The Future of Retail is Digital Commerce. Is That Really So?
If you’ve been tracking e-commerce news, you would be aware of the media claiming that the retail apocalypse is here. According to the latest Coresight Research Report (June 28, 2019), U.S. retailers have announced 7,037 store closures as compared to 5,864 closures in 2018. However, there are a few interesting trends that indicate digital commerce may not be the nemesis of the retail industry after all.
Let’s ponder over two findings:
- According to the International Council of Shopping Centers, total spend in physical stores for the 2018 holiday season nearly doubled Amazon.com's sales.
- eMarketer reported that average monthly time spent on select direct-to-consumer (D-to-C) retail sites among U.S. internet users increased by 105 percent between October 2016 and October 2018.
On one hand, more and more physical stores are investing in setting up their online shop to become more accessible to consumers and battle it out in large marketplaces that are threatening to wipe out local businesses. On the other hand, seasoned online retailers have realized that digital commerce isn’t a threat to the business at all. They're investing in cutting-edge technology to drive more sales online and optimize their capital cost of operations. Additionally, retailers have also discovered that digital can be a strong enabler for their physical stores. With an engaging online presence, they can now touch customers at different points of their journey and use a combination of web and mobile channels to drive a more robust brand discovery experience.
The future, therefore, isn’t digital or physical. It's a combination of both, which is popularly termed as omnichannel commerce.
An omnichannel approach will help digital retailers provide an engaging and compelling shopping experience for consumers. This will be especially useful in the case of D-to-C brands, as noted in Finding 2 above.
Here's how digital commerce brands can drive an online experience that converts shoppers into buyers, and buyers into brand loyalists.
High-Quality, Robust Product Discovery
There are two aspects of product discovery: relevant search results and detailed product information. The key reasons why shoppers still prefer the physical store experience online are twofold:
- Ease of finding a product, either in categorized shelves or with assistance from a sales associate: Online retailers need to ensure that their shoppers are presented with an equivalently easy experience on their site as in-store. For example, brands like Zara help shoppers make better purchase decisions by asking for details on body measurements as well as provide crowd-sourced information based on what suits a specific shopper’s size.
- Rich product data: The more information a shopper can have on a product, the closer they are to making a purchase. Standard product cataloging may include size and color, but advanced product data enrichment can consist of more information on fabric, cut, style, seasonal suitability, etc. This is especially critical when it comes to product categories such as apparel, home furnishings and accessories.
AR and VR Experience
Using augmented reality (AR) and potentially virtual reality (VR) solutions, online retailers can recreate the in-store experience to a great extent. Ikea, for example, used Apple’s ARKit to launch Ikea Place that enables shoppers to use their mobile device’s camera to visualize how Ikea furniture would look in any given space. Accurate application of AR can be a considerable leap in bridging the gap between physical and online stores as it enables a shopper to feel more confident about making purchases that can’t be easily returned.
Personalization and Hyperindividualization
Personalization typically targets a segment of people based on their geography and demographics. To compete with the in-store personalized experience, online retailing is rapidly moving towards hyperindividualization, which treats a shopper as an individual and not a part of a user segment. This means that a shopper gets recommendations based on their specific interests and needs. Hyperindividualization can be critical in driving a higher level of user engagement.
The future lies in providing an omnichannel shopping experience that enables a customer to transact between the online and offline worlds seamlessly. More shoppers are browsing on mobile, yet purchasing on desktop. Also, some brands now offer purchase online and pick up in-store. This kind of flexibility and cross-platform interaction speaks well to an increasingly tech-savvy demographic.
McKinsey Research and Harvard Business Review conducted a study of 46,000 shoppers and discovered that a majority, 73 percent, used multiple channels during their shopping journey and were omnichannel customers. Retailers such as lululemon, Best Buy and Ikea have nailed this strategy of cross-platform sales, and many others are joining in rapidly.
Clearly, the future of retail commerce entails digital and physical working synchronously to build a returning base of brand loyalists.
Roland Gossage is CEO of GroupBy Inc, a data-driven e-commerce solution.
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