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Don’t let ‘digital innovators’ steal your customers, warns analyst

Retailers need to stop regarding online sellers as “a disruption” and need to learn from the likes of Amazon and Alibaba if they are to succeed in an omni-channel world, says global digital commerce consultancy Salmon.

In its latest report, Salmon Futures 2018: Digital and E-commerce Trends You Need to Know About, report, global head of consultancy and innovation Hugh Fletcher said: “There has never been a more important time to get to grips with e-commerce. While traditional bricks-and-mortar businesses struggle with diminishing footfall and share of wallet, online retailing continues to grow apace.

“E-commerce is being driven by its main protagonists – Amazon and Alibaba – as well as by consumers, who are happier to interact and purchase online via an ever-increasing range of channels. While traditionalists view this as disruption, it is not. It should simply be seen as the terms of engagement for businesses that want to succeed in the omni-channel world.”

Mr Fletcher added: “What was seen as revolutionary only a few months ago can quickly become the benchmark of what is expected.”

Salmon warned that while many retailers “are still planning a screen-based future, the digital and retail innovators are stealing a march”.

It pointed out that 2017 saw voice become mainstream with the increased usage of Amazon’s Echo, Google Home, and the announcement of Apple Home Pod. This has introduced a new age of interfaces – “a new age that will ultimately result in screens ceasing to be our primary access point into the web”.

Salmon pointed to research it had carried out that showed 41 per cent of customers want to use voice for purchasing online.

Hugh Fletcher, Salmon

The report said: “Feel free to plan your e-commerce futures exclusively with screens in mind. But do so in the knowledge that soon, your competitors will be using more natural, less intrusive interfaces to sell to customers. How will your mobile site and website stack up then?”

Another trend highlighted in the report is the growth of ‘programmatic commerce’. This refers to automatic ordering and replenishment, where products take over the purchasing on behalf of the user.

Salmon pointed out that the technology is already here and highlighted the Brita water filter jug that automatically reorders new filters and Nespresso coffee machines that order new pods for the user. More importantly, the report highlighted that consumers want this technology. Salmon’s own research found that while in 2016 only 13 per cent of consumers would have been happy for a product to take over purchasing and replenishment, when it re-ran the poll last year, that number had risen to 46 per cent.

The report added that, with a number of ‘mini-trends’ pushing consumers into a subscription-led society, with the likes of Spotify and Netflix, automatic purchasing and replenishment was “not only likely, but inevitable”.

The report also warned of what Salmon called the “aggressive horizontal expansion” of companies like Amazon and Apple, “looking outside their core competencies for the next opportunity”. It cited Amazon’s move into hardware with its Echo product family and Apple’s acquisition of the Beats headphone brand.

The report warned: “Whatever your competitor landscape is now, it’s unlikely to be the same in the future. Not only will these competitors be new, but their outlook on your industry will be fresh, too. And it’s likely that these new competitors will address the friction points that you’ve been avoiding in new and innovative ways.”

Salmon concluded: “So a fight is on to own the first digital mile… mainly between Amazon and Google. But shouldn’t this be a fight that brands, retailers and companies get involved in? It’s a fight for the first interaction with your customers after all. So why are brands sitting back and letting the digital innovators and search engines battle it out for the first bite of their customers?”

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