Retail used to be about putting up your shingle and offering your wares to the masses. Success was built on scarcity and, if you had the right selection, price and service, customers would line up at your door.
Then eCommerce came on the scene, and retailers braced for disruption. Scarcity was going to be replaced by abundance. Any product a shopper could want would be just a click away, the era of bricks and mortar was finished.
Fast forward to 2012, and eCommerce hasn't been as disruptive as everyone assumed. According to the U.S. Census, eCommerce still only accounts for less than 6% of retail sales. Inured to cries of wolf after so many years, many retailers have put up a web site, called it a day and
Not so fast. Digital technology has disrupted shopping in ways no one foresaw just a few short years ago. The new world of digitally-enhanced shopping is a battlefield that puts retailers, brands, and technologists into fierce competition. Shoppers take smartphones with them to the store, putting the best information the Internet has to offer within reach at any moment. Every piece of media can have a digital checkout embedded in it, and users are accessing content from devices ranging from smartphones and tablets to cars and TVs.
A New Omnichannel World
With digital opening up new opportunities to integrate technology into the shopping experience, what can marketers do to stay ahead of the curve and win the future of shopping?
The answer lies in what Daniel Rigby calls the "Omnichannel Organization." A purchase, after all, is more than a singular event, but a series of touchpoints that result in a sale. Consumers often browse online and purchase in-store or vice versa.
So the question is no longer one of e-commerce vs. traditional commerce, but one of how digital technology can be deployed to improve the overall shopping experience. Consumers are already seeking tools to save time on travel and save money on gas when going out, and the explosion of new digital services make it where they can find tools to save time and money in-store as well. Brands need to get ahead of creating tools and services that make it easier for consumers to feel more confident in their purchase decisions.
We'll explore 5 major digital shopping trends that you'll need to take advantage of to stay ahead of the future of shopping.
Setting up an attractive storefront used to be all it took to drive foot traffic, but nowadays people will check an app like Yelp! or Foodspotting before even walking in. Whereas word of mouth used to be confined to offline conversations, digital word of mouth is instantly accessible and lasts forever--that bad review about a rude waitress from a year ago may still be harming your business today.
The Internet is filled with great information about products, finding what you truly covet is becoming more difficult as information overload turns the Internet from friend to foe unless you know where to find reliable recommendations that cut through the noise.
64% of Millennials say personalized recommendations based on their Facebook profiles are helpful because there is too much information out there.
Recommendation sites and apps have quickly become a way for customers to discover and share reliable information about places and products. 40% of consumers rely more on online recommendations from others than marketing messages from retailers. Two primary approaches to discovery have emerged: social recommendations and personalized recommendations.
Social recommendation services focus on recommending services or goods based on what people whom users trust have recommended in the past. These social recommendations can come in many forms: Likes, tweets, blog posts, and other user-generated media. Friends and family serve as filters, marketers, and salespeople.
New social apps are revamping recommendations. Pose is an app that makes it easy for mobile users to post photos of their wardrobe and get feedback from friends. People can also follow friends and tastemakers to discover new looks.
Foodspotting has emerged on the scene as a simple tool for recommending food. Users snap a photo, tag a location, and review the food from the app. People can easily discover new meals nearby just by flipping through photos.
Many people don't like the things their friends like, though, which puts a limit on the effectiveness of relying on friends and family recommendations. Personalized recommendation services primarily filter goods and services based on a user's past behaviors compared to the past behaviors of similar users.
For example, as you rate movies you watch on Netflix, an algorithm is comparing your rating to those of others who have rated the same film. Netflix then recommends a movie based on what those similar to you have also watched. The same idea holds for Amazon.com. The site is constantly recommending what "people like you" have purchased.
As users reveal new data like their location, their mood, or their budget, personalization takes on a new meaning. Leveraging these new data sources creates new opportunities and obstacles for marketers. The good news is that with better user data, recommendations are more relevant and personal, providing new ways to expand CRM efforts into social and mobile media.
If digital recommendations aren't helping drive sales, it may be time to turn to another traditional tactic with a digital twist: digital couponing.
We know coupons can drive sales. Digital couponing presents an opportunity to drive sales while also building long term engagement with shoppers. Digital makes it easy to use coupons as a platform for building and growing your online audience from couch to shelf while expanding your direct marketing database.
Digital print-at-home coupons have given rise to a new breed of coupon clippers that use personal printers instead of newspapers to get their coupons. Many grocery shoppers now rely on sites like Coupons.com to discover great coupons before they head out to the store.
Smartphone adoption has also made digital coupons more appealing to consumers as deals can now be targeted directly to a phone based on time and location. The growth of digital couponing has become entrenched as an important aspect of digital marketing to online consumers. A survey in 2011 found that 45% of people who engage with a brand on social media are primarily seeking deals and discounts.
Brands like Pretzel Crisps and Jimmy Dean have found innovative ways to use digital couponing to boost brand awareness and drive trial. For example, if shoppers shared Jimmy Dean coupons with 3 friends, they'd get a deeper discount. Pretzel Crisp "like-gated" its coupons by only making them available to people who liked the brand on Facebook.
By using this social couponing strategy, Pretzel Crisps was able to go from less than 500 fans in June 2010 to more than 150,000 fans within a few months. Jimmy Dean was able to get a 64% referral rate promoting the social coupons with the deeper discount. This approach relies on influencer referrals. By providing valuable content to fans, brands trust that influential followers will spread their messages for them.
New social services have altered the marketing landscape by offering new twists on deals. The meteoric rise of services like Groupon and LivingSocial have paved the way for new entrants into the daily deals space like Google Offers and Fab.com. Groupon has even partnered with Foursquare to make it easier for users to discover and redeem deals right at the point of purchase.
The smartphone is increasingly used to discover and save digital deals. While there were only 13.3 million Americans using mobile coupons in 2010, that number is expected to surpass 35.6 million mobile coupon users by 2013. Apps like The Coupons App and Coupons.com make it easy to save store loyalty cards and digital coupons in one place, removing the need to keep track of membership cards and printed coupons. Placecast enables merchants to push time-sensitive deals to nearby smartphone owners whenever store traffic dies down, optimizing the performance of a store's operating hours.
Mobile couponing has also given new life to an old payment technology: the credit card. AmEx has recently partnered with Foursquare to make deal redemption quick and easy, removing coupons entirely by applying the deals to the user's statement at the end of the month. Swipely and LevelUp are other companies choosing to build on the more than 170 million credit card holders in the United States by linking credit cards to their services to simplify deal redemption.
Consumers are being driven to stores thanks to recommendations and digital coupons, but sometimes you just need to close the deal. Digital also creates new opportunities to act on recommendations and deals by putting the checkout in some unexpected places. With that in mind, we'll move on to embedded check-ins.
Today, practically every piece of digital content can be turned into a checkout. The point of purchase has flattened, making it possible to turn an image or a video into a direct marketing vehicle.
YouTube popularized embeddable content by making it easy to copy and paste code to put a video in any website or blog, and now checkouts can be embedded in media just as easily.
By using services like Flite, brands are able to embed checkouts in rich media ads, eliminating the steps between awareness and purchase.
Liveclicker adds checkouts to a brand's online videos, and other video commerce services are making it easier than ever to turn a YouTube channel or brand website into a solid Home Shopping Network alternative. The concept even expands into images thanks to in-image checkouts enabled by companies like Thinglink, Stipple, and Luminate.
In 2011 Facebook emerged as a new e-Commerce platform that brands started taking seriously. Facebook apps make it possible to set up storefronts right in a brand's Facebook Page. Moontoast is a company that makes it possible to embed checkouts directly in a brand's or user's status updates, turning the Newsfeed into a sales platform driven by recommendations from people users trust. Facebook's importance as a commerce and referral channel will continue to grow through 2012 and beyond. While some brands that trialed Facebook commerce in 2011 shuttered their stores, others have pioneered the use of social networks to drive sales.
Now that Facebook has Frictionless Sharing, meaning that actions taken on different apps such as Spotify, Hulu, and even retailer apps show up in the Newsfeed or Timeline without having to press Like or Share, the appeal of Facebook to brands is increasing.
Facebook apps like Payvment and Fab.com demonstrate that Facebook can be a sales driver. Payvment's Shopping Mall app doubled its user base from 700,000 to near 1.5 million within January 2012. While the Newsfeed only drives 9% of impressions but drives more than 50% of referral traffic. Fab.com has seen similarly impressive growth, with Facebook driving more referrals to the site than Google (25.1% vs 23%). With more social-first retailers becoming popular, users will face simpler options for Facebook commerce that overcome many of the obstacles faced
by early adopter brands in 2011.
Online shopping is moving from desktops and laptops to smartphones, tablets, and a host of emerging devices. Digital shopping is becoming a tactile experience, where shoppers can swipe, tap, rotate and demo a product from a connected device before they decide to purchase.
In 2011, mobile commerce accounted for $6.7 billion in sales. 26.8 million Americans completed purchases via mobile in 2011.
By the beginning of March 2012, more Americans owned smartphones than featurephones.
The Post-PC future will be filled with upcoming stories of new devices triumphing over their 20th century counterparts. From smartphones to cars, new devices will offer unique commerce experiences in every environment.
With greater smartphone adoption comes new opportunities for consumers to shop while they're on the go. Mobile commerce, where consumers make purchases through their phones, is growing, and people are buying things through their smartphones many of us would have balked at purchasing just two years ago such as plane tickets, appliances, and even cars.
Tablets are also vital to the future of shopping. Tablet adoption is growing rapidly. After the 2011 holiday season tablet ownership in the U.S. nearly doubled from 10% to 19%. The tablet will be the primary "couch commerce" device a few years as laptops fall by the wayside for the primetime shopping set. Research from Adobe has shown that tablet users who visit retail sites have 21% greater purchase amounts than those who visit from desktops and laptops.
Tablet users also use these devices to research products before heading out to brick and mortars. 64% of tablet owners conduct local searches each week, and 86% make a purchase based on that search.
Connected TVs are an emerging platform for eCommerce, and the technology is already available in 17 million households. Users can now buy products through interactive channels through services from cable and satellite providers. The History Channel piloted a system on Verizon FiOS that made it possible to shop items related to different shows in a sidebar on their TV while watching the channel.
The cars of the future will be connected as well, enabling new online shopping opportunities during one's commute. McDonald's in Japan is testing a program that lets people order meals from their cars en route to the restaurant, reducing wait times during busy periods of the day. Future in-car app systems from companies like Ford and Toyota will likely focus on enabling eCommerce as radio's formerly captive audience looks for new distractions in the connected car of the future.
"A store has got to be much more than a place to acquire merchandise. It's got to help people enrich their lives. If a store just fulfills a specific product need, it's not creating new types of value for the consumer. It's transacting," says Ron Johnson, CEO of JCPenney and creator of the Apple Store.
While the online world has been transforming itself, the physical world hasn't been exactly standing still. The Apple Store, for one, has become a cultural phenomenon as much as a commercial one. The integration of great customer service at the Genius Bar and useful technologies like concierge have made the Apple Store an experience worth visiting.
With the smartphone, Apple's effect on retail moves beyond the Apple Store. More than 50% of shoppers used their smartphones while shopping during the 2011 holiday season. 38% of shoppers called friends for advice before making a purchase. More than 24% of shoppers looked up product reviews or online prices via their mobiles in the store. Retailers are having to discover new ways to keep the attention of smartphone wielding shoppers who use price scanning apps to find a better deal a block away or online.
Technology makes it easier for customers to help themselves. The smartphone is a shopper's Swiss Army Knife. Barcode scanners make it easy to comparison shop with the added benefit of seeing and touching the physical product. Apps like Thumb and Pose make it easy for shoppers to turn to their social networks for real-time advice on what to buy.
One approach retailers and brands have taken is to extend the physical into the digital by using barcode scanners or audiotagging to make it easy for customers to get more information about products on their phones. Best Buy uses QR codes to link to product reviews. Calvin Klein partnered with Shazam and made it possible to "tag" certain messages over the store PA system to unlock deals and access other branded content.
More than 50% of shoppers used their smartphones while shopping during the 2011 holiday season. 38% of shoppers called friends for advice before making a purchase. More than 24% of shoppers looked up product reviews or online prices via their mobiles in the store.
Emerging media can be used to make brick and mortar stores a destination worth experiencing. Whether it's salespeople equipped with their own devices or a retail environment laden with technology, digital can play an important role in revamping the retail experience into one customers will love and return to. Equipping the sales floor with mobile POS systems eliminates the hassles of waiting in line for the shopper. Programs like Macy's Backstage Pass lets customers get expert tips directly in the store. Home Depot developed a mobile app that gives users in-store guides, making stores easier to navigate.
Integrating technology into retail isn't merely style over substance. Retailers need to focus on which technologies make sense for providing a better experience for their shoppers. Retail technology development should still remain focused on driving better customer service. The difference is that nowadays the “service” may be to get out of the customer's way or let a digital kiosk serve as a surrogate salesperson that helps consumers help themselves.