The U.S. Department of Commerce recently announced that e-commerce sales were up 18.4 percent in the second quarter of 2013 compared to the same time last year, the largest year-over-year increase since before the 2008 financial crisis. As economic optimism spreads and consumers begin to open their wallets, retailers are investing in the technology they need to stay competitive. Investments in mobile and social may grab the headlines, but retailers are also dedicating significant resources behind the scenes. Behind-the-scenes technologies, including e-commerce platforms, email promotions, SEO, and SEM, are at the heart of any effective e-commerce company and are critical to success.
Traditionally, tech investments are authorized by the CIO, and the IT team implements and administers the technology itself. These "technology gatekeepers" are generally not the people on the front lines of the company's retail efforts -- the merchandisers ordering products, developing promotions, and interacting directly with customers. As a result, many companies experience a disconnect between those that control the technology and those with the front-line insights to best leverage it.
This dynamic has its roots in the realities of the past. Just a few short years ago, there was a sharp distinction between the technical skills of the IT team and the expertise of the merchandising team. While there is still a distinction, Gartner predicts that CMOs will soon be spending more on IT than CIOs. This suggests that many more modern applications are becoming directly accessible to merchandisers and marketers on the front lines, not just to IT specialists. Coupled with the broader trend of the consumerization of the enterprise, in which user-friendly devices and applications are making technology and data accessible to everyone in the organization, it is clear that enterprise technology is no longer solely owned by IT departments. A quick look at the plethora of business intelligence applications for all sorts of specialties ranging from web content management to advanced traffic analytics illustrate that this transition is taking place now.
Unfortunately, technology to consumerize e-commerce is lagging behind, and the power of retail data analytics -- analysis, testing, reporting -- has largely remained in the hands of IT departments. As e-commerce revenue continues to increase and more money is invested in the technology, the toolset of the merchandiser must grow if retail is to keep pace and reap the benefits of modern applications. The real power in retail will come when merchandisers can integrate front-line knowledge with technology to positively impact business results.
This is not something that will happen overnight, but there are a few things that must start now in order to empower merchandisers and bring them into the modern era. On the back end, cloud-based architectures and standard APIs must be used to scale and support large catalogs and to capture and analyze the growing collection of shopper data. This, in turn, will allow front-end interfaces that make daily access and deployment of online retailing strategies simple and accessible to merchandisers. It will be these web-access interfaces that empower merchandisers to view and deploy a variety of strategies across catalogs and websites in real time in order to adjust to fast moving, consumer controlled markets.
Let's look at a real-life example to see how this could work. Imagine an online merchandiser is determining promotion strategies for an upcoming holiday campaign. He has an idea of what shoes to pair with a particular pair of pants based on his experience observing shopper behavior. That front-line knowledge is extremely valuable, but what if he could take that knowledge and couple it with actual data on how customers interact with the items online? With the entire universe of shoppers providing data on their favorite pant and shoe combination, the merchandiser would be able to build on his initial inclination and adjust online placement and promotions accordingly -- all without having to go through the IT department.
The ability to leverage and act on merchandiser intuition in collaboration with data will move retail companies closer to a culture of empowerment that pushes access to data and insights as close as possible to the customer rather than relying on the IT gatekeepers. Merchandisers will be able to use these insights to identify trends, refine strategies, and reap better e-commerce performance. In other words, this will lead to e-commerce capabilities (systems and people) that consistently add value to customers and the bottom line.
Dan Darnell is VP of product and marketing for Baynote.
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