With showrooming on the rise, here are three ways retailers can fight back.
Anyone looking for numbers to describe the e-commerce trend would probably get different answers, all of which points to positive growth in the coming years. For instance, Bain Capital Managing Director Ajay Agarwal described the huge opportunity in e-commerce as only about 6 percent of retail sales are done online globally. EMarketer has a more upbeat projection for e-commerce with growth in Asia Pacific exceeding traditionally strong markets in North America and Europe.
Hence, the increasing adoption of e-commerce, online (PC and mobile) payment, and fuss-free fulfillment will undoubtedly impact the economic performance of retail stores as rising numbers of digitally savvy consumers abandon past practices of window shopping, browsing within stores, and interacting with the sales staff to enjoy the "reduced friction" presumably from e-commerce.
At the same time, the increasingly ubiquitous high-speed mobile data networks in high-density shopping areas led to the trend of "showrooming." This trend refers to smartphone handset users searching online for product information, comparing prices with other retailers, or getting feedback from contacts in social networking sites while browsing in physical retail stores. A subset of these "showrooming" shoppers would be redirected by mobile search engines (sponsored searches) and consumer research sites (affiliate marketing) to e-commerce stores, thereby cannibalizing retail store sales.
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Clearly, physical stores have to adapt to cater for a rising number of sophisticated shoppers in the maturing world of digital shopping on mobile devices. One approach is to embrace mobile and its "always on" access to the Internet as a ready tool to complement the physical attributes displayed in the stores. Here are three ways that brick-and-mortar store owners can leverage on the mobile Internet to navigate in today's e-commerce world:
1. Give shoppers the best Internet experience on your terms
Since it is almost impossible to prevent shoppers from using the Internet via mobile data networks, physical store retailers should take control of the Internet experience by providing high-speed wireless Internet access for shoppers within the store.
Such high-speed networks are assumed to be faster than 3G or 4G mobile network access offered by operators, thereby reducing loading time for browser and app access. This relative speed delta represents the value to convince shoppers to use the Internet access within the shop.
Having in-store high-speed wireless Internet access offers retailers an excellent opening to "direct" in-store shoppers to register online to access the fast-speed Internet on their mobile handsets. This registration allows retailers to build demographic profiles, track repeat shoppers, and measure time spent within the shop - important data points that allow retailers to tailor their in-store strategies such as shelve displays and product mix.
2. Build data sets
Once a mobile user correctly configures her smartphone to access the Internet within the physical shop, then her browsing history on the in-store Internet network will offer the store owner valuable data to answer questions such as:
a. What are the top 10 "most researched" products?
b. Which sites do the customers use to perform their research?
c. What is the most-used social networking platform?
3. Sales attribution
Realistically, customers can decide the channel they wish to make their purchases in and this sometimes means that there will be a segment of retail shoppers that "drop off" to make their purchase online. As a result, the channel contribution relative to sales revenue could show shifts in purchase behavior and raises questions on the value of maintaining physical retail store presence.
These questions are valid from a financial perspective as there are costs associated with the presence of physical stores. However, I would argue that channel contribution should be measured from the context of the path to conversion taken by customers to complete the sale. This hypothesis suggests that sales conversions can be attributed to different channels such as retail stores and such attribution should be measured for its effectiveness.
For instance, a shopper who visits a physical store and uses a smartphone to scan unique QR codes displayed on shelves in the store can point to that moment as the start of the conversion path. Hence, an appropriate attribution metric can be assigned to the physical store as the shopper is guided by the smartphone (e.g., store mobile apps) to either complete the sale online using the high-speed Internet access at the store (which translates to a higher attribution score to the physical store).
Physical retail stores are not going away as they give shoppers the visceral buying experience, which is difficult to replicate in a digital environment. However, retail stores have to adapt to the irrevocable digitalization of the sales funnel brought about by high-speed Internet and smartphone technologies. Only then can retail stores be characterized as relevant and tailored to the needs of today's digitally savvy shopping community.
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With more than 16 years of experience in mobile, digital media/advertising, and e-commerce, Darren has successfully developed and launched pioneering mobile Internet initiatives such as subscription-based mobile news services, location-based advertising, behavioral targeting using consumer analytics in Singapore Press Holdings, SingTel, Cisco Systems, and DBS.
At InterContinental Hotels Group (IHG), Darren will serve as the regional subject matter expert on mobile and drive overall utilization of mobile to increase revenue and engagement in Asia, Middle East and Africa (AMEA). His mandate includes developing, implementing, and managing mobile marketing strategies to generate greater brand awareness and revenue through owned, paid, and earned media.
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