Today, the boundaries between the physical and digital world have been blown wide open and brands, whether traditional retailers or pure online players, need to adopt multichannel strategies to get the best of both worlds. Thus, while chains of stores have largely given way to e-commerce websites, e-commerce players are gradually opening physical points of sale, showrooms, or pop-up stores in an extension of the online shopping experience.
Two consumer trends reveal the relevance and necessity for brands to reconcile online and in-store sales. The first is showrooming, in which shoppers visit a store to find out about a product, to be advised by a salesperson, try the product out and see what they think, and then head off to find the best offer using price comparison websites and make the purchase online.
This practice tends to work against physical store chains, which play the role of advisor without making a sale. This means that physical retail networks must not only provide good advice, but also compete on price with online stores, even going as far as making very narrow profit margins that are then bolstered by the sale of additional products. This is particularly true of photography, where prices online and in-store tend to be similar. Stores do, however, make a handsome profit on accessories like memory cards, bags, insurance, etc.
The opposite of this is ROPO (Research Online Purchase Offline), in which the consumer researches a product online on blogs and specialist websites before visiting a store. They use online product comparison websites to assess the features and performance of two cars, refrigerators, or TV sets, for example.
Armed with this information, the consumer then visits the store to make their final decision, trying the products out and seeking further information from sales advisors. This practice boasts a dual advantage: not only can the consumer specify their needs upstream, but they can physically assess the product. Most importantly, they can take their purchase home, instead of waiting for it to be delivered by an e-commerce website with all of the inconveniences that may entail: breakages, post office opening time, etc.
These two major trends, far from competing, are each suitable for different products. Showrooming is particularly suited to small purchases (like clothes), whereas ROPO is suited to more significant purchases: hi-tech, cars, etc.
To cater to these new behaviors, retail networks are creating web-to-store strategies in an effort to give the consumer the best of both worlds with in-store advice and hands-on experience, and payment and other services online. Click and collect, for example, lets shoppers make their purchase online and collect it from the store. This is all the more appealing for retailers because the average online shopping basket is worth more than the average in-store basket. On an e-commerce site, shoppers can also pick a time-slot for collecting their product, avoiding the need to queue in store. They can also reserve a parking space, check that the product is definitely available, and pay online, etc. These multichannel strategies guarantee a more fluid overall experience for shoppers.
Seen in this light, it no longer makes sense to consider physical stores and e-commerce websites as competitors. Online stores are a way to reach more people, to offer services and build customer loyalty by offering them the opportunity to share their purchases and reviews on social networking sites. As for physical stores, they remain places for higher quality contact with the customer, to dispense advice, and offer a retail experience that more closely matches the shopper’s individual needs.
M-commerce: a new revolution
The rise of smartphones and the mobile Internet has also changed the hand dealt to merchants, and provides them with new opportunities. According to Daxue Research, there are 420m smartphones in China. 98% of Chinese smartphone owners use it to find products online, and 69% to buy them. In Europe and the USA, mobile purchases are slowly catching up to those made using a computer. According to a study published by the Centre for Retail Research, while smartphone and tablet purchases accounted for 12.5% of total online purchases in Europe in 2014 (19% in the USA), this is set to rise to 20% in 2015 (27% in the USA).
These new consumer behaviors are forcing brands to rethink their e-commerce platforms to better suit mobile screens, as well as to develop finely targeted marketing strategies: sending an SMS or alert when a shopper passes a point of sale, location-specific advertising for discounts, information, etc.
Payment and security
While online fraud accounted for 60% of banking fraud in Europe, the need for more secure electronic transactions is a major new challenge for e-commerce and m-commerce alike. This is even more so in a context of double-digit growth for e-commerce: the sector’s turnover in Europe was set to reach €185bn in 2015, and around €219bn by the end of 2016, recording annual growth of 19%.
It is clear that consumers are waiting for increased security to buy online with peace of mind. According to a study published on Paysite-Cash.com, 80% of customers feel more secure when the online payment module displays “traditional” or well-known payment players (Mastercard, Discover, Amex, Visa, Paypal, etc.). 40% state that they trust a website more if it offers several different ways to pay. Lastly, 59% abandon the transaction if their preferred payment method is not available.
Among payment means, bank cards remain widely used and preferred by consumers for online purchases. In this type of transaction, known as card-not-present (meaning that the card is not inserted into a payment terminal), the PIN code is not requested and the information needed to pay is featured on the card: card number, expiry date, and 3-4 digit security code on the back of the card. This means that if someone obtains the information featured on the card, they can use it to make online payments, without the consumer knowing it. OT provides one solution with OT MOTION CODE™, a payment card whose security code is displayed on a screen and changes regularly (every hour, for example). Other solutions are appearing that enable secure contactless payments in-store using a smartphone. Cell phone manufacturers, for example, are embedding dedicated payment chips into their smartphones, such as the Samsung Galaxy S6. OT protects card details from hackers, and the payment is confirmed using the fingerprint scanner. To manage these new online and in-store purchasing behaviors, banks and e-commerce players must adapt their strategy, as well as take an increasing variety of payment methods and habits into account in order to provide users with the best suited payment method to them. All of this, of course, comes with the obligation to provide maximum security to everyone, and for all transactions.
* Sources : RetailMeNot – Centre for Retail Research. January 2015 – Report carried out in 8 European countries : Germany, Spain, Italy, France, the Netherlands, Poland, the UK and Sweden.