The enforced social distancing introduced to combat the COVID-19 contagion has plunged our traditional way of shopping into crisis – but the future promises great rewards for those who manage to adapt.
With sales in the global e-commerce market expected to top 4.8 trillion US dollars within a year, a bonanza is just over the horizon for those companies in a position to seize their share. And top analysts are warning that any failure to act now in order to embrace the new emerging opportunities will exact a high price.
In the last five years, the online marketplace has increased by an estimated 56%. Over the same period, brick-and-mortar outlets achieved a rise of only 2%. Currently, it’s estimated that there are two billion digital buyers in the world who account for 15 percent of retail sales, a figure likely to rise significantly, especially in the wake of the current crisis. Traditional retailers have little option but to evolve in the aftermath of coronavirus if they are to have any hope of surviving.
“If you look at markets in the UK and the US, even at a time when traditional brick-and-mortar retailers are struggling, the online shopping brands are growing, usually taking a share from the traditional stores,” points out Ivan Kotzev, the lead analyst in Customer Experience Services for NelsonHall, an internationally-renowned firm that closely studies worldwide consumer trends and advises companies on IT and business processes.
The changing face of the High Street was already stark evidence of the number of big-name stores that have failed to adapt and been left behind. This situation can only be exacerbated by the effects of the coronavirus lockdowns adopted around the world. Digital brands, says Mr Kotzev, are setting new standards and implementing new models in order to challenge incumbent players. But traditional retailers moving into the world of online shopping soon discover that there are certain rules to be followed – and the key to success is a .
The first step, the analyst advises, is to ensure that the customer experience in-store is consistent with what they find online. The information must be the same, there must be no significant price difference, the product must be available on both channels. “A poor experience in one channel will definitely bleed over into the other,” warns Mr Kotzev, who covers CX Services Research in the areas of transformation, delivery and vertical capabilities. He helps both buyers and vendor organisations assess opportunities and supplier capability across CX services.
“If you look at the programs on which the investments are focused, they’re geared to eventually involving some form of experiential selling, where you attract shoppers by offering something beyond what they can conveniently do from their homes, in order to give them a reason to leave the comfort of their homes, such as 24/7 online ordering. So it is about creating more of a service rather than purely a product, more of an experience versus a pure transaction in-store. All these traditional retailers need to speed up their digital transformation plans, they need to continue adopting multichannel strategies and embracing new technologies like augmented reality and the internet of things.”
A key area with great impact and one that is set to expand, according to Mr Kotzev, is “conversational commerce” in which users can have asynchronous conversations over messengers and can interact both with humans and. Companies now deploy technologies like natural language processing and AI scripts and algorithms in dealing with customers, interacting with them over Whatsapp or Facebook messenger and, at the same time, with some form of bot helping them at least in part of the journey, for example offering them products, helping them navigate to the different features of the product and then allowing them to directly purchase or connecting them with the right person to complete the transaction.
Getting this stage of the customer journey right is vital, he says. Four out of five shoppers who stop doing business with a company cite poor customer experience as the reason. Even before the coronavirus outbreak, the digital revolution has radically changed the way people do their shopping and hugely inflated their expectations and demands. But it has also produced masses of data that provide unprecedented insights into consumer behaviour. So how will this develop over the next five years?
“A lot of the trends in e-commerce will be a continuation of current developments, many of them initiated in the last two years,” says Mr Kotzev. “For example, the ongoing proliferation and access to big data allows for hyper personalization of the customer experience, something that is brand new, and this allows the customization of offers, for example. At the same time, there is the over-empowerment of the consumers. They now have a lot more tools at their disposal to compare prices, see, test and try goods before purchasing.”
The ubiquity of mobile phones has put the world’s merchandise inside the pockets of billions of consumers but, while that gives companies unprecedented access to buyers, it cuts both ways.
Mr Kotzev points out that, because buyers are always connected through their phones, they gain greater sway, greater influence over brands. He sees this as an opportunity but also a threat to companies. Brands can now create and reach niche communities, they can micro-target users, open new channels, such as social media influencers, but, on the flip side he says, they have to manage their brand reputation actively and they have to address new trends such as ethical and sustainable shopping. Strategic use should be made of social media in creating communities around specific experiences and products and effectively targeting individual customers. Companies also need to optimize their supply chains and work hard to retain their buyers.
“Brands now need to offer social media care and support not just to the user but also to their distribution and digital marketing organisations.. There is a greater need among the retail and Consumer Packaged Goods brands for support in their online presence.”
The increasing application of Artificial Intelligence, deep learning and image recognition to the masses of data collected every second around the world is offering undreamed-of insights into consumer behaviour but, according to Mr Kotzev, not enough companies are making the most of the opportunities this provides.
The analyst points to Comdata as a company that is very strong on investing in its, especially in the retail and e-commerce space, setting up the necessary platforms, developing the service, the questionnaires, applying them selectively, targeting the right customer profiles, processing the information, prioritising all the findings and then, once all these insights have been generated, putting them into practice operationally and turning them into changes, whether that be to the support side, or the products or the sales experience.
Technological advances have made it more possible than ever before to personalize the entire customer experience and ensure consistency in meeting growing expectations. The coming few years will separate those who have put in the digital groundwork and those who have not, according to Mr Kotzev.
“Those that remain behind thecurve will suffer,” he predicts. “Constantly adjusting and meeting the customer on their preferred channel, providing live interaction and offering a greater level of self-service for the customer will become even more important than they are today. The future of e-commerce is definitely bright but there are these different tiers of success that are based on the level and the culture of innovation of the different companies.”
There are few certainties in the era of COVID-19 but the exponential expansion of e-commerce is now inevitable.