Managing Growth and Profitability in the Wacky World of ecommerce

    July 20, 2022
    Managing Growth and Profitability in the Wacky World of Ecommerce

    Nordstrom announced it’s turning its Nordstrom Rack off-price stores into one-stop online order pickup locations for all of its brands. The brick and mortar world of retail is changing right before our eyes to accommodate the shift to ecommerce, which is expected to rake in over $700B this year. 

    While ecommerce is booming, many brands are struggling to meet demand while maintaining a profit. Stay-at-home and social distancing requirements have pushed more shoppers to opt for delivery. And, advertisers must figure out how to drive profitable revenue where demand is the highest and they have the healthiest stock levels or an assortment they want to aggressively price to win more customers. With so many options, sales, marketing and supply chain issues have suddenly become very complex for brands. 

    Multichannel and omnichannel ecommerce has become the norm. And, the only way for brands to keep up with customers is by taking a tech-led approach. Machine learning keeps up with all these variables, automates offers appropriately and makes sure inventory levels are high enough so that customers can get their purchases as quickly as possible. 

    This type of approach that uses machine learning, analytics and automation to optimize the ecommerce channel and win at the moment of purchase is known as ecommerce Channel Optimization (ECO). Today, more brands like Avery and Logitech are using it to drive profitable market share growth on Amazon, Walmart and other ecommerce marketplaces. 

    For example, let’s say you, as a brand, have $1 to spend. You could spend that dollar on Amazon to advertise. Or, you could spend that dollar delivering an item to pick up at a grocery store, by shipping it, or arrange a curbside pickup. How you spend that dollar is a difficult, multi-faceted decision. ECO helps brands decide, on a real-time basis, where that dollar should go.

    Now, let’s say a competitor has an item that goes out of stock on Amazon Saturday at 2AM. What if you had an intelligent system that immediately detects this event and automatically starts promoting your competing offering. Not only do you increase your chances of making a sale, you win a NEW customer. You gain market share. And with the right technology platform you can accomplish this at speed and scale, without added effort from your team. 

    An AI-driven platform such as CommerceIQ that uses an ECO approach will recognize this and immediately react by promoting your competing item. Situations like these are great opportunities to convert customers and it all happens without a human having to intervene. You can capture and take advantage of opportunities that you may not have even known existed or know that they occured, and that you certainly couldn’t have responded to fast enough to take advantage of them.

    With an AI-powered approach like ECO, brands can make smart decisions on the fly – increase advertising in a segment or geography where you have high inventory levels or pull back on advertising spend where you are successfully fulfilling shopper demand and inventory is running low. All using real-time shopper, inventory and advertising data. 

    Success lies in having the flexibility to meet customers on their terms without being stuck using prescriptive approaches built only for brick and mortar.


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