If you’re reading this on a smartphone, you’re not alone. An estimated 3.4 billion people around the world now use a smartphone to connect, engage and shop.
The dizzying pace of digital adoption presents enormous opportunities for business. But the last few years have also brought challenges -- particularly for established companies, as a new generation of consumers, competitors and technology platforms has emerged to define the age of digital disruption.
Every business needs to position itself to survive and thrive in the age of digital disruption. It helps to first understand the forces shaping the landscape.
- Mobile is reaching a tipping point. Mobile will represent about half of e-commerce in 2018, growing four times faster than desktop.The challenge for retailers is that while engagement rates on mobile are higher, conversion is lower. Messaging is emerging as a new commerce platform, with chat bots and machine learning enabling distributed commerce.
- Consumer behavior is shifting. Online and offline channels have blurred. Seventy five percent of people do online research before making an in-store purchase. Over 80 percent of consumers say online posts from friends influence their purchase decisions. And over 60 percent of online shoppers have bought online and picked up the item in a store. We live in an omnichannel world.
- Competition is intensifying from all angles. Bricks and clicks stores are investing in omnichannel strategies. Online etailers are investing in growth. Search engines and social networks are getting into online commerce. And while venture funding has slowed, commerce start-ups still have the potential to be significant forces of disruption.
As commerce companies, we need to stay ahead of these shifts and ensure we are where our customers are – on desktop, mobile, social, or messaging – with an offering that is meaningfully better than the competition.
Defining a strategy for the age of digital disruption
So how does a company stay relevant in this age of digital disruption? There are many ways to define a winning strategy. Here are four principles I have found useful in this journey:
- Confronting the realities of your starting point
Organizations often times prefer to focus on their strengths, rather than on what’s broken. But it is sometimes only by confronting the truth about what is holding it back that a business can move forward.
For over 20 years, listings have been at the heart of eBay’s marketplace. But one of the realities we had to deal with was that it can be difficult for consumers to find exactly what they want from amongst 900 million product listings.
We’ve now committed to change this by converting our listings into a structured product catalog. By confronting this difficult reality, we can improve search results, provide sharp product comparisons, and create a more relevant, compelling platform for our customers -- enabling people who shop on eBay to find their version of perfect.
2.Cultivating a mindset for innovation.
Having a mindset for innovation is about a willingness to face the truth of not just of your starting point, but also of your future. Take the example of an incumbent which was still thriving, but which recognized that to stay relevant into the future, it needed to boldly innovate.
At the end of 2014, USA Network was America’s most watched cable entertainment network for the ninth consecutive year. But, like all other networks, it was facing major shifts in how its viewers – particularly younger viewers – were watching its programming. The network, which is owned by NBCUniversal*, made the bold decision to shake up what had been a winning formula of light-hearted, feel-good TV, with a calculated play for a modern, millennial audience – one that values courage, risk-taking and authenticity.
It introduced Mr. Robot, a dark and critically acclaimed drama, so far from the usual programming choices for USA Network that it surprised many reporters. It was a gamble – but a gamble that paid off, pulling in new, younger audiences, but also delighting the loyal, core USA Network audience. Mr. Robot was not only the most buzzed-about series of 2015, but went on to win major awards for the network, including the Golden Globe for Best Television Series-Drama and a prestigious Peabody Award. 3
3. Creating a compelling ambition and strategy to win
There are three questions I believe can help define a company’s ambition and strategy.
- What do you want to be famous for? Create a clear and compelling ambition for your company.
- Where will you play? Define your target customer, your market segments, your geographies.
- How will you win? Determine what assets you’ll leverage; define what you’re really good at; and decide how you’ll differentiate yourself from competition in the eyes of your target customer segment.
We have a clear target customer in mind for eBay – they are treasure-hunters and self-expressionists. Our strategy is to offer buyers amazing product selection – the right product (new, last season, vintage, refurbished) at the right price for them - in a simple, relevant shopping experience. And for sellers, we are working to deliver the most powerful selling platform.
4. Align the organization and maniacally execute
The final principle for success is to clearly and simply communicate your strategy, and cascade it throughout the organization, so that everyone is aligned. This involves translating multi-year imperatives into clear in-year initiatives that will deliver results; assigning accountability; having goals and ownership for those goals; and maniacally executing.
Preparing for the digital future is about being honest with yourself about where you’re coming from, and where you need to go. It’s about cultivating a mindset for innovation. It’s about creating a customer-centric strategy for where to play, and how to win. And it’s about getting your organization and your people aligned behind you.
* The Chairman of NBCUniversal, Bonnie Hammer, is a member of eBay’s Board of Directors.