Pure e-commerce approach does not work for every retailer

Retailers can no longer be successful with an e-commerce approach alone, according to NYU professor of marketing Scott Galloway

Retailers can no longer be successful with an e-commerce approach alone, according to New York University professor of marketing Scott Galloway.

At Demandware’s Xchange 2015 conference, Galloway, who is also the founder of digital business intellegence company L2, said that technologies such as click and collect have led customers to expect a convenient physical presence that delivers products faster than online shopping.

“Stores are the new black in e-commerce,” said Galloway. “This feature that was considered a bug is now a feature.”

Retailers should place a focus on customer convenience and this can only be delivered with an omni-channel approach, added Galloway.

This realisation has led to several retailers who were once focused on online only, such as Amazon and Made.com, to open bricks-and-mortar stores.

But Galloway argued it is only a matter of time before these stores resemble showrooms rather than a traditional store experience.

“The future of retail looks more like Macy’s than Amazon. Pure-play e-commerce doesn’t work for anybody,” he said. “The world looks like a multi-channel future, pure-play e-commerce is dead.”

Customer focus wins

Ultimately, according to Galloway, the success of a retailer comes down to its ability to cater to the customer need.

He highlighted Apple as a retailer which is so dedicated to providing the customer with what they want that it was able to increase the price of its products after each iteration.

“The most successful retailer of the past 50 years is a tech company,” said Galloway. “What other product has been able to actually increase its price point as it matures?”

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Brand identity and how customers associate with a brand and what it says about them is growing in importance, he said, especially during the new social media generation.

“Teens now express themselves through their smartphone rather than the hoodie they wear,” said Galloway.

Addressing a cloud strategy

Galloway also highlighted that research by L2 and Demandware showed retailers that adopted a cloud strategy as opposed to in-house development appeared to grow more quickly.

He said that retailers which started on the e-commerce path later on but adopted a cloud-based strategy, as opposed to in-house, eventually overtook established multi-channel retailers that had home-grown systems.

“Companies on cloud just have an easier time scaling globally across the border,” said Galloway.

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