7 November 2019

Convergence and centrality of the human factor: the evolution of e-commerce

An online presence is essential, but the secret to an e-commerce site's success nowadays is to strategically integrate the variety of online and offline channels and touchpoints.

We discussed this topic with Pablo Liuzzi, CEO of The Innovation Factory a company that boasts strong vertical expertise in designing and developing e-commerce solutions, that joined forces with the mashfrog Group at the beginning of 2019.

E-commerce figures throughout the world, Europe, and Italy

Since the emergence of e-commerce until now, we have witnessed the buying experience and sales strategies evolving and undergoing a true paradigm shift. Growth over the next decade will be even more rapid and radical thanks to new technologies, machine learning, artificial intelligence, and Big Data. Facts and figures. Nowadays, most users have made at least one online purchase and the number of platforms has significantly increased with the growth of e-commerce over the last few years. These platforms are not only online shops, but they also include large marketplaces that gather together a wide variety of products.
Throughout the world, 1.79 billion people made 1 purchase in 2017 and an estimated 2.21 billion people will make purchases online by 2021.
In Europe, the value of e-commerce was estimated at around 602 billion euros in 2017, an increase of 14% as compared to 2016. 324 million people shop online. In the last five years, the Netherlands and Italy have seen the fastest e-commerce growth, which is expected to increase by a further 14% every year until 2021. The United Kingdom, Germany, and France dominate the European scene, generating 70% of the e-commerce turnover in Europe.
The B2C e-commerce market in Italy generated revenues of 35.1 billion euros in 2017, growing by a total of 11% as compared to 2016.
In short, e-commerce presents a real opportunity for all companies, brands, and b2b and b2c and retailers that want to sell online and increase their business.
It is unfortunate, however, that according to industry data processed during 2017, approximately 33% of Italian e-commerce sites fail within 12 months of their launch date.
Let's explore the reasons why and look at the strategies to sell online in the right way. 

How much does it cost to launch an e-commerce site, and how much does it cost companies who do not have one?

The cost of an e-commerce site is proportional to the merchant's expectations and depends on the merchant's defined target. The investment increases: if the reference market is very competitive; if the entrepreneur seeks to achieve a result in a short space of time; if it is an international market; if the product to be sold is suited to a multi-channel system. 
Conversely, it is difficult to determine any loss caused by a product's absence in the online market. It depends on the merchant's, or, in this case, the company's sales figures made on the traditional market.

Beyond any shadow of a doubt, the digitisation of sales procedures and the experience that users expect are part of an innovation process that has been underway for years. Beyond the sales figures, if a company chooses not to enter the online sales market, it means that it is isolated from the world and increasingly moves away from its customers and the market.

In addition to the platform costs, what are the other expenses to consider?

1. The cost of corrective and evolutionary platform maintenance.
2. The cost of marketing campaigns on various channels, an expense that can be divided into two main categories: ongoing strategic consulting for campaign management and the media budget.
3. Training staff to use the platforms.
4. Companies that have established traditional sales processes also need to consider the cost related to the integration of technological systems, as well as the integration and evolution of business procedures. The process of digital transformation that is the basis of every successful e-commerce project.

What is happening in the retail sector? 

I believe that the retail world has been overwhelmed by online sales in recent years and its reaction has been somewhat delayed. This assertion does not apply to all markets and all countries in the same way and during the same period, but in essence, the retail world was late to the party. At an early stage, the traditional offline market saw the internet as its worst enemy. It tried to fight this trend in unfamiliar territory and, most of the time, it lost. Today these two sectors, online and offline, converge. Many brands approach us to design platforms and services that are able to guarantee a Complete Purchase experience. An experience that cannot be separated from the offline experience, especially for certain products, such as Fashion, Luxury, and Food.  

Marketplace vs e-commerce: what are the main differences?

An e-commerce portal is a platform dedicated to the exclusive sale of the product or products sold by the owner of the portal.
A marketplace, on the other hand, is a shared space that houses shops, showcases, and products from several sellers.
Depending on the type of product or service sold, the two channels can co-exist, creating success stories.

I consider it crucial to think of e-commerce and marketplace sites, social networks, and traditional stores as tools and channels that I define as services to the customer. They are varying and convergent ways to guarantee the best possible shopping experience.

Innovation focused on the human factor 

In 2019, TIF joined mashfrog, adding vertical expertise to the Group's business lines in the design and development of e-commerce solutions.
TIF innovates by remaining grounded in reality and always maintaining focus on the human factor.
TIF's DNA includes a vocation for innovation, a passion for coding and programming, and a constant focus on the human factor that remains central in every design phase. Again, the keyword is convergence: the convergence between digital and real, between online and offline, which Pablo considers the indispensable ingredient to tackle and overcome the challenges of an increasingly competitive market.