The Continued Challenges of Online Retail in 2020
When you think of the online retail industry, the growth it experienced in the last few years has become more than notable. In 2018, online sales reached $501 billion in the United States, with a predicted growth of $604 billion in the region by 2020. In countries like the Philippines, the online retail industry saw an annual growth rate of 101.4% starting in 2016, well into 2020.
These may seem like lofty numbers from the outset, but it is also indicative of where the industry is heading. With more customers using the internet for all their shopping needs, online retail continues to show both promise and more opportunities to connect with a larger audience with a global reach. At the same time however, this also means facing new, often consistent challenges for retailers to reach their desired audience, how they can stand out from the rest and leveraging the tools they have to the best of their abilities.
With 2020 on the horizon, it’s worth looking at the challenges the industry will face.
Shaping Personalized Experiences
Many online retailers will tell you that providing quality customer service is no longer enough for them to be successful. To stay ahead of the game, retailers must now provide them with unique customer experiences. It’s a level of engagement with customers – new or returning – that feels more personal, sincere and effective. A retailer’s website or online platform will always be the first introduction to their products or service. Right from the get-go, customers that visit retailers online should have robust communication options––whether through chatbots, a live spokesperson or via email.
A personalized shopping experience does not just mean a better product selection than most. It is about providing a seamless browsing and purchasing platform that customers can quickly navigate and adapt to. It’s about being able to shop from any device they have and with any platform while providing the same level of service for each.
Sebastian Siemiatkowski, CEO of Klarna, a global e-commerce payment provider says that “Experience is the new loyalty.” By continuing to deliver personalized experiences through convenience, customer loyalty is certain to follow. Strong, consistent engagement continues to be a challenge for retailers but ensuring it means more repeat visitors.
A Multichannel Presence
Today’s online shopper is likely to be signed up to at least one of the major social media platforms. While this sounds obvious on paper, it’s also something that online retailers should be aware of and how to take advantage of it. Nearly every visitor to an online retailer is signed up to either Facebook, Instagram, Twitter or a host of other social networking sites. It stands to reason, therefore, that building a presence in just one of these channels hinders an online retailer’s full potential.
According to the Harvard Business Review, 73% of online retail customers use multiple channels. Called Omnichannel customers, it was found that they spend 9% more in a store that can be found across different channels compared to just one.
A Multichannel presence and engagement must be part of any online retailer’s strategy. Not just for 2020 but in the years to come. As more consumers look for different purchasing options and platforms, it’s a good rule of thumb for retailers to strengthen their presence where they are most visible.
Mobile Matters Most
Among these channels, a retailer’s mobile presence should be the most sought after. By now, anyone in online retail should know how significant a mobile-friendly site is to their business. With more consumers are browsing the internet and purchasing products through their handheld devices, being mobile-friendly is an absolute must.
Defining a site as “mobile-friendly” means more than just having the right display on smaller screens and quick access to essential links. With more consumers making purchases online, mobile payments need to also be more secure and have a range of options. Part of the user experience in mobile is feeling safer and at ease when buying items through mobile devices.
By 2020, mobile online retail is expected to have a market of share of 70.4%. By 2021, that number will rise to 72.9%. With mobile sales on a consistent upswing, it is now imperative for online retailers to optimize and boost their mobile presences.
Looking Beyond 2020
As a global industry, online retail predicted to make more than $4 trillion by next year. This is thanks in part to advancing technology, changing consumer habits and wider purchasing options. It is believed that these trends will continue to shape the industry beyond 2020, which should serve as a great starting point for retailers wanting to rethink their strategies.
Forward-thinking online retailers see the value of unique customer experiences and the importance of maintaining a multichannel presence. Coupled with a stronger mobile presence, there’s plenty to be excited for in the industry as the times continue to change.
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The Need for Innovation in Retail
Earlier this year, tech firm Ricoh and StollzNow Research shared the findings of its Workplace Innovation Index research. The report was a look into the challenges many retail Australian businesses face in driving digital innovation and adapting to change caused by global competition. It showed that 75% of Australian companies admit that innovation is not a core value for their business and only two-thirds of business leaders believe they can drive innovation programs. Globalization continues to threaten many retail companies in Australia and the United States. Many companies are caught off guard as the demand for innovation is growing in emerging industries.
Despite the number of government programs that offer research models and solutions to aid businesses, the growing skill gap is making it difficult for many brick and mortar companies to stay competitive. Sadly, most of them are forced to close down because they failed to see the importance of innovation in global competition. Because of this, many Australian businesses are continuously looking at how to bridge the gap between innovation and skill as we move towards a more technological future.
Bridging The Gap
Education plays a significant role in responding to the needs of current and emerging industries that aims to help local businesses to bridge the growing skill gaps between jobs. According to LinkedIn’s 2018 Emerging Jobs research, tech roles are highly in demand in the emerging jobs market across different industries. In Australia, many retail companies are shifting their focus and resources to data and digital products. However, only 4.9% of the total number of enlisted students in 2017 were enrolled in Information Technology programs, 21.8% higher compared to the first half of 2016.
New job opportunities are also emerging more rapidly, and the current research and education system might not be producing the right talent to meet the needs of emerging industries. It’s not just a case of new jobs replacing traditional ones. These roles are also evolving into new positions. Professions that didn’t exist a few years ago like Data Scientists and Experience Designers are suddenly in demand today. As technology advances, so does the job market and so must the education system in order to keep up with the times.
What We Need To Consider
Being prepared to adapt to innovations brought by technology is vital in determining the success of a business. We are now looking for specialized skills and hiring jobs that did not exist ten years ago, and we must foresee where the gaps in our workforce will be in the next few years. With this in mind, Is it right to wait for the next generation to fill in the skill gap we need? Or should we be prepared to upskill our existing workforce to rise to the challenge?
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Why Offshoring Is Like Holiday Shopping
As the year comes to a close, the time for holiday shopping is finally upon us. With days like Black Friday and Cyber Monday falling in that period, some say it’s the busiest time for anyone in the retail industry. While shoppers look for good deals on their favourite products, retailers scramble to meet the consist demand. For shoppers, they look for the shops that will provide them what them the quality products they want without needing to break the bank.
Does this sound familiar? It’s because from the outset, there a few parallels between working with an offshore team and getting your holiday shopping done. If you’ve been thinking about how you can benefit from offshoring, you can look at it from a different perspective as you do your yearly holiday shopping.
Holiday Shopping Savings
When you think about holiday shopping, it often relates to all sorts of bargains and sales. It’s not uncommon to see merchants touting upcoming sales for shoppers with very enticing deals. Products you could normally buy in the year have now just become easier to get while still retaining their quality.
Think about how that relates to what makes offshoring an attractive business model for many. Successful companies that have offshored say the cost savings they incur is pivotal. By working closely with an offshore team, they see the quality of work does not diminish despite costing less than it would to hire locally.
The Name of the Game is Deals
You see those comfortable socks? How about that brand new laptop? Or even that shiny set of cooking knives? The deals and sales during holiday shopping season are plentiful and diverse. We often think that typically expensive items – like electronics and major appliances – are what companies put on sale. However, if you know where to look, you can find just about anything that’s on sale for reasonable, lower price. Even things you wouldn’t expect will be on sale during the holiday season!
Shoppers can buy just about anything on sale during the holidays.
Just like these sales, the roles and functions that companies can offshore are also plentiful and diverse. Though once limited to voice and support roles, current technologies have allowed for more flexibility with offshored roles. We’re seeing more companies today explore the different functions they can send to an offshore team. Graphic artists, accountants, even full marketing teams are just some of these roles that companies have sent offshore.
The Online Advantage
Holiday shopping is often associated with being a tumultuous, often chaotic time. In movies, television or newspaper photos, we often see shoppers waiting to bust down doors, ready to run towards their favourite stores. They run past other shoppers so they can buy what they’re after at a lowered price before they run out of stock. While still a common occurrence during this season, it’s much less prevalent now thanks to online shopping. The convenience and ease that online shopping brings not only shows a shift in preference among consumers but allows for more companies to also participate in sales.
More shoppers are embracing the convenience of online shopping.
Indeed, companies are finding a much larger audience when they take their business online. Not just listed companies, but even mid-sized businesses are finding success. They’re able to do this through leveraging an offshore team that helps alleviate some low or mid-level functions they may have. This, in turn, allows them to put more emphasis on local efforts that bring about growth and more opportunities.
Taking Advantage of the Season
With all that people hear about holiday shopping, there are those that choose to sit it out. The reason being that the effort to shop is often not worth the lines or disappointment. For those that engage in it, however, notice their fellow shoppers taking advantage of deals that will ease their holiday shopping. It often feels like if they’re not taking advantage of these deals, then it’s likely someone else will.
Choosing to adopt an offshoring is just like that. It’s understandable that people feel hesitant and unsure about it, which prevents them from strongly considering it. Those that are on the fence about it however often need to be encouraged how it can benefit them. After all, if they haven’t adapted or even considered offshoring, there’s a chance their competitors already have.
‘Tis The Season
At their cores, both offshoring and holiday shopping are about savings without reducing the quality of the product. Their biggest difference however is, while the holiday shopping season happens towards the end of the year, the window to start offshoring is much bigger.
As an approach that helps shapes business trends, saying that companies can (and should) offshore “now” might be an understatement. Companies that want to start their offshoring journey today need not look any further than HGS. We remained committed to hiring the best and brightest for your offshoring team, while not needing to spend as much as you would locally. If you’re ready to do a little holiday shopping yourself to prepare for the New Year, reach out to us today to get started.
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The Impact of Automation in the Retail Industry
The impact of artificial intelligence’s role in the retail industry is a hot-button topic that continues to be a divided issue. Some champion the use of automation while others question its effect on local employment. With the rapid advances in technology, it is understandable to feel anxious over its influence in the retail industry.
In order to progress and stay competitive, companies must not be resistant to change and adapt to new technologies. However, going to the other extreme of fully automating every aspect of your processes may not be wise either. The need for human interaction is still critical, often welcomed, especially in the retail industry. At the same time, meeting the challenges of daily demands can be augmented through automation.
The Benefits of Automation
It’s undeniable that automation can help increase productivity in any industry. Through self-learning algorithms, AI-based services can assist customers in providing a better online shopping experience. With its capability to process large amounts of data, AI can become tailor fit to every customer.
From this description alone, it’s easy to see how powerful AI and machine learning is for the retail industry. It allows companies to predict customer preferences through analysis of browsing and purchase patterns. With the breakneck speed information is processed online, utilising automation to keep up with consumer demands has become more necessary.
Concerns with Current Technology
On the other hand, a fully automated retail industry is a serious concern for many. While automation can spark an increase in productivity, it risks the employment and livelihood of some. In a 2016 Forrester report, experts predict that 6% of current jobs will have been turned over to automation by 2021, while another report predicts that in 10 years, over 7 million jobs in retail could be vulnerable to automation.
Human interaction is something that even the most up to date machines cannot perfectly replicate.
More than that, AI in its current state is still susceptible to errors that can easily be avoided by human intervention. In a previous article, we also discussed how AI’s biggest flaw is how it interprets context and content. More recently, IBM’s famous AI learning program Watson came under fire for giving unsafe recommendations for the treatment of cancer patients.
How the Retail Industry is Affected
In the case of retail, machine learning helps customers with other shopping recommendations by using their browsing habits and purchase history—providing customers with a more personal and targeted online shopping experience. While this sounds good on paper, it’s easy to overlook other factors that make AI successful. A lot of AI solutions require massive amounts of data. And the technology itself has not evolved enough to understand the nuances in human behaviour. To complicate things further, data breaches and other security concerns have pushed consumers to be more protective of their personal information.
Predictions for the Future
There’s no denying that automation will become more pervasive in the retail industry in the next few years. We already see companies use the technology for mundane, administrative tasks like chatbot support. What’s important, however, is how people adapt enough to the changes while not neglecting the real impact of human interaction. When all is said and done, customers still prefer talking to other people for assistance over a machine learning bot.
For retailers, embracing this new technology may be a challenge, but it can also be a welcome one. Amidst the bleak predictions mentioned earlier, new reports state that automation is set to create 58 million new jobs by 2022 across all industries, retail included. For them, AI and machine learning are tools and not a replacement of their workforce. The need for human input and interaction remains vital, especially in an industry where personal preferences and nuances vary from person to person.
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Surprising Roles The Retail Industry Can Offshore
The retail industry is experiencing a beneficial yet challenging transition. With more retailers going digital, online shopping has become more competitive. This means knowing a little bit about everything in the digital space and going beyond what it traditionally means to be a retailer. Some of the most successful companies today see what it means to adapt current business trends to their advantage. They know how to make the most of their business without spending too much.
This is where offshoring comes into play. With more retailers looking at a bigger global presence in today’s online landscape, staying with the trend has become more important than ever.
What Retailers Need To Know
Many retailers may be thinking that offshoring roles are the typical ones that appear in the news. It’s true that retailers can benefit from offshoring their customer service and administrative tasks. Delegating these functions will certainly contribute to further productivity and efficiency in their operations.
However, offshoring is now not just limited to these roles. With the ever-changing business landscape, the need for more specialized, highly trained roles has become a priority. This has resulted in wider markets, better brand awareness, and a stronger presence online for many retailers. Through proper implementation, many in the retail industry have become aware of the potential offshoring teams have as they take on important roles and collaborate with their local teams.
In other words, if you still haven’t considered offshoring to help your retail business, there’s no better time to start than now. Let’s look at some of the roles that you will be able to offshore.
Finance Roles
More and more finance roles are being sent to offshore teams. These roles have ranged from accountants, analysts, bookkeeping and overall financial administration. Whether they’re a medium, large or listed business, the retail industry can take advantage of offshored financial roles. The cost savings incurred would be significant compared to what they would hire locally. The most experienced retail companies today see where the current business trends are going, including offshoring.
The very idea of offshoring such vital roles would have been unheard of only a few years ago. Letting an offshore team handle a company’s financial responsibilities might have even been seen as taboo. However, offshoring has shown that any of the roles listed can be handled at very high levels. Today’s technology has made it easier for people to communicate and collaborate better regardless of where they are in the world. That is to say, if you haven’t thought about hiring an offshore accountant, your competitors may already have.
IT Roles
When you think about the retail industry, you don’t normally associate it with IT roles right away. In fact, many retailers would probably say that handling the backend of their website isn’t in their priority. However, this line of thinking needs to be changed, especially in the current business environment.
A strong back office is vital for any retail business to succeed online.
Part of the success of retailers like Amazon and Loblaws is their understanding of ecommerce’s impact in today’s society. They see the real value of establishing a strong online presence that allowed them to scale their businesses based on consumer demands. In order to do this, they needed a strong back office support from an IT team to handle different channels of their businesses. Through regular maintenance and data handling, an offshored IT team allowed them to stay competitive at a lowered cost.
Marketing Roles
With your website in place, your retail business will no doubt need leads and traffic that will direct people to it. This is where a smart marketing team becomes effective. Their understanding of trends and consumer behavior shapes the strategy and direction your business should take. This is especially important in the retail industry, where there are numerous specialized interests that can be catered to. Through smart content distribution, your marketing team can be a dedicated source of asset creation that ranges from blogs, research papers, infographics and even short video presentations. In turn, you retailers can turn browsers into potential buyers.
The content and direction online that a marketing team can create are vital to any retail business. Working with them also does not need to be a costly endeavor. Many industries have espoused their satisfaction of working with an offshore marketing team, and these benefits can also be carried over into the retail industry.
Working With The Right Provider
It’s certainly an exciting time to be in the retail industry. With more tools and technology in place, businesses can reach more customers than they previously could. We’ve seen already how major companies have utilized offshore teams to their advantage by assigning them mid to high-level functions they can manage.
HGS continues to work closely with clients in the retail industry and we understand their different needs. Through a collaborative process with us, our clients have produced strong results and have been able to free up resources for further ventures. Drop us a line today to start your offshoring journey.