I have read a number of articles on retailers experimenting moving their stores to focus on delivering great customer experiences, not stock levels. For example, have a smaller volume of products in stock, but improve the opportunity to experience those items. Then ship the products to the person’s home. That way you can have less stock in the store, freeing up space for other purposes.
This post is my Sunday afternoon musings on the issue. This is just gut opinions, not backed by any hard data. Hopefully it will spark some interesting ideas of your own.
Before getting into retail stores, what are some of the problems faced by ecommerce stores compared to physical stores? Moving to a ship-to-home strategy is not without its own set of issues.
Shipping costs: This is still a big problem, but people are working hard on it. Have to continue to optimize to get costs down as “last mile delivery” is not cheap. Will robots and automation help? Or drones, delivery robots, etc.? I expect progress will be made, alongside a lot of failures. A fertile area for experimentation.
Home delivery security: How long will it be before our letterboxes become secure parcel-boxes? Increasing the number of parcels left on a doorstep has real security problems. Maybe this can be solved by better scheduling so parcels arrive when someone is home. Perhaps delivery robots can have code to open a special delivery cage where boxes are dropped off. Densely populated areas (e.g. apartment building) can have lockers. Suburban houses can have parcel-boxes, or maybe drones can drop deliveries into backyards, out of sight from the street. But I think better solutions are needed here.
Home design?: Cost effective and secure home delivery I don’t think is solved yet, but I expect it will be. Once standardized, I can well believe houses will start to be designed to make this possible (e.g. have special room attached to car garage with pin codes for deliveries to be made to). Just like stores often can accept deliveries around the back, homes can be designed with the same… one day!
Instant gratification: I often go to stores for instant gratification. I want it NOW! I don’t think most stores will go to zero inventory levels, but they can reduce them and run lower stock levels where going out of stock is not such a serious issue – “shall I ship it to your home?”. One last stock item would always be kept for people to experience the product.
Ecofriendliness: I don’t hear many people talking about the relative ecofriendliness of getting parcels shipped individually to homes vs a truck taking lots of products to a store. As volumes of home deliveries goes up, with smart logistics, I hope this will be eco friendly. (Many delivery trucks stop many times going down our street, so I am hoping the density of deliveries is making it efficient.)
Personal advice: Physical stores can offer better personal advice from in-store staff. Online chat can help here, or online video, but simple ecommerce websites often lack that personal touch. (This is where personal online shopping channels I think are interesting. E.g. set up a YouTube channel where your staff do regular product reviews, responding real time to questions from chat. Then hook the recording up to your online product information and share on social media.)
Physical Store Challenges
A store that is little more than a warehouse that looks nice can work for high traffic products, but is going to face stiffer challenges against online stores.
Range and selection: A physical store with 20 types of chopsticks can be more confusing than useful. Online I can see reviews from people who have used them, giving me additional insights I would not otherwise have. Range and selection of accessories on the other hand is interesting. Too many unique items can make shopping either more fun or frustrating. Online experiences can use machine learning to provide guidance and make recommendations that you current don’t get in stores yet.
Cost of store: A nice physical store in a prime location can be expensive. A warehouse in a less expensive district can reduce costs.
Commodities: If I buy the same commodity product over and over again, the need for in store assistance goes down. If the shipping costs are brought under control, why not just order online? Give me a shopping experience that brings products I frequently purchase to the top of the list.
Fresh food: I like picking fresh food items personally. But I could imagine having my electronic shopping list I build up (my memory can be bad!) which I then take to the store and I select all the fresh food items myself, with all the boring boxed goods brought directly to my car when I am ready to go. This reduces delivery time and costs for the merchant while letting me hand pick the products I care about. I am no expert here, but I can see a lot of ideas being trialed for grocery shopping.
Automatic reordering: I do think there are opportunities to better know when I am low on stock to get boring items reordered. I just want toilet paper when I run low. There has been technology trials (e.g. Amazon dash buttons), but nothing so far has really stuck that I have seen. Are internet fridges the answer? Bar code readers built into your trashcan? We shall see.
What Can Help?
There are all sorts of physical stores with different products and different shopping experiences. I don’t believe there is a silver bullet that will be the right solution for all. I also am a believer in the ideas put forward by Blue Oceans Strategy (it is good to be different – carve out your own niche). But there are some short term trends that I can see helping a range of retail stores almost immediately – well, as fast as they can be built anyway! These link the offline and online worlds.
Here are some of my thoughts:
Linking to online identity: Stores can hugely benefit from getting linked to the online identity of their customers in their physical stores. It can enable all sorts of smoother experiences. Today, loyalty cards achieve this somewhat, but only at checkout, not earlier in the in-store customer journey.
Linking offline to online: It can be immensely valuable to link offline to online experiences. This could be a QR code, NFC, barcode scan, whatever. But it should be an experience leveraging mobile devices that most people have in hand, not a new device. It has to be easy to use. It has to deliver benefits to shoppers to make it worth the effort. I think this is getting easier to achieve.
In-store product reviews: You have product reviews online, why not make them available in-store as well? Allow a product to be scanned and bring it up directly on the shopper’s phone. Ideally do so in an app where the shopper is already logged in, so the store immediately knows their identity.
Store product reviews: As well as reviews from other shoppers, retailers can provide expert reviews from their own staff. Record a video, host it online, and link it from the product information. This can help shoppers in store learn about your products and see you as an expert, increasing brand loyalty. They can see value from buying from you.
Call for assistance: Want to maintain that personal touch? Then instead of only having online product reviews, offer a “ask for assistance” button in the app. A shopper that presses the button automatically registers a request for help on a particular product. The most experienced staff member for that product can then assist, knowing exactly where to go (if a large store). The staff member also can have access to previous purchase history or other customer data and use that to further customize the support they provide.
Speed up checkout: Give customers a benefit – if they scan codes as they collect items in their cart, speed up checkout flows. Let customers pay inside the app. Checkout is then just a matter of checking the cart before they leave.
Automatic upsells: Apps can make special offers immediately or at a later time. E.g. for an extended warranty you don’t have to get the commitment at checkout – if you have a connection to a user via their online identity you can follow up later with helpful information and additional related offers. Or, if you notice particular items in the cart, offer the customer personalized special offers while they are still in your store.
Warranties and returns: Having purchases linked to the user’s online identity can help the shopper find receipts later for warranty claims and returns. This makes life less cluttered for shoppers.
Ask for reviews: Online purchases you can request reviews, but with in-store shopping this can be harder to convert. If you can link an in-store purchase to their online identity, it is much easier to ask the shopper later for a review. Tying all purchases to a single identity you can also control the volume of review requests (you don’t want to burn out that good will).
Discounts and coupons: Linking in-store purchases to online identity can automatically bring up discounts, coupons, and other special offers for the customer. They get benefit from using the service. How often have you had a special offer but felt annoyed rather than happy because you forgot to bring the coupon with you to the store?
In-store add-to-cart: Shoppers can click add-to-cart in an online app and have a sales associate (in-store or behind the scenes) collect your order. It can be used to create some interesting different shopping experiences.
Home shipping: If a product scanned is not in stock, if the user has added it to their cart on their mobile device, it can be a seamless experience to offer to ship it to their home instead. They can pay in the same in-store transaction, but you have all their home delivery details already recorded.
In this post I was musing over potential ways to improve physical store retail experiences, using technology that is not far off. As many merchants already have ecommerce platforms with supporting resources such as product information, media, product reviews, etc., it feels natural to make this information also available in-store. That can also lead to greater insights as it becomes easier to understand consumer behavior in your store. The challenge here is how to link offline in-store experiences to online systems.
I believe the personal connection is best done using mobile devices that shoppers own. I believe also to deliver maximal value to retailers, users should be logged into such applications (not just an anonymous web browser session). This has to feel natural, not invasive, to shoppers. Linking to add-to-cart and payment experiences therefore feels natural to me, to give shoppers a benefit from doing so.
Having a native mobile application per retailer however feels unlikely to take off. You want most shoppers coming into the store to have the experience. That implies using a partner, sharing data with the application provider – they need to be trusted (you do not want to share in-store data about your customers to a rival). That leads me to believe payment wallet applications are more likely a better fit than say ecommerce marketplaces (both have identity, payment capabilities, and shipping details).
This is why I personally find projects like the Google Spot Platform intriguing. (Yes, I work at Google, so I am mentioning one from my work rather than others out there!) It is still in its early days, but it is an example technology that can be used to link real world experiences to the online world. When a code is scanned, it opens up in the Google Pay application which has both identity and payment details built in. It can bring up a merchant webpage within the app, so you can build linkages to existing experiences using traditional web technologies (keeping training costs down). You can then build your own custom experiences on top of the platform, experimenting to work out what fits your business and customers best.
I also think such pushes to reuse online stores assets (such as customer reviews and product information videos) from physical retail experiences will continue to evolve ecommerce architectures. Each valuable asset should be reusable easily in multiple contexts to give greater business agility. When designing shopping experiences, more and more the online and offline experiences should be designed together. Your ecommerce site should not be developed in isolation from your in store experiences – the two should support each other.
I expect to see a lot of creative ideas (and failures!) coming during 2020 and beyond, trying to merge offline and online experiences to deliver better experiences for customers and drive revenue of businesses. The good news is a lot of people are thinking about these problems – but it will be up to merchants to decide which ones to adopt and make the necessary investments.