Shopper options multiply, with retailer and brand innovation enhancing experience
Changing landscape requires
harnessing data, technology
by Jonathan Dodd
Global Chief Strategy Officer
How we shop has changed dramatically. Online shopping is now an established global practice and the likes of Alibaba and Amazon are reaping the rewards. (Amazon’s market cap of almost $440 billion is more than US retailers Walmart, Target, Costco, Kohls, and Macy’s combined.) The omni-channel shopper is an everyday reality, with BOPIS (Buy Online, Pick up In Store), BORIS (Buy Online Return In Store) and ROPO (Research Offline Purchase Online) behaviors commonplace. Remarkable as this change has been, all the signs are that far from abating, the rate of change is set to accelerate.
Greater acceptance among shoppers, combined with ongoing retailer and brand-owner innovation is driving e-commerce sales across all categories, including those where growth has been slower to date, such as grocery. In fact, grocery sales are expected to be the biggest driver of growth in e-commerce over the next five years.
Options for shoppers are multiplying, making it easier for them to try and ultimately adopt online shopping. Shoppers no longer go online. They live online, and mobile is the online device of choice, allowing the shopper to be “always on” and connected along their journey. Facilitating the drive to ever-greater convenience, mobile payments are set to multiple dramatically in the next five years across the seven major EU economies.
Personalization, through greater understanding of shoppers and application of technology, is enhancing the shopper experience, providing more relevant solutions, whether that is based upon convenience, tailored products and pricing, coaching on how to use the product, time of day, weather or location.
Amazon and Alibaba drive change
These developments are set to further reshape our shopping experience as a new retailer landscape emerges, driven by innovative and sometimes unlikely partnerships. Amazon is often cited as the primary indicator of e-commerce growth, but it’s China where we can see growth on an unprecedented scale: Sales are expected to exceed $900 billion this year, representing almost half of all such sales worldwide, and it is China’s local operators that are the major disruptors, as evidenced by Alibaba’s partnership with Bailian Group, one of China’s leading retail groups.
Alibaba’s ambition goes way beyond having a significant presence in on- and offline channels, to a complete reinvention of retail—utilizing its technical, data and logistics knowledge to impact the entire shopper journey, redesigning physical stores, incorporating digital engagement (including the Internet of Things, artificial intelligence, virtual reality, and payment via its Alipay system). But the partnership goes beyond the immediate shopper experience; by monitoring transactions in real time, data will influence the supply chain, fulfilment and more,
According to Alibaba CEO Daniel Zhang, “Our partnership with Bailian is an important milestone in the evolution of Chinese retail, where the distinction between physical and virtual commerce is becoming obsolete.” This partnership sees Alibaba move from e-commerce player to true retail solutions provider, a move that is mirrored by Amazon with initiatives such as Amazon Go: physical stores that replace the checkout queue with the smartphone, introducing “just walk out” shopping.
Bricks and mortar react
In the battle for the omni-shopper, traditional brick-and-mortar retailers are no longer standing idly by. Walmart’s $3 billion acquisition of e-commerce operator Jet.com has similar ambitions as Alibaba’s Bailian partnership, seeking to leverage technology to develop innovative new offerings to help shoppers save time and money.
To make things even more interesting, as the borders between on- and offline dissolve, brand manufacturers are breaking down the boundaries between making and selling, as is evidenced by Unilever’s billion-dollar acquisition of the direct-to-consumer male grooming business, Dollar Shave Club, and Whirlpool’s incorporation of Amazon’s Dash technology into its washing machines to enable detergent auto-replenishment.
And as is the case in all times of change, smaller innovators are exploring and exploiting new opportunities; goPuff in North America offers the impulse shopper a convenience store proposition online, with an average delivery time of under 30 minutes, all for a flat fee of $1.95 (free for orders over $49).
The central role that social media and the smartphone play in our lives is evidenced by BongoBox’s staff-free store in China, facilitated by the country’s biggest messaging platform, WeChat, through which shoppers can gain access to the store and pay from their WeChat mobile wallet.
B8ta sells consumer electronics, but owns no inventory, showcasing products in an enhanced customer-service space. In a physical manifestation of the third-party online marketplace model, vendors lease space and receive shopper data to improve future selling.
New technology has the ability to make a dramatic, immediate and widespread impact on how people shop. The way that shoppers move seamlessly across channels and the blurring of the line between living and shopping, with triggers occurring anywhere, anytime, requires a more holistic view of those behaviors and a more frequent reassessment than ever before.
Large or small, the most successful retailers will be those who innovate most effectively to understand and meet shoppers’ needs while harnessing data and technology.