The Changing Landscape of E-commerce and Challenges for CIOs and CMOs
By Ajit Sivadasan, VP and GM Global eCommerce, Lenovo
In a world defined by internet ubiquity, e-commerce, is arguably the most impactful and transformative business model we have witnessed in over a 100+ years. Today, e-commerce is a way of life, in fact, many of the ideas are remarkably simple, relying on the ability to leverage the power of networks, always on connectivity and cheap computing power. The sheer scale and size of the transactions are astounding. Alibaba, the Chinese e-commerce powerhouse, transacted over $9B in online sales on a single day on Singles day (11/11), there are other examples in Flipkart in India or Amazon in the US.This discussion is focused on the impact of e-commerce on the traditional business specifically in how it affects the roles of the Chief Marketing Officers(CMO) and Chief Information Officers(CIO) in terms of their ability to support their company’s e-commerce related mandates.
"A seamlessly integrated sales and marketing platform powered by social, mobile and digital considerations is core for competitive differentiation"
What is driving change?
The e-commerce explosion has been aided by a set of very powerful global drivers. In order to properly examine the implications, it would be prudent to understand these drivers. These change drivers are predominantly rooted in macro economics, technology or organizational culture. Here is a list to consider relevant to our discussion.
• Large economies are driving internet adoption at an astounding rate largely aided by countries like India and China, countries where internet adoption and innovation has been picking up steadily, it appears we are approaching inflection points. The adoption will be marked by broader programs that impact society as a whole like the open source movement, the world of crowd sourcing and crowd funding, micro lending and financing to name a few.
• The network effect of digital, social and mobile is impacting how brands connect with their customers. For the first time in a long time customers control the power in the equation, causing brands to pay attention to how they communicate and manage their customer relationships. Thanks to the network effect, we can reach 80 percent of the world’s population in 20 percent of the time. Packaged experiences are giving way to continuous experiential engagements.
• Technology is increasingly commoditized as cost of computing technology continues to fall thanks in large part to Moore’s law; from a $1M/TB some 20+ years ago to less than $1/TB in 2020. This is making innovation affordable and within reach of the masses.
• Entrepreneurship in a box is becoming very real as several key components needed to drive entrepreneurship gets commoditized and is easily accessible, including capital. Development costs, hosting costs, access to global networks for crowd sourcing ideas, open source movement to build common components have all helped anyone with an idea to bring tangible products and services to fruition.
• A highly connected world market is the order of the day. Today entrepreneurs think of the global economy as the market. Almost any product or service either in its original or a variant form will exist and thrive globally.
• Challenges to the CIOs and CMOs A seamlessly integrated sales and marketing platform powered by social, mobile and digital considerations is core for competitive differentiation. Our customers go across devices, domains and different business models all at once. As CMO and CIO you want to delight the customer with a seamless brand experience and things to perform in a manner that is consistent with that brand promise. Although, developing and managing a constantly evolving global e-commerce platform is difficult and expensive challenge. Careful thought and flawless execution is required to understand long term cost of ownershipCIOs have to enable systems that are owned and driven by business stakeholders, while minimizing costs and preventing the malaise of the waterfall approach to building capabilities.
• Finding talent in an increasingly talent constrained global economy will become a much bigger challenge than what we have experienced this far. It is a gone time when India and China provided quality talent at low cost as they are themselves driving e-commerce activities at par with western economies. What will brands do to keep their talented folks and to manage their rise in wage cost and talent scarcity? Outsourced partnerships are possibility, but make no mistake about the implications of such an arrangement on competitive differentiation and potentially organizational culture. Outsourcing that may not be best course of action.
• Data management and advanced analytics will determine next winners and losers. Mere discounting and pricing is not the answer to sales. Differentiation of products and services afforded by the virtual world seems to be significant in terms of scale and variety. Tools that enable brands to understand customer types and preferences, allow for evolved personalized experiences will have a leg up on competition How will Big Data principles and capabilities drive the ability to crunch through petabytes of data to find insights and meaningful recommendations?
• Community based experiential marketing and sourcing of ideas will become a major CMO mandate. Clearly we see everyone evolving their marketing strategies to become more and more towards experiential. The clear implications of this are several—increased bandwidth on everything from content storage to dissemination to measurement. But increasingly the lines between where your site ends and where an external site begins is blurring. CMOs have to think through how and what is needed to make content extensible seamlessly?
• Security, privacy, phishing, fraud, legislation is not far behind where there is success. Increasingly online commerce has become the trading currency for making a point for hackers or those involved in extreme social causes. Whether it is carbon emissions or an overlooked security vulnerability on a website. The stakes are extremely high when it comes to impact on e-commerce both from a direct financial hit due to attacks or implications to brand reputation due to stolen credit card numbers or other personal information. As a CIO, you have to stay one step ahead of the discussion, as a CMO, you have to handle the community reaction when something terribly wrong happens and it’s not in your direct control. Brands are increasingly using cutting edge tools and talent to protect themselves.
• A move towards customer advocacy and end to end ownership finally. The new measure of success for brands is increasingly loyalty and advocacy. The ability to measure social sentiment allows brands to understand where we are in our standing with our most loyal of customers and how we are doing in our quest to delight our existing customers so they may ultimately become advocates. As a CMO you are constantly looking for ways in which to delight existing customers with their repeat purchases and interactions. As a CIO you are working to build systems that enable flawless execution on your supply chain processes. You are working hard to react in real time to a complaint on social media about a problem the customer has on his or her recent purchase.Big e-commerce focused brands are pushing the envelope of what is aspirational from an experience standpoint. Others whose primary business isn’t ecommerce are having to catch up with technologies and strategies to better serve their customers. The implications are big and ignoring them potentially catastrophic in the long run.