Infographic: 2018 Challenges for Digital Retailers

In our last post, we looked at 2018 facts about consumer behavior and consumer trends with regards to digital transformation and digital customer experience, including:

  • Thanks to the Internet of Things, we’re drowning in data
  • The continued growth of digital messaging and eCommerce
  • The desire for personalized service, but only if it’s accurately targeted
  • Online purchasing habits and attitudes, and how they vary by generation

However, looking at consumer behavior is only telling half the story. How companies are adapting to meet changing expectations is just as important. So what exactly are brands doing when it comes to implementing digital initiatives? When you look at the data for 2018, it seems that retailers especially have experienced more challenges than successes when it comes to digital.

Here are the big trends that we’re noticing:

1. Businesses are (mostly) embracing messaging

According to Facebook, there are now nearly 20 million business pages that enable users to exchange messages with companies. This year, businesses exchanged an average of 8 billion messages per month with Facebook users.

However, while these numbers might indicate growing enthusiasm for digital, many companies have yet to climb onboard. As of August of 2018, a Deloitte study showed that only 1/3 of companies are compliant with GDPR – the sweeping new EU General Data Protection Regulations that went into enforcement in May of this year. Given that there have been 16 major data breaches by large chains exposing the personal information of millions of people in the United States alone, it’s reasonable to anticipate that lack of GDPR compliance is going to be seen as a lack of concern for your customers’ data.

2. Businesses are looking before they leap into chatbots

The implementation of chatbots by businesses is booming, and while it’s resulted in some high-profile success stories (some of which we’ve covered on this blog!), those cases are far outnumbered by poor, sloppy, or badly thought-out chatbot implementations. There are nearly 300,000 chatbots deployed on Facebook Messenger, and yet 70% of those chatbots are failing to fulfill simple user requests.

Additionally, in 2019 it’s predicted that 60% of new chatbot deployments will not include the ability to transfer to a human agent from a web-based chatbot session, meaning that customers will be stuck with poor experience and the added frustration of having to start all over with a human.

3. Retailers haven’t yet optimized shipping

Even as eCommerce explodes in popularity, retailers have failed adapt their shipping systems to keep up with increasing demand. 77% of retailers are still sending shipments from regional fulfilment centers, rather than from local stores closer to the intended delivery address. Further, almost 70% of retailers have not optimized their order processes to fill entire orders from one location – which leads to split shipments and higher freight costs.

This failure to adapt has been caused partly by a lack of motivation to change the way they operate. (After all, why undergo the difficult process of change when you can simply pass on the extra shipping charges to the consumer?) It has also been caused by:

4. Retailers continue to face inventory system challenges

Inaccurate inventory systems remain a stubborn problem for many retailers. Despite the growing consumer demand for click-and-collect purchasing, 66% of retailers surveyed said that their unreliable inventory systems cause problems with click-and-collect orders. Because of these error-prone systems, 84% of retailers only show items as available to consumers if the system has logged multiple units of that item in order to prevent customer frustration.

Additionally, most retailers are not adequately examining their own customer purchase data to draw conclusions about purchasing trends from location to location; nearly 80% of retailers are not allocating inventory to stores based on customer demand for items from that specific location.

5. Employees are frustrated by the lack of executive engagement with digital

By and large, digital transformation initiatives are being initiated and driven from the middle of the organization, with little to no involvement from company executives. And when companies do have C-level involvement in digital transformation efforts, it is nearly always from the CTO or CIO. This is frustrating to many employees, who want their organizations to adapt to changing customer needs. Surveys have shown that employees want to see higher levels of C-suite engagement with digital transformation initiatives in their companies.

6. Most companies are not walking the walk when it comes to CX

It is not controversial to say that consumers are no longer loyal to brands, but are instead loyal to great customer experience. Consumer buying habits continue to undergo a tectonic shift, and we’ve seen what has happened to companies – even companies thought to be too big to fail – that have failed to keep up. Certainly marketers are very passionate about the possibility of digital – 90% of surveyed marketers said they believed personalized experiences were the future of CX. These marketers also identified CX as the most exciting business opportunity in 2019 – ahead of even content and mobile marketing.

And yet, despite many analysts proclaiming that 2018 would be the year of customer experience, CX quality remained flat – with almost no movement in CX Index scores for the third year in a row. Unfortunately, while companies will give lip service to the importance of CX, customer experience improvement remains undervalued in most organizations.

2018 Retail challengers summarized:

What does this mean for the future?

Looking at 2018 facts and trends, what lessons can we learn? And what predictions can we make about 2019? Stay tuned for our next post, where we’ll dive into the problem of making predictions in such a rapidly-shifting landscape.

In the mean time, if you’d like to talk with one of our digital customer service experts, please contact us. Or get a demo to see the ITC platform in action.

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About the Author: Anna Kreider