Transforming E-commerce: Harnessing the Power of Customer Digital Experience

The digital commerce industry is booming with the advancement of cutting-edge technologies. According to Forbes’ predictions, the e-commerce market is expected to reach a total of over $8.1 trillion by 2026 [1]. While consumers can access online commercial stores at their fingertips, a plethora of technologies exists to elevate their digital shopping experience to new heights.

Hyper-personalization - the bleeding edge of survival

Personalization is the key to unlocking the treasure trove of customer experience in e-commerce, and hyper-personalization takes it to the next level. Indeed, a 2021 report from McKinsey found that 76% of consumers are prompted to purchase a product when brands offer personalized experiences [2]. Hyper-personalization goes beyond the use of customer data. With a combination of advanced technologies such as machine learning (ML) and artificial intelligence (AI), businesses aim to deliver personalized experiences to their customers and build an emotional connection with their customers.

But not every e-commerce fashion brand can afford to invest heavily in technology for hyper-personalization. It is recommended that most businesses allocate a minimum of 15-20% of their budget towards technology investments, regardless of their industry  [3]. Yet, fashion companies seem to be falling short in this regard. McKinsey research indicated that fashion retailers typically invest only 3-3.5% of their revenues in technology solutions, significantly lower than the recommended percentage [4]

However, some trailblazers like Zalando - one of the trailblazers of European online fashion platforms - are demonstrating the art of meshing science and fashion to deliver a unique customer experience. Vilma Sirainen, a senior product designer at Zalando, identified three significant concerns that Zalando customers face. These challenges encompass the struggles of assembling outfits within a specified budget, feeling overwhelmed by the abundance of choices, and a lack of connection with the products displayed on the platform.

To resolve these issues, Zalando employed around 120 researchers that work specifically on machine learning, with some of these focusing on customer needs and how to make their experience better using AI. Thus, they developed Advanced Fashion Cloud (AFC) - a cutting-edge digital outfit recommendation tool that serves up a fresh and stylish outfit recommendation in a few clicks. By utilizing machine learning, the prominent retail brand relies on customers' past purchases, suggesting completed outfits or spot-on recommendations for individual shoppers. As a result, Zalando reports that outfit recommendations from the algorithm lead to a whopping 40% larger basket size [5]. While most of the AFC algorithm is the result of repeated purchases by the customer, this algorithm also ensures that customers are not stuck in a 'fashion bubble' of their past decisions.

AI and machine learning are no longer just buzzwords reserved for the tech-savvy – they are now essential tools that can help businesses thrive in an increasingly competitive market. By leveraging these technologies in hyper-personalization, businesses can unlock a wealth of benefits that go far beyond just improving the customer experience. Personalized recommendations empower businesses to cultivate meaningful customer relationships, ultimately driving higher satisfaction levels and fostering customer loyalty. They can revolutionize the way businesses operate by streamlining processes, reducing costs, and empowering decision-making.

Charting a sustainable path

While online retail has brought the convenience of shopping from the comfort of one's home, it has also given rise to numerous environmental issues. From excess packaging and delivery transportation, the environment is burdened with the ever-increasing emissions. It's a harsh reality that cannot be ignored, with 73% of consumers globally expressing their willingness to change their consumption habits to reduce their environmental impact [6]. Indeed, younger shoppers are willing to buy from brands and companies that promote transparency in making a positive environmental impact. In the study of 75 organizations, the results indicated that consumers are 4 times more likely to purchase from the company committed to sustainability practices [7].

In the quest for sustainability, businesses should adopt a greener packaging approach. Due to the low cost, most e-commerce stores utilize non-biodegradable materials such as plastic or foams for packaging. Not only do the large amounts of packaging occupy extra space that could be used for other deliveries, but it also is unjustified consumption of resources. TOMS is an example of a shoe brand that has embraced sustainable practices in their supply chain. Notably, by using 80% recycled materials for packaging and utilizing soy ink for printing, the company not only reduced their environmental impact but also helped to create a positive brand image among consumers who prioritize sustainability.

Besides greener packaging, offering eco-friendly delivery options such as the use of electronic vehicles can be a powerful driving force for businesses. In fact, research shows that 26% of British consumers are more likely to purchase from a retailer that utilizes electric vehicles for delivery [8]. Besides, by clearly communicating the environmental benefits of opting for a sustainable delivery option, 43% of consumers say they are more likely to shop with a retailer if they offer sustainable delivery options [9]. Therefore, businesses can create a ripple effect that promotes a greener e-commerce industry.

More technologies, more ways to pay

The advent of the digital age brought with it the emergence of e-Wallets, a new means of online payment that has gained significant traction among consumers. In fact, according to Businesswire projections, the digital payment industry is anticipated to surpass $361 billion by 2030 [10]. It comes as no surprise that customers are gravitating towards this innovative payment technology, as it offers a more convenient and secure alternative to traditional payment methods. As online shoppers can complete purchases with a simple touch, this streamlined payment process accelerates the buying journey, ultimately bolsters conversion rates and driving ecommerce sales.

In addition to e-Wallets, "buy now, pay later" (BNPL) model allows online shoppers to defer payment for a purchase and pay it off in installments over time. BNPL has become increasingly popular, especially among younger generations. According to Juniper Research, there were approximately 360 million BNPL service users worldwide in 2022. While BNPL has become widely adopted, Gen Z-ers and Millennials are more likely to use BNPL often than the forecoming generations [11]. This payment method provides consumers with greater flexibility and affordability, allowing them to make purchases they might not have been able to afford otherwise.

Mobile banking is another popular digital payment method that allows customers to transfer funds and make purchases directly from their mobile devices. Vantage Market Research forecasted that the global mobile banking market is expected to reach USD 1873.23 million in 2030 [12]. Mobile banking apps enable users to manage finances on-the-go, empower customers to stay in control of their financial well-being and reduces the friction associated with traditional banking processes. This new financial development does not only improve convenience for customers but also allows businesses to offer personalized and tailored services, ultimately strengthening customer relationships and driving satisfaction.

The door to new opportunities

Technologies have opened doors for e-commerce stores to thrive. Thus, it is essential for businesses to deliver the optimal customer experience. Failure to keep up with the digital pace can result in losing a competitive edge in the retail market and customers, as illustrated by a study with 49% of loyal customers leaving a brand due to poor customer experience [13].

To sum up, businesses can provide customers with greater flexibility and convenience when it comes to paying for their purchases. By diversifying payment options, businesses can mitigate cart abandonment and foster customer loyalty, resulting in increased sales and revenue. While leveraging data and technology to tailor offerings and messaging to individual preferences with hyper-personalization, e-commerce stores should also consider minimizing their environmental impact through eco-friendly packaging and sustainable delivery options. It is now a fact that embracing emerging technologies empowers businesses to not only stay ahead of the competition but also cultivate an exceptional customer experience that keeps customers returning for more.  



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