The juggernaut of online shopping
It is just to state the obvious that the Internet has totally transformed the world for both the shoppers and the retailers. Shoppers have taken to online shopping with gusto and entrepreneurs and businesses are straining hard to exploit the opportunity. In the early days of Internet, it was common to consider the web as a resource or an aid to shopping, and it was expected that consumers will rely on the Net to look for information about products, to locate a store where they can buy and to perhaps look for advice and assistance on how to make the right choice. It is indeed true and nearly all agree that the Internet has become a very useful resource for shopping. However clearly it has gone far beyond that and has become a gigantic marketplace - consumers are buying everything from luxury goods, shampoo, automobiles and freshly slaughtered chicken on the Internet.
It is just to state the obvious that the Internet has totally transformed the world for both the shoppers and the retailers. Shoppers have taken to online shopping with gusto and entrepreneurs and businesses are straining hard to exploit the opportunity. In the early days of Internet, it was common to consider the web as a resource or an aid to shopping, and it was expected that consumers will rely on the Net to look for information about products, to locate a store where they can buy and to perhaps look for advice and assistance on how to make the right choice. It is indeed true and nearly all agree that the Internet has become a very useful resource for shopping. However clearly it has gone far beyond that and has become a gigantic marketplace - consumers are buying everything from luxury goods, shampoo, automobiles and freshly slaughtered chicken on the Internet.
Online shopping has not just
established itself in the developed markets, it has firmly established itself
in the developing markets and e-tailing already accounts for 5-6 percent of
2012 retail sales in China and about 5 percent in the United States. In China
online sales recorded an astonishing estimated 60% year-on-year growth in 2012
(Source: McKinsey. MGI China e-tailing report)
Last year online shoppers grew by 25% in
China, with nearly 50 million new shoppers added to the fold (Source: CNNIC
January 2013). The growth of group buying or tuan gou (which actually
originated in China), also continues. We also see that consumers are losing
their fear on online payments. In the initial era of online shopping, cash on
delivery used to be a common method of payment, but thanks to Taobao (the
largest online shopping platform in China with more than 6 million merchants
listing their products), and the escrow system of payment known as Zhifubao,
which protects both the buyers and the sellers, online shoppers are now ready
to pay online.
The circuitous consumer journey
For the consumers the two worlds of
online and offline shopping are now intrinsically intertwined. In the initial
days of online shopping the consumers often looked for information on products
online but the then returned to the comfort and security of the familiar bricks
and mortar environment to lighten their wallets. While this is still a reality,
the other phenomenon is more prevalent and on the rise - consumers today often
touch and feel the product in the traditional stores, but come back to their
comfortable chair at home, where they sit in front of their favorite computer
or the newly acquired tablet and enjoy in-home retail therapy by clicking the
"Buy" button.
The fact is that today the Internet is
as much a part of the retail scenario, as is the supermarket or the
hypermarket. Whether you are a retailer or a marketer of brands, it is no
longer a question of developing an e-commerce strategy - the task really is to
entirely reshape and develop a retail strategy for the digital world.
Online, offline and seamless..
This juggernaut of online sales has
huge implications on the online as well as the traditional retail industry. It
is not possible to understand the implications for e-commerce unless we simultaneously
look at and compare the respective roles that online retail and conventional
retail are carving for themselves. And to understand that we must understand
what consumers expect in an online environment and what are their expectations
in a traditional store.
Consumers are very clear when they
think about what is important to them in an online store – ‘saving money’, ‘more
payment and delivery options’ and ‘better
selection and delivery’ top the list. The needs from an offline store are very
different. ‘Ability to touch and feel the products’, ‘satisfaction of immediate
delivery’, ‘better service’ and ‘enjoyable
experience’ top the list. So the two channels have very different strengths and
at this moment at least, it is too early to proclaim the demise of the traditional
trade, though some change in its role is definitely in the offing
According to Deloitte’s Store 3.0
Survey among retail executives, it is apparent that the role as well as form of
a bricks and mortar store will inevitably change. Today the executives say that
he role of in-store employees is largely in providing basic purchase service
and assistance and display some product knowledge. But this is expected to be
totally transformed five years from now, when the most important skill of the
workers will be to be able to leverage technology to enrich the customers'
experience. Another important role of the sales staff will be to act as brand
ambassadors. In fact retail executives indicated that in five years, providing
customers with a compelling brand experience will become the primary role of
the store.
So what does it augur for the future
of online and offline trade. Online retailers need to clearly understand, that
they lag behind the traditional trade when it comes to providing
immediate gratification, intimate touch and feel, the immersive experience and
the joy of shopping. They need to look at innovative ways of providing that
intimacy - can technology be used to provide a better virtual touch and feel of
the products, can virtual reality be used to help consumers come closer to the
product? Can they collaborate with traditional retailers or can they establish
their own limited brick and mortar presence (as some of them are doing already)?
For offline retailers, the task it to
zealously guard and enhance their ability to facilitate human interaction with
the consumer. The store's function is not just to act as a convenient
transaction center, it is to provide a valuable and important experience to the
customer. For brands it is an opportunity to develop a relationship and bond
with the customer, which is more of a challenge in an impersonal online
environment. The most successful retailers will be those who can offer the best
of both offline and online shopping and in fact offer a seamless
shopping experience in which the shoppers can effortlessly move from online to
offline, back to online then again to offline if they so desire .
This
article is based on FutureBuy 2013 - a research study conducted by GfK in 14
markets across the world – which focuses on understanding shopping trends
across the globe.
Written by Ashok Sethi
Ashok.set@gmail.com
