Voice of the Industry

Global online commerce – 10 drivers of change

Wednesday 16 February 2022 13:03 CET | Editor: Raluca Constantinescu | Voice of the industry

Ajit Sivadasan, President and Global Head of DTC at Lenovo, explores the global online commerce space and shares his view on the key drivers of change and why they are important

Considering the past two years with COVID-19 challenges and the previous ten years of changing customer behaviour, technology and business model innovation have dramatically changed the online landscape. 

Every day new winners and losers emerge, and company valuations have skyrocketed based on value creation and disintermediation of traditional business paradigms. What is even more interesting is the way ecosystems have emerged based on consumer consumption patterns and significant venture capital investments that have pushed the envelope of technology-driven business model changes. The following is a view on what these changes are and why they are important. 

1. Customer experience is driving customer value chain improvements across industries globally. Each link of the customer value chain is getting dis-intermediated by best-of-breed use cases. From Waze for maps to Uber, Lyft, Didi for ride-sharing, to WeChat for payments to Amazon, Walmart, Alibaba for immersive omnichannel experiences. These examples are capitalising on a clear need in the marketplace for better experiences, powered by whatever emerging technology is in play – from blockchain to AI to agile supply chain to drone technology, better customer data management, social marketing, search, AR/VR applications and so on. The use cases are all singularly focused on driving every aspect of the customer journey forcing the overall customer expectations to go higher every day. Pure-play ecommerce companies are leading the charge in this regard. 

2. Digital experiences are being adopted at a rate we have never seen before. In many cases, COVID-19 has accelerated adoption rates because of necessity. However, the ‘digital population’ is pushing scale and showing an enthusiasm for new ways of doing things. Millennials are at the heart of pushing the adoption curves forcing everyone to try new things. The rise of Snap, Instagram, YouTube are all examples of usage patterns reaching scale. The opportunities to monetise have increased so significantly that good ideas find buyers much sooner, encouraging a new breed of entrepreneurship. Data availability and advanced measurement strategies allow for companies to optimise things faster, making monetisation an easier endeavour than in the past. One needs to acknowledge the role of mobile apps and devices in driving this equation at a breathtaking speed. 

3. Democratisation of services is driving the biggest disruption and value creation. Almost all of the major disruptions we have witnessed recently and will continue to see are primarily coming from services-based disruption. From Netflix to Uber to WhatsApp to Airbnb, to name the obvious, they all represent service-based innovation built on improving existing service opportunities, leveraging existing physical infrastructure, but by democratising access. And they are all closely related to point #1, customer experience. 

4. Business models are rapidly changing. Who would have thought that Amazon would become the world’s biggest search company and Google one of the biggest marketplaces? Business model innovation is creating new possibilities as companies get access to critical mass in various aspects of the customer journey. For Amazon, monetising search and advertising is now a big imperative – and competing with Google is an inevitability. On the flip side, Google has to monetise its ability to sell products to customers because of its ready access to a significant customer base using its core services. Beyond this, many traditional companies are investing significant capital to build online capabilities, and online pure players are in equal measure innovating around omnichannel plays. Retail and online combinations are emerging that look to drive seamless experiences in a more compelling and cost-effective manner. Amazon buying whole foods and grocery stores partnering with pharmacies are great examples of this evolution. 

5. Internet of Things (IoT) is driving customer ecosystems and allowing companies to understand customer needs in near real time. Companies now have a better ability to understand how their customers are using their products much more granularly, allowing them to improve their products and services faster but in a far more optimal manner. For Whirlpool, GE, or Bosch it means washing machines that can tell how customers are using their products, when to help order supplies, use data to push repairs, understand preventive maintenance more exactly, and so on. It also means new partnership opportunities which didn’t exist even a few years ago. Everyone has probably already heard of efforts from companies like Walmart to be able to stock individual refrigerators with perishables based on customer preferences. The world of IoTis just getting started, with a significant push to sensor-based data collection on the edge that will invariably shorten the cycle time for feedback and subsequent actions. 

6. Smart devices become ubiquitous in the home and office. A few years ago, Amazon Echo was a device that could do a few neat tricks, but as of late, it has an estimated 30,000 ‘skills’. It’s no longer smart, it is brilliant. From controlling the temperature in your house to remotely controlling your garage door, Alexa can connect the owner to their house through an app regardless of where they are physically located. Let us not forget what this means to the connection to the vast Amazon marketplace. With a voice command, one can order whatever they need, whenever they need it. Chances are, in the very near future, Alexa-like interfaces will power every new house that is built. It also means that traditional friction in the buying process will continue to be reduced as companies try to focus on other aspects of the customer life cycle. 

7. Smart payments make social networks the authenticator and the new marketplace. The most evolved example of this, by far, is WeChat. What started as a social network is now the basis for many in China to pay for everything, with no need to handle cash. A cashless transaction processing system that is so frictionless and secure that the need for cash or credit card is disintermediated completely. Facebook, Instagram, Google, and others are still playing catch-up, but are well on their way to capitalising on the possibilities this presents. 

8. Smart retail threatens to make cashiers obsolete and AR/VR dressing rooms. By now, everyone has heard of Amazon Go stores where a swipe of a phone allows access to the store and walking out without the need for a ‘checkout’. AR/VR capabilities allow customers to experience products and services in a new way. Customers can try on a myriad combination of products without actually trying them on, in store and in many cases from their homes. New partnerships emerge every day where new opportunities are created to help improve the customer experience – whether that is Amazon’s partnership with Sears to order tires or Amazon’s partnership with Kohl’s to handle returns of online purchases. 

9. Smart supply chains and last-mile logistics move delivery of goods to hours. Drones dropping off what you ordered is no longer science fiction. Autonomous, driverless cars dropping off pizza are in the market already. The fight for the last mile has never been fiercer, but it is driving a level of delivery service that is truly mind-boggling. More importantly, it is changing the traditional formats of warehouses, distribution centres, and the type of technology used by companies to fulfil customer choices. Everything we have known about the distribution and warehousing business is being changed rapidly. Add blockchain into the mix and now you have a trackable supply chain to a unit of one, not to mention data that describes in detail how everything travels everywhere while driving a high level of integrity in the system.

10. Artificial Intelligence, machine learning, and deep learning push predictive models to new limits. We have all probably seen what Google Duplex is doing to reservation systems. But use cases in call centres utilising chatbots, expert systems for configurators, and needs-based recommendation engines are all at the infancy of meeting the customer’s desire for simplicity and relevance. We won’t even get into use cases in drug discovery, disease management, and genome research. Whatever has complexity is fair game to be disintermediated. 

All of these are a few examples of the changing landscape of customer experience, ones that most of us have seen, experienced, or read about. The implication for companies that are not innovating and participating in these types of changes is frighteningly significant. Customers will continue to expect a new and enhanced way of being serviced even as the current landscape is changing rapidly. 

What are the broad implications and actions? 

1. Intense focus on customer experience is not a matter of choice but table stakes. The reality is that most companies are far behind in their technology, and making changes is not cheap. A real prioritisation of resources in building next-generation capabilities is essential for just competing in the future, let alone deriving competitive differentiation. 

2. Having direct relationships with your end customers is important from the standpoint of understanding their preferences in real time and possibly monetising these relationships through expanded services and other offerings in the future. Ultimately, the degree of separation will continue to reduce, and the inability for companies to properly understand, measure, and effect changes will be a source of competitive disadvantage. In some cases, this may be difficult to do directly but one must find other ways of getting access to such information through deeper partnerships or through the use of proxies. 

3. Business models are evolving and changing every day. Capital expenditure for infrastructure, platforms, and people have to be thought through properly to boost the agility to adapt to upcoming changes and the ability to make new changes. Being stuck in inflexible systems and processes will cost time, money, and market share. Newer ways of evaluating and benchmarking the business are crucial for companies to be successful in the future. 

This editorial was first published in our Cross-Border Payments and Ecommerce Report 2021–2022, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally. 

About Ajit Sivadasan 

Ajit Sivadasan is focused on managing the customer experience with the brand as well as the purchasing experience on Lenovo.com. Prior to joining Lenovo, he was an executive producer at Gateway.com. Ajit holds a bachelor’s degree in industrial engineering from the University of Kerala, a master’s degree in industrial management from Northern Illinois University, and an MBA from Claremont Graduate University – Peter F. Drucker and Masatoshi Ito Graduate School of Management. 


About Lenovo 

Lenovo is a USD 50 billion Fortune Global 500 company operating in 180 markets around the world and developing world-changing technologies that create a more inclusive, trustworthy, and sustainable digital society. By designing, engineering, and building the world’s most complete portfolio of smart devices and infrastructure, Lenovo is also leading an Intelligent Transformation.


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Keywords: ecommerce, COVID-19, marketplace, retail, IOT, artificial intelligence, machine learning, customer experience
Categories: Payments & Commerce
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Countries: World
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Payments & Commerce