As online retail grows and more shoppers move to the web, retailers will face a series of challenges. How can they best prepare for the successful future of the online retail industry?
The online retail industry has witnessed significant growth over the last several decades. According to data from the U.S. Department of Commerce, online retail accounted for $136.6 billion in sales in 2007. By 2015 the number of sales online more than doubled and surpassed $340 billion. The future of the online retail industry promises to be even more prominent, with Forrester predicting online sales will reach 523 billion in the U.S. alone, by 2020.
The growth of online retail sales is promising and presents an opportunity to connect with customers on a larger scale. However, as more customers turn to the web, retailers will face a number of challenges, specifically related to connecting disparate sources of data and integrating systems, applications, and devices. The best way for retailers to overcome these challenges will be to create a personalized retail experience by analyzing, integrating, and unlocking valuable data to better connect with customers.
The future of online retail requires personalization
Developing relationships with customers online is dependent on creating a personalized experience for every customer. In a study of 1,000 consumers, 88% of respondents stated that they are more likely to shop at a retailer that offers individualized and connected online and mobile shopping experiences. Retailers are therefore now trying to incorporate human, tailored experiences into their online platforms. For example, a chatbot on a retailer’s homepage can now welcome visitors and simulate a greeting that customers would receive when they walk into a store.
A website or platform of a retailer is therefore quickly becoming a unique gateway into their products and brand. If a customer is visiting a retailer’s website and has a question, they should have instant and personalized communication options––whether that is through an AI-powered personal assistant, live chat, email, or over the phone.
Similarly, repeat customers expect to get tailored retail experiences that leverage their digital footprint to predict their tastes, suggest products, and send relevant coupons and offers to their email inbox. According to the same study, approximately 87% of customers surveyed cited that such individualized retail experiences increased their loyalty to a retail brand. This shows that the future of online retail is highly dependent on providing more than a product transaction but rather building a relationship with the customer.
In order for online retailers to build effective personalized retail experiences, they need to address the ‘siloed’ data problem. This is difficult because retailers use a wide variety of systems and applications, including on-premise and cloud applications. In addition, customers now jump between devices – mobile, desktop, tablets – and purchasing channels throughout their customer journey. And as the world becomes more connected, customers will use more devices and purchasing channels to shop online. Retailers need to ensure that they can rapidly and effectively tap into this data.
This growing IT landscape presents a challenge for online retailers; they want to connect data from disparate sources to create a single view of their customer. Working with our retail customers, we are told that they want an effective integration strategy that connects their POS, marketing, ERP, and other critical systems. Additionally, they want to integrate these systems to social media management platforms, mobile applications, and third-party systems. A retail integration strategy therefore ensures that, regardless of which channel a customer chooses to engage with the brand – in the store, on the web, or on the phone – that retailers are able to unify the customer’s data in one place to create a seamless online retail experience.
The path to integration in the retail industry
Integration is key in the retail industry and a majority of retailers understand the importance of connectivity between their systems. Based on our conversations with retailers, we find that most use point-to-point integration in order to connect data, devices, systems, and applications. However, point-to-point integration is complex because the number of endpoints exponentially increases as connections are added. This means that retailers that adopt point-to-point integration not only end up with a complicated IT architecture, but are also unable to ensure that this architecture is future-proof––thereby hindering IT agility and the ability to respond to market changes.
We believe that IT agility is crucial for the future of the online retail. As technology continues to disrupt the industry, retailers must be able to continually connect modern systems, applications, and devices, and remove outdated connections if necessary. This ensures that when the next major channel emerges, for example, retailers are able to easily tap into customer data on the platform in order to create personalized retail experiences for their customers and better prepare their sales and marketing teams. One way to ensure IT agility is by adopting a composable, future-proof approach to integration: API-led connectivity.
API-led connectivity provides an approach for connecting and exposing assets. With this approach to integration, rather than connecting things point-to-point, every asset becomes a managed, modern API that is discoverable through self-service and controlled through governance. This methodical approach to integration allows retailers to build composable applications and systems––guaranteeing their retail enterprise is future-proof and preparing them to better adapt to customer demands.
Through these modern APIs, retailers are able to unlock valuable data. Take, for example, the experience of one of our customers––a luxury retailer. The retailer saw that their customers were expected to interact with the brand across digital channels. As a result, the customer – traditionally a brick-and-mortar store – wanted to heavily invest in building personalized digital experiences through mobile applications and in-store iPad applications.
The customer, like most retailers, had built up their IT architecture on point-to-point integration and was finding it difficult to connect systems quickly and launch new digital initiatives. The luxury retailer needed a new approach to integration to better connect with their customers, so they adopted API-led connectivity. MuleSoft was able to support this customer’s eCommerce platform migration and connect all relevant endpoints. The customer used modern APIs to power their mobile and in-store iPad applications, and safely expose data to third parties and partners––thereby building their online retail strategy. The retail customer is now set up to deliver a personalized experience leveraging a flexible and agile IT architecture.
As we look to the future of retail, online sales will continue to grow and there will be increased focus on the major eCommerce players such as Amazon. In 2016, Amazon accounted for 43% of all online retail sales in the U.S. As Amazon and other marketplace giants continue to gain market share, retailers will continue to differentiate their offerings through online channels. To better prepare for the future of the online retail industry, it is important for retailers to embrace an approach to integration that is agile and future-proof, such as API-led connectivity.
Want to learn more about how you can leverage MuleSoft to prepare for the future of online retail? Explore how organizations can develop omnichannel strategies with APIs and check out our integration solutions for the retail industry.