Unknown Speaker 0:00 Oh? Darin Newbold 0:35 Alright folks, Good day and welcome to Commerce Today. My name is Darren Newbold and as always with me is Josh Warren, we're so excited to be together again for another episode. And for this one, well, we're embracing the future of retail. And what that really means is looking at the evolution of E commerce and how that evolves. And then I think Josh is going to impart some wisdom to us about harnessing the three horizons of innovation. I can't wait for that. So with that, help introduce the rest of this topic probably a little more succinctly. How about that? Joshua Warren 1:13 Yeah, you missed my subtitle, navigating change through innovation? And I like that, because really, what I'm seeing is there ecommerce directors out there that are freezing, and they're ecommerce directors out there that are innovating. And both are common responses, I think, to change in challenging times. But obviously, the ones that are innovating, are setting themselves up for greater success. Darin Newbold 1:37 Gotcha, gotcha. Okay, freezing, not freezing, as in cold, but as a fight flight or freeze, not moving forward. That helps just for for the slow ones in the audience like me, I just want to make sure that we had that cleared up. All right. So there are specific challenges that we're looking at. And these are, obviously inflation, cybersecurity, and supply chain disruption. How do those kind of impact this movement through the horizons, if you will, or through this change process? Joshua Warren 2:10 Yeah, I mean, really, it's, it's all about, again, how you address those challenges? Are you going to freeze? Are you going to be kind of reactionary? Are you going to be innovative and get out ahead of them? And obviously, there's only so much you can do with inflation? Unless you had a crystal ball and made some big moves about two years ago, which I think some people did, and are way ahead. But yeah, the pressure on profit margins. But we'll see in a little bit how with the right tools, you can really address that a lot better than I've seen some companies address it. And then, yes, cybersecurity, the evolution of the threats there. As we're recording this, as we're live streaming this, just a few days ago, it was announced that there was a major major hack that I think it was Louisiana was one of the states involved in it, it had a lot of the government. And basically, if you had a driver's license in Louisiana, if you had filed just about anything with the state of Louisiana, it was hacked, it was lost, your ID numbers are out there, your date of birth, lot of your personal information is out there. Obviously, that's a threat to retailers, as well as kind of the the ongoing threat of all this ransomware that tries to hold your data. for ransom. There's been some interesting things happening with Reddit around that, but we're not going to get into that today. Luckily, Reddit does not usually have a big impact on the world of E commerce. And then finally, supply chain disruptions. I think we've all been hearing a lot about that about just how disrupted all of that has been and how, you know, again, there's some retailers that are making the most of it through technology and some that are just freezing and are honestly going bankrupt. Darin Newbold 3:56 Haven't haven't some of these started inflation, it's gonna play out how it's gonna play out. And and, yeah, the cybersecurity obviously, companies can do different things to avoid that and be better. But that's a you're kind of, you're always kind of chasing perfection in a way there. But on the supply chain, I felt that things had started to work itself out in a way there as it not is there Are you still seeing and for me, that's one that I wanted to kind of hit on a little bit more just because what are what are you seeing or what's what's still out there that's causing people to pause? Joshua Warren 4:33 Yeah, so in a lot of areas, it's gotten a lot better, but there are still industries that are struggling. I actually went out trying to buy a PC Power Supply recently. And if you're looking for a nicer one, I won't name the brand I was looking at because sadly literally, all the power supplies are out of stock everywhere because they're having so many supply chain issues. So in here I was wanting to buy and it's a premium brand who's going to spend a premium pricing, I literally can't find somebody to take my money because they can't get the parts to get them built. And then once they're built, they're not making it to the stores in time. Darin Newbold 5:08 Wow, that's crazy. What do you think the causes of that? What's the root behind it? Joshua Warren 5:12 I think there were decisions made 123 years ago, either based on the pandemic, based on the supply chain disruptions at the time, people zigged when they should have zagged, they're still catching up. Darin Newbold 5:25 They just missed it. Okay. All right. Well, thank you for a little bit more discussion on that. So let's, let's now talk about an innovative framework and how this framework can then apply to e commerce and maybe, maybe relieve some pressure and help those frozen executives, if you will, that are that are really racked with the the fear of change, or the fear of the speed, fear and speed of change that's going on? How can I help them this three horizons of innovative framework? Yeah, so Joshua Warren 5:56 this came about, there's an article we'll link to in the show notes. That was about a study from HFS research that developed this horizons model. And I really liked this because they basically said, Hey, there's, there's a lot of E commerce directors getting squeezed by their bosses, their CFOs, and their customers. So basically, they're being told spend less money, but the customers are demanding more and more. And so this horizon framework gives you a way to prioritize. And so the first horizon that they and they build on each other, it's almost almost like a pyramid, I question exactly how they picked horizon, other than it's the in the name of their company. But the base, the foundation, the first horizon is digital modernization. So basically, get your systems up to date up to speed, get them talking to each other. This is the digital transformation that we and others I know, Adobe has been talking about that for 10 years now, probably, there's still a lot of companies that were dragging their feet and hadn't done it. So that's where you can't address these threats. You can't innovate without having that solid foundation built. First, Darin Newbold 7:00 let me pause you real quick. I'm just curious. And this is putting you on the spot. And I know you love this, Josh. But if you were to take a swag from a percentage of the merchants, and we'll just use the US a swag of the merchants in the US. How many of them do you feel are still still in horizon one and trying to figure out that program what to do? Joshua Warren 7:21 I think you can slice it based on size. Oddly enough, I think the smallest and the biggest merchants are doing pretty good. I think that the absolute biggest ones, they had the resources and they got hammered by their shareholders. So they did it, they had to do it right, the smallest ones, there's been so much innovation in that space with all these off the shelf tools you can buy now that if you're launching a new e commerce business kind of from scratch, you go straight into you are modernized, right? It's really that middle ground that I would say, I don't think even 50 60% of them have completed this yet. I think there's a lot of interest companies in the middle that are stalled out on that horizon. Darin Newbold 7:59 Hmm. All right, definitely an opportunity out there. All right, moving up the pyramid if you will arise in two. Joshua Warren 8:06 So the second horizon is being able to provide, basically, they call it unmatched consumer experiences, but a really solid customer experience is what I would call it. So being able to provide personalized experiences, Omni channel experiences using that level of experience, basically, when you go to that website, and there's that wow factor of like this was, this was an enjoyable experience versus Oh, wow, I can't wait until I can finish this transaction and get on with my day. Darin Newbold 8:35 Okay, yeah, I had one of those that's interesting that you bring that up, I just a quick sidenote I, I, I'm an Amazon person like it or love it or hate it or whatever. But so because it's the same experience some good some bad it is. But I recently made a purchase from another site. And in their, in the way they did it, I was I was a little blown away. I was like, wow, I I liked this experience. Now, I don't need to go there a lot. Because how many shoes do you possibly need? But I guess depending on the person, maybe a lot. All right. And that's about that horizon three. Joshua Warren 9:09 So the third kind of final horizon is after you've addressed the first and second one, Horizon three, move on to driving value through new business models. So this is where you really get into the innovation where your technology and your customer experience are so solid, that you can say okay, how do I disrupt my industry? How do I do that whole Blue Ocean Strategy sort of approach? Darin Newbold 9:31 Okay. So thinking real quick, and I asked on the percentages, where do you see kind of the e Commerce Industry overall in there in the horizon levels if you were to kind of swag it? Joshua Warren 9:43 I think if you go to a conference, or you read a case study, you think everybody in the world is on Horizon three, because the conferences and the case studies all love to talk about that. I think that a lot of companies are kind of at Horizon 1.5 if you will, still trying to get that experience to the level they want it to be? Darin Newbold 10:02 Well, one of the things I was thinking of as you're describing these Josh's, is it possible to be trying to do some of the things in horizon three, but yet still be needing to solve horizon one in a way or, or some different levels? Joshua Warren 10:17 Yeah. And I, that's a hard place for a retailer to be because you might have executives or customers that are asking you to skip straight to Horizon three. But if you haven't addressed horizon one, if you don't have your technology stack where it needs to be, you're gonna have a bad time. Like you really need to this definitely builds each level. Darin Newbold 10:36 I think we've had some experience within some of those cases there. Josh, we, that's for a whole nother episode, probably not for even this podcast. So moving right along, moving right along. So all right, what, what's the role of this digital modernization and the unmatched consumer experience in retail? What does that look like? Joshua Warren 10:55 So the digital modernization piece used to this is one of those things where the goals, the goal has moved us to basically mean get all your systems talking to each other, eliminated paper and manual processes, you know, your inventory, ideally, your suppliers are giving you inventory feeds, they're giving you data via EDI, so you know what's coming in, you have an electronic, you know, solid warehouse management system, you know, where everything is, you know, what your sellable inventory is, you know how to get it out the door, that used to be kind of that level. Now, AI has changed everything, we're now digital modernization, if you truly want to be modern, you need some way that you were weaving, you know, if it's not full blown AI, at least some level of automation into your technology stack. Or you're not truly modern anymore. Darin Newbold 11:49 Interesting. Well, and that leads us on into the the rise of the direct to consumer sales model. How is that impacting the innovation? Yeah, on the way. Joshua Warren 12:00 So the companies that have really kind of nailed horizon one, Horizon two were the ones that they skipped that third got to that third horizon of new business models. And one of the ways many of them innovated were direct to consumer, we're basically figuring out, Hey, I don't need the middleman, I don't need distributors, I can sell direct to consumer. And that has, you would think it would lower prices, it hasn't. But that has increased profit margins for those companies. And of course, they realize they could do that. But it gives those brands so much more control, like when you're the one selling the product direct to consumer, you can provide that amazing experience. And that experience can just be a constant reinforcement of your brand versus you go on Amazon and you buy something there. And you may not even realize what brand you just purchased, and you have no kind of connection or affinity to that brand. Darin Newbold 12:57 That's interesting. Yeah, important to note. And it's definitely an important, important area to look at in that horizon three zone. So as we start to put this all together, what's our what's your message? What's our message to the merchants out there that are saying, Hey, I don't even know which horizon I'm on. I'm on horizon, you know, a and he's talking 123? Or, alright, I'm in horizon, one, two, or three? Probably a one or a two in the grand scheme of things. What do I do? What what do I do with this? And how do we, how do we create the impact we need to create? Joshua Warren 13:36 I think where the horizon model really helps is if you're in that freeze position, or a little overwhelmed, stop, breathe, go back to basics, and basically say, Hey, look at us as a checklist. Have I completed horizon? One? Is my brand, are we truly modernized? And if not start there, because your efforts on Horizon two, will take longer and cost more if you haven't finished your efforts on Horizon? One. Darin Newbold 14:00 Interesting, yes, that is so key. So what you're ultimately saying is when when the economy is pushing, saying, Hey, we can't spend more money. Okay, well, we can't spend more money, the money we are spending, we've got to be modernized. We've got to have the, like anything the foundation built well, right. Right. Right. Then upon that foundation, then maybe an even would encourage our merchants to review some of our previous episodes, because we do talk about some areas that probably very well fit into that horizon to to start exploring, experimenting, some that may be expensive may some of them may be not expensive, that are easy to do. That would add that just that extra value to your site. Joshua Warren 14:49 Yeah, that sums it up. Well, and I think that for a lot of merchants, they don't they hear horizon too. They hear us talking about these consumer experiences and they think oh, that's out of my reach. I can't afford that. At my brands not like that, that sort of thing, but talk to your customers, whether that's through formal user research, or just an informal poll on your website or open call on social media for feedback, but talk to your customers, because there might be friction points in the customer experience are opportunities to delight in the customer experience that are the low hanging fruit that aren't going to be too expensive or complex to implement. Darin Newbold 15:25 Interesting. All right, Josh, last prediction for future trends and changes in the E commerce landscape. Joshua Warren 15:32 So I think that, as we've talked about a lot, we're going to see a lot of AI and automation in the next couple of years. I mean, next couple of weeks Darin Newbold 15:42 are just waiting for but even Joshua Warren 15:44 with AI, it kind of goes back to that same thing of like the people that have their data in a format they can easily feed into an AI are gonna win, versus the ones that haven't done that horizon, one work that don't have their systems, you know, put together in a way that makes that easy. So I don't know if we're gonna see a lot of companies solving that. I think that's where people should be putting their time and attention but doesn't always work that way. Darin Newbold 16:10 Interesting. All right. Well, you You heard it here first, we're as always happy to have you on board for Commerce Today. We appreciate appreciate you listening in and definitely come back for the next time. Until then take care Transcribed by https://otter.ai