SC247    Topics     Business    News    Pivotree

How Digital Commerce Can Survive and Thrive in Times of Inflation

In this blog post, we'll explore the impact of inflation on digital commerce. We'll also discuss a top strategy to help you push through the challenge and come out on top.

The impact of inflation on digital commerce

Inflation was oppressive in 2022, reaching a four-decade high in the US and impacting nearly every part of the world. But has it gotten better?

Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives

“We’re certainly down from the peak of inflation pressures last year, but we’re lingering at an elevated rate. The road back to 2 percent is going to take some time.”

There’s definitely an uptick in optimism. The US economy showed signs of a rebound in February. However, prices continue to rise monthly across various goods and services — especially in categorie like grocery and housing. In PYMNTS’ latest “Consumer Inflation Sentiment” report, 41% of families with children and 42% of millennials say they’ve switched to lower-quality groceries to save money.

Despite changes in buying behavior, customer expectations remain high for a frictionless experience. 

Keynote Speaker and Author Shep Hyken recently noted:

“Frictionless is almost not noticed—until it is. At some point, customers realize how easy it is to do business with a company, and they like it. In fact, they like it so much, as the findings show, they will pay more and keep coming back.”

What keeps commerce leaders up at night?

On top of meeting consumer demands, inflation creates internal pressures. Most business leaders share the same anxieties, whether from big or small commerce companies. Their worries include:

  • How can I keep prices low? My suppliers keep raising my costs, and it’s not sustainable to pass those price hikes on to my customers.
  • How can I build loyalty? Customer acquisition costs keep rising, so I must appeal to my existing customer base.
  • How can I automate more tasks? My team and resources are leaner than ever.
  • How do I speed up profitability? I need to invest in technology this year, but my budget keeps shrinking.

Clearly, there’s a lot bubbling to the surface. To sum it up? Commerce leaders need ways to provide the experiences that consumers demand without overextending on cost.

How prepared is your business to survive and thrive?

In a recent survey by Pivotree and Canam Research, only 39% of commerce business leaders said their commerce strategy and tactics are “definitely keeping pace” with changes in customer behavior.

If that sounds familiar, what’s holding you back? For many, it’s an aversion to big-bang investments or lengthy, tedious implementations. And that makes total sense.

For example, let’s say you want to improve your supply chain operations and identify a warehouse management system (WMS) as your biggest gap. Here’s the problem: When you combine the traditional buy cycle and implementation time, most projects are years away from going live with the first warehouse. In the current market, we know that’s simply unacceptable.

So, how do you work around these limitations? Here’s our advice: Put the wheels in motion to make quicker buying decisions, go live with the basics, and leverage pre-defined models for incremental innovation.

In the next section, we’ll share how to accomplish this with a leading commerce strategy.

Survive and thrive: How to evolve from CAPEX to OPEX

During lean economic times, businesses must reduce costs and optimize their financial resources. One top strategy is shifting from a capital expenditure (CAPEX) model to an operational expenditure (OPEX) model.

The benefits of this approach for digital commerce include:

  1. Predictable costs: With an OPEX model, businesses pay for services or resources as they use them. OPEX allows businesses to avoid costly and unpredictable capital expenditures, instead paying a regular subscription or usage fee that fits their budget.
  2. Improved cash flow: Because OPEX doesn’t require a significant upfront investment, it can help businesses maintain cash flow during lean economic times. Businesses can redirect resources toward other pressing concerns or opportunities.
  3. Agility: With an OPEX model, businesses can scale up or down as required. This flexibility is critical during lean economic times when businesses need to be agile to adapt to changing market conditions and consumer demands.
  4. Access to the latest technology: OPEX allows businesses to stay current with the newest technology without an overwhelming capital investment. This is particularly important in rapidly evolving industries, where outdated technology or “tech debt” can quickly become a competitive disadvantage.

To transition to an OPEX model, consider focusing on incremental innovation. The goal is to implement the right technology at the right time while spreading out the cost.

Leverage “as a service” to open up new doors for your business

To apply incremental innovation, you can take advantage of an “as a service” model that’s opening up new doors in digital transformation.

This model is subscription-based and highly predictable. It allows you to add innovation incrementally, and with a gradual investment. Your ROI starts rolling in while the initial cost remains low. Each project takes a fast pace with an incremental investment — making it digestible even during times of economic instability.

Pivotree takes this approach forward by bringing commerce, supply chain, and data management under one umbrella. We help you target whatever service or technology will make the next greatest impact — whether that’s Commerce as a Service (CaaS), composable commerce, Data as a Service (DaaS), or supply chain innovation that leverages the MACH architecture (Microservices based, API-first, Cloud- native SaaS, Headless).

For example, let’s say you want to launch robotics in your warehouse. With our “as-a-service” model, you can get the operational excellence you need with our cloud-based WMS. Then, you could launch robotics or AI as a layer on top of your WMS. This incremental innovation helps you meet customer demand for fast delivery, optimize your inventory, and save costs — all within the framework of an OPEX model.

Thinking beyond inflation

Everyone expects 2023 to bring challenges. But what about all the opportunities? To help you find them,our digital commerce experts have put together the 2023 Commerce Trends Guide.

It covers some of the top trends for the year, with advice on how you can drive your business to thrive—not just survive—the turbulent times ahead.

Article Topics

Pivotree News & Resources

8 Ways a Warehouse Management System Can Improve Backorder Fulfillment
Unlocking the Benefits of a Microservices Based WMS for Warehouse Automation
How Digital Commerce Can Survive and Thrive in Times of Inflation
Master Inventory Data Reconciliation between ERPs and WMS for Warehouse Excellence!
An Order Management System Can Increase Your Sales Conversion
How WMS & OMS Can Drive Customer-Centric Growth
Navigating Modern Supplier Collaboration
More Pivotree

Latest in Business

Bank of America Introduces Digital Supply Chain Finance Platform
National Retail Federation Seeks to ‘Close the Loop,’ Acquires Reverse Logistics Association
How Digital Commerce Can Survive and Thrive in Times of Inflation
Talking Supply Chain: Cardinal Health at-Home Solutions Remakes the Supply Chain
Yellow’s Demise Underscores the Need for a New Labor Relations Narrative
Talking Supply Chain: Women Ascend the Supply Chain Ranks
How Education is Adapting to New Industry, Student Demands
More Business

Consumer expectations have never been more unforgiving or complex. We live in a world where consumers can buy what they want, however, they want, at any moment, and delivered the fastest way possible. Omnichannel is here to stay, and it is essential to ensure your supply chain can scale to demand, and at the same time, be responsive to disruption. As a result, frictionless fulfillment that can connect brands, warehouses and 3PL's comes down to the right technology, the right solutions, and the right approach. Pivotree’s portfolio of digital solutions, managed and professional services, provides customers with frictionless end-to-end solutions to manage complex digital commerce platforms, along with ongoing support from strategic planning through platform selection, deployment, and hosting, to data and supply chain management.

View Pivotree company profile


Featured Downloads

Resource Management System (RMS): How to Effectively Leverage Your Assets
Resource Management System (RMS): How to Effectively Leverage Your Assets
This guide provides an in-depth analysis of the potential of various resources available in a warehouse and how they can be utilized...
Sustainable Supply Chain Insights From PITT OHIO
Sustainable Supply Chain Insights From PITT OHIO
A whitepaper on supply chain insights gleaned at the LEED-certified gold Cleveland transportation and sustainability summit.

20 Warehouse & Distribution Center Best Practices for Your Supply Chain
20 Warehouse & Distribution Center Best Practices for Your Supply Chain
In this guide, we picked the brains of our supply chain engineers to find ways to improve warehouse and distribution center efficiency...
SOLOCHAIN WMS plus a Guide to Warehouse Management Systems
SOLOCHAIN WMS plus a Guide to Warehouse Management Systems
In these 2 'papers' Solochain WMS, we detail Manufacturing Execution System capabilities and Generix's portfolio of SCM solutions to manage all distribution logistics,...
Supply Chain Outlook: What to Expect Near-Future
Supply Chain Outlook: What to Expect Near-Future
An investigation into how supply chains have changed, where they are heading, and how you can prepare.