Launched at NRF 2023, the study outlines the top three investments brands and retailers must make to drive customer engagement and profitability this year.
VTEX (NYSE: VTEX), the global enterprise digital commerce platform for premium brands and retailers, has released its new retail profitability research paper, “Three investments to drive e-commerce growth”, in NRF 2023.
The research, developed by VTEX partner AWS, highlights important investment opportunities for retailers looking to achieve profitable growth despite the economic headwinds ahead. He specifically dives into the challenges of e-commerce, the new era of profitability and how retailers can achieve it in the new year by focusing on the customer and their evolving needs.
Samuel James, Chief Digital Officer (CDO) of Grupo Carrefour Brasil, VTEX customer, participated in the Big Ideas panel at NRF and said: “When we are in an era of growth at all costs, it is very difficult for a company like Carrefour to compete because there is a lot of unreasonable spending growing, which is not possible for a large public retailer. Now, we are on a more level playing field with the rest of our competitors.” He also added, “We compete with really sophisticated digital players and the best talent in the market, so our strategy was to move to the VTEX platform to have a solid foundation that could meet our needs, and that allowed us to focus on scaling our business. ” The executive said that Carrefour managed to look at the fundamentals of its business and hit the unit economics. “We did that and were able to double our business in the last 12 months. So we were able to build an efficient e-commerce and at the same time grow because we were able to focus on the things that really move the needle in our business”.
Since the onset of COVID-19, the rules of commerce have been rewritten and a greater emphasis on growth over profitability has consumed retailers. Despite this shift, a recent study by Publicis Sapient showed that 37% of retailers say e-commerce is not meeting its profitability goals.
"The pandemic ushered in the era of growth at all costs, but now retailers are facing higher expectations as they battle a storm of financial challenges and changing consumer demands," said Jordan Jewell, author of the report, former analyst at IDC. and current Director of Trade Growth Strategy at VTEX. “Retailers are feeling the pressure to turn a profit and are unsure which investments will help them get the ROI they need. Through our findings in this research, we give retailers the tools they need to make the right decisions for their businesses to do just that.”
When evaluating what will drive long-term growth, VTEX recommends focusing on three key investments:
- Get more from customers you already have. The bulk of a brand's profits come from its most loyal customers, so investing in these select customers can make a big difference in profitability. Retailers investing in this sector should focus their efforts on customer retention, first-party data collection, and cross-channel communication.
- Make inventory and supply your strength. VTEX research shows that 55% of brands are still in the early stages of the omnichannel maturity curve. Investing in this strategy—specifically in inventory management, order management, and supply chain—can improve customer satisfaction. These initiatives should focus on treating customer service as a product, unifying inventory and leveraging market models.
- Engage with customers in new ways. The digital commerce market is fiercer and more competitive than ever. Therefore, brands need to move away from their traditional customer experience strategies to better engage with consumers, through video commerce and immersive product pages, to increase conversion rates and stand out from competitors.
For the full report, access the link.
