The rise of the marketplace, O2O, the new consumer journey and emerging technologies. What do these things all have in common?
They’re among the major challenges facing retailers, and as technology continues to emerge and globalisation continues to be at the top of a retailers to-do list, the consumer journey shifts and creates an even bigger headache for retailers.
None-the-less, instead of becoming weighed down at the thought of these new and arising challenges (no, this isn’t another ‘Amazon is coming article’), retailers, advertisers and publishers must embrace that these are now the times that they operate in.
Australian retailers have so many options at their disposal, here are a few things that can be addressed to assist in meeting some of these challenges.
The rise of the marketplace
Late last year research revealed that Amazon (sorry, I said it) was set to overtake Macys’ as America’s leading clothing retailer. A shift that would present a huge shakeup for the apparel industry, which has long been dominated by department stores. Many in the industry have taken this as a sign that marketplaces are set to overtake traditional retailers.
The term marketplace has been formally defined as “a medium that allows buyers and sellers of specific goods or services to interact in order to facilitate an exchange.” This very definition means the likes of Uber, Lyft and Airbnb are deemed as marketplaces, disrupting their predecessors and accelerating the growth of online marketplaces.
The success of marketplaces can be put down to accessibility, curation, community and efficiency. Further to this, the proliferation of mobile is a contributing factor to the success of the marketplace. Consumers are searching for a way to locate what they need instantly and conveniently.
In order to combat the rise of the marketplace or the “Amazon Effect” (I said it again!) as it has often been dubbed, retailers need to ensure they’re allowing their brands to be discovered and accessed in the best way possible. My counterparts in the Affiliate Marketing industry as an example would agree that this channel is a way to be present in environments where consumers are either absorbing content (via Influencers, editorial or blogs) in a discovery phase or are in the shopping consideration set, across sites such as shopping, reward and loyalty. In fact the largest marketplaces globally in Amazon (dammit!), AliBaba, eBay and Rakuten and all major global retailers have a program to extend the reach of their products and drive sales in an extremely cost effective way.
At last week’s UBS Consumer & Retail Conference in Boston, Karen Hoguet, CFO of Macys stated that there is a bigger competitive threat challenging her company’s business over time: off-price. Off-price refers to emerging retailers who resonate with shoppers due to their constantly changing inventory, as well as their consistently low prices. So it’s not just the marketplaces that are creating a challenge for traditional retailers.
An obvious advantage that many retailers have is their brick and mortar. Consumers are continuing to blur the lines between online and offline, and they expect an integrated and consistent experience regardless of the channel they choose to interact with.
A great example is last Septembers Accenture reported that millennials prefer shopping in store, with up to 68% stating that they want an integrated experience across channels. Oliver Chen, Managing Director at consumer intelligence research group, Cowen Co. reinforced this idea “retail is going through tremendous pain right now, but the future will be seamless shopping which includes physical stores and online.”
We know that milleninals love to be connected. The prevelance of social media in day-to-day life is evidence of this, and their shopping behaviours are no different. For many shopping is a social experience, the ability to turn to friends for product advice is key to the millennial shopping experience. Studies have shown that 53% of millennials will ask a friend within a store for advice, 28% will call or text, 9% turn to Snapchat or messaging apps and 5% will consult Facebook or Twitter prior to purchase.
Further to this, personalised deals and promotions are among the most desired instore innovations amongst millennials.
The New Customer Journey
In Asia-Pacific there are over 1.13 billion smartphone users. Consumers are using smartphones to research products, even whilst they’re in physical stores; to compare prices between retailers; and to read user reviews.
The way we as people interact with technology has challenged many aspects of day-to-day life, and in turn the way people shop. It has created a shopping evolution which has resulted in a bizarre new marketplace known as the web. Some would argue that this evolution has taken the human interaction out of the shopping experience. However, technology provides retailers with the opportunity to put the human interaction back into shopping.
Personalisation in display advertising is a great example of this. Using data to fuel your creative decisions allows advertisers to reconnect with their consumers in a meaningful way. By personalising ads with products that you know your customer has viewed, or that your data tells you they may be interested in, you’re able to interact with consumers in a similar way to that of a sales assistant.
Similarly, the evolution of social media as a touchpoint throughout the consumer journey provides opportunities for retailers to reintroduce the human element. The convergence of mobile, social and messaging apps delivers consumers real-time and intimate dialogue.
Last year the world was taken over by the Pokémon craze. Everywhere you walked there were women, men and children attempting to catch tiny creatures that could only be seen using the camera on their smartphone. It was a craze that infiltrated our culture and daily lives, to some it was simply about catching them all; to those in the world of technology it was a meaningful step towards everyday use and adoption of emerging technologies like AR and VR.
What does this mean for advertisers?
Until there is more sales data and consumer research available, market forecasts for the immersive tech market should be taken with a grain of salt. By the same token, brands and publishers need a clearer picture of how VR and AR will help boost their business before making it a high priority.
There are also challenges associated with these new technologies. Marketers are going to have privacy concerns, it’s important to not get weighed down in this and allow time for the hype to wear off in order to determine real opportunities. Similarly, campaigns aren’t easily scalable and are difficult to recreate. Marketers will also need consider how they detangle multiple users on one device.
Although we’re being faced with these challenges, advertisers have been able to put these technologies into action and are seeing interesting results. Pokémon Go garnered a lot of media attention through the games AR capabilities. But other users of AR, like Snapchat Lenses and ‘try-before-you-buy’ functions in a beauty brands mobile app better underscore how these technologies can be applied in smart, seamless ways.
Australian retailers certainly have more to think about than the above, however, understanding how the market is shifting, be it to marketplaces, the role of technology, or the customer new journey, are a few key things to consider. There is certainly enough to test in order to capitalise on Australian retailer’s already established strengths, and it’s imperative for retailers to stay ahead of the curb. Facing the challenges head on, and leveraging new opportunities.