It’s trendy to talk about replacing comprehensive ecommerce technology systems with Lego-like assemblies of modules that address various aspects of online retail, such as merchandising, site search and checkout. But that approach — often referred to by terms such as headless or composable commerce or MACH — can be challenging.
In the year ahead, many retailers and brands will turn away from that strategy and focus instead on adding specific pieces of ecommerce technology that address pressing needs and promise a quick ROI, Forrester Research Inc. says in its recently released “Predictions 2024: Digital Commerce” report.
Emily Pfeiffer, principal analyst, Forrester Research Inc.
Retailers and other types of companies are driven to seek new solutions when existing ecommerce systems that impact customer-facing transactions and internal processes are unable to meet new needs, says report co-author Emily Pfeiffer. For example, many retailers and brands have inventory systems that do a good job of tracking merchandise from suppliers to distribution centers to customers. However, they are not designed to provide online shoppers with real-time information about inventory availability.
Commerce teams move away from replatforming to ‘point solutions’
Those inventory systems and other components of ecommerce operations, Pfeiffer says, “would have a very high cost to rip and replace.” Instead, she says, more companies are leaving those systems in place for now and seeking add-on technology that addresses the pressing needs they currently face.
“And that is the right way to think about it,” Pfeiffer says. “I have a business problem, what capability will solve it, what tech function will give me that capability, let me go add that. Those are the types of moves we see coming in the next year.”
Pfeiffer, a principal analyst at Forrester, isn’t surprised by this development. In last year’s report, she and her colleagues predicted that one-third of organizations that tried to “play software company” by piecing together combinations of function-specific technology would regret they did. She believes that prediction was on the money.
In response, Forrester predicts that fewer companies will attempt big initiatives to refresh their ecommerce technology infrastructure. It also predicts that “smaller, targeted moves will replace half of major replatforming projects.”
In many cases, those smaller moves will consist of retailers and brands looking for a “point solution,” technology that addresses their specific problem. While that may lead them to new vendors, she says it’s a good idea to determine what a retailer’s current vendor offers, as ecommerce tech providers are constantly acquiring companies with specialized expertise and innovating themselves.
“Start with your trusted vendor, then look at point solutions,” Pfeiffer says. “The last resort should be a major replatforming.”
Other ecommerce technology predictions for 2024
Besides predicting a shift to more targeted tech investments, the Forrester report makes four other predictions for 2024:
1. At least one-quarter of digital tech spending will shift away from maintenance.
Given the need for flexibility today, “businesses will realize they can’t keep throwing good money after bad. They’ll spend less on maintaining legacy systems — and on the partners that support them — as they finally move to eliminate outdated tech instead of paying to keep it on life support.”
With many tech budgets tight, Pfeiffer says she and her colleagues hope companies will “put money into things that will move them forward instead of automatically writing that check” to maintain the systems they have in place.
2. Only one-quarter of businesses will benefit from digital commerce initiatives based on generative AI.
Retailers will be constrained by consumers demanding more control over their personal data and new AI-related regulations, Forrester predicts.
“Trust is everything,” Pfeiffer says. “Make it really clear what data is being used, how it’s being used and give customers control if they want it not to be used.”
3. Social media giants will partner with three retail media networks for commerce.
Forrester doesn’t predict which three retailers’ advertising networks will partner with social networks. But it points to examples such as Meta Platforms Inc., owner of Facebook and Instagram, working with retailer Dollar Tree. It also points to Pinterest working with U.K. retailer Tesco.
Such relationships, Forrester says, will leverage customer data to make purchasing on social networks more appealing. And social commerce is yet to take off among U.S. consumers overall. However, a 2022 Forrester survey found 61% of U.S. online adults under 25 had completed a purchase on a social network.
4. Six percent of businesses will boost employee productivity with computer vision and augmented reality.
Examples include store associates, warehouse workers and B2B salespeople using cameras on mobile devices to capture physical data and get recommendations on the best actions to take. Already, 4% of retail and wholesale workers say they used augmented or mixed reality tools on their jobs weekly. Forrester projects an increase of at least 50%, to 6% or more, in the coming year.
“Digital businesses should initially adopt these tools as tests with clearly defined desired outcomes — and then carefully monitor the impact on those intended results and goals,” the Forrester report advises.
In addition to Pfeiffer, Forrester analysts Lauren Cevallos, Chuck Gahun and Brendan Witcher co-authored the 2024 digital commerce predictions report. They had input from Fiona Swerdlow, Keith Johnston, Kelsey Chickering, Joe Cicman, J. P. Gownder and Delilah Gonzalez.
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