The ecommerce innovation dilemma – one step further

I closely followed the interesting conversation between my colleagues Roman Zenner, Alexander Ringsdorff and Björn Schotte about innovations in the ecommerce sphere. I like to add my thoughts here.

First of all: the ecommerce system manufacturers are companies with a product themselves – not only suppliers. So it just doesn’t make any sense that the system manufacturers all say: “The innovation needs to come from the customers’ side.” To go back to the car industry comparison (that was already used in the discussion) it would be like every manufacturer building the same car and expecting the customers to customize it. While I’m writing this – it actually feels a bit like this in the ecommerce industry at the moment. From my last consulting projects, where I screened the existing solutions, it is pretty clear that the distinction between the system is really small by now. Why would you choose one system over the other? If you as a shop system manufacturer are in this state, you are in danger, since your product is pretty replaceable. The only thing that holds the merchants back to switch frequently is the investment in one platform that has been done. Imagine for a second that the switching costs and investment in a new platform would be nearly zero: would the merchants stay with the systems they have right now? And why would they? If you lose the competitive edge on innovating your product it is likely that someone else will come around the corner and eat your lunch. If you do not innovate, you lose the differentiation. All products consolidate over time and the distinction shrinks to a minimum – and so the competitive advantage. If you want to read more about innovation theory, go take a look at the works of Gary Hamel.

Björn already went one step in the direction where I want to follow up now. And that is what’s happening if you think aside from online-desktop-computer-shopping. I guess that is what describes the situation pretty much. The common shop systems are all still desktop centered online shops. If you take a look at mobile commerce, which is the next level (and is happening right now!) all common shop systems more or less screwed up on delivering a mobile solution to their customers. I mean: come on! The iPhone is here nearly 7 years now. There are some templates, some responsive stuff and some native app solutions out there – but barely used, since they are not attractive to merchants, nor really neatly integrated in the platforms. Not to talk of the technological part there – not one shop system manufacturer is offering a web-app solution, which could be regarded as technological edge.

And now think even some more steps ahead. Think multi channel. Think connection between online and offline. Think new devices. And now think of what the shop systems can do for you. So? Right. Barely nothing.

If you go for instore shopping, window shopping, instore catalogues, iBeacon technology, wearables, smart tv’s, location based stuff – the shop systems are not of use for any thing like that. The recent technological developments made things possible that have been around for a long time. The idea behind Googles Glasses is like 35 years old. But only today the miniaturization makes it possible to build these things in a useable way (take a look at http://en.wikipedia.org/wiki/Wearable_computer). And I personally think that we will see a lot of new stuff within the next years. So the innovation on the hardware side will go on. But will the current software stack be able to utilize these new things?

If you want to use these technologies right now, you need additional systems that are quite expensive and complicated to integrate. At the moment this maybe is a rare case for merchants with bigger budgets. But like the mobile revolution (with an average of 20% visitors on shops over mobile devices right now) also this area will grow rapidly in the future, as it is the way to go for merchants with or without brick and mortar stores. If the shop system manufacturers do not support these technologies in the future, my best guess is that they will just become another component in the bigger orchestra of the technology stack. They will simply lose the significance they have right now – and will simply be replaceable. In my opinion this is a huge challenge, since all system manufacturers are aiming for the enterprise sector to monetize. But if they only deliver the desktop like solution in the future they deliver right now, that will just not be enough for the challenges merchants will have to face.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s