Ecommerce Leaders Embrace an Integrated Approach to Product Discovery
Ecommerce companies understand the importance of making it easier for customers to find what they want to buy. They also know the tools exist to help them do so. What marks out the market leaders is that they implement the tools, and they do it well.
Helping online shoppers find what they want to buy has always been a big challenge. There’s too much choice, serendipitous discoveries are rare, and no one has really replicated browsing. Now new research shows product discovery tools are widely seen as a big part of the solution, so the key to competitive advantage is how well those tools are implemented.
This is the core finding in a new report by London Research, The State of Product Discovery in Digital Commerce, published in association with Attraqt.
Product discovery is the process of helping shoppers learn about the products available effortlessly and find what they’re looking for more quickly. It combines on-site search, merchandising and personalisation, and it requires retailers to understand the precise intent and specific goals of each individual shopper at the exact moment of engagement with them.
Recent events mean the prize for solving the product discovery problem has never been bigger. Online sales in the US increased by 32% in 2020 (to $791.7bn), and by 31% to almost £100bn in the UK.
At the same time, customer journeys are becoming ever-more complicated, spreading across more channels and platforms, and involving an average of 15 touchpoints with the brand. This means retailers are under even more pressure to treat them holistically, joining up data sets and breaking down silos.
As one agency respondent told researchers: “Clients often don’t understand how all of the different touchpoints need to work together to provide an optimised experience that sees greater returns. Instead, touchpoints are owned by different departments that operate in silos and are reluctant to work together, to protect ownership of ‘their’ area.”
Product Discovery Technology Delivers Results
Research for the report found that optimising product delivery produces significant results. Two-thirds of online retailers surveyed saw increased sales. More than half (56%) saw customer loyalty increase, and 42% said customer perception of their brand improved.
The report breaks down respondents into leaders and the mainstream; leaders are those companies that had ‘significantly outperformed’ their competitors over the previous 12 months. The research found more than three-quarters of leaders have an integrated approach to product discovery, compared to less than half of mainstream companies. They also:
- Have a deeper realisation of the challenges consumers face in the era of hyper-choice;
- Understand their customers’ journeys in greater detail;
- Take a more strategic, holistic view of retail;
- Think about product discovery in a more integrated way; and
- Are more demanding in their choice of technology, and are more likely to adopt newer developments such as machine learning.
What’s Stopping You?
The challenges retailers face in adopting a product discovery-based approach are the familiar mixture of the operational, the technological and the organisational.
The most significant problem is the volume of products sold – this was an issue for 30% of respondents. Second is the number of customer personas the company has, cited by 29%. A quarter of companies also have insufficient data, and metadata, about the products they sell.
Around a quarter of respondents said they suffered from technology and technology-related problems. These included the inability to build a business case for investment in product discovery tools, lack of IT support, and the fact that they were working with disparate systems and point solutions.
Larger companies – those with annual revenues of more than £50m – were more likely to struggle with disparate technology solutions and siloed organisations than were their smaller counterparts. Smaller companies had greater difficulty making the business case for technology investment, and also suffered more from poor product data and metadata.
Despite this, bigger companies are much more likely to be ahead in product discovery than are smaller ones. Almost three-quarters of bigger companies surveyed have an integrated approach, compared to less than half (47%) of smaller ones.
AI is the Battleground of the Future
Looking ahead, while the report found leaders and mainstream companies were equally likely to be investing in product discovery technology in the future, leaders are placing more emphasis on the importance of artificial intelligence.
Two-thirds of leading companies (68%) said AI capabilities are ‘definitely’ part of their product discovery technology investment decisions, compared to just over a third (36%) of mainstream firms which said the same. This suggests that leaders, having established a competitive edge through product discovery technology, are likely to increase that lead in the future.
The State of Product Discovery in Digital Commerce is now available for download.