Maximizing digital commerce and customer engagement in 2023: Nacelle CEO weighs in

As we approach 2023, small to medium-sized businesses (SMBs) are sketching out new strategies to face the growing macroeconomic challenges. 

Brian Anderson, chief executive officer (CEO) of Nacelle, a California-based data orchestration company, compiled five topics and trends that merchants should heed to boost their digital commerce and customer engagement in 2023, amidst looming challenges.

Trend 1: Increase in digital advertising costs

Digital advertising costs will rise even more in 2023, as device and browser privacy policies such as Apple’s App Tracking Transparency (when an app asks you if it can track you) further tighten, Anderson said. Merchants will find it more difficult to target new customers and have less insight into what works and what does not.

Apple’s policy changes makes the whole supply-demand curve fluctuate, and that trickles down to other tech systems that use their platform, and then subsequently to SMBs, who really get hurt, particularly if they were relying heavily on digital advertising.

“Before Apple changed its privacy policies, a commerce startup could grow through digital advertising channels like Facebook. These merchants didn’t need enormous marketing teams with hundred-million-dollar budgets and a plethora of data to operate and compete. The actions Apple is taking, while good for consumer privacy, undermines Facebook’s algorithms. And this change adversely impacts SMBs who find it harder to advertise profitably online without the power of these algorithms.”

He added that the consequences of these events are two-fold: “First, mid-market and enterprise organizations now have an advantage in the marketplace. And second, Facebook’s parent company Meta will be investing heavily in AI infrastructure to upgrade the ad platform and recommendation engine.”

Meta is also betting that AI-powered algorithms and predictive analytics will resolve the problem, however, its infrastructure is not where it needs to be to support heavy AI solutions for the masses, Anderson added.

Retailers with first-hand data and offering a superior user experience will have a significant competitive edge and will be able to offset the rise in digital advertising costs with higher conversion rates and larger cart sizes.

Trend #2: Macro-economic pressures to drive conservative capital outlays

Consumers’ discretionary wallets continue to suffer as high inflation and interest rates persist, following loose monetary and fiscal policies during the pandemic, stated Anderson. 

As a result, commerce leaders in 2023 will reconsider significant capital outlays. Instead of risky and expensive platform changes, merchants will consider extending the life of their existing technology systems, assessing the market regularly and adding technology upgrades accordingly and gradually.

Anderson pointed out that the issue of the housing market in Canada is a “recipe for stagflation,” and that will significantly stunt growth and technological upgrades for companies. “When they do deploy capital, they want to make sure they’re maximizing their ROI as quickly as possible. And I think that will make them a little adverse to ripping out entire systems and putting new systems in, because of the risk and the timeline associated with those big projects.” 

Trend 3: Headless commerce to become the norm

Headless commerce, an ecommerce model that separates the backend operating system from the front shopping interface, is gaining traction for its speed and agility, and will give merchants an advantage in 2023.

“Headless implementation in isolation will be deemed foolish, so in 2023, top merchants will look at headless within the context of their broader company vision and technology strategy.” said Anderson.

Trend 4: Storytelling is key to a company’s brand

Top commerce brands are expert media producers and storytellers. Merchants can only seek to compete once they start leveraging technology to produce and distribute good content to their channels and shopping interfaces while avoiding the risk of being commoditized.

“2023 will be the ‘Great Differentiation Year’ as merchants look to technology to appropriately syndicate relevant information to personalize the online shopping experiences.” said Anderson

Trend 5: Data flow to become the engineering focus

Merchants will favor vendors that focus on solving one problem and making that solution 10x better than what monolithic platforms offer.

“Most vendors offer an API, yet forward-thinking CTOs know that an API is not enough; data flow to and from the network of individual best-of-breed vendor solutions becomes the key to success. In 2023, shrewd architecture work will implement best practices in this distributed world, and engineering patterns like data normalization, event replays, data transformations, and abstraction will become the norm,” Anderson said. “Finding the right partner as a merchant takes on new technology updates is also important, especially when your human capital needs readjusting accordingly. Merchants should seek to move their talent team in tandem with a system integrator partner that can supplement the work that the internal team does.”

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Ashee Pamma
Ashee Pamma
Ashee is a writer for ITWC. She completed her degree in Communication and Media Studies at Carleton University in Ottawa. She hopes to become a columnist after further studies in Journalism. You can email her at [email protected]

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