What Retailers Need to Know About Today’s Hyperconnected Economy
Exhibit A: $1.4 trillion. That's a nice stack of cash.
And according to Forrester Research, it's the amount of U.S. retail sales that will start digitally in 2014. In four years it will be $1.8 trillion. This means consumers literally hold the buying process in the palms of their hands.
Exhibit B: Cisco has found that internet-connected devices outnumber people — and by a wide margin.
By 2020, there will be 50 billion such devices, including PCs, smartphones, tablets, smart TVs, chips, sensors, implants, wearable devices, cars and others not yet invented.
These are two aspects of what Irving Wladawsky-Berger, a commentator on the global evolution of business and technology, calls the "hyperconnected economy." A number of major IT trends, he says, including mobile devices, cloud computing, the Internet of Things, social networks, big data and analytics, are each gathering speed while interacting with and amplifying each other.
This has a direct effect on retailers. According to a report published in September by comScore, m- and e-commerce combined hit $61.6 billion in the second quarter of 2014, up 13 percent from the same period a year ago. Digital commerce is continuing to gain market share from brick-and-mortar retail: combined desktop and mobile e-commerce accounted for 11.6 percent of discretionary spending in the second quarter of 2014, up from 9.7 percent in the same period last year.
Mobile-only commerce also has grown significantly. ComScore says mobile has become the primary medium through which consumers engage with retail brands online, with 70 percent of engagement coming from mobile devices. The firm also says $6.8 billion was spent in mobile commerce in the second quarter — about 11 percent of total digital commerce dollars in that period — up from 8.5 percent for the second quarter of 2013.
Smartphones account for a large segment of m-commerce sales. An eMarketer study reported that sales initiated by smartphones alone currently stand at $40 billion annually. Furthermore, a Deloitte Digital report said that all mobile-influenced in-store transactions account for $593 billion in sales per year.
Here's what retailers need to keep in mind when it comes to today's hyperconnected marketplace:
- It truly is a worldwide market. Nearly 3 billion people worldwide have internet access, and there are nearly 7 billion mobile cellular subscriptions worldwide. Taken together, these stats mean retailers have the potential to reach literally billions of customers around the globe.
- Online consumers use their mobile devices for many shopping-related activities. The traditional shopping model has changed. There's more information at shoppers’ fingertips than ever before. With a few clicks, consumers can find items and compare prices, features and availability from wherever they are. They also use their mobile devices to locate stores, find coupons and search for deals.
- Consumers are using their mobile devices in-store. Once in-store, consumers use their smartphones to take pictures of products, call or text friends or family about products, and send pictures of products to friends or family. They also access the store's site or app for online discounts.
- Mobile device sales are going nowhere but up. By the end of 2014, according to Forrester Research estimates, 29 percent of all online retail sales in the U.S. will take place on smartphones and tablets. The firm also predicts that smartphone-enabled retail sales will total $26 billion this year, or 9 percent of total e-commerce sales, while tablet-enabled sales for retail and daily-deals websites are expected to be $61 billion this year, or 21 percent of total e-commerce sales. The overall volume and percentage will continue to grow.
All of this adds up to one thing: The hyperconnected economy is having a profound effect on how consumers engage with retailers. The buying process is becoming more technology-driven than retailers imagined even a few years ago. Underpinning these new engagement models is a slew of software that must work as quickly and precisely as hyperconnected consumers can buy.
The retailers that can keep up with the pace of change will be the ones that win. Conventional software delivery processes were designed for an era of infrequent change, and with IT in the driver's seat. Today, the business is far more engaged in the software life cycle, and the volume of work to validate changes before go-live is growing rapidly, putting a strain on head office teams. Existing testing methods that rely on manual processes or coded automation are too slow and inefficient, ultimately putting business performance at risk.
Automating software testing and website validation remains the holy grail, but a new approach that makes it easy for the folks in marketing, e-commerce, customer care, finance, etc., is required. Only then will retailers have the speed required to compete successfully in the hyperconnected economy.