The world of digital retail is fast-paced and presents a multitude of challenges, also impacted by the pandemic, pre-war, inflation and a global economic upheaval. Constant change calls for short- and long-term decisions that consider more than just staying afloat. And this is also true in the field of e-commerce, which remains a decisive factor in the development of retail.
Back in 2018, economic forecasting firm Gartner reported that companies using artificial intelligence (AI) for digital commerce will experience a 25% increase in customer satisfaction, sales and cost efficiency by 2023 – a forecast that has been supported by the constantly advancing use of technological means in recent years.
Online channels are reaching ever higher standards, especially in regions where some of the above categories are already met. Thus, it becomes imperative for brands and retailers to ‘move along’ and integrate the benefits of technological developments into their day-to-day business. The methods and tools that have left the trend phase behind and provide the basis for technological progress can help companies to better control their data flow in relation to goods and customers.
Read on to learn what three scenarios will shape digital retail in 2023 and how businesses can join the ‘technology success wave’.
1. AI and automation: The promising basis
The idea, which seemed rather abstract in 2018, that artificial intelligence will become indispensable in retail will take shape in 2023 – mainly through automation and AI, which should make the shopping experience for customers faster, easier and more efficient.
With the help of AI, retailers are able to track their customers’ behavior and preferences in order to offer them a personalized shopping experience. For example, brands can improve their marketing strategies by using personalized data and insights that provide insight into the customer base and drive customer loyalty. AI-based tools such as virtual assistants, chatbots and automated customer service systems that affect the interaction with customers are becoming increasingly popular – because using AI for customer care not only saves time and money, but at the same time created a better experience for the customers. For example, the AI can analyze customer data to make personalized recommendations, adjust the customer journey, or detect potentially fraudulent activity.
In addition to AI, automation is also playing an increasingly important role. Above all, it makes it possible to streamline processes and reduce manual work, but also to save costs and time. For example, order processing, customer service and inventory management can be simplified. At the same time, this also increases customer satisfaction: In an industry survey by Euromonitor in November 2022, forty-five percent of professionals stated that a positive digital customer experience is crucial to success.
2. New priorities: Sustainable approaches
The increasing awareness of sustainability is also being further driven by AI and automation. In 2023, more and more retailers will adopt more sustainable solutions, such as using recycled materials, reducing packaging and using energy-efficient technologies. Companies are working to reduce their carbon footprint and improve their environmental impact by 2026 – a steep learning curve necessary to meet the growing need of more than half of online consumers to stop climate change.
In order to run a successful company, it is important to balance the expectations of shareholders with the concerns and demands of employees, customers, suppliers, the supply chain and the environment. AI paves the way for data insights into the impact of green practices in an industry where carbon emissions, logistics performance and waste are an inevitable part of production and supply chains.
According to Invescpcor, more than 60 percent of consumers return and send items back more than once without incurring any additional costs. The costs are instead on the retailers and on the environment: around 10-20 more units in each currency and in high CO2 emissions.
There is a growing willingness among companies to use renewable energy sources such as solar and wind power to power websites and other digital infrastructure, and to consciously use sustainable packaging materials and shipping methods – but the question remains: why are companies not becoming more sustainable despite this?
More responsible long-term decisions about production, supply chain management, and compliance with product standards stem from the intention to make them in the first place. We now have the capacity and automation software to collect and organize the data that drives these endeavors—not to mention how it can also help drive revenue and customer loyalty. Additionally, this data can be used to support transparency by sharing material and product flow information with consumers.
Adidas stands out with its sustainability efforts. As part of its partnership with Infinited Fiber Company and the EU-funded project ‘New Cotton’, the sportswear brand has recycled 96 percent of all polyester used by 2022 and produced a clothing collection with at least 60 percent fibers from recycled cotton waste and 40 percent organic cotton.
Organizations are increasingly relying on professionalization and data processing powered by machine learning to make the right allocation and increase sales. In another promising step, companies can strive for policies that not only satisfy customers and create loyalty in the authentic metaverse, but also enable green and sustainable retail.
3. DTC and omnichannel models
The merging of direct-to-consumer (D2C) and omnichannel offers brands and retailers the opportunity to create a unified, integrated customer experience. As customer demands continue to increase in areas such as convenience and efficiency, it becomes more and more important for companies to offer an omnichannel experience – this is the only way to remain competitive in the long term.
Again, the secret to success is collecting and using data. For an individual, tailor-made customer experience, data from different channels must be brought together and evaluated – this includes, for example, customer feedback and sales data with which marketing campaigns and product offers can be more targeted.
Campaigns are now not only driven by innovative ideas, but also significantly designed by AI. The process, which documents consumer behaviors automated by AI, enables retailers to produce precise predictions that become machine-readable templates through recognition, processing and simulation. As AI and automation become the norm, it becomes easier and easier for brands and retailers to adopt an omnichannel approach, build a D2C model, and automate processes – resulting in a personalized shopping experience, streamlined flow, and ultimately, increased sales and more profitability leads.
Especially for the omnichannel approach, AI and automation are a perfect combination, because by using the machine learning ability of AI, pricing is managed across different channels, taking into account the purchase history and price sensitivity of customers. IT infrastructure can also be reconfigured to better meet the demands omnichannel distribution brings – this includes digitizing the supply chain for better time and cost efficiencies.
What is often overlooked in the DTC model is that the data and insights generated are concentrated in one central point – even if they are composed of different systems.
Since 2009, Tradebyte has established itself as the market leader in the DTC and Marketplace SaaS revolution. As a trusted integrator for fashion and lifestyle marketplaces in Europe, the company has worked with over 1000 brands, retailers and manufacturers such as About You, Asics, Guess, Karl Lagerfeld and Puma.
More and more customers are using multiple channels such as web, mobile and social media to make their purchases and expect retailers to always be reachable and ready to support them. According to Forbes, it is projected that up to 75 percent of DTC brands will have a subscription-based offering by the end of 2023. To achieve their revenue goals and differentiate themselves from the competition, brands need to focus on personalizing the customer experience, leveraging AI and machine learning technologies. This allows visitors to be offered a tailor-made, personalized experience.
To meet this expectation, many retailers are turning to unified commerce, which means they are building a 360-degree retail network to get faster and more targeted data through a single and fully integrated software platform. This approach eliminates the need to reconcile data from different systems, saving time and resources. In addition, databases are broken up and it is ensured that the data from different sources is stored securely and intact within the uniform merchandise management system.
The technology helps companies transform data into digital customer experiences that are similar to shopping in a physical store. Gen Z’s online shopping style demands an increasingly immersive experience, with visuals and sounds that are engaging – live shopping and virtual try-ons are examples. As the boundaries of the online experience continue to blur, technologi serves to engage all of the senses – including touch, smell and even taste.
Summary
Digital retail in 2023 is challenging but still paving the way to capitalize on advances in AI, automation and sustainability. It’s up to the companies themselves to rise to the challenge and streamline their e-commerce operations to provide a better customer experience and use data-driven tools to reduce their environmental impact.