embracing_new_technologies

Retailers – It’s now or never when embracing new technologies

By Adrien Nussenbaum, CEO of Mirakl Inc.

The last few years have seen many retailers across Europe fall by the wayside, unwilling or unable to adapt to the new market conditions and the on-going challenges of ecommerce. In the UK, HMV, Jessops, Blockbuster and Comet are just some of the major retail brands that have run into difficulties and there are similar examples in almost every other country in Europe.

While there are different and specific reasons for each retailer that has had issues, one constant is a lack of willingness to truly embrace new technologies and innovative e-commerce channels. Amazon is a dirty word for many retailers but this is as much a fear factor as anything else. The Amazon business model is able to deliver excellent customer service, competitive pricing and an incredible product range. Retailers feel under constant pressure and this has only exacerbated since Amazon launched its online marketplace, bringing together buyers and sellers under the Amazon platform and dramatically increasing product range and lowering prices further.

So with almost constant media reports about the death of the high street and the on-going challenges for retailers, the question must be asked – why is there still an air of caution among so many European retailers and what should they be doing to remain competitive in 2014?

The rise of the online marketplace

More than half of Amazon’s business is now conducted via its online marketplace. This means that Amazon gets additional e-commerce channels without inventory or logistic constraints and its customers benefit from increased product choice. There are other, vertical marketplaces that have been created from scratch, such as Etsy (arts & crafts) or Farfetch (fashion). For these, marketplace activity represents 100 per cent of sales, in some quarters exceeding the billion Euro mark.

Mirakl recently conducted research that showed six in ten UK adults in the UK has bought from a marketplace over the last 12 months, while one-third said they would buy non-core products from a favoured online retailer, if they started offering them. Only 14 per cent said they had been put off buying something from an online retailer because an item was provided by a third party seller.

With such consumer willingness to use online marketplaces and the impressive results generated by existing marketplaces, this feels like a productive way for retailers to open up new e-commerce channels, improve customer service and grow revenues. Some retailers have been progressive, but many remain cautious, liking the idea of a marketplace but lacking the technical expertise and / or bravery to get started. Perhaps some are worried they will lose control of their brand, but a good marketplace solution must fit with a retailer’s brand completely, ensuring the same customer experience as in existing online or offline channels.

A truly mobile world

Smart phones have been part of our lives for several years now, with around two-fifths of all mobile phone users—close to one-quarter of the worldwide population—expected to use a smartphone at least monthly in 2014. People shop, bank and manage their lives on these devices, yet retailers have not capitalised on this as effectively as you might have expected. More than a third of current online retail comes via a mobile device, and m-commerce sales in 2018 will be equal to e-commerce sales in 2013, so it is an opportunity not to be missed – but what is the hold-up? An obvious move would be to offer a mobile optimised website, with 2013 Black Friday sales on mobile-optimised sites up 187 percent over 2012.

Yet the recent Skava ‘UK Retailer Mobile Optimisation’ report showed that a quarter of the top 100 UK retailers have yet to optimise their e-commerce websites for mobile devices. US retailers are doing better but other European countries have similar levels of mobile optimisation. Given how widely used mobile devices are, this is a major oversight and another example of retailers failing to recognise how the market is moving. This is without even touching on many of the other mobile innovations available to retailers, from contactless payment to in-store location and NFC to in-store wi-fi for customers.

It is a tough market for retailers, consumer-led and highly competitive. But there are technologies available (online marketplaces and improved mobile optimisation are just two) that can really make a difference and enable a level playing field. What is missing is the vision to embrace these technologies and the time has come for retailers to be bold.

Read the article also published in Entrepreneur Country Global  here.