The Rise of 'Phygital' and its Impact on E-Commerce

As more and more people are buying products online, e-commerce businesses are looking for creative ways to differentiate themselves from competitors and to engage shoppers. At the forefront of these approaches is “phygital,” an omnichannel mode of retail shopping that presents an opportunity to create a more immersive, engaging and interactive customer experience. Retailers from Sephora to Amazon.com are utilizing phygital strategies to reap benefits, including increased conversions, personalized customer journeys, and boosted brand loyalty.

Phygital’s Growth and Value for E-Commerce

So what is phygital? Phygital is an innovative marketing tactic that combines the best of both physical and digital features, a hybrid of online and offline shopping, to create a cohesive customer experience (CX). It’s dynamic in blurring the boundaries and creating its own distinct retail experience, one that's instant, connected, and engaged.

There’s value in e-commerce businesses adopting a more phygital strategy, as shoppers make purchases both in digital and physical spaces. In 2019, 87 percent of shoppers began their product search online, so it would be foolish to neglect those channels. On the other hand, when deciding which retailer to buy from, 70 percent of those surveyed said the ability to shop in stores was important. There’s shopper demand for both online and offline purchasing options, as well as interactive experiences. This is where phygital thrives, in the in-between, by providing a holistic approach to communication that humanizes the customer experience. Creating a phygital strategy where the needs and wants of shoppers are prioritized leads to a more immersive and engaging CX. 

Let’s Get Phygital: 5 Strategies for Incorporating Hybrid Practices

1. Introduce buy online, pick up in-store (BOPIS).

BOPIS allows shoppers to make purchases more efficiently without the burden of selecting products from shelves, waiting in line while socially distanced, and checking out. This is a particularly strong option for avoiding extended shipping delays due to current supply chain issues.

2. Launch pop-up stores.

Pop-up stores are a great option for online brands to showcase their products in person to potential customers and drive traffic to their online site. The temporary nature of pop-up shops drives fear of missing out (FOMO) for local shoppers and incentivizes them to buy. E-commerce eyewear brand Warby Parker was able to expand into 90 permanent retail storefronts after initially testing pop-up stores. Whether online or brick-and-mortar, there are few better ways to create buzz for your brand, connect with your customers in person, test new products, experiment with expansion, and receive real-time feedback from shoppers than by launching a pop-up shop.

3. Create interactive mobile app experiences.

Mobile apps are a great way to engage customers and connect them to your products. Make the shopping experience more personalized and interactive with customized experiences, such as virtual try-ons. Sephora allows app users to virtually test makeup shades through technology called Virtual Artist. Allbirds allows for app users to try on the brand's shoes virtually. Virtual try-on features make shopping more accessible to those who otherwise wouldn’t be able to see the products for themselves in person. Shoppers can test out the products before committing to a purchase, either online or in-store.

4. Use augmented and virtual reality.

In the e-commerce space, augmented reality (AR) and virtual reality (VR) are phygital practices that not only have large growth predictions, but also have direct application to retail. From 2021 to 2024, the AR, VR, and mixed reality market size worldwide is expected to grow by $266.2 billion. The projected compound annual growth rate (CAGR) of AR and VR use worldwide from 2018-2023 is 138.7 percent for retail showcasing. A great example is Nike, which partnered with Hovercraft Studio in early 2021 to use AR QR code scanning technology to create Oregon’s Smith Rock State Park at its flagship New York store, complete with an interactive mobile activity checklist, geofencing, and digital maps. This phygital effort was created to tell a story surrounding Nike’s new line of outdoor products, ACG HO20 sportswear.

5. Implement seamless checkout processes.

Phygital is all about making the customer experience more fluid and seamless for shoppers. This includes all stages of the customer journey, from product discovery to purchase. Make sure to consider ways to make the purchase process easier. For instance, you can integrate your mobile app with digital payment options, such as Apple Pay and Google Pay. Self-checkout devices in stores are another example of phygital practices that are more mainstream. Shoppers visit the retail location in person, but use a digital tool to check out, creating a more efficient and contactless shopping experience.

Is the Future Phygital?

Blending physical and digital elements of retail combines the best of both worlds, but to what extent should phygital practices be widely adopted by e-commerce brands in the future?

When considering how to implement phygital strategies, it’s important to consider the perspective of the shopper. After all, phygital is all about creating seamless customer experiences. The concept of customer experience is linked to the topic of customer journeys, or the steps the shopper takes in their path to purchase. And while brick-and-mortar retailers improve customer journeys by streamlining a store’s layout and e-commerce journeys are improved by removing obstacles and utilizing smart promotions, phygital marries the best of both worlds — giving consumers a more creative and engaging shopping experience.

Chemi Katz is the co-founder and CEO of Namogoo, the world's first Digital Journey Continuity platform, helping over 1,000 unstoppable brands shape their customer journeys to fit each and every shopper's needs.