Earlier this month at Spryker EXCITE, Alexander Graf presented a session on “Navigating the Future of E-commerce” (and a following fireside chat with Oliver Kraft, Tim Hagemann and Alessio Keller - recording available here).

Some interesting questions were asked:

Does Price Win or Not?
To Copy or Cooperate?
Sell Products or Sell Reach?

All leading to the overall question: is the classic model of value creation in commerce still valid today?

Primary and Secondary Activities of Michael Porter's Value Chain

In the rapidly evolving landscape of global commerce, a truly seismic shift is underway that threatens to topple the foundations of traditional business models. As the CEO of a commerce company, you might find yourself standing on increasingly shaky ground. The pillars that once supported the construction of retail success are crumbling, and the tremors are impossible to ignore. Let’s examine why the old ways of creating value are becoming obsolete and why innovation is now a matter of survival.

A) The End of Operations as We Know It

Remember when mastering your supply chain was the key to victory? Those days are fading fast.

Businesses are increasingly challenged to adapt to technological advancements, such as artificial intelligence (AI) and automation, which are reshaping traditional workflows and operational paradigms [1][5].

Companies like TEMU and SHEIN have rewritten the rulebook, achieving exponential growth by prioritizing speed and adaptability over operational perfection. TEMU’s meteoric rise—from launch to 100 million active users in the US in just six months—demonstrates the power of this new paradigm. Their ability to rapidly expand into 48 countries while maintaining growth underscores a fundamental shift: agility trumps efficiency in today’s market.

B) The Price & Sustainability Paradox

Conventional wisdom dictated that competitive pricing was the path to market dominance. However, the success of players like SHEIN challenges this notion. Despite offering rock-bottom prices, SHEIN’s growth has outpaced established giants like Zalando and Zara. SHEIN’s true competitive advantage isn’t just low prices (like other competitors have as well), but their incredibly fast turnaround from design to market. This suggests that while price remains important, it’s no longer the sole determinant of success. The new currency is speed-to-market and trend alignment, forcing traditional retailers to rethink their entire approach to product development and pricing strategies.

Growth comparison between SHEIN and Zalando

Source: excitingcommerce.de / April 2024

A counter trend is the growing consumer consciousness regarding corporate responsibility, forcing businesses to increasingly align with ethical standards, focusing on sustainability, diversity, and inclusivity. A significant majority of consumers—70%— say they are willing to pay a premium for ethically sourced and sustainable products, while 66% expect brands to understand their needs and preferences [3].

This shift from profit-driven motives to socially responsible practices is becoming imperative, as modern consumers prioritize companies that reflect their values [2]. Companies will be compelled to integrate sustainability into their core strategies, engaging in eco-friendly practices and circular economy models to maintain competitiveness [1].

So research shows consumers making sustainable choices, but the (SHEIN/TEMU) numbers show us that price and fast turnaround are still winning… On which strategy will you place your bets?

RIP ❌ Inbound Logistics & RIP ❌ Classic Operations

C) Marketing: From Cost Center to Profit Engine

The traditional view of marketing as a necessary expense is obsolete. Techniques such as hyper-personalization, driven by real-time data and artificial intelligence, allow businesses to deliver tailored marketing and product recommendations based on individual consumer behavior. This shift helps mitigate issues related to choice overload and enhances customer satisfaction [8][9].

Amazon’s transformation of its marketing division into a revenue powerhouse is a wake-up call for the industry. With advertising revenues skyrocketing to rival its core retail business, Amazon has effectively turned a cost center into a profit engine. This shift demands a fundamental reevaluation of how commerce companies view and leverage their marketing capabilities.

D) The Attention Economy

In the new commerce landscape, attention is the most valuable commodity. The ability to aggregate and monetize user attention has become a primary source of value creation. This explains the success of platforms that excel not just in selling products, but in capturing and retaining user engagement across multiple channels. More than 60% of consumers are engaging in “phygital” shopping, which combines both physical and digital shopping environments [4]. This demand for convenience and seamless experiences underscores the necessity for businesses to provide integrated and coherent shopping journeys across various platforms.

The implications are clear: commerce companies must evolve from mere product sellers to attention brokers, or risk irrelevance.

RIP ❌ Classic Marketing & Sales

E) The Workforce Crisis

The global workforce crisis adds another layer of complexity to this changing landscape. While automation may streamline repetitive tasks, it simultaneously opens avenues for new roles focused on managing and improving automated systems. This creates a need for workers skilled in data analysis, AI programming, and system management, thereby redefining the workforce landscape [5][6]. This shift necessitates a complete overhaul of human resource strategies, focusing on continuous learning and skill development to remain competitive.

No more workforce? RIP ❌ Classic Outbound Logistics & RIP ❌ Classic Services

The above trends lead to a complete breakdown of the primary activities of the classic model:

😱

The Path Forward: Commerce 3.0

To survive and thrive in this new era, commerce companies must embrace a radically different model of value creation. As Alex mention in his talk, the future belongs to those who can master:

Offer Aggregation: Curating a diverse, rapidly evolving product mix that keeps pace with consumer trends.
Attention Flywheel: Building platforms that not only sell products but capture and monetize user attention.
User Insights: Leveraging data to understand and predict consumer behavior at an unprecedented level.
Seller/Buyer Matchmaking: Creating ecosystems that efficiently connect supply with demand.

The market is still characterized by a high growth stage, driven by rapid technological innovation and increasing demand across various sectors [7]. Companies are exploring innovative strategies, such as digitizing supply chain functions and fostering collaboration between human and automated systems, to mitigate talent scarcity and turnover rates [7].

But is it enough?

The stakes couldn’t be higher. Those who cling to outdated models of value creation face the very real risk of obsolescence. The rapid rise of new players and the transformation of established giants prove that no company is too big to fail—or too small to disrupt.

Innovation is no longer a luxury or a side project; it’s the very essence of survival in the new commerce landscape. The question is not whether you should innovate, but how quickly you can transform your entire business model to thrive in this new reality.

The collapse of traditional commerce models is not a distant threat—it’s happening now. Will your company be a casualty of this seismic shift, or will you seize the opportunity to turn this volatility into value? The choice is yours, but the clock is ticking.

The long version of Alex’ keynote will be published as a book in a few weeks.

Sources:

The Collapse of Traditional Commerce - Why Innovation is No Longer Optional