First, let’s agree that e-Commerce, m-Commerce, s-Commerce, Catalogues, Order-by-Phone, etc. are all in the end different channels for Commerce, the act of selling something by any legal means to someone and making a profit out of it.
The digital revolution is touching every single market of the old economy. After music, cinema, the retail market has been in a deep mutation for the past 10 years.
Amazon is seen today as the one to kill when it comes to retail, which is the main threat to any traditional retailers mutating slowly but surely from a post-industrial revolution century to the digital world, where the leaders are Wal-Mart, Carrefour and Tesco, and where new players can take 5 to 7 years to grow from zero to billions in revenue. Welcome to the new world without any space and time limitation to sell anythings, anywhere, anytime.
We’re open 24H – WorldWide
The way customers used to buy stuff by going ONLY to stores is dying at an increasing rate since 2004. Customers must no-longer be considered as market segments isolated in those silos while completely missing that the customers behaviors have evolved and still is, as digital native live in a 24/7 opened world with no limitation of time and space, moving to the multi-channel experience.
In 2008, study showed that in the past, consumers typically obtained all their channel services from a single integrated channel at all stages of their decision process, but in the last decade, the use of different channels at different stages of the decision process has become popular. It is straightforward that customers have rapidly expanded their channel experiences and preferences beyond traditional channels (such as stores) and they expect the company with which they do business with to have a presence on all these channels (Blattberg, Kim and Neslin, 2008 p. 636).
It means that a daily customers buying experience goes from dropping a few coins to buy a coffee and a croissant in the morning, to pay his parking ticket with a mobile dedicated apps, to order his grocery online with his Visa and then pick it up at the drive-in after work, to buy music with a single password, or to buy virtual goods like tickets for the next U2 gig trough a QR Code, or even scanning the barcode of that bottle of milk to add it in his next grocery order.
Traditional retailers have evolved and are now providing a complete cross-channel experience from acquisition to delivery with a full range of services to accommodate the customers’ buying experience.
Still, retailers have yet to finish their mutation, they’ll have to revamp the entire sales channels, and not only implement the digital channels over their old and traditional business.
I deeply believe that retailers will have to provide a fully optimized omni-channel customers experience that will match the following points to maximize their ROI in the next 5 years:
- Unification of dispatched inventories to allow cross-selling channels. We have that specific items your looking for in our warehouse or in that store around the corner, do you want to pick it up or have it delivered somewhere? Traditional Point-of-Sales (POS) must also act as shipping warehouse to provide strategic services like 1h-delivery to your door.
- Traditional stores, only in heavily crowded physical spots, with a one-to-one personalized customers experience, thanks to your customer history in POS, but with also Web-to-Store, Scan&Save, Express Checkout, Click&Collect experiences. We all have a favorite restaurant where we’re going to on a regular basis. The owner calls you by your first name, knows your favorite table and your tastes. He always has a little something free for you on the side to enhance your experience, and will always be friendly on your checkout options. But he also knows that you’re mostly going to choose the same things days after days. eCommerce offers all kinds of shipping methods but 82% of the customers will always choose the regular one (Source: Poste Canada); as to the fact that they will be offered the possibility of shipping to different addresses, they will keep the same address 83% of the time. By better knowing and addressing their customers with an omni-channels experience, retailers will have a better knowledge of their customers behaviors and will be able to address them better, and with an immediate return on their investment by increasing in-store sales as much as online sales, Scan&Save (coupons 2.0) in your drive-to-store strategy, also providing a Store-to-Web experience letting customers have more info on the product like reviews-comments-notations-benchmark (infos already provided on the eCommerce platform of the retailer), Self-checkout process or through any salesperson in the shop, see the Apple Store, HMV, Sephora, Neiman Marcus, Sport Chek, experience.
- Showrooms, the question every traditional retailer should have is why maintaining over-expensive traditional stores where there isn’t huge natural crowds around as there are in shopping centers? Customers will only be show-rooming and then buy somewhere else, online it’s called Browser Shopping and it’s also the 1st case of Abandonment Carts (99% dropout rate on 1st visit – SeeWhy 2013). The evolution is to only maintain the minimum inventory locally, in more small stores, to let clients see the different products, try them on, see what the quality of the product is. This process is mandatory for some customers. But in Showrooms, retailers can also provide enhanced and unique customers experience. Checkout what the great platform LightSpeed Retail have built over the past 8 years, or the customers experience at Les Quatres Temps, Hoinster, Bonobo or House of Frazer. Don’t forget Web-to-Showroom strategies either, start online with your virtual personal shopping assistant, then check-it out at the showroom.
- Pick-up points, is the new hot thing in Europe and Asia. Not sure to see it growing that big in North America though, as there is one thing they don’t lack: space ! But in NYC, LA, Boston and all major cities, retailers could provide their customers with that solution. In 2000, I took the lead at AligaStore, I re-oriented the strategy to a Click&Collect solution for books, CDs, DVDs in 1500 book stores in France. Looking for a book? There’s one at the book store around the corner of your location! Pay now and pick it up when you want at the cashier. Can any shipping company beat that delivery deal?
- Pop-up Stores & Virtual Stores, well that’s my favorite part in this strategy. I like it so much that it has its own paragraph!
But as of today, traditional retailers are mostly only followers and not innovators!
We’re open 24H – WorldWide – Anywhere on/off line
Within five years of its launch, in July 2008, Yihaodian has increased its selection from 3,000 stock-keeping units to over 2 million, from 1 fulfillment center in Shanghai to 17 in 7 cities, revenue from 4 million yuan ($650K) to over 6 billion yuan ($1billion!!!), and employees from 40 people to over 9,000.
Yihaodian, which started as an online supermarket by offering mostly fast-moving consumer products, now boasts categories ranging from consumer electronics, apparel, books to mom and baby products.
What was their secret sauce?
Virtual Stores and QR Codes, exactly 1000 Virtual Stores. And that strategy put them #1 above Carrefour and Tesco in China!!
Pop-up stores are unbeatable for user experience and when it comes to put stores where it’s too crowed, like a in subway station where people have nothing to do but to wait for the next train. Thanks to QR Code, yep those good ol’QR Codes that a lot of people called dead even before it could make it to mass market, customers are now able to shop like in any grocery, and the « funny » thing is that Tesco used that strategy to grab the #1 place on the South Korean market in 2012. But still when it comes to provide more and more items Pop-up stores are limited compared to Virtual stores.
The campaign was very successful, with more than 10,000 people scanning the QR codes. New customer registrations increased by 76%, and online sales rose by 130%. Wondering when was the last time and eCommerce saw those figures? PayDragon is trying this way too in the US and sees revenue grow 35% per week with a customer acquisition price at only $2 and a touch of virale marketing. He’s CEO said that he expected to hear that the app was convenient, but he didn’t expect to have people to say the app is addictive…
QR Codes or Barcodes are bringing the stores to shoppers wherever they are IRL!!! Now online stores can be linked straight to customers when they’re offline « in the real world ». Pop-up stores are great, the ROI is unbeatable compared to any POS. But Pop-up stores and Virtual stores are only the beginning…
Traditional retailers have been embracing the digital world, now the digital world is embracing the real world. Connected SmartPhone are common things nowadays. Remember the iPhone was only born in 2007. Pop-up store is only the tip of the iceberg, it’s time to digitalize the real world and make it a giant POS. Imagine a world where you see an advertising for the latest XYZ famous brand of jeans, sadly there’s no store selling that brand in Canada, but the US eCommerce platform delivers to you door ; that printed advertising can be in a magazine, on a wall in the subway, at the bus-stop, at the vending machine, at the pop-up store, a barcode printed directly on the product, but also could be in a radio or TV commercial or a NFC signal… All of these points of contact are opportunities to grab that little momentum where buying is still 81% impulsive, before it becomes a thoughtful act where it’s going to be harder to close the deal. It’s also an occasion to A/B-test your sales channels. And that’s exactly what the Chinese eCommerce leaders are doing, transforming any points of contact with their customers in selling opportunities.
China was the Factory in the world, now they’re the best innovators in eCommerce. Never forget that Chinese are known to have invented commerce.
As of today, the most innovative leaders in omni-channels retail are Wal-Mart, Carrefour and Tesco.
I’m wondering when an eCommerce leader will buy one of those traditional retailers who have struggled to adapt so the business can be a valuable asset to acquire at the end of the road?
The next challenge for those new eRetailers will be to uniformise all the payement methods and to come up with the same omni-checkout experience from any supports and devices.
But first, they have to fix the checkout process -which didn’t evolve for the past 30 years and is still BROKEN, not performing right. Could you name any other store where 2 clients out of 3 willing to buy, walk out of the store without buying BECAUSE of the checkout process??!!???
That will be the subject of my next post.