In Markets

Expert Opinion: Retailers should adopt balanced approach to keep the world spinning

Shopping – perhaps more properly described as the retail sector – is still the linchpin of most economies. But, it is changing, and changing fast. And the consequences for pure-players that continue selling on a single channel, could well be as severe as the fall of the Roman Empire was for some merchants of those days— extinction!

To survive, pure players have to change and demonstrate excellence in a variety of areas, both physical retail, as well as digital. In practice, this means that all pure-play physical retailers will have to forge a presence in the online, and pure-play, e-commerce operations will need to have physical shops to further support their business.

There are certainly numerous macro-economic trends affecting retailers and forcing them to change the way they are doing business. The most visible of these include:

  • Increased rental costs, especially for brands
  • High inventory costs
  • Intense price competition from e-commerce shops
  • Demographic changes

It is already happening. Traditional retailers are growing and investing significantly into an e-commerce arm of their business. This approach is clearly paying off at least from an investor perspective. For example, Macy’s, Nordstrom, Walmart, and Best Buy yielded better returns for their investors when compared to Amazon for the period of December 2013 to December 2014.

The advantages of having an e-commerce presence are clear. However, despite this, it is surprising that some of the world’s most famous brands and retailers still don’t have an e-commerce play.

From E-commerce to Bricks-and-Mortar

However, there is no safe haven in the pure-play, e-commerce sector either. The pressures are on this business model are considerable, including:

  • Profit margins that are squeezed by the ease of comparing prices online;
  • Difficulty in ensuring returning buyers;
  • The high cost of acquiring customers in the first place; and
  • Increasing shipping costs, which can be a “silent killer” for any business.

Research also supports the view that, for numerous reasons, consumers still like to touch and feel a product before they make a buying decision. This is a major reason why many pure-play, e-commerce businesses are opening physical shops.

There are some obvious examples. In the Unites States, traditional pure-play e-commerce players such as Warby Parker and Rent the Runway have opened brick-and-mortar shops. In Asia, the Ensogo group and Groupon have opened click-and-collect shops.

The advantages of a physical shop are obvious. They provide a place for customers to “try out or try on” a product before purchase. They also improve brand building and interaction in the real world with customers, and hence have an impact on loyalty, too.

Mobile: The Moving a Target

One way for online commerce companies to gain new revenue streams is to target mobile users. However, how should they go about it? What exactly makes a site “mobile-friendly”?

According to Google, there are a number of criteria to be taken into consideration. For example, the site must be responsive and capable of automatically rendering a website to fit any screen.

Additionally, there are some key steps that any company should consider when embarking on a concerted assault on mobile e-commerce.

Step 1: Find out exactly how mobile-friendly you are

Determining mobile friendliness may be easier than you think. Google offers an effective and free tool that can quickly determine how compatible an existing site may be with mobile commerce. As well as offering some insight into how much work is required, this tool can also do double duty and determine how mobile-friendly competitors are.

Step 2: Understand who you are targeting and give them what they want

Consumer behavior intelligence can help to define who your audience actually should be, which may be very different from who you assumed. Additionally, knowing precisely who you want to sell to, helps better pinpoint what to offer them.

Step 3: Become the first option on Google

Steps 1 and 2 will highlight actions to help you appeal to your audience, which will lead to increased Google rankings. However, restricted budget and complicated business models could still prevent you from topping Google ranks.

One Channel is Good, but Omnichannel is Better

Omnichannel of course is a multichannel approach providing shoppers a seamless shopping experience whether it is online from a desktop or mobile device, by telephone or in a bricks and mortar store.

We’ve covered a lot of ground. However, one thing is clear – the need of the consumers to touch and interact with products, the increased costs associated with renting space and delivering goods, as well as the explosion of the mobile economy, are all redefining the way the products are going to be marketed and sold to us as consumers.

What’s more, taking a single channel to market is quickly becoming a recipe for disaster. The key to long-term success is an omnichannel approach. This enables the enterprise to generate revenue on different fronts in order to maximize both opportunities and income.


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