Making Unified Commerce a reality

Charmaine: Consumer preferences are changing fast, influenced by the internet and ecommerce. Customers are looking for better ways to interact with merchants and service providers. And it's all about the user experience. So what that means for companies in retail, fashion, hospitality, or F&B is that their margin for error is shrinking. Consider this: In the Adyen Retail Report, 61% of consumers say they want retailers to continue selling across multiple channels. Customers have come to see a pandemic era feature as a standard convenience. Many also say they will be more loyal to retailers who allow them to shop in store but finish their shopping online or vice versa. As this new reality takes hold, companies have to look at ways to offer smooth and seamless services and high-end consumer experiences to meet rising customer demands across sales channels. In other words, the era of unified commerce is at hand.

Lawrence: So we're talking about unified commerce. It's important to define that and understand a little bit about what that means. Unified commerce, to me, is around having a single view of the consumer. The unified commerce is actually saying "well, how can I look at this consumer from a single lens and see everything that they do with my organization?"

Charmaine: Welcome to Behind the Figures, the podcast that goes beyond the data to explore the trends shaping the retail, restaurant, and hospitality sectors and shares expert advice on how to leverage the latest technology and innovation to make the most of it. I'm your host, Charmaine Yee. In this episode, we're going to look at the concept of unified commerce – what it's all about, the benefits to both businesses and consumers, and the challenges of implementing it effectively. First up, we have Unified Commerce expert Jan-Pieter Lips, who will kick things off by explaining what sets unified commerce apart from the more commonly known omnichannel experience.

Jan-Pieter: Omnichannel or multichannel means we give customers a choice how they want to shop, whether they want to shop online, in store, or other channels. Now, often those channels are not connected in the backend. They often act as silos. So what unified commerce is, is omnichannel in a connected way. So it's the next evolution after omnichannel. So why is it a problem that channels are not connected? Well, first, it's very difficult to give a consistent experience to customers if channels are not connected. Because for customers, they shop with a brand, not with a channel. So when people buy something online, they want to be able to return it in store. Secondly, it creates a lot of complexity for brands. Not only are single journeys now often over different channels – so people buy online and they pick up in store, or they're in store and buy something from the ecommerce assortment but they still pay on a payment terminal. Also, there's a real proliferation of channels, so lots of new channels like kiosks, like apps, and social commerce. So the complexity for merchants is really, really increasing if those channels are not connected. So the first thing a retailer needs to do is to make sure that they have a single view on their inventory. So they always need to know where their products are, across the different stores and their distribution centers. Secondly, they need to make sure that their financial systems are connected, so that in their store, they can find the transaction that was done online, for example. And having a single payment partner is part of that. And then thirdly, they need to understand what customers are doing across those different channels. Because if somebody shops online, once or twice, you may think they're a small customer, whereas if they also shop 10 times in the stores, you treat them differently, and they're a better customer, and you would probably market to them differently. So it's important to understand what people are doing across those different channels. And that's becoming more of a challenge as we have more channels.

Charmaine: So unified commerce is going beyond omnichannel, ensuring that all touchpoints are well connected. And in this day and age where customers have so many options. strengthening those linkages must be the top priority as businesses adapt to an uncertain economic environment and a constantly changing tech landscape.

Jan-Pieter: The key challenges for businesses really start with technology, because a lot of the issues of getting to unified commerce is systems that don't talk to each other. And the reason for that is that they were created at different points in time. So often, we started with stores and then we had our ecommerce channels, so different technology, different teams, and siloed data. So connecting those systems is really important. Now, if you can't completely replace, rip out all your systems, and replace them with a unified set of systems, then there's different ways of going about that. One is to create middleware to connect to different systems and unifying the data. That's quite a practical approach. Some companies create some middleware to connect their legacy systems and unify the data in that way. Other companies are a little bit more bold, and they either completely replace their system or they replace their systems over time for a more unified set. But it's important not to just view it as a technology challenge, because there's also a people challenge and organizational challenge. A lot of companies are set up in silos. And when I speak to a retailer, I always have to remind myself: am I talking to the digital team or the stores team? Because they've got different objectives and different ways of looking at the world. So it's important to create roles in your organization that actually are end to end, that are omnichannel.

Charmaine: Getting the technology right and ensuring that the various systems within an organization talk to each other are the biggest hurdles of making unified commerce work, agrees Lawrence Palletier, Sales and Marketing Director at hospitality IT platform, Redcat. Understanding the workings of your internal processes and correctly identifying who your customers are also help.

Lawrence: So the unified commerce bit is actually saying, "well, how can I look at this consumer from a single lens and see everything that they do with my organization?" And I think that the challenge in getting to that place is having the right technology partner actually providing all those different components, combined with the right payments partner that's gonna be able to glue things together almost in the background, so that at a fundamental level, you get unified reporting across what's happening with our customer. Talking about like one of the biggest hurdles around unified commerce and adopting it, I probably say that it's a technology hurdle, really is your biggest challenge. And when I say that, I think it comes in a couple of directions. One is that if you've built a solution for the consumer, that's made out of lots of different partners, lots of different components, unifying those components becomes really challenging. One of the hurdles is how do I get all of those systems to talk to each other? Because once I have them talking to each other, I then have data sets that are unified. It's really difficult if I have consumers that exist in five different ways that aren't unified and aren't attached to each other. So if I've got a bunch of different versions of consumers that aren't in any way connected, it's very difficult for me to connect those. Bringing unified commerce into that is just a new challenge, it's possible that I could use that to try and start to link in these different systems. But you're actually creating a rut for your own backyard, you're creating a difficult scenario. One barrier, if you like, to the adoption of unified commerce is actually saying I need to first kind of unify my systems, and then bring in this unified layer, if you'd like, of data from unified commerce, and then I can actually create an ecosystem that makes lots of sense. You gotta say, "why am I doing this?" And one of the biggest reasons or drivers, if you like, of that sort of innovation is usually around consumer loyalty, understanding the consumer. To do that, we must unify the data, then I can start to understand how that's going to affect my marketing, even understanding my own customer base. The more I understand about the people who are actually coming into my shop, the more I then start to understand what might make a lot of sense. And I can give you a quick example, we had a customer that they knew that their core consumer was actually middle-aged men, tend to be workers. They started a loyalty program, started to then collect demographic information around all the different people who are coming into their shop. And it turned out that they actually had more women than men coming into their shop and they were mostly younger. They then started to redesign the menu to start to understand, well, if I have a menu that's more focused on that group, what will that do? And it actually increased sales really significantly. So getting that first understanding of what's happening in your shop, then you can start to layer some solutions on top of that and give you more and more information, data, and fundamentally a better business.

Charmaine: As with any big organizational change, implementing unified commerce effectively needs the buy in of the company leadership. For Dione Song, CEO of Love, Bonito, the Singapore-based fashion house, there were a number of reasons behind her company's decision to adopt unified commerce.

Dione: The first question we asked ourselves was really the sort of the omnichannel expansion or offline expansion, does that sort of make sense for us as a brand in the first place? Since we were actually digitally native, we started the other way around. So I think that that first foray into just expanding offline right and going more omni for us was really category- and customer-driven. Especially in fashion, we have to observe that having a offline presence, it's actually quite integral to our brand, and to conversions, and to just customer education, because it's quite different. I think we really want our customers to come in, to try the product, to touch the fabric because these are experiences that we cannot offer just through a pure play website or ecommerce experience, at least at the moment. And when you think about struggling moments when it comes to fashion, the biggest struggling moment will probably be sizing – getting really that perfect fit, the perfect item. And it's not that easy with online, regardless of all the types of, you know, AI sizing tools that you have, because a key reason sometimes for discrepancies when it comes to sizing. And so for us, that was really that key impetus for us to expanding offline. And that was really important that did not want to be a traditional brick and mortar player, where you're just collecting receipts, you're not understanding consumer, you're not collecting data, which then actually inhibits you from really serving your end customer and your community. Then it was really important for us to think about creating a more unified commerce experience between online and offline, where if someone's coming through, firstly, through their transactions offline, we can tie them back to that customer ID for their past purchases online as well. And why do we want to do that? So that we can then provide her a much better experience through the stores and through online and then just increase our understanding around her, which will allow us to then give her much better, more accurate recommendations. And to do that, we also realized that it's also not that easy. And that was actually also one of the key reasons why we introduced a loyalty program to also even give more incentive for customers walking through the stores to also sign up and login or create an account on the spot. Because if there's no incentive, perhaps, or no advantages to be doing that, then it's actually quite hard to be encouraging your customer to be creating an account at the point of sale or in store. And with that, and we were able to really create a unified ID of our customer in the backend, and to ensure that all of that is going into one source of truth in our data warehouse.

Charmaine: While ecommerce has been a huge gift, especially during the pandemic, it can be a whole different proposition when it comes to buying clothes online. Who among us has not struggled with shopping online for that ideal outfit? No matter how smart AI sizing tools are right now, it can be a challenge to get the size or fit right, as Dione says. Then you're faced with the challenge of using the online portal to return or exchange the product. It's no wonder so many people want to be able to seamlessly engage with a brand across multiple sales channels. This is the promise that unified commerce holds for businesses, allowing them to connect multiple channels and understand their customers better through rich payment insights, driving better service.

Dione: Unified commerce has really been very beneficial to our business. Again, it's really because of also the category that we're playing in. We think about it: ecommerce CAGRs are very high across the region. But the percentage of transactions and retail volume and spends is still predominantly actually made offline, even today. While we're seeing the proliferation of many different website, fashion marketplaces, and so on, that shows that consumers are actually still going out to the malls, they do enjoy and they do appreciate shopping offline. Definitely when it comes to unified commerce for us, and expanding offline, it has allowed us to really increase our market share, because it allows us to reach out to our customers in the most thoughtful manner through avenues that are most familiar, convenient, and easy for them. So I think that's really one of the primary benefits. But when it comes to the entire omnichannel experience by having both an online and offline and a more unified presence as well, what we're seeing is that we're able to also drive a lot more retention, a lot more stickiness with our consumers. What does this mean? It means that, hey, maybe someone's discovering us first offline. But because we're able to capture that moment, capture that email, have them sign on, we're able then to start a relationship, right, we're not just collecting the receipt. We're setting relationship, we're able then to onboard them into our program, we're able to send them a first email, and we're able then to also do more education and be like, "Hey, you've tried us offline perhaps would you like to try shopping online with the convenience of your home?" This allows us then to increase a touchpoint, what we're also seeing is that consumers who have tried us across multiple different channels online and offline are typically higher value, because now they're more immersed in the brand. They understand really our products much better. They understand what we're offering, there's a lot more stickiness and loyalty actually to the brand. And now you see so much more resonance. And I'll throw one statistic, very interesting one. Today, actually over 30% of consumers that we have acquired 10 years ago, they are still active shoppers with us today. And they're shopping at least three to four times a year. And that's really unheard of, especially in the fashion and retail space.

Charmaine: It is clear that unified commerce has a key role to play in meeting the growing demands of today's consumer. Yet using that capability on a daily basis, especially to grow the business can be challenging. As Dione points out, there are a lot of issues to consider in order to get unified commerce right.

Dione: For companies that are looking to adopt unified commerce, one of the very important fundamentals that I would advise would be around scalability. To really pick a partner that can support in the markets that you're present in or the markets that you're planning to expand into, and because again, you want more economies of scale and also efficiency for your day to day operations. In addition to scalability, being able to have the omnichannel support and presence is equally important, especially as you think about expanding your footprint not just online, but also offline with your stores. And then apart from that, at the end of the day, it's also all about data. Is this a partner that can provide you the right insights, the right data, the right transparency, easy integrations for your teams to be really also deriving the right insights? Essentially, you're able to put all of this data into your data warehouse for your data teams to also mine through all of the information. I would say I think that's a very important use case.

Charmaine: As an industry right at the forefront of our consumer-driven economy, fashion provides a very clear view of how unified commerce can be utilized to grow a retail business. Explaining how and why it makes sense in the F&B industry and how it's being implemented, is Josh Bell, Principal of Guzman y Gomez, a Mexican casual dining and fast food restaurant chain.

Josh: For us, unified commerce has been put on steroids through COVID. And the adoption of something like delivery, pre-COVID, the delivery companies were struggling to sort of continue to grow in certain areas. They were starting to max out, especially in small markets like Singapore, and where everyone's very technology savvy. COVID hit and that just changes the game. I mean, we're a perfect example. We went from 35% delivery sales to 98% delivery sales. So it just meant that every single person on this island was ordering delivery, you know, and if you weren't prepared for that you're dead, you know, you're in big trouble. The consequences felt by those players that weren't prepared, from one point is the delivery companies couldn't get the tablets to the restaurants fast enough. So there was like a three or four month delay on supplying the delivery tablet to the customer, because they weren't prepared. And most restaurants don't have four months operating free cash flow. That was devastating. And fortunately, we were very prepared. And so we did well. But that is an analogy of the delivery experience from a unified commerce perspective. But now it's flowing back into the restaurants. Customers want to use their phone, they're comfortable with Apple Pay now. They were not comfortable with Apple Pay two or three years ago. They want to check out through a website with Apple Pay on their phone, they want to check out through a QR, or they want to check out through Apple Pay through QR in a restaurant sitting at a table. They do not want to put their credit card into their phone. So restaurant operators just have no option but to embrace unified commerce and prepare for all kinds of scenarios, customer expectations, customer demands. So not even expectations anymore. They are so aggressive and so fast-moving that it'd be crazy not to embrace unified commerce in the QSR industry space.

Charmaine: Demand seems to be the operative word here, as empowered consumers vote with their wallets. And businesses find themselves having to step up and offer the kinds of options, flexibility, and efficiency customers have now come to desire. Fortunately, we can always count on technology to come through.

Josh: The way we've approached technology is we want to put it in place so that it supercharges our business. I think the future is inevitable and technology, there's no way around it. And to resist that is to kind of swim against the tsunami, it's not gonna go well. So I think technology must be woven in deep into the fabric of every part of the business in order to allow that concept to scale. So I guess if you're a specialist boutique restaurant that's only interested in one store and serving a very niche customer base, and growing, scaling is not exciting, then maybe you can get away with much simpler technology. But not many people are taking that approach, I think the scaling and growth and exciting evolution of a product or food or anything, that's where the magic happens. And so in order to execute that today, it just must have deep focus on tech.

Charmaine: As we talk about technology supercharging the different industries in APAC, there is the question of cost. Cost is a key factor that goes into decision-making when choosing to invest in new technologies or new processes. It's a dilemma companies are always struggling with.

Josh: The short answer is, a friend of mine said and that is – you buy cheap you buy twice. And the second point would be like with all things right, you buy quality, you buy a reputation, you buy a brand that's established and secure, you don't have to think about it. Again, it's almost self funding. An analogy, I guess, it would be a point of sale system, which is really our brainstem and our backbone of our business. If we go cheap on that thing, the staff are going to get very frustrated. So the processing speed of the point of sale is weak. The UX for the staff is poor. It's very frustrating taking 700 orders in a day on a poor POS system. Then you move to the customers now. The customer is going to be more frustrated because the staff are frustrated. And so what happens there that we lose revenue and we're in big trouble. And so now we think about it in the other perspective, we've got a state of the art point of sale system. The UX for the staff is immaculate, the seamlessness of the transaction is immaculate, the customer is so happy. Now, that to me is completely self funding. And that's going to ensure that we can focus on what we're good at – the burritoes, the customer engagement, the food quality, the food safety. We're not thinking about anything else, you know, we just want to make sure that customers are happy.

Charmaine: While embracing unified commerce can be an expensive proposition, it will pay for itself over the long term, by taking care of other challenges, and allowing businesses to do what they do best, which is offering a high quality product or service to their customers to keep them coming back. But that's not the end of it. Getting the payments part right is key to perfecting the consumer experience. Here's Cat Parker, Global Director of Commercial at T2 Tea, speaking to the ways to capitalize on unified commerce to hone your payments strategy and how to save costs while doing so.

Cat: Our payment strategy is all centered around unified commerce and having a single view of payments at the ground level of everything that we do. Working with clean first party data can help inform all of our decision-making for what we're doing. And that can be decision-making that's related to a customer, it can be decision-making around our store footprints, it can be decision-making around the types of products that customers are interested in, depending on their geography. But also it helps us understand more around our loyalty members versus non-members. So there's quite a few different aspects to that. And I think in terms of the payment types, having that mix of the traditional payment types like your Visas, your Mastercards, your AmEx, as well as buy now, pay laters all as part of one nice, clean tech stack really, really helps us. And the other thing obviously is always keeping in control of costs. So being able to keep the fraud to a minimum, that's critically important for us. Also, the other thing that is a hidden cost that a lot of retailers have, but don't realize that there's a cost-savings on, will probably be Least Cost Routing. And you know, you can achieve six figure savings in that area quite easily if you partner with the right technology solutions.

Charmaine: Yet another way to keep costs down is to focus on retaining existing customers. This is because the cost of acquiring new customers can be exponentially higher. A time-tested tool that companies use to keep customers coming back is the loyalty rewards program, which can take many shapes and forms. Lawrence from Redcat explains how unified commerce platforms can help merchants meaningfully engage with the customer, strengthen their bond, and turn new customers into loyal ones.

Lawrence: One of the challenges is understanding what loyalty is because loyalty is just a word, it doesn't mean much, you know, until you define what you're trying to do. It's actually just a concept. So when we talk about loyalty with our different customers, there's a couple of different varieties. So loyalty, in a very simple way, is just recognizing that that's your particular customer and being able to track and understand that customer. That's a form of loyalty. You might not do anything with that customer, they might not be aware that you're aware of them. But it's still a loyalty program. Another version, if you like, could involve a bunch of coupons and things, or it could involve rewards like birthday rewards and things. Often we see like coffee card kind of contests where somebody buys, you know, 10 drinks and 10 coffees, and they get one free, that sort of thing. And it can go over into even gift cards and points like earning and burning points, all those sorts of different aspects are all loyalty. So the next part of loyalty is saying, well, if I've devised this program that I think encourages these consumers in the way that I want to encourage them, what am I trying to do? So if you determine that you want to, for instance, try and encourage visitation, so you devise a loyalty program that will help you to encourage those consumers to visit more often or in a different way, and then you want to affect their behavior. Then the next step is to figure out, okay, what do I do to make that happen? So it could be, for example, a simple example from a real customer might be: Mondays and Tuesdays might be your slow days. So you go, "okay, well, if if I know those are my slower days, I'm going to try and shift some demand or create additional demand on Mondays and Tuesdays." And that could be through promotions, or offers, or whatever makes sense. And you work with those to encourage those consumers to see how much you can get that extra visit out of them. Or maybe you're shifting them from Friday to Tuesday, but it's easier for you to have extra capacity on Friday. And as you start to devise this program and put it in place and get some benefit from it. One of the aspects around that is this unified commerce that we've been talking about. So if you look at how unified commerce impacts on that, unified commerce helps you to understand or to get a single view of the consumer. So for example, by tokenizing credit cards, I can see when a consumer interacts so that it might not be that they come in and show a loyalty card and present themselves as a loyal member, but through unified commerce, I can actually see that they are the same person. And now I have some options. So if I have friends, for example, I've got somebody who in the past has presented a loyalty card and their credit card. And so I know that that is a particular person, particular consumer. At another time, they might come into my shop, just present the credit card, I know it's them. Now, I have a couple of choices, I could, if I've got the right tech partners to make this happen from a data set perspective, I'll know that they came in, and that I'll see their behaviors, right. And I can use that in my future marketing. The flip side is like if I wanted, I could actually recognize them, greet them appropriately, and talk to them about some offers that they might have available, like in their wallet, so to speak, they could have like a birthday offer. And I could proactively say, you know, "John, how you going? It's good to see you again. Did you know that you have a birthday offer?" You know, that sort of thing. As long as you can do that in a way that doesn't confuse or scare or freak out the consumer, right, it can be a really nice way of interacting. That's how unified commerce sort of fits into that plan. You still need to have this loyalty concept and the plan of how your loyalty program is going to work. And then you can augment it, if you like, with unified commerce bringing in this more unified data, adding a lot of value over to that program.

Charmaine: Another way to get your customers to stay loyal is by listening to them and understanding what they want and even anticipating their needs. This is especially true in a virtually borderless world where your competition can come from anywhere. Leveraging unified commerce can prove indispensable, says May Lam, a partner at EY, who specializes in advising companies on technology leadership, business transformation, and payments innovation.

May: So if you cut through the layers of a business, you will have your non-negotiable compliance requirements, whether it's fraud protection, risks, data security etc., then you will have your product and services leveraged by your data. And then the last but not least, the top layer is the one that's about the experience and journey that with your customer, that you can embed those relationships and continue to grow. So when you think about that connected commerce, powered by the unified commerce platform, actually goes through all these layers. And you can't grow your business without looking after your back office. And that's so important of having the right unified commerce platform for you to leverage all layers and harness all this data opportunity to help to improve your productivity, especially in this rise, of cost hurdles. We know that the inflation is going up, we know that the interest rate is going up. And we are living in a bear market. So it's even more important in the next two years to lower the costs, understanding how you run your business, and at the same time that it is a competitive world. And everyone is going global. Your competitor is going global, they're taking your pie. So what is a strategy to deepen the relationship, to be more personalized, leverage the data to create a new revenue stream. Hence, I think that that unified commerce platform is extremely important as the growth engine for any businesses.

Charmaine: As we've heard today, unified commerce has become an essential tool for APAC businesses as they battle for the attention and loyalty of a vocal and demanding customer base. Its benefits are numerous. It's seen as a system that pays for itself by streamlining inventory and payment processes, keeping customers and staff happy, and boosting bottom lines. It also produces the right kind of rich insights that helps companies know who and where their customers are, information they can use to scale efficiently and boost revenues. But as today's episode makes clear, companies looking to adopt unified commerce must approach it thoughtfully and with the help of knowledgeable partners in order to fully reap its advantages. I hope you've enjoyed this episode of Behind the Figures. For more great advice and insights on the trends shaping the retail, restaurant, and hospitality sectors in Asia Pacific, check out our other episodes covering topics like how payment technologies can enable growth and how platforms are transforming ecommerce.