Do you want to join our team? We're hiring!
  • Product
    • Features
    • Why Frontastic
    • Pricing
  • Partners
  • Use Cases
  • Documentation
  • Contact
  • Request a demo
  • Menu Menu
You are here: Home1 / Insights2 / Optimization versus innovation in digital commerce

Optimization versus innovation in digital commerce

Authors: Paul Lynch, LiveArea | Nina Jonker-Völker, Frontastic

In a year of disruption, businesses are reminded of how critical it is to be able to pivot and adapt. The number of executives who listed innovation as a top-three priority for their company jumped from 65% in 2020 to 75% in 2021, the largest year-over-year shift seen in 15 years of BCG’s Most Innovative Companies survey. 

However, it’s hard to say how many of those executives are talking about bringing completely fresh ideas to market (innovation) and how many are talking about adopting the hottest emerging strategies, technologies, and business models and tailoring them to their own customers (optimization). 

Distinction between innovation and optimization

In a space that moves as fast as commerce, the distinction between innovation and optimization is never black and white. This is especially true in a year where necessity drove massive amounts of innovation. As physical stores shut down companies had to spin up solutions they had no blueprint for, turning shops into fulfillment centers or transitioning in-store staff to online consultants in a matter of days. 

Innovation, however, is a brief window. The early adopters lay the groundwork, the next wave of users find best practices to streamline processes and measure efforts, technology vendors figure out how to commoditize it, and it becomes an industry standard. Adding curbside pickup in 2021 is still valuable, but it’s no longer an innovation — it’s expected. 

Luckily, a large part of the value of industry breakthroughs comes after the innovation window. As technology to measure and test innovation matures, companies put their own creative spin on it, and the approach can be steadily optimized over time to capture the full long-tail value. 

Different paths to the same destination

Often the drivers behind optimization and innovation are the same — you want happy customers, happy co-workers, and a better bottom line.

Customer Experience: Tapping into the wisdom of the crowd and making continuous, small optimizations is the most surefire way to please the majority of your customers. From convenience to community, a solid feedback loop keeps a finger on the pulse of changing customer expectations. Innovation offers customers the unexpected. It brings radically new experiences that may only impact a small group of customers at first, but that group is going to be over the moon about it. 

Return on Investment. There’s more certainty in optimization, as you’re fine-tuning something that’s already working with your customer or proven in your industry. Tools to measure these efforts are usually more mature, which makes it easier to validate your work and secure a budget. With innovation, you’re hoping that 1 of the 15 experiments you run pays off all of them. This typically means working with leaner tools that let you get prototypes up and running quickly, and making larger investments into scale and optimization after the prototype has proven itself. 

Job Satisfaction. There’s a lot of gratification in seeing your well-oiled machine steadily become more efficient. With nearly unending possibilities to automate and tweak the system, optimization is a playground for data lovers. Innovation, being more driven by gut feeling, is likely going to draw more emotional investment. This is important because if you’re doing something brand new you’re going to have to be able to advocate for it and get others on board and excited. 

Essentially, optimization and innovation come down to 3 key actions: Think, make, and test.

OptimizationInnovation
ThinkFrom 100 proof points — internal data and industry insights — we’re confident about the results this will bring Out of 100 ideas — good and bad — this is the 1 we’re most excited to take a chance on
MakeLong-term investment, specified roles, aim to streamline and automate Low-cost experiments, collaborative group of generalists, aim for fast prototypes to test in the wild
TestDriven by positive feedback — make incremental improvements based on what’s working wellDriven by negative feedback — pull the plug quickly on what doesn’t work to make space for the next experiment

Examples of commerce optimization

Optimization is crucial for scaling the commerce experience, steady improvements that bring convenience to customers or efficiency to teams can quickly build up to a major competitive advantage. 

When CHRONEXT, a platform for luxury watches, found it too cumbersome to manage and update their website they knew they needed to replace their outdated technology — without pausing for a major replatform. So they adopted a Composable Frontend Platform, which gave them the freedom to refresh their customer-facing experience, roll out global sites 1 by 1, and gradually step off their legacy software without disrupting business. 

Chronext store preview on mobile and desktop

When Nuun was looking to create a loyalty program, they wanted one that was optimized for their community of adventure and fitness enthusiasts that love their hydration products. They put a fresh spin on an industry-standard by gamifying loyalty with points for engagements such as referrals and social sharing, ultimately seeing 70% of members making multiple purchases after joining the program. 

Examples of commerce innovation

In a year where many traditional business models were disrupted, companies responded by pivoting to brand new markets. While some of these switches were short-term efforts to help out with the pandemic response, such as Burton Snowboards adapting their factories to make PPE masks and the many distilleries producing hand sanitizer, some pivots have opened new markets permanently. When offices shut down, SnapCab suddenly had no market for their open-office privacy pods. They quickly realize their pods could be useful for 2 of the most pressing needs in the pandemic, with potential for long-term relevance in the space. First, they worked with healthcare experts to revamp their pods to be suitable for medical testing. Second, they created a home-office pod for those who needed a quiet space in their own house. 

Other innovations occur as companies explore new technologies to amplify the reasons their customers already love them. Louis Vuitton, Cartier, and Prada are leveraging blockchain to provide another layer of authenticity that’s essential for luxury buyers. While LUSH has developed an AR app that provides product information for unpackaged bath bombs, an experience that’s both novels and fits well with the cosmetic brand’s focus on ethical shopping and sustainability.  

There’s also the option to buy innovation, such as Lululemon’s acquisition of the fitness startup, Mirror, which is catalyzing their transition from an athleisure company to a lifestyle brand.

The double duty of eCommerce teams

While innovation and optimization can happen in any area of commerce, they both tend to be most associated with the digital side of the business. As a result, many eCommerce teams find themselves in a hybrid position. 

The digital commerce department has the most detailed view of the customer, with insights into purchasing behavior and engagement trends that offer a wealth of opportunities for optimization. At the same time, it’s often the department with the most access to cutting-edge tools and technologies, which sets the stage for innovation. 

The demand for new digital commerce experiences is clear there, with 54% of shoppers enjoying browsing and discovering online more than in-store. The expectation is clear there, with 1 in 5 CEOs citing “digital” as part of their top priorities in a 2021 Gartner CEO survey. The investment is clear there, with 75% of consumer goods companies expecting digital transformation funding to increase, according to a 2020 survey from BCG. 

However, there’s a key resource missing for many eCommerce teams to make this all happen. In a survey of 146 marketing professionals, the number one challenge cited across all sizes of companies was limited time. 

Customer expectations are high, and relatively small eCommerce teams are taking on demands for new channels, personalization, rich product information, multiple payment methods, a widening range of shipping and return options, 24/7 support, and the seamless experience that connects it all. Even more challenging, many teams are doing this on outdated technology that was built for the online commerce of 5 years ago. 

Summary

In the next 2 articles in this series, we’ll take a look at how eCommerce teams are tackling the ballooning expectations of digital commerce, practical tips for balancing optimization and innovation, and why companies with omnichannel ambitions are adopting composable commerce to stop wasting time managing the status quo and start pushing the boundaries of today’s shopping experience. 

About this blog series

This blog series was created together with our partner LiveArea. LiveArea is an award-winning global customer experience and commerce agency, and brings the full potential of digital business to life, helps brands create meaningful and lasting customer connections. LiveArea delivers B2B, B2C, and D2C solutions in health and beauty, fashion and apparel, luxury, consumer packaged goods, retail stores, healthcare, and automotive.

Find out more about LiveArea here.

Stay in the loop

Subscribe to our newsletter to keep up-to-date on all the latest Frontastic news.

Related

operational efficiency as metric for headless commerce

Operational efficiency: The future metric for headless eCommerce platforms

Insights, Tech Talk
This blog post explores how operational efficiency will be the future metric for headless eCommerce platforms. If you've moved to headless or are planning towards headless transition then this article will serve as the best guide for you.
Read more
April 28, 2022
https://www.frontastic.cloud/wp-content/uploads/2021/07/Operational-efficiency-Li.jpg 1260 2400 Zoya Ruhe https://www.frontastic.cloud/wp-content/uploads/svg/frontastic-commercetools-logo-gradient.svg Zoya Ruhe2022-04-28 08:00:052022-04-12 13:53:28Operational efficiency: The future metric for headless eCommerce platforms

Business problems a headless frontend can solve

Insights
While eCommerce has grown over the years, there're still obstacles and challenges that companies face in their attempt to improve the online shopping experience. In the article, you will find some of the top issues that still cause difficulties and how you can solve them with a headless frontend.
Read more
April 12, 2022
https://www.frontastic.cloud/wp-content/uploads/2022/04/unsplash_gTs2w7bu3Qo-1.jpg 1260 2400 Zoya Ruhe https://www.frontastic.cloud/wp-content/uploads/svg/frontastic-commercetools-logo-gradient.svg Zoya Ruhe2022-04-12 08:00:042022-04-07 12:53:33Business problems a headless frontend can solve

Multichannel commerce and why technology matters

Insights
For more than 2 years now, remote work — be it hybrid or fully remote — has been part of everyday life in many companies. In this blog post, we want to talk about productivity in remote environments and share the experiences and tips of our team.
Read more
April 4, 2022
https://www.frontastic.cloud/wp-content/uploads/2022/03/Multichannel-strategy-1.jpg 1260 2400 Zoya Ruhe https://www.frontastic.cloud/wp-content/uploads/svg/frontastic-commercetools-logo-gradient.svg Zoya Ruhe2022-04-04 08:00:402022-03-14 11:52:51Multichannel commerce and why technology matters

Categories

  • Product and Functionalities
  • Company News
  • Tech Talk
  • Partnerships and Integrations
  • Insights
  • Remote Work
  • What others say

Product

  • Why Frontastic
  • Features
  • Product Tour
  • Use Cases
  • Pricing

Partners

  • Agencies
  • Tech partners

Resources

  • Blog
  • Documentation

Company

  • About us
  • Careers
  • Events

Contact

  • Contact sales
  • Support
  • LinkedIn
  • Facebook
  • Twitter
MACH Alliance Logo
Data privacy     Legal     ©2022 Frontastic
Scroll to top
  • Ready to innovate?

    Fill in the details below and we’ll find a personalized plan that works for you.

  • We store your name, your email address, and your message in our CRM ProsperWorks to ensure timely and reliable processing. Without your consent, we won't use your email address for newsletters or similar but to answer your request. We can also delete your data if you want us to. Just let us know!
    If you select this checkbox, we'll regularly send you news. You can unsubscribe at any time using the link in the newsletter.
  • Seeing is Believing

    Fill in the details below to take a personalized guided demo.

  • We store your name, your email address, and your message in our CRM Copper to ensure quick and reliable processing. The data transfer is encrypted. Without your consent, we won’t use your email address for newsletters or similar but just to answer your request. By clicking on “Request demo” you confirm that you’ve also read our data privacy terms and that you consent your data is processed as described.
  • We save your name and email to send you regular news. For this purpose, we use the service Mailchimp, to which we transfer your data. You can always unsubscribe from the newsletter using the link at the end of the newsletter.
  • Let’s get together

    Fill in the details below to join us on our mission to create extraordinary digital customer experiences.

  • We store your name, your email address, and your message in our CRM ProsperWorks to ensure timely and reliable processing. Without your consent, we won't use your email address for newsletters or similar but to answer your request. We can also delete your data if you want us to. Just let us know!
    If you select this checkbox, we'll regularly send you news. You can unsubscribe at any time using the link in the newsletter.