A recent report released by 1WorldSync, a leading multienterprise product information network, revealed the negative impact of not leveraging content solutions across platforms. In its survey that polled 400 merchants and suppliers from the U.S. and Europe, 45 percent of respondents have lost more than one million dollars in revenue due to cross-channel obstacles — and more than 13 percent have lost more than $3 million.
The study also revealed the areas that are leading to such huge losses. “Half of merchants and suppliers do not use a third-party content provider, which hinders their ability to syndicate product content across channels and platforms,” the report said. Merchants are meeting the most challenges in cross-channel commerce. “Fifty-one percent of merchants cannot support mobile commerce, and 80 percent don’t integrate product information management across web, mobile, applications and physical stores,” the report said.
Here, Nihat Arkan, chief executive officer of 1WorldSync, discusses the resistance to adopting new solutions, why companies aren’t investing in IT experts and what retailers can further glean from the study.
WWD: What were the biggest surprises in collating the results for the report?
Nihat Arkan: When looking at the results from our new survey “Charting Course for Global Commerce,” the biggest takeaway is that today’s merchants and suppliers aren’t prepared for the cross-channel demands of today’s customers. No company has perfected multichannel commerce, despite increasing consumer demand for seamless, engaging and adaptable shopping experiences across channels.
Merchants and suppliers that can’t keep up with rising consumer expectations risk major losses on customer loyalty and revenue long-term. That said, the survey found that almost half of merchant respondents are still unable to support mobile commerce and 80 percent can’t integrate product information management across web, mobile, applications and physical stores.
We were also shocked by the number of suppliers who reported challenges struggling to keep up with the changing global compliance standards. Forty-one percent cited wide differences in regulatory standards across regions as their top pain point. What’s more, 41 percent of supplier respondents believe that it is more cost-effective to pay the penalties for noncompliance than to invest in product information system updates that are compliant with new and changing regulations. Global commerce will only get more complicated in the future, so suppliers that are struggling today will only continue to face challenges in the future.
Adding fuel to the fire, merchants and suppliers don’t have the proper external support to drive multichannel success. Half of merchants and suppliers do not use a third-party content provider, which hinders their ability to syndicate product content across channels and platforms. A third-party content provider is critical for maintaining authentic, consistent product information from manufacturer to retailer to end consumers. Consumer trust and ultimately sales are built upon the reliability of this information.
WWD: Why is there such low buy-in of technologies that would support multichannel commerce?
N.A.: There are a variety of factors that impede executive investment in multichannel commerce technology, including budget pressures, disagreement in priorities across IT and commerce departments, and even misunderstanding of the point of these systems.
In fact, the study found that more than half — 53 percent — of merchants and suppliers experience a knowledge gap internally when it comes to understanding the value of cross-channel capabilities. This is a huge factor in creating a lag when it comes to new technology adoption, as internal stakeholders are content to continue doing business the way it’s traditionally been done.
WWD: There seems to be a contradiction among the known needs and willingness to financially back hiring and training of employees with IT expertise — why is this occurring?
N.A.: When it comes to actually putting the money behind hiring for the needs to today’s e-commerce environment, the issue can be broken down into three key areas — and can be one or even a combination of all three:
Finances: Although 45 percent of merchants and suppliers have lost more than $1 million in revenue due to challenges faced with cross-channel commerce. Of that 45 percent, nearly half report they will spend just 25 percent or less of their digital budget on cross-channel commerce capabilities. Seventeen percent reported they would spend 10 percent or less of their digital budget. Despite the fact that organizations are losing money, short-term thinking prevents them from making the kinds of investments in both personnel and systems that enable long-term success.
Vision: A lack of support from stakeholders to pursue investments in digital sales is another barrier to selling online. Selling across multiple channels and generating a holistic view of sales performance demands company-wide buy-in on the importance of cross-channel capabilities, from entry-level employees to c-suite executives.
Infrastructure: Common roadblocks include a lack of systems to handle the increased ordering demands of online purchases — 15 percent — and the absence of a team infrastructure to manage and fulfill online orders — 15 percent. Adding to these issues, nearly half of all merchants and suppliers — 49 percent — do not use a third-party content provider and are forced to collect and aggregate content manually through methods like Excel spreadsheets or QuickBooks.
WWD: What key lessons can be drawn for retailers and brands?
N.A.: Merchant and suppliers across the globe can look to the investments and capabilities of market leaders for insight into where their priorities should be and what they should allocate their budget to remain competitive. The report found that market leaders [defined as companies that complete 51 percent of more of sales online] exhibit several distinct characteristics, but investment in omnichannel capabilities is one of the critical factors to success. Sixty-four percent of market leaders dedicated more than 30 percent of their organization’s commerce budget to digital and mobile commerce expansion in the last year. These companies understand that e-commerce is going to continue to grow and are upgrading their systems now to increase market share in the future. Additional lessons learned from market leaders include:
Commit to a third-party content provider: Eighty percent of market leaders use a third-party content provider, which makes it easier to transfer product data, speed up the supply chain, and work with a larger partner networks.
Embrace the cloud: Ninety-five percent of supplier market leaders use a cloud-based product information system, which allows for multiple users, real-time updates, and easy access along the entire supply chain. Market laggards don’t have these capabilities and rely on outdated legacy systems that allow only one user at a time, which places roadblocks at every point of the supply chain.
Focus on new channels: Seventy-three percent of merchant market leaders support mobile commerce, compared to 57 percent of market laggards, while 67 percent of market leaders can execute social commerce, compared to only 35 percent of market laggards. Companies leading the way here understand that these new channels are a part of the new omnichannel approach to e-commerce and aren’t going away.
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