continues to create new winners though - new vertically integrated retailers who manufacture their own products are starting to establish themselves – think Bonobos and others. Brands like Under Armour and Sephora have learned how to connect with their customers by engaging through social and community channels and leverage apps and mobile experiences to grow both online and offline channels.

It’s very clear that channels have moved beyond omni-channel, where customers can expect seamless experiences across digital and physical channels, to fluid commerce. My POV is that fluid commerce means consumers will shop however they please and retailers must meet them where they research, buy, and talk about products. Who cares what the channel is. Retailers must figure out how to engage with customers in new ways.

For example... 

It’s common today for a consumer to research a product on Amazon, then search on Google to find a better price or something in stock today, then go to that store’s mobile app, start a shopping cart, complete the purchase on their laptop when they get back to their home or office, then pick the items up at the local store because it was in stock.  And, they want to do that seamlessly without having to login or re-create what they have already done. Either that or they just go back and order using Amazon Prime. Retailers today understand those behaviors and find ways to support these fluid channels.

Summarizing my overall observations along those lines:

Customer Experience and Engagement Trends

  • Sellers must support the buyer’s path to purchase – whatever that may be – consumers have more choices and control of their buying decisions than ever. This means you need to understand your customers and markets better than your competitors
  • Community building is powering digital commerce leaders. Under Armour (UA.com) has done a fantastic job of creating community and engaging with them in ways that are far beyond products. Health and fitness are a focus, but lifestyle, sleeping and eventually emotional state are also emphasized in their community and products. This volume of information leads to much more personalized experiences for their loyal customers, usually served through their mobile app.
  • Storytelling is a key way to drive engagement and conversion. Many sessions focused on adding value through better user generated content, expert content, and improved product content.
  • Loyalty apps for the most loyal customers drive revenue and engagement and also provide incredible insights into consumer behaviors – Starbucks, Sephora, UA.com are leaders in this area. The customer information becomes a huge corporate asset and provides leverage for differentiation and market knowledge.
  • Augmented reality is going to grow exponentially, in innovative ways. IKEA, Wayfair, Sephora, and Lowes are the tip of the iceberg – expect a lot more. Sephora is doing incredible things that connect digital and physical experience through their app. The use augmented reality to capture great details about your face and allow you then to model a new makeover without even coming into the store. Very cool use of AR. IKEA and Wayfair both allow you to visualize furniture in your own home by uploading pictures. Lowes app will guide you through the physical store to your item using an in-store digital map with arrows and directions. Undoubtedly, they will present related items and cross-sell promotions as you wander the store.
  • Conversational Commerce was not discussed much in sessions I was in – but we all know it will come on the heels of Amazon and that will enable a change in customer behaviors. Search via voice and devices that support voice are growing quickly. Kids under five today will natively talk to devices to support all aspects of their life. Shopping will be included – the use of a traditional ecommerce site will be as alien as a Sears Catalog to them.
  • Mobile commerce is growing faster than anyone expected, so to overtake other devices as the primary shopping method. China is already there through We Chat, the US and Europe are actually behind, but expect that to change. I expect much more use of in-app and social purchasing in the future. As nice as responsive sites are, native apps are more focused and support customer engagement and loyalty programs that will emerge as tools for retailers.
  • As noted before, fluid commerce experiences are more important than ever – research on mobile, add stuff on laptop, buy online, pickup in store.
  • Machine learning and AI are powering experiences, merchandising, and engagement today and will become default capabilities in the next three years

Technology Trends

  • SaaS, microservices-based commerce platform’s booths were well visited since they found finding their way into the Gartner Magic Quadrant and Forrester B2C Wave. ElasticPath led the way here previously from an architectural standpoint. I spent time with both VTEX and CommerceTools to learn about their technology and customers. I’m not a technologist, but this makes sense because more and more digital commerce is being powered by mobile apps, IOT, in-app purchases, social commerce and so forth. Microservice architectures allow application developers to simply call the services they need rather than working through a more monolithic platform that likely includes services they do not require. More on this in a later post.
  • Shopify and Magento had the most traffic that I witnessed at the conference in the exhibit area. This makes sense as IRCE attendees are mostly small to mid-market online retailers. Oracle Commerce and Netsuite, SAP Hybris, Insite, Sitecore, and other more traditional platforms were also on hand. The focus for all vendors is on cloud offerings – the move from on-premise solutions for B2C and B2B is clearly at a tipping point.
  • Direct to consumer CRM for online retailers to support omni-channel marketing and personalization was all over the show. I spent some time in the booth with the team from Emarsys, but there were many other cloud-based consumer CRM solutions on hand. These will also see tremendous growth because they are unifying social channels, email, loyalty, analytics, and other capabilities under a single SaaS platform. Many use AI and machine learning to personalize content and merchandising offers across all channels – digital and physical. This is very powerful and used to be available only to very large companies with huge budgets. These technologies will facilitate disruption for small and mid-market retailers to engage with their customers more efficiently than larger competitors.
  • PIM vendors were not as prevalent as expected. Saw inRiver, Agility, and Salsify only. PIM is critical to supporting digital commerce today for big retail. Not sure what some of the more traditional vendors were thinking.

That’s it for IRCE 2017 for now. 

Loading Next Article