Next gen e-commerce: why is it important

E-commerce has changed how we shop and interact with brands in a world where technology continues to change our daily lives. The traditional idea of online shopping is undergoing a significant transformation as we move deeper into the digital landscape. This will pave the way for a new era of next-generation shopping experiences (next gen e-commerce) and AI e-commerce. The introduction of AI e-commerce is redefining how we shop by offering improved convenience, customization, and engagement in addition to predictive analytics, seamless omnichannel integration, and virtual fitting rooms. The topic of this blog post is digital commerce, the function of AI and blockchain, and what the shopping experience will be like in the future.

Exploring E-Commerce and Next Gen e-commerce shopping

Technological advancements and shifting consumer habits have shaped the e-commerce industry’s transformation. In its early stages, e-commerce primarily consisted of straightforward online transactions through straightforward websites with few product options and simple user interfaces. E-commerce platforms, on the other hand, began to flourish as the internet grew and people adjusted to digitalization, providing a wider range of goods and services to a larger online audience. The development of safe online payment methods and digital marketing innovations furthered the growth of e-commerce, making it possible for businesses to reach customers all over the world and simplify the buying process. E-commerce underwent yet another significant shift as a result of the proliferation of smartphones and tablets as online shopping tools.

How is e-commerce today?

Personalized product recommendations, dynamic pricing strategies, and predictive analytics to enhance the shopping experience have all been made possible by the integration of AI and machine learning (ML) in recent years. In addition, the rise of influencer marketing and social commerce platforms has blurred the lines between e-commerce and social media, opening up new opportunities for brands to connect with customers and increase sales. Currently, e-commerce continues to develop rapidly and has emerged as a significant component of online shopping trends. The retail industry’s future is being reshaped by innovations like drone delivery services, voice-activated shopping assistants, and virtual reality (VR) shopping experiences. As technology continues to advance, the boundaries of e-commerce will continue to expand, offering new opportunities and challenges for businesses and consumers alike.

Some make-or-break truths on next gen e-commerce

Invest like an attacker

Over the past year, geopolitical tensions and frequently conflicting economic indicators have led to a more cautious business outlook. Our own tech trends analysis saw a reduction in investment across almost all of those trends in our sample over the past year. That caution is reflected in our e-commerce analysis as well. Tellingly, however, leaders are cutting costs at a much lower rate than laggards. Cost reduction is one of the top three strategic e-commerce priorities for lagging businesses. for executives? It does not even make it into the top ten. This through-cycle investment strategy is a proven winner, with leaders outperforming their peers in three particular areas:

New AI and technology

Compared to less than 5% of laggards, almost 20% of leaders are making gen AI their top priority in e-commerce and are willing to spend. About 30 percent of them are planning to put more than 10 percent of their e-commerce budget toward gen AI in the next 12 months (with more than 10 percent shifting more than 25 percent of their e-commerce spend). On the other hand, fewer than 10% of laggards are catching up to that change.

Digital channels

Omnichannel commerce is a well-established concept in e-commerce, but even here we see notable differences emerging. In general, leaders are working harder to increase the number of touchpoints they have with customers so that they can have more meaningful interactions with them. The development of online marketplaces (60 percent versus 54 percent), direct-to-customer websites (56 percent versus 48 percent), and social commerce (63 percent versus 50 percent) show the greatest disparity in terms of investments made. These trends are largely consistent across B2B and B2C companies, though the gaps vary. For instance, while only 56% of B2B leaders are spending more on social selling, 70% of B2C leaders are doing so, compared to 55% of B2B leaders who are spending more on social selling.

Shopping occasions

More than 40 percent of leaders get a significant amount of their annual e-commerce revenues (more than 10 percent) from shopping events such as Black Friday, while almost 25 percent of laggards don’t even participate. The same is true for almost 30% of leaders in B2B companies. The most important shopping events are Black Friday and the end-of-year holiday season, followed closely by companies’ own shopping days. Businesses plan to spend a lot more money on these events in the coming year. 42% of small consumer businesses and 30% of B2B businesses are investing more than 10% of their e-commerce budget in shopping day events, which account for almost half of all large consumers.

Technology is strategy

Leaders have prioritized upgrading their technology infrastructure in addition to bringing tech talent within the company. That focus is becoming increasingly critical as technology infiltrates every aspect of the next-gen e-commerce value chain. When it comes to handling materials, for instance, robots have been the technology that has grown the fastest over the past few years. This is primarily due to the rise of e-commerce (30 percent CAGR) and warehouse management systems (17 to 19 percent).

Traditionally, tech infrastructure has been seen as an issue for “IT to manage,” but technology has become so fundamental to a company’s ability to compete that top companies now treat it as a source of strategic advantage. That explains why, according to our analysis, almost 20% of leaders plan to spend more than $100 million on e-commerce technology infrastructure (compared to 8% of laggards). But this isn’t about spending more money; rather, it’s about spending smarter so that businesses can build quickly and innovate quickly. We have found that embracing “MACH” development principles—microservices, API-enabled, cloud-native software as a service (SaaS), and “headless” (where front-end design is decoupled from back-end systems)—is the most effective strategy for enabling a modern tech infrastructure for e-commerce. This strategy enshrined a commitment to developing a tech stack composed of scalable and replaceable elements that can be continuously improved. The headless approach is particularly crucial for large e-commerce organizations because it allows businesses, products, and regions to easily tailor their strategies and offerings to local needs, either by building them or by integrating the best vendor option.

Amazon pioneered many of the principles of this approach, with its focus on API-enabled architectures and microservices. An international healthcare provider is also moving in this direction. It is focusing on using open-source technology, which has helped it attract more technologists with the right skills, make system changes quickly, and dramatically cut down on maintenance costs. There are difficulties associated with this change. The platform must be actively managed and updated by businesses. While major systems should be replatformed every ten years or so, a MACH approach requires about 10% of the platform to be changed annually. Companies also need to have sufficient tech talent in-house to manage the systems. Given how many components of the e-commerce value chain—from sales to fulfillment to logistics to pricing—depend on a single large system, businesses will also need to carefully manage the transition.