eCommerce goes local, digital transformation of the entire shopping experience has begun

Alibaba’s business model includes physical and digital trade as well as the digital transformation of retail business. Their “new trade” business model has a gross trade volume target of $1 trillion by 2020. In a world of dying shopping streets and the defeat of retailers against eCommerce giants, Alibaba’s focus on both channels is refreshing.

Something Amazon is striving towards, too, with their multi-billion dollar acquisition of Whole Foods and their plans to expand its Amazon Go stores. While the company is achieving astounding revenue with their eCommerce business it’s easy to oversee that eCommerce in general accounts for a relatively small share of total retail sales. One of the strongest categories for eCommerce is apparel and footwear, where it’s share is still less tan 15% of total revenue, according to the latest “Office for National Statistics Report”. For food, it’s just 5%.

As in any industry mid-disruption, those retailers who embrace the changing reality and smartly adapt to it may not only survive but thrive.

Jon Polin, Cofounder and President, StorePower

The simple truth is that consumers still enjoy shopping in the store. Not just older generations who grew up without online shopping. 98% of Generation Z consumers shop in the store, with more than two-thirds (67%) choosing offline shopping as their preferred method of shopping, shows a study by IBM and the National Retail Federation.

Some years ago there was the fear that the transition from physical to digital shopping would be linear and one way only. But it’s a dynamic development, the digital transformation of the entire shopping experience. It all started with multichannel and morphed into omnichannel, which combines physical and digital paths. Digital best-practices and innovation are applied to the online and the offline world.

So how can you follow this idea and be part of the new era of trade?

Optimization to the right goals and numbers

Marketing professionals regularly focus on optimizing digital results, such as clicks and conversions, to guide visitors to the company’s Web site where ultimately the sales process can take place. In reality, consumers do not necessarily buy products on the company website. One would probably not go to the website of Unilever or Persil to buy laundry detergent, or on the websites of Mondelez or Cadbury to buy chocolate eggs.

These brands are not interested in clicks and online conversions. They want to know if their digital impression has enough effect and their product first comes to the customer’s mind when they go through their local Tesco or Asda market. While this viewpoint is most applicable to FMCG products in supermarkets, it is equally relevant to fashion or beauty products available in department stores or third-party stores.

Rather than boggling down on clicks and online conversions, brand marketers should focus on audience data that reflects their individual buying behavior and thus determines the effectiveness of their real-world advertising. Does your digital marketing strategy increase the actual number of customers on site in addition to the website traffic and in the end these sales actually generate sales?

The “likely shop buyers” as a target group

In the digital world, the focus is on visibility. Understandably, manufacturers do not want to spend a budget on impressions that have no chance of being noticed by consumers at all. If you apply this concept to the offline world, then brands have to invest in impressions that are clearly aimed at customers who actually enter the business with the respective products.

Marketers use a variety of methods to get customers into stores. The most obvious, Geofencing, uses location data from smartphone users who pass a particular store and tries to lure them into the store with personal messages. Geofencing, however, has many limitations. Initially, the target audience is quite limited as it is only used by customers who are close to the business. However, the fact that someone walks, drives or otherwise stays close to a store does not necessarily mean that he wants to shop there.

Rather than just relying on the information that a potential customer is nearby, companies should relate location data to other information to understand who the customer is - not just where they are. By determining the neighborhood, for example, it is often possible to make a statement about the household, the income situation and about the shopping possibilities in the respective area of ​​a customer. These insights can be supplemented with additional details. For example, demographic data, surfing behavior, and online purchase intent indicators can be used to create 360-degree profiles that connect online and offline activities without making the customer personally identifiable.

Such detailed profiles allow brands to target customers who tend to shop in a particular store while ignoring non-interested customers who happen to be in the area. As a result, they do not have to wait for the consumer to pass the store, and they can promote the right products in advance, attract attention, interest, and purchase intent for specific products even before customers enter the store.

It’s only logical that topics such as the growth of eCommerce and the decline of traditional retail stores will lead brand marketers to focus more on the digital market. Before that, however, they should take a step back and become aware of how the modern consumer buys today. Marketing professionals can gain a deeper understanding of customers while delivering messages that drive online and offline actions alike: through an omnichannel approach that encompasses both digital ad developments and audience data - while not forgetting that most conversions still take place offline.

Source: FutureOfRetail
Image source: HMY

About the author
 

Patrick Queisler is a product manager and designer with a UX background at snabble. He has worked with design agencies and international corporations as well as with small startups. He is always looking for innovative ways to reduce complexity for customers and enhance their experience. Follow @queisler on Twitter.

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