e-Commerce vs. Brick-and-Mortar: Brands Share How to Find Your Balance
I read recently that visits to U.K. town centers are down 17% over the past decade as online purchases rise 10% per year. Research also shows that the percentage of U.S. e-commerce sales to in-store purchases have more than doubled in the last decade.
While many brands which relied upon in-store sales as their primary revenue driver are now flailing or going under (like House of Fraser in the U.K. and H.H. Gregg in the U.S.), other fluid, savvy digital-first e-commerce players can afford to explore the fruits of pop-up stores or other kinds of physical presences.
As a consumer, the ease of my shopping experience is really ONLY about two things:
- Experiences → From online to offline and vice versa, it has to be “seamless” and fluid
- Lack of friction → Ease is important as more brands are decreasing steps needed to purchase
E-commerce, for the most part, accelerates or enables both. But for traditional retailers, how can the physical infrastructure already in place be successfully leveraged, or how can the digital space be exploited if your main bread and butter are bricks, not clicks?
Retail Stores vs. e-Commerce: Finding Your Own Balance
Are we looking at the beginning of the brick-and-mortar mass extinction, and does this mean the cartwheel of fortune will lean even more favorably toward pure play e-tailers? Or, better yet, is there a medium point whereby brands — their physical stores and online presence — can thrive while also delivering an amazing customer experience?
- Merging online and offline
- Engaging more customers by mending their online and offline actions
- Recreating the magic of online experiences and bringing it back to the physical world
- Communicating with all customers based on who they are as individuals
- Customer retention, and driving active customers back to the website to spur sales
- Growing the customer database, and maximizing in-store data capture
- Linking CRM activity and gaining a single customer view (SCV)
Why physical stores are boarding up — and why I have a problem with it
It wasn’t more than a few weeks ago I served on another panel. During, I was joined by a fantastic, disruptive, online-only brand. The problem? The representative from the brand summarized his role and purpose as wanting to literally “shut down the high street.”
This worldview that’s permeated the minds of too many digital and e-commerce marketers who are stuck behind a screen all day only serves to contribute to the demise of in-store shopping as noted above.
Now I don’t know about you, but I don’t want to see my local street full of pound shops (what you’d call dollar stores, knock-off shops, or outlet stores in the U.S.). Even those are closing up, too!
So what’s left? Aside from grocery stores, restaurants, and service providers, if we keep moving in this direction, we’ll be left with few quality physical retail stores. We’re all consumers first — and as a consumer, I relish my choice to shop in-store OR online, and I’m afraid to keep seeing strips of once-thriving shopping options boarding up and derelict, looking like a slum.
“I relish my choice to shop in-store OR #online, & am afraid to see more strips of stores boarding up, looking like a slum in Mogadishu,” says @davelittlechild CLICK TO TWEET
We have a responsibility to get this balance right – and to shift our paradigm by combining the power and ease of online with the physical experience to see, try on, or hold. But to do this successfully, we have to alter our strategies.
What to do? Struggles, use cases, and solutions
If change is to be had, it starts in the mindset of the marketers making day-to-day decisions. It then must work upward, like a ripple effect, to your teams, bosses, strategies, and eventually the company’s overarching business plan. One practical way you can start thinking about how to mend this divide is to make your website more like your store, and, conversely, make your in-store experience more like online.
Try on a different pair of shoes… start thinking more like a consumer, and less like a marketer. Here are tips and real-world examples from panelists on how to bridge the divide between in-store and online.
“Try on a different pair of shoes – start thinking more like a consumer & less like a marketer to bridge the divide of in-store & #onlineshopping” says @davelittlechild CLICK TO TWEET
► If you don’t have a size/style in-store, but the item is in your inventory, ship it to the customer
One multinational fashion retailer in the UK leverages customers’ email address as the core of their profile and can identify who customers are, and send orders from their online stores to physical stores or vice versa. U.S. athletic apparel retailer Finish Line does the same.
► Localize warehousing
Stock management is instrumental to delivering incredible customer experiences.
While many brands prefer to host products in a centralized warehouse, more and more are actually localizing warehousing in physical stores for faster fulfillment. Amazon is another example, here.
► Minimizing returns and get sizing right
Sizing is a beast. For example, an XL in the U.S. is massive compared to an XL in the U.K. which is a lot smaller. Of course, more wrong sizes lead to more returns.
Representatives from one brand also pointed out that “one key threat to profitability is item returns — so, we try to ensure that what we sell and send is less likely to get returned. One good way to do this is by knowing size comparisons on a global scale, and being flexible with sizing options.”
➤ Pro Tip: Be flexible around payments and returns. Klarna, a third-party payment go-between, offers payment upon delivery. Some brands in Germany offer five-day invoicing to help overcome massive return rates of 50%-60%. So, if you’re a global brand and can offset the reduction in returns in even one region where they’re the highest, then all the other markets are a walk in a park.
Some shoppers often buy two pairs of the same shoe, strictly for sizing purposes. One way to overcome this trend is to ask customers what shoe size they are; then match the best size in their shoe. For example:
→ Pick your favorite pair of shoes you own (e.g., let’s say it’s a pair of Nikes),
→ Select model and size,
→ THEN, based on that, offer “X” size which corresponds to your current size based on what you have.
Another size-related tactic to consider is to personalize as much as possible simply by asking quantifiable information about customers’ preferences. A panelist from Zmags recalled one instance when a well-known luxury menswear brand asked his size, weight, and other dimensions during an online purchase to offer a precise best fit for him.
► Merging online with offline to drive to the retail store
If you can integrate all you do by creating a “unified customer profile,” it becomes much easier to personalize and “get it right.”
A fitness brand, for example, can integrate a customer profile among all systems where it can create alerts when a customers’ trainer is about to run out as it tracks their activity. Another tactic that really savvy retailers have experimented with is creating a sort of suit with many smart dots — all which connect to a machine — to find the best fit for that customer.
Tiffany & Co., the jewelry retailer, recognizes that buying a ring that fits is important… but that most guys haven’t the slightest clue on sizing. So, it’s app has a feature where it walks the groom-to-be, step-by-step, for how to pick the perfect size.
Zmags recognized that in industries like furniture, for instance, you still need to drive in-store foot traffic as customers are more likely to buy in-store because they can touch, feel, and try the furniture. Websites like Made.com and revolutionary technologies like VR/AR make furniture shopping easier online, but brands continue to invest heavily in showrooms that are strategically placed in areas where their customers are.
➤ Pro Tip: Blinds Direct is disrupting the blinds and window shades market. It understands that when buying blinds, consumers need to touch and feel the fabric. So, they operate an online store, but send samples to all customers that buy online within 9 hours of their purchase.
Many retail/fashion brand consumers will visit a physical store for returns — but that these customers actually end up increasing and buying more merchandise (often up to 40% more for one brand on the panel!). So in-store returns can actually facilitate sales.
➤ Pro Tip: Offer free WiFi to encourage customers to browse the website as they shop — so you can track product browsing behavior, and then remarket to them at a later date.
A luxury leather goods manufacturer in attendance has been exploring the revenue of sales split between online and offline, and noticed something interesting: an approximately even split of revenue generated in-store and online. For the brand, it must prioritize both worlds.
While there’s certainly a clashing of heads advocating for more of an investment either in-store or online, all parties can agree that data capture of in-store shoppers is critical. The digital realm is more trackable and customers online and more likely to convert, too, so finding ways to increase in-store data capture is an agreeable midway point for retail marketing managers and their online e-commerce marketing counterparts.
► Become platform agnostic and leverage data
Data is the river that runs beneath everything. It powers customer communications, serves as a benchmark, and can help show ROI and advocate for a pivot in strategy.
Technology, though, can be the catalyst to propel you toward success in using that data.
Use case: Royal Academy of Arts
Royal Academy of Arts, an art academy and store in London, gathered 11 departments from the company — fulfillment, marketing, in-store associates, and more — who all came together to figure out if a unified platform could centralize everything for each of their needs.
When they analyzed the result, they found that every single department had a necessary connection to information within the platform (Magento). Having a single platform to unite teams isn’t just an abstract nice-to-have or figment of our optimistic imaginations. Royal Academy of Art found that all departmental tools were connected, and therefore they all had a critical impact on sales. Now, the brand can easily gain buy-in across the C-suite to explain how the company is working together and driving impact.
The key here is to unify everything into one platform which will then enable omnichannel and the ability to become platform agnostic.
“It’s all about being platform agnostic! There’s little need to distinguish between retail and online sales — it should just be “sales.” The illusion that it matters is a reflection of internal politics of whose job it is to drive foot traffic vs. online traffic. Sales doesn’t fall to one team; it’s just the job of the whole company.”
— Luxury leather goods manufacturer and retailer
And enabling multiple channels with seamless data flow has other benefits, too. One brand ultimately found that taking a multiple channel approach actually helped support foot traffic to stores. The challenge, for them, is now around attributing efforts. Similarly, the beauty industry is one of the fastest growing for personalization. Beauty brands can run your physical profile through an algorithm, and suggest products suited exactly for you. The machine enables true personalization at scale — but only because all data sources is unified in one place.
Research and experts alike both suggest that there’s no need to worry about a ‘retailpocalypse’ as physical retail store growth continues — and that’s certainly not my argument. I simply don’t want to see quality brands forced to close up their physical shops due to lack of foot traffic and in-store revenue.
I don’t want to see more retailers going out of business or closing up shop. And you don’t have to — it just takes a new paradigm by which you must evaluate your in-store efforts and connect it to the digital space. Put the customer at the center of everything you do, literally and figuratively, and you’ll flourish in this new, connected ecosystem of commerce that we’re simultaneously creating and responding to as marketers. ◾
➤ Interested in the topics addressed in this article? This is the tip of the iceberg. Join Google’s Director of AI, Ashwin Ram, as he spearheads a group of futurists, digitization experts, and marketing gurus at Emarsys Revolution 2018 in London, October 15-17. Learn more and register!
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About the Author
With a 20 year career spanning London, New York and Sydney, Dave Littlechild has been at the forefront of digital marketing and e-commerce globally for the past 14 years. He presently takes the reigns of the global partnership team for Emarsys, enabling marketers around the world to deliver truly personalized interactions. Dave also works with industry bodies including the DMA’s Email Council, The Email Experience Council of the U.S. DMA, and the Data Protection Network in the U.K.