Eugenia Perelman & Rashed Haq
Organization decision-makers agree that e-commerce profitability remains a challenge:
Among companies with both e-commerce and brick-and-mortar operations, nearly half (46%) say e-commerce is less profitable than brick-and-mortar. The largest-revenue companies ($5B+) are even more likely to report this gap.
While 9 in 10 claim to know what’s needed to improve e-commerce profitability, half struggle to deliver. Identifying necessary improvements and actually investing in them are two different things—44% say their companies struggle to make these investments.
Significant efforts were made to meet pandemic needs, but not always optimally. The sudden onset of the pandemic forced many to ramp up digital efforts in less-than-ideal ways.
Revenue tells a compelling story: there is a roughly 20 percentage point difference between companies earning less than $750M and those earning $750M+ in terms of finding it difficult to invest in necessary improvements.
Decision-makers agree that they struggle to invest in necessary e-commerce improvements:
Digital customer experience and omnichannel commerce are seen as having the greatest potential to boost profitability. When asked which investment areas are most critical to increasing profitability, these two areas take the top spots. Supply chain modernization and marketing technology/data monetization form a middle tier (selected by roughly 4 in 10), while customer service, digital store, and strategy are cited by about 3 in 10.
A holistic omnichannel digital experience is the clear priority. Whether considering short-term challenges or longer-term opportunities, decision-makers gravitate towards investments in a holistic omnichannel digital experience.
Replatforming and expansion through marketplaces are top challenges today, with current investments reflecting this. Looking ahead, expansion is the top growth opportunity, followed by dynamic pricing and promotions.
Shipping optimization and offering multiple shipping options are top challenges today, and these are also the main investment areas. Micro fulfillment centers (MFCs) are the #3 challenge overall and #2 among those in the grocery sector.
Business intelligence and analytics are a top focus, both as a short-term challenge and a longer-term opportunity. Personalization is also a key area, ranking second as a short-term challenge and investment, and third as a longer-term priority.
Self-service and chat-based support are the most pressing needs. Decision-makers are particularly interested in self-service online customer support tools.
Modernizing POS systems is the top priority today. New or updated store footprint designs are also a significant focus, ranking as the third-most pressing challenge and the second-greatest opportunity for future growth.
Balancing digital and physical business models, customer acquisition, and expansion are top areas of focus in both the near and long term. These align with current investment priorities: customer acquisition and expansion are the top two, with optimizing the digital-physical split close behind.
Publicis Sapient and Salesforce partnered with Ipsos, the third-largest research and insight company in the world, to conduct the Global Retail Decision-Makers survey. This study was designed to understand what retailers are prioritizing regarding e-commerce investments, steps taken to improve e-commerce profitability, and more. Ipsos surveyed approximately 300 retail decision-makers based in seven markets: United States, United Kingdom, Germany, Denmark, Norway, Sweden, and Australia.
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Publicis Sapient is a digital business transformation company. We partner with global organizations to help them create and sustain competitive advantage in an increasingly digital world. We operate through our expert SPEED capabilities: Strategy and Consulting, Product, Experience, Engineering, and Data. Combined with our culture of curiosity and deep industry knowledge, this enables us to deliver meaningful impact to our clients’ businesses by re-imagining the products and experiences their customers truly value. Our agile, data-driven approach equips our clients’ businesses for change, making digital the core of how they think and what they do. Publicis Sapient is the digital business transformation hub of Publicis Groupe, with 20,000 people and over 50 offices worldwide. For more information, visit publicissapient.com.