Like startups, legacy retailers should leverage existing technologies instead of investing in costly in-house research and development. Walmart is an example of a large retailer that does it well.

Gautam Daswani, director of luxury business development at Talos Digital

Ecommerce sales have been steadily increasing for over a decade. Still, the arrival of the novel coronavirus outbreak and subsequent lockdown measures worldwide have helped drive a surge in online sales in recent months.

The percentage of total retail sales attributed to ecommerce has risen from 5.1% in 2007 to 16% in 2019, with ecommerce accounting for more than half (56.9%) of all retail gains last year. Due to the pandemic, experts are projecting ecommerce sales will jump 18% in 2020.

Despite these figures, some legacy retailers are still dragging their feet on adopting ecommerce and, more importantly, embracing an innovative and agile approach to the industry.

Since the beginning of the year, large retailers like Pier 1 Imports and Victoria’s Secret have been shuttering hundreds of bricks-and-mortar stores or declaring bankruptcy, with $12.3 billion erased from the market capitalizations of J.C. Penney, Macy’s, Nordstrom, and Kohl’s.


Simultaneously, many startups have fared well amid the so-called “retail apocalypse” due to their innovative and agile approaches to ecommerce. For example, Shopify has seen stock prices soar as merchants migrate to the online platform during COVID-19. Gary Vaynerchuk’s Empathy Wines have reported sales resembling that of Black Friday or Cyber Monday for its subscription-based wine business.

It’s s time for decision makers at large retailers to approach commerce strategy startup entrepreneurs. That gives them the best chance come out less battered on the other side of this pandemic than they otherwise could be. Here are three traits they should follow that startups do well.

Leverage easily accessible, cutting-edge technology 

Historically, bleeding-edge technology was the domain of large enterprises and governments. Nowadays, thanks to innovations in open-source and cloud computing, startups have greater access than ever before to powerful technology like artificial intelligence (AI) and big data analytics. And they’re taking advantage of it.


According to a report from accounting firm KPMG, “Lower costs and accessibility to the building blocks for technology startups to launch is leading to more entrepreneurs tackling billion-dollar markets than at any time in history.”

In the ecommerce space, smaller online sellers that leverage open-source ecommerce platforms like Adobe’s Magento Commerce can quickly and easily deploy powerful tech tools to help them boost their online sales. A recent example was Magento’s launch of its AI-powered product recommendation tool. Like startups, legacy retailers should look to leverage existing technologies for their ecommerce operations, instead of investing in lengthy and costly in-house research and development. Walmart is an example of a massive retailer that does it well.

In recent years, the retail giant has been eagerly acquiring artificial intelligence startups to leverage their technologies for their fledgling ecommerce platform. Last year, for example, Walmart bought Aspectiva, an AI startup that makes product recommendations based on user browsing behavior. These investments seem to be paying off.

Since it purchased Aspectiva, Walmart has tightened the gap between itself and Amazon for online sales in the U.S., with Walmart accounting for 5.3% of U.S. ecommerce sales and Amazon accounting for 38.7%—a drop in market share from the 50% that Jeff Bezos’ company held just a few years prior. Walmart and other legacy retailers would be wise to continue to leverage cutting edge technology to help take market share away from the Seattle-based ecommerce giant.


Experiment with user experiences to keep up with shifting consumer demands 

It should be no secret to marketers at large retailers that buying journeys shift as new generations access novel technologies. More and more, the inspiration for purchase for millennials and Gen Z customers comes from the internet—either via social media, search engines, or ecommerce marketplaces.

According to a survey from global advertising agency Wunderman Thompson, most respondents (52%) said they got the inspiration for purchases from, 51% said search engines. In comparison, just 15% said they were inspired by browsing in brick-and-mortar stores. However, the shift to online inspiration for purchasing decisions has happened, and many startups are innovating the next wave of technologies that will help inspire purchasing decisions. 

Decorilla, an online interior decorating service, launched virtual reality (VR) and augmented reality (AR) tools on their platform to allow customers to “walk around” in their room design before they purchase furniture or make expensive structural changes. An example of a legacy company doing this well is British online fashion and cosmetics retailer Asos, which recently announced its “See My Fit” AR tool powered by Israeli startup Zeekit. The tool allows customers to see how a particular garment may fit them considering the cut of the fabric and the person’s body type and measurements. 

A recent survey from Fatma Baytar and the Body Scan Research Group found that: “While not as effective as physically trying it on, the researchers found that AR boosted participants’ attitudes toward the garment, potentially improving the experience and efficiency of online shopping.”


Another area in which startups are adopting novel approaches to the customer journey is the use of voice-activated ordering technology. Mass adoption of this technology relies on mass adoption of smart speakers and voice assistants. But, a recent survey of people who use smart speakers and voice assistants showed that almost all respondents who own smart speakers mentioned using voice assistants, including for shopping. Additionally, 73% of Gen Z shoppers in an Accenture survey said they’re currently using or can’t wait to try voice-activated ordering technology. 

Large retailers should aim to be as creative as startups with their approaches to influencing the customer journey and make bets on the next generation of B2C technologies that improve the customer experience. 

Take an aggressive approach to the market

When Amazon, the world’s most successful ecommerce company, was starting up in the late 1990s, it heavily reinvested all profits into expanding its market share at the expense of the company’s perceived value. Reinvesting heavily into capturing market share and not taking profits out of the business is a tactic used by almost all startups. Uber is perhaps among the most famous for reinvesting its rideshare profits to expand into emerging markets around the globe. 

Larger retailers—especially luxury brands accustomed to high profit margins—shouldn’t rest on their laurels and be comfortable with the profits they have. Instead, they should keep a startup mentality and be willing to lower their profit margins when entering the ecommerce space to capture more market share.


The best example of a large company doing this today continues to be Amazon, which continually invests in companies to snatch up market share—most notably in 2017, when it purchased Whole Foods for $13.7 billion to allow entry into the grocery market.

But the company’s biggest U.S. retail competitor, Walmart, is also investing heavily to re-capture online market share from Amazon. Since acquiring ecommerce startup in 2016, Walmart’s stock price jumped to 53% in 2019 and the company’s US online sales increased by 40% in 2018, according to Recode. Despite this, the company still reported losses in its ecommerce department. But that’s OK! Large retailers must understand, as many startups already do, that making long-term bets on capturing market share online will pay off in the future—as it has for Amazon.

With the novel coronavirus pandemic accelerating consumers’ shift online, legacy retailers must double down on ecommerce investments. To be successful, they must adopt startup mentalities that allow them to be quick and agile when leveraging new technologies and experimenting with creative user experiences. Additionally, they must take the startup approach to aggressively capturing market share, sometimes at the sacrifice of initial profitability. 

Talos Digital is a software, ecommerce services and blockchain advisory firm.