What are the best open innovation practices for e-commerce?

Open innovation is a strategy that allows e-commerce businesses to leverage external sources of knowledge, ideas, and resources to create value for their customers, partners, and stakeholders. By collaborating with other actors in the ecosystem, such as suppliers, customers, competitors, universities, or startups, e-commerce businesses can access new markets, improve their products and services, and enhance their competitive advantage. In this article, we will explore some of the best open innovation practices for e-commerce and how they can help you grow your business.

1 Co-creation with customers

One of the most effective ways to practice open innovation in e-commerce is to co-create with your customers. Co-creation is a process of involving customers in the design, development, and delivery of your products and services, based on their feedback, preferences, and needs. Co-creation can help you increase customer satisfaction, loyalty, and retention, as well as generate new ideas and insights for innovation. Some examples of co-creation in e-commerce are: allowing customers to customize their products, using online platforms to crowdsource ideas and solutions, and creating online communities to engage customers in co-development and co-marketing.

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Circular fashion is the next big thing that's going to boost sales volumes. It's going to be bigger than installment payments. Today's consumers - digital natives - want to see an expected resale value during product discovery, so right on the product detail page (PDP) below the current purchase price. It's becoming a key decision making factor. If a designer bag costs $1,000 but its expected resale value is $700, then the final purchase cost for the consumer is $300. That's a much better deal! And of course, resale price data comes from past consumer transactions selling pre-loved products and sharing the data with future buyers. Customer shopping data circulation fuels circular commerce and benefits everyone involved.

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2 Collaboration with suppliers

Another way to practice open innovation in e-commerce is to collaborate with your suppliers. Suppliers are not only providers of raw materials, components, or services, but also potential sources of innovation and value creation. By collaborating with your suppliers, you can reduce costs, improve quality, and speed up your time to market, as well as access new technologies, capabilities, and markets. Some examples of collaboration with suppliers in e-commerce are: integrating your systems and processes to optimize your supply chain, sharing data and information to improve your forecasting and planning, and co-investing in research and development projects to create new products and services.

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Russell Isaacson

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Tech providers can collaborate with retailers by leveraging retailers' real-time signals on consumer behavior to deliver better experiences, whether it's around personalized promotions, merchandise recommendations, etc. Tech suppliers can build the engines that retailers can fuel with their data.

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3 Partnership with competitors

A more radical way to practice open innovation in e-commerce is to partner with your competitors. Partnering with your competitors may seem counterintuitive, but it can also offer significant benefits for both parties, such as sharing risks and costs, expanding your customer base, and learning from each other's strengths and weaknesses. By partnering with your competitors, you can also create synergies and complementarities that can enhance your innovation performance and outcomes. Some examples of partnership with competitors in e-commerce are: forming alliances or joint ventures to enter new markets or segments, licensing or cross-licensing your technologies or intellectual property, and co-branding or co-promoting your products and services.

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4 Engagement with universities

Another way to practice open innovation in e-commerce is to engage with universities. Universities are hubs of knowledge, research, and talent that can provide you with valuable inputs and outputs for your innovation activities. By engaging with universities, you can access cutting-edge research, expertise, and facilities, as well as recruit and train your future workforce. Some examples of engagement with universities in e-commerce are: sponsoring or participating in academic research projects or programs, hiring or mentoring students or graduates, and hosting or attending events or workshops.

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Russell Isaacson

Driving incremental retail sales with Zip
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At Klarna we co-sponsored a hackathon at Wharton's Baker Retailing Center. Seeing the students' creativity and energy was inspiring, and the structured approach ensured their efforts got a proper forum. For a relatively modest investment, we were able to generate valuable brand awareness/preference among an influential group of up-and-coming business leaders. Moreover, we tapped into fresh new ideas that reflected emerging trends among one of our target segments.

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5 Incubation of startups

A final way to practice open innovation in e-commerce is to incubate startups. Startups are agile, creative, and disruptive entities that can offer you fresh perspectives, ideas, and solutions for your innovation challenges. By incubating startups, you can support and nurture their growth and development, as well as benefit from their innovations and learnings. Some examples of incubation of startups in e-commerce are: providing funding, mentoring, or resources to startups, acquiring or investing in startups, and integrating or collaborating with startups.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What are the best open innovation practices for e-commerce?

1

2

3

4

5

6

1 Co-creation with customers

2 Collaboration with suppliers

3 Partnership with competitors

4 Engagement with universities

5 Incubation of startups

6 Here’s what else to consider

Business Innovation

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What are the best open innovation practices for e-commerce?

1

2

3

4

5

6

1 Co-creation with customers

2 Collaboration with suppliers

3 Partnership with competitors

4 Engagement with universities

5 Incubation of startups

6 Here’s what else to consider

Business Innovation

Rate this article

Thanks for your feedback

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