The long-awaited super-fast broadband network promises to have a dramatic impact on the Australian retail sector, in a similar way that the birth of the chain store in the 1880s and the advent of self-service supermarkets in the 1960s changed forever the way we shop and engage with retailers. A recent IBISWorld forecast of ‘Australia’s Digital Future in 2050′ predicted that the retail sector will experience a significant benefit from the new superfast broadband utility in the coming 40-50 years, including the possibilities of product embellishment, potential productivity gains and advantages in terms of faster growth, lower costs and higher profitability. The researchers also predicted that the traditional retail model as we have known it will be redefined, shifting much of the transactional commerce to online and mobile platforms, while the physical retail space is expected to evolve from a traditional self-service environment to a more immersive, social experience of merchandising.
Rather than a gloomy outlook, this future is pretty exciting, because it is already here. Ecommerce and m-commerce are already big business for retailers and service providers, and are complementing the shopping experience and influencing what we buy in ways we never imagined possible as little as ten or even five years ago. Social media has also played a significant role in the growth of online commerce, with customers choosing to engage with brands and products on this platform as part of the purchasing process. 42% of online consumers have ‘followed’ a retailer, while 67% of Twitter users have clicked through to a retailer’s site from a tweet. In January 2012, Pinterest drove more traffic to online retail sites than LinkedIn, YouTube and Google+ combined. In February it had moved ahead of Twitter, and by June it was driving more referrals than Bing and StumbleUpon. So how can retailers embrace this next evolutionary stage and, better yet, reap the benefits?
It may be cliché, but the single most important stakeholder in any retail strategy is the customer. When embarking on an ecommerce venture, the customer should be the heart of everything you do. After this, I see six other ‘vital organs’ making up the anatomy of a successful online strategy:
Visibility: Invest in the promotion of your online store with special focus on the products you sell. 74% of users search for a product not a retailer. Be where your customers are, if your customers are talking about your brands and your products on Facebook and Twitter, you should be listening and contributing to those conversations.
Listen to your customer: Consider the many different preferences customers have and different paths to purchase, and apply this thinking to the different touch points you offer. The omnichannel shopper wants to use all channels – store, email newsletters, catalogues, call centre, ecommerce and mobile – simultaneously.
Expand your reach: Let your customers interact with you across multiple channels (don’t just limit it to online). Create ‘experiences’ for individuals and communities, start a dialogue using social media and even experiment with new types of consumer engagement such as near-field communications. Why? Research by the Australian Centre for Retail Studies has found that omnichannel consumers shop more, spend more and are more loyal. But remember that omnichannel does not mean multiplying the same content and user experience across all channels. Each channel needs its own approach, especially mobile which due to its smaller size needs optimised content and more intuitive functionality.
A solid footing: Australia’s online and omnichannel retailers are increasing their investment in technology, with half of them either planning to replace their core ecommerce platforms in the next 24 months or doing so already.
Flexibility: Flexibility is the key to dealing with industry volatility, economic uncertainty and complexity faced by online retailers today. The technology platform you choose to invest in also needs to be flexible, to allow you to dream big. If the technology doesn’t support you the way you want it to, get new technology, not new dreams.
Insights: Data analytics allows a retailer to take the guesswork out of market segmentation and customer behaviour. Get to know your customers through their purchases and the context of their communities (such as Facebook and Twitter). By analysing your data you are able to make informed and targeted decisions and connect to individuals in a more meaningful way. With big data, it’s not about what you know, it’s about what you do with it. Retailers need to have the capabilities to turn the data into actionable insight and use this insight to increase the relevance of how, what and when to engage with consumers.
Each of these components will build the foundation of a successful online strategy, but the key is how well you meet the needs of your customers. The customer is in control of how they want to shop and how they want to engage with retailers. Retailers need to adapt to change at the same rate as consumers to stay relevant and appealing.
Sources: IBISWorld ‘Australia’s Digital Future in 2050′, Shareaholic, Shi & Daniels, Forrester, Hand and Parker (IDC), Google, SEOmoz, FD Mobile Survey, Comscore, trendwatching.com