The State of Retail Ecommerce: 2023 Recap
Consolidate & save: 6 points to consider when consolidating your ecommerce tech stack
Amid growing pressure to cut costs, many consumer brands are considering consolidating their ecommerce tech stack. But what does it take to consolidate successfully, and what are the pitfalls to avoid?
After years of explosive ecommerce growth, 2023 has been all about consolidating gains and driving efficiencies.
And for good reason. As consumer brands battle soaring inflation, budgets are tighter than ever and teams are being asked to do more with less.
With cost-savings front of mind, many brand owners are taking a long, hard look at the ecommerce tools and applications they have accumulated in recent years and asking: Is this still working for us?
As a result, tech stack consolidation has moved up the agenda for many.
What is tech stack consolidation, and what are the benefits?
In an ecommerce context, tech stack consolidation involves moving to a single, integrated provider for functionality such as digital shelf analytics and optimization, retail media management, ecommerce sales management, market share, and profit recovery automation.
Doing this creates economies of scale and simplifies a brand’s tech stack, which can unlock significant cost savings and efficiencies. Many consumer brands are discovering it’s easier, faster, and more cost-effective to work with a single provider than juggling multiple systems, points of contact, and support teams.
But tech stack consolidation isn’t just about cost savings; consolidating your ecommerce stack can also unlock additional functional benefits.
For example, by combining retail media and digital shelf data, brands can optimize for what is truly incremental instead of optimizing for siloed advertising metrics. Adding in functionality such as cost-to-serve and deductions management can unlock further benefits still.
At CommerceIQ, many of our customers have got to a point where they are essentially self-funding some of their retail media on Amazon thanks to tech stack consolidation. This is because they are using a single, integrated tool that is recovering several hundred thousand dollars of extra funding for them through deeper deductions management and other optimizations. These funds can then be re-invested in advertising to drive more top-line sales.
A single tool working on its own – no matter how effective – simply wouldn’t find those optimizations.
What to consider when consolidating your tech stack
In many ways, the key principles of picking a digital shelf vendor apply, but there are also consolidation-specific points to consider.
As enticing as the benefits are, tech stack consolidation comes with risks. No brand owner wants to put all their eggs in one basket only to find the basket has a hole in it. Strong due diligence is therefore essential.
As you set out on your tech stack consolidation journey, consider the following:
1. Is the data truly integrated or just connected?
Connection is not the same as consolidation.
Lots of providers offer tools that talk to each other on a regular basis, but data that syncs every now and then is a very different proposition to true consolidation.
You need real-time integration and activation to unlock the deeper benefits of consolidating your tech stack, so don’t be tempted to settle for mere connection.
A good litmus test is to see if a provider allows you to download all the data from their various tools together. Can you get a single source of truth, or are you still using different datasheets and logging into different places? If it’s the latter, you are probably leaving dollars on the table in terms of functional benefit.
2. How actionable is the data?
Your tech stack consolidation should be in service of a specific business outcome and drive clear action.
Be wary of solutions that just show you numbers and expect you to decide what to do about them. It’s not enough to get a report card; after combining data, your teams should be able to see a clear set of actions they can take to either improve or change your position.
Similarly, be cautious around abstract claims that don’t connect to a tangible outcome.
We often hear of something-or-other being ‘the best paid search tool’. Which is nice, but paid search isn’t a job to be done. The job to be done is driving your media ROI, both paid and organic, so using a paid search tool in isolation – without incorporating cost-to-service, purchase order data, and market share – won’t drive the outcomes you need.
3. Are you getting the right level of granularity?
Don’t let the 80:20 rule lead you astray.
Some of the most valuable opportunities for consolidation can be found in the tail end of your ecommerce operations. Many providers, however, will give you data for only the top 80% of SKUs or media keywords and leave the remaining 20%.
So, before consolidating your tech stack, make sure you poke at the granularity of that consolidation and pressure-test the tech stack down to the lowest level of granularity.
At the same time, be careful not to let providers overwhelm you with data that doesn’t add value. Location-based analytics are a big trend right now, but they often yield far too much data to drive meaningful action.
Just because you can get more data doesn’t mean it’s the right data for you, so resist the lure of the latest shiny capability. Chances are, you’ll end up buying far more data than you actually need.
4. How good are the individual tools?
No amount of consolidation will compensate for mediocre tools.
It’s great to have a phone that seamlessly connects to your smartwatch and earphones, but there’s no point buying a worse phone just to get that connection.
When consolidating your ecommerce tech stack, you still need to pressure-test each individual component of the stack to ensure it is best in class. It’s also a good idea to look for evidence that the provider has a credible roadmap for developing and improving each tool in its own right.
5. Are the capabilities you’re buying actually live?
‘Vaporware‘ can be a problem, so robust due diligence is key.
It’s one thing to have a compelling concept; it’s another to have a working demo. Don’t sign up for a tech stack until your teams have seen and tested the product, and make sure whatever capabilities you have been promised are up and running. Automations are often a weak point, so double-check they are working properly.
It’s also essential that people across your own organization are talking to each other and aligned on implementation and KPIs. Otherwise, you’re losing out on the ‘people’ benefits of tech stack consolidation. We sometimes find that one department goes off to buy tech tools without looping in others, which can lead to poor purchasing decisions and money being wasted.
6. Who will be running your account?
To get the most out of your tech stack consolidation, you need to work with a team that knows how to work across all relevant functions on your side.
Before signing up with a provider, take a very close look at their account team and find out who exactly will be in charge of your account. It’s surprisingly common to have relatively junior account managers running the show, even for major consumer brands.
Consolidation shouldn’t mean a jack of all trades, master of none. It’s one of the reasons the team at CommerceIQ has deep expertise across ecommerce and gets constantly trained on all major functional areas.
At a time of high inflation and global cost pressures, tech stack consolidation can help consumer brands cut costs, improve efficiency, and unlock valuable functional benefits across their ecommerce operations.
However, consolidation comes with risks and choosing the right provider is key.
Being clear about the business outcomes they want to drive, along with a robust due diligence process, will help brands consolidate successfully and set them up for ecommerce success in 2024 and beyond.