E-commerce profitability is tied closely to technology—and with good reason. Each example discussed within the supply chain and product catalog relies on technology, in one form or another, to identify opportunities and activate solutions.
The most obvious example of the power of technology can be found in data analysis and, by extension, AI and machine learning (ML). With enough high-quality data, retailers can identify trends that can help anticipate buying patterns, optimize inventory levels, right-size the workforce, and set prices and promotions that maximize revenue. These technologies draw on a vast array of data sources, including past transactions, behavioral data, social media activity and geographical location to create algorithms and models that give the organization both a more complete customer profile and greater awareness of the business. AI can also be used to power solutions—from 24/7 customer service chatbots to customized product recommendations—thus helping retailers increase their profitability in the burgeoning digital world.
An equally powerful opportunity lies in robotic processing automation (RPA). Many warehouses are woefully out of date, relying on humans to collect items for digital orders. Through the use of scanners, conveyor belts, robots, automated forklifts, exoskeletons, and drones, the time spent at every stage of the fulfillment process can be significantly reduced. Not having a centralized and automated shipping facility makes it nearly impossible for retailers to achieve the efficiency of other modern e-tailers, all of whom are leveraging the latest in robotics and automation technology to increase efficiency.
Accelerating data transformation in the cloud
The deployment of data-enabled tools and robotics requires a level of speed and flexibility far beyond what is supported by many retailers’ current IT operations. Although organizations appear eager to adopt advanced technologies such as AI and ML, their ability to effectively do so—and harness the applications’ full benefits—may necessitate infrastructure upgrades. The cloud holds promise because migrating key business services to cloud-based systems enables near real-time performance monitoring and inventory awareness. These insights can unlock new levels of efficiency across the value chain—from inventory optimization, to product recommendations and customer service. Cloud-based technology also provides the speed and flexibility needed to scale, which is a crucial point as retailers attempt to expand successful pilot programs or test applications throughout the organization.
Although virtually all organizations recognize the value of technology, many stop short of implementation, largely due to cost concerns. However, technology infrastructure investments are just that—an investment. Increasingly, these capabilities are not just enablers of growth but also key to viability. Fail to keep pace with digital applications, and the entire business will suffer.
Research by Publicis Sapient found that IT infrastructure investments can pay back in two to three years while continuing to create long-term value through increased conversion, affinity and loyalty. Our research estimates an annual cost savings of 17.5 percent through reduced operating costs and increased productivity and quality.
Modernizing the organization
The successful development and implementation of any e-commerce profitability strategy relies on two main areas: human capabilities and data. Businesses must assess both to determine gaps and restructure the organization in a way that enables profitability.
An obvious concern is ensuring the business has the necessary skills and experience. Beyond that, there may be a need to adjust the organizational structure to make the best use of employee skills. Flattening the organization and moving decision-making into the hands of team leads is one possible way to increase speed and efficiency. Further, augmentation of human capabilities through the use of robotics is another way to augment the workforce. No matter the approach, refining the organization’s e-commerce profitability efforts will require a tremendous amount of flexibility.