Global Retailing: The Promise of Omni-Commerce
The past few years have brought about big changes in consumer behavior. The practice of showrooming — examining a product at a brick-and-mortar store, but buying it for a cheaper price online — has led to the failure of a number of venerable retailers.
“The staff at Jessops would like to thank you for shopping with Amazon,” was the bitter sign posted at a Jessops store after the 78-year-old British camera chain went under.
Brick-and-mortar stores around the world are at risk. At least 43 percent of US adults participate in showrooming, according to an InternetRetailer estimate. And 24 percent of shoppers in the U.K. showroomed during the run up to last Christmas.
Another trend is that people seldom read product or vendor brochures before making a purchase these days, observed Jonathan Becher, SAP’s chief marketing and communications officer. He was speaking at an event Tuesday in New York to mark SAP’s acquisition of Swiss e-commerce company hybris. Instead, consumers are crowd-sourcing their decisions.
One negative online review may change a consumer’s mind about buying a product, Becher stated. This poses a challenge for companies and brands.
“It means we have to listen and respond to a whole host of digital signals,” Becher said. “We have to change our mindset from controlling customer relationships and automating them.”
This is where hybris comes in. A retailer can use the same hybris platform to handle business-to-business and business-to-consumer transactions, covering the entire gamut from brick-and-mortar retail stores to e-commerce sites, call centers, mobile devices and on-premise back-end systems.
In short, hybris enables the retailer to provide a consistent experience across all its sales channels.
Why is this important? Because “consumers know brands, not channels,” said hybris CEO Ariel Luedi.
Ensuring a good consistent customer experience is crucial, Luedi stated, adding that a breakdown in information exchange across a company’s various contact points with a customer can be dangerous to a company. He gave a personal example, citing his frequent flier status.
“I am a HON Circle member at Lufthansa; I am proud of it; I am treated like a king, but sometimes it breaks down,” Luedi said. “Then I am treated like a plain economy flier. It hurts!”
The challenge in retailing today is that multiple channels cause immense data complexity, according to Luedi.
Managing Every Channel
hybris has been very successful in managing this complexity so that enterprises have a unified view of their customers, products and orders. Becher and Luedi called this management of every possible channel “omni-commerce.”
A good example is Grainger, an industrial supply distributor on the Fortune 500, with more than 3,000 suppliers. On a good day, it handles 500,000 orders — and its entire order pipeline goes through hybris to SAP’s customer relationship management (CRM) system.
Becher and Luedi both talked about the potential of improving e-commerce worldwide by bringing SAP and hybris together. The biggest possibilities lie in emerging markets, such as China.
China is the second largest market for e-commerce today, according to Luedi. Soon it may become the largest.
By some measures, the world’s most successful online company is China’s Alibaba.com. Last year, Alibaba.com had sales totaling 1.1 trillion yuan (about US$170 billion). This is more than Amazon and eBay combined, as the Economist pointed out.
SAP and hybris are helping many Western retailers with their omni-commerce presence in the important Chinese market, Luedi stated. There is also tremendous potential in the other BRIC countries, as well as emerging economies, such as Indonesia, where online retailing is becoming increasingly more popular.
The Danger of Legacy
Of course, no discussion of online retailing is complete without talking about Amazon.com, which will have 26 percent of global e-commerce market by 2016, according to forecasts. Amazon’s dramatic success is proof that you can be prosperous with great execution and a less-than cutting-edge user experience, Luedi said, pointing out that Amazon’s recommendation algorithms use old technology and sometimes give silly results.
“I ordered a book for my godson,” Luedi said. “It was Winnie the Pooh.”
He then ordered a book on IPOs, since at that point he was examining various options, including an IPO for hybris. Amazon’s technology tried to be clever.
“I must be a pedophile investment banker,” Luedi joked.
Tailored for Tomorrow
Today’s retailing landscape includes Big Data, extreme cost pressure, rapid technological change, consumer-driven user interfaces and multiple interconnected devices across geographies and time zones, Luedi stated. In such a landscape, traditional enterprise resource planning systems, CRM systems and relational databases are inadequate. While they won’t disappear, they will play a diminished back-end role, he predicted.
hybris is incorporating SAP’s HANA in-memory technology. The resulting platform is ideally suited for the future of commerce, according to Luedi.
To drive home the point, Luedi dwelled for a few moments on why hybris agreed to be acquired by SAP. The fit with SAP seemed a lot better from the integration perspective. It would allow him to achieve his dream of omni-commerce worldwide – delivering the future of commerce today.
Otherwise, Luedi said, hybris had “other options, even financially more interesting options.”