How the IoT is Merging Online and Offline Retail Experiences
Before, we had online retail and offline retail, and never the twain shall meet. Now both worlds are merging into each other, sped on by the increase in mobile usage, which now represents 60 percent of the time spent online. It’s no longer a question of online vs. offline; consumers want to be able to shop in-store or online, whenever they want, wherever they are.
Previously, it was the accepted wisdom that offline retail needed to go online, but now there’s the reverse trend, too, as many online enterprises are realizing the benefits of having an offline presence. Savvy retailers are gearing up to fuse their online and offline offerings to give customers a seamless shopping experience.
The Internet of Things (IoT) is playing a key role in the blurring of lines. It’s enabling online retailers to reach out beyond screens to touch people’s everyday lives, while brick-and-mortar retailers are beginning to use the IoT to offer consumers personalized and enriched shopping experiences. This is giving traditional store retailers the ability to finally fight back against showrooming and the growing reach of online retail.
Even online giants are now opening brick-and-mortar stores, like the one Amazon.com recently announced for New York City. Amazon isn't alone, as e-retailers like Warby Parker, BaubleBar, Birchbox, and Frank & Oak have also opened physical stores.
Coming Out From Behind the Screens
While online retail always had an edge in creating personalized shopping experiences, until recently it was never able to pass beyond screens to touch consumers directly. This has changed. Amazon is leading the charge when it comes to grabbing the IoT bull by the horns.
The new Amazon Dash button allows consumers to use a device the size of a key ring to order things online. The internet giant also recently launched Amazon Home Services, an on-demand installation and handyman service. With Amazon’s recent acquisition of the IoT solutions developer 2lemetry, it's sure to develop more ways to integrate the IoT, including possibly facial recognition, into its retail offering.
However, Amazon isn’t content just to have cornered the online consumer market. It also recently launched a developer program that allows companies to build reordering buttons directly into their own hardware. This move ensures that other online companies will soon also be moving into IoT territory.
A Fusion Between Offline and Online
Perhaps the biggest winners from this "merging" trend are brick-and-mortar stores, which looked set to lose out as the internet started to take bigger pieces of the retail pie. However, while showrooming continues to grow, it's been accompanied by the more recent phenomenon of webrooming, where consumers research products online but prefer to buy them in-store .
Perhaps the biggest factor in this swing is the digital move from desktop computers to mobile devices. An InReality survey revealed that 75 percent of shoppers use their mobile phone in-store, while 25 percent of those shoppers go on to make a purchase on their mobile devices while in-store. This trend has been a determining factor in encouraging offline stores to adopt technology to increase customer engagement.
Offering Customers More Personalized Journeys
Brick-and-mortar retailers have a golden opportunity, but also a challenging road ahead. Ninety-four percent of all retail sales in the U.S. were made in brick-and-mortar stores last year. However, it's online experiences that are driving consumers to expect more from their shopping journeys. Coming from digital shopping experiences, they want and expect personalized information and offers, the possibility to make product and brand comparisons, and a smooth and enjoyable transition throughout the shopping journey.
The question now isn't just about trying to maximize sales using the IoT, but more about how to leverage it to improve customer experiences. That means looking beyond the current scenario of providing money-off coupons through beacons.
Experiences Beyond the Store Door
With the advent of the IoT, brick-and-mortar stores have the opportunity to offer consumers omnichannel experiences that neither start nor stop at the store door. Bloomingdale's is one of the forerunners, placing iPads in smart changing rooms that allow shoppers to request different sizes and colors.
In Spain, Leroy Merlin has become the first retailer to use the Oculus Rift virtual reality goggles, allowing consumers to virtually visit 50 different models of kitchens. They then later receive an email with photos and information about their favorite kitchen units. The technology not only saves space and improves customer experiences immediately, but also gives Leroy Merlin valuable data about customer preferences, which can be used in social media and email marketing campaigns. The campaign is at the center of a move to a full omnichannel strategy by year end.
How the IoT Can Drive Better Customer Experiences
The IoT is empowering brick-and-mortar stores by giving them the same access to data that online stores have. It’s also enabling them to track and improve the customer journey. This is particularly valid in the purchase of big-ticket items, whereby a store’s CMS can track when people buy things, when they need servicing, and when they might be ready to purchase a replacement. With useful data like that, retailers can tailor personalized offerings to their customers, while also getting insights into what sells and what doesn’t.
While stores are experimenting with different ways of using the IoT, beacons are at the forefront. Although they were initially seen as a way of offering promotions to customers, beacons are now perceived as a way to offer richer and more personalized customer journeys. They allow retailers to collect data that enables them to offer customers relevant experiences both in-store and online, along the lines of “Hello Katie, the dress you looked at online is now 20 percent off, and available in two additional colors.”
Retail operations that succeed in using IoT technology to develop stronger relationships with their customers will find that both their online and offline businesses will grow. Retailers need to stop seeing themselves as primarily online or offline, but look at when and how their customers need to interact with them, and to act accordingly.
Boris Kraft is the co-founder and chief visionary officer of Magnolia International, a Swiss-based open source CMS vendor.
Related story: Revolutionizing Customer Service With the Internet of Things