Ecommerce evolved – ‘phygital’ is no longer that fidgety media strategy

Sérgio Brodsky looks ahead to an OOH environment where the presence of physical retail and seamlessness of ecommerce meld into a single cohesive customer experience.

Just like the Atkins, South Beach or ketogenic diets, emphasising a medium over another is a recipe for a fad. For healthy eating we need to balance our carbs with proteins and fats. The same goes for consumers’ media habits, often mixing print, radio, social, OOH, TV and much more. Taking that in consideration, new ‘phygital’ (physical + digital) channels seem to be gradually encapsulating more dynamic executions that were once only possible by combining multiple, separate channels.

Phygital shoppers have high expectations and combine online and in-store experiences in whatever way is most convenient for them, utilising a range of technologies to help them find what they want. A 2015 study from technology business Mindtree – surveying 2400 customers across the US – revealed that connected shopper behaviour has flipped the traditional supply and demand model, with demand now discovering supply.

This means that rather than fragmenting communication channels to target consumers on their whereabouts, brands need to further fragment their distribution channels and become more interspersed throughout consumers’ journeys. This is not about the still-to-be-proved leapfrogging promise of wearable technologies or embedding new digital services into physical products, but better distributing a brands’ physical and mental availability.

Amazon is a notable example; having saturated its ecommerce presence it started acquiring significant real estate, through the Whole Foods acquisition, to create an effective and complementary physical footprint. The opposite can also be true. In May of 2011, Magazine Luiza, a family-run Brazilian retail chain for household and electrical goods, raised R$926 (AU$342) million from its flotation on the São Paulo stock exchange. Luiza Helena, the chief executive, wanted to use the money to expand the business further and was looking at ecommerce – Brazil ranked fifth worldwide for total number of internet users, so the potential market was huge.

Magazine Luiza developed the innovative ‘Magazine Você’ (‘You shop’) programme. This allowed anyone to create their own virtual store, in which they could sell up to 60 Magazine Luiza products to friends through social networks such as Facebook and Twitter. They would receive a small commission if a friend made a purchase.

To maintain relations with traditional customers, the company supplemented its ecommerce strategy with offline initiatives aimed at their particular needs, such as free internet access, staging live concerts and offers of free food. In the stores, sales staff extended credit and offered a range of financial services to consumers who normally did not qualify.

In the first nine months of the project (2011), there were 50,000 new stores. In 2015 the company registered more than 150,000 mini-stores, accounting for approximately 20% of total sales. Clearly, that was a smart investment and much smaller than rolling out more of the existing big box formats.

In 2019, the shopfront-ecommerce combo gave birth to a new hybrid, the smart kiosk. Smart kiosks are, essentially, digital street signage screens in miniature, where both direct and programmatic ad sales are possible, potentially opening up ad inventory to a global marketplace. The result is a media-rich experience that adds value to the customer experience by providing plenty of utility.

Firstly, this genuinely phygital channel combines the seamless aspects of digital shopping with a physical presence able to supply shortcuts to the demanding modern shopper. Moreover, the latest smart kiosks come equipped with fast broadband connectivity, internet of things (IoT) and open-source APIs – enabling new business models through multiple connecting points including other kiosks, people and the cities where this infrastructure is present.

City governments are recognising they can use smart kiosks to make public transportation easier to navigate and make information accessible to citizens. They are also realising that behind the scenes, smart kiosks can provide efficiencies through robust data networks, be they subsidised or funded through third-party advertising. According to the Brookings Institution, the repopulation of urban areas has created a growth opportunity for smart kiosks that provide free Wi-Fi, way-finding, public transportation access and other public information.

Australia started moving on this direction in a partnership between Telstra and outdoor media company JCDecaux. Developed in the Paris-based JCDecaux Media Lab, smart kiosks were rolled out in the city of Perth. Wi-Fi, USB charge docks and Telstra touch screens are the key features used to display local information and utility.

Related: JCDecaux and Telstra stunted in ‘21st Century’ payphone rollout again – this time Sydney »
Telstra payphone

In this year’s Melbourne Knowledge Week (MKW19), Smartbox*, a new outdoor media player, exhibited its smart kiosks with a promise to enhance civic participation, unlock value from underutilised city assets – all the while delivering a unique tactile brand experience enabled through an ad-funded model. Besides its physical structure and digital screen, Smartbox also counts with vending capabilities able to create new distribution channels or sampling opportunities for brands.

The company is allegedly testing sophisticated modules that can clean the air, produce clean water from atmospheric humidity and generate power to supplement the grid. Below are renderings of prototypes undergoing research and development.

Smartbox prototype renders

According to Emma Forster, Smart City projects officer for City of Melbourne, “If brands need to think outside the box, cities need to think outside the grid. We invited Smartbox to exhibit at MKW19 exactly for that reason. Their smart kiosks create a blend of physical and digital customer experience that also ads value to citizens through their other non-transactional capabilities.”

Outdoor media was once mainly about mass awareness. Now, consideration, conversion and advocacy can all be a part of the experience taking customer more quickly through the sales funnel. “Our ‘Textured Advertising’ approach is one that brings the many stages of the sales funnel with an innovative tactile brand experience. People go beyond just seeing or hearing an ad to also touching a product or any object that enhances the sensorial interaction,” says Smartbox director Navdeep Tuteja.

Voice, VR, AR, MR, haptics and myriad other technologies have been promised to reinvent CX. Solving the frictions of traditional retail with the seamlessness of ecommerce (via smart kiosks) is a better route for brands to capture the fidgety consumer.

*Full disclosure: Sérgio Brodsky has previously consulted for Smartbox.

 

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Image credit:Steven Su

Sérgio Brodsky
BY Sérgio Brodsky ON 7 June 2019
Sérgio Brodsky (L.LM, MBA) is an internationally experienced brand strategist, a marketing lecturer at RMIT and chairman at The Marketing Academy Alumni.
He is passionate about cities and culture and the role of brands and technology in society, an intersection from where he drew inspiration to conceive a radically innovative approach to brand communications, he coined Urban Brand-Utility.
Connect with Sérgio on www.sergio-brodsky.com or through his Twitter handle @brandKzarglobal brand strategy and innovation. Follow him on Twitter: brandKzar.