What Big Retailers Can Learn From E-Commerce Startups

  • August 1, 2018 at 1:16 PM EDT
  • By Matt Simonsen, Infor
0aaMatt Simonsen Infor
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Technology is a tool. A commodity. But its effect on business models and competition is time relative. Today, no company has an advantage over their competitors because of how they leverage landline phones. But at one time, long before the world knew of “Internet companies,” the business world was in thrall to “telephone companies.” To be clear, these were not companies involved in the manufacturing of telephones or service providers — these were companies using telephones!

Telephones were no doubt a competitive advantage, but like all technologies, an advantage that erodes with time. To stay ahead of the competition, companies are constantly looking for the next technological advantage — the modern version of the mid-20th century telephone. This drive is most evident with technology companies that are built around innovating in the digital space.

When it comes to the retail industry, we are finding that technology-driven e-Commerce companies are the ones consistently leading the pack when it comes emerging digital trends. The very survival of an e-Commerce company is reliant upon innovation, and monetizing that innovation enough to fund new investments before commodification comes calling. Further, the quickest path to monetization is customer acceptance, so innovations relentlessly focus on improving the customer experience.


All that said, it is clear that retail is undergoing massive technological change and business models continue to be disrupted by innovation, which is many times driven by e-Commerce startups. The pressure is on traditional retailers to respond. Their survival depends upon it. Failure must be ruthlessly acknowledged, accepted and moved past to the next time because there is no time for doubling down on losing strategies.

Does survival in the current retail landscape require brick-and-mortar retailers to become technology companies? It may seem like they do, but the answer is clearly no. Retailers do not need to create their own technology any more than they need to produce their own electricity or manufacture their own cash registers. But while retailers do not have to be technology companies, they will see incremental benefits by thinking like technology companies. Here is how:

Embrace Failure — And Learn From It

Retailers must inject innovation into business strategies, monitor the impact and be willing to pull the plug, learning from the experience and moving on if it does not work. Take for example Amazon, which has relentlessly innovated — but that did not stop them from pulling the plug on the Amazon Fire Phone despite the fact it had the support of Amazon founder Jeff Bezos. Instead of wasting money and resources by refusing to accept the failure of the Fire Phone, Amazon shifted attention to Amazon Web Services and Alexa. And when that direction proved successful, Amazon doubled-down on their first-mover advantage. Failure is inevitable when risks are involved — and risks are necessary to stay relevant in the current landscape.

Find The Right Partners

Retailers also need to partner with the right technology companies that have the vision, platforms and tools to identify and introduce innovation into business operations. They need the analytics and insights to double down or withdraw based on customer satisfaction. Retailers must continue investing in customer-pleasing innovations, which technology partners can help them identify and implement, and be patient enough to trust that the long-term bottom line will be boosted by customer satisfaction.

Consider that some of the world’s largest retailers, such as Walmart and Target, recently partnered with Google to enhance search capabilities online. Through this new partnership, items from the retailers will be listed to purchase easily via the search engine. Partnerships like these are vital in ensuring that even the most successful brick-and-mortar retailers are adopting an e-Commerce strategy to rival online-only companies like Amazon.

Adopt The Latest Trends In Technology

Artificial intelligence (AI), the Internet of Things (IoT), blockchain, augmented reality (AR), automation and other emerging technologies are all hot areas of interest and investment in retail. But like the telephone, these will all be commodities someday. However, there will be competitive advantage for those who quickly embrace these new technologies, measure success by customer satisfaction, correct fast when something is not working, and look for what is next — meaning, those retailers that think and act like technology companies will benefit in the end.

Just look at fast-fashion behemoth H&M, which recently announced an enhanced focus on emerging technologies like big data and AI to help analyze purchase history and inform stocking decisions. By doing so, each location can ensure that their inventory is aligned with customer preferences and expectations, enhancing customer loyalty as well as reducing waste on unsold items.

Digital transformation is not easy and is not the core competency of retailers; retailing is the core competency of retailers. In order to be innovative and delight customers, retailers need to adopt the agile, customer-first mindset that drive the world’s leading e-Commerce and technology companies forward. Retailers that find good partners to work with on their digital transformation journeys can leverage innovation into first mover advantage and double down on customer satisfaction. Together, retailers and their partners will build the truest competitive advantage available in retail: customer loyalty.


Matt Simonsen is the Director of Retail Strategy for Infor, a position he has held since April 2016. He is an experienced communicator, teacher and leader in Finance, Retail and IT, and is passionate about making a difference and adding value through hard work, deep analysis, and strategic thought. Prior to joining Infor, he held various leadership positions with UnitedHealth Group, Insys Group, and Target. Simonsen received his B.S. in Management Information Systems from Iowa State University, and his MBA in Finance from the University of Minnesota. He currently resides in Minneapolis.

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