How UK and US brands are optimising for profitability when choosing ecommerce tech solutions
Samir Kamnani
·May 15, 2024
How UK and US brands are optimising for profitability when choosing ecommerce tech solutions
As an ecommerce merchant, you have thousands of tech solutions to choose from to support your business operations, from marketing to warehouse management to customer support, and so much more. On the Shopify app store alone, you’ll find over 8,000 ecommerce apps that seamlessly integrate with your Shopify store to help you run your business.
So how can you narrow down your choices amongst so many versatile options?
Don’t get caught up by the snazziest branding campaigns, or get drawn in by bells and whistles that you don’t actually need.
When selecting your tech stack, focus not only on functionality, but on profitability: How will the solution guide you towards higher profit margins and improved customer retention?
By focusing on your business goals to help you narrow down the contenders, you’ll be able to more easily identify the solutions that will support you in achieving sustainable growth.
We recently spoke with Francesca Raggio, from our partner agency Vervaunt, to get a better sense of what they’re seeing in technology sourcing among both UK and US ecommerce brands. Vervaunt is a London-based agency that focuses on helping global ecommerce brands scale, and supports them in choosing the right technology and processes to help them grow exponentially.
Raggio shared some tips on what to look for in a tech solution, and what brands are seeking out in the UK v. the US:
Trends in UK merchant tech solutions
UK merchants need to focus their technology dollars strategically, particularly if their goal is to break into the overseas market. Vervaunt notes a couple of key trends in their technology spending:
- Testing and validation
In the UK, Vervaunt is seeing their clients invest heavily into A/B testing tools that they can use to experiment with different ideas, so that they can validate concepts before investing in development. Such tools can be useful in planning new landing pages, for instance, so that brands have a better idea of what design and copy pairing will lead to the highest conversion rates.
“As A/B testing tools become more accessible and teams are looking to streamline budgets, this has become a really important part of a brand’s tech stack to ensure they are proving concepts before investing in development,” says Raggio.
- Cross-border commerce
Because the UK market is limited in size, UK-based brands are likely to internationalise faster than US-based brands, and will need a robust solution that supports them with payments, duties and taxes, delivery, and returns. Global-e, a cross-border ecommerce platform, has been an ideal tech solution to support many of their customers’ expansion plans. The app, which integrates with Shopify, provides an end-to-end localised experience for shoppers from over 200 destinations, with local messaging, pricing, and payment methods; a guaranteed landed cost; multiple shipping options; and simple returns.
By prioritising apps that support merchants in both validating ideas to invest in, and streamlining international commerce operations, UK brands are able to reduce their operational costs and ensure that they’re investing in the right ideas to foster ongoing growth.
Trends in US merchant tech solutions
For merchants in the US, Vervaunt found several other themes when it comes to building the right ecommerce tech stack:
- Paid media solutions
In the US, merchants are spending more to cut through the noise and reach their target audiences – but it’s also important for them to be able to track their spending to understand which channels are having the biggest impact. That means they’re investing more into marketing technology and attribution tools. - Video and UGC content solutions
US brands are also focused on finding innovative new ways to connect with their customers, often through social channels like Instagram. To that end, they’re spending on video creation tools, as well as platforms for spotlighting user-generated content where customers can share the products in their own spaces. These tools are especially important for fashion and beauty brands, “where visual content is so important to cut through the noise,” says Raggio. - Returns and post-purchase solutions
US brands ship their products across broad geographic areas, even if they’re only shipping domestically – so the cost of reverse logistics can pile up quickly, especially as the ecommerce return rate is often 25% or higher. US brands are turning to returns management solutions like Loop, which can help them lower their reverse logistics costs with dynamic routing options, consolidated return shipments, alternative return options, and other unique features. Loop can also help brands improve profit margins and customer retention by transforming refund requests into opportunities for exchanges.
A common goal: Strong ROI
As operational expenses keep rising in both regions, “our clients are a lot more profit/ROI-orientated when it comes to testing and onboarding new solutions, ensuring any new tech really ties into and helps them to achieve their overarching goals,” says Raggio.
As a merchant, it’s important to focus on finding solutions that are well-integrated with your existing tech stack and also set up for scalability – so that it can integrate with the tools you’ll use a year or two from now, not just the tools you use today. Rather than switch platforms as you grow, it’s important to identify consistent solutions that can scale along with your needs, and are built to help you solve more than one problem.
“This has resulted in more consolidation of the tech stack overall, and ensures that any third parties being used are working as hard as they can be,” says Raggio.
Whilst building your brand’s tech stack, make sure that you keep profitability and scalability in mind as key business goals. By assessing every new piece of technology against your business’ long-term goals and needs, you’ll be able to find a sustainable technology stack that will support and accelerate your growth.
Learn how Loop’s post-purchase solution can help you boost your business’ profitability.
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