What are today’s online consumer needs and how can physical store formats cater to them? This article discusses recent case studies including Amazon Go, Alibaba and many more.
Online Consumer Needs: ‘Same Same but Different’
I recently had the opportunity to give a lecture about the trends in retail digitalisation at a German vocational school. The students where all in their early 20s and in the last year of their curriculum to becoming retail professionals. They also were what I call ‘digitally savvy’ shoppers. All of them had a smartphone and each and every one of them had at least one shopping-app on their phone. For most, this was the Amazon app, but some also had more niche apps catering to particular interests like consumer electronics or gaming.
I started off by asking them how they shop and what a retailer would need to do to keep them happy. Their answers almost perfectly matched the findings of a 2017 study by bitkom (download summary here) which was based on a representative sample of the German population.
The top three online consumer needs today are:
- Shopping convenience
- Product information
- Choice
Doesn’t this sound rather stale and as if taken from a retail textbook straight from the 1960s? And aren’t convenience, choice and information at the core of what any retailer worth their salt has already been focusing on for decades? In some ways, they are indeed. But in light of more recent technological developments, let’s have a look at what that means in the context of online consumer needs and how retailers address them within their brick & mortar formats or omnichannel networks respectively.
Convenience: Towering Expectations
When I was young, shopping convenience in Germany primarily meant that a supermarket or store was within a ten-minute drive from home. Ideally, that meant being at the store and ready to shop within those ten minutes.
Old school convenience shopping: free parking (Source: KCLR)
That only worked if the retailer of choice had parking spaces available at their store, which even now is still not a given. If you were really lucky, parking was free or paid for by the retailer if you bought their merchandise. That was what convenience largely meant. Even better if I could also shop at a few additional stores just around the corner and return home within an hour or so of leaving the house.
With the advent of the internet and mobile devices like smartphones, the possibilities to reach products have increased massively and, as a result, the meaning of convenience has shifted considerably. Online consumer needs around convenience are probably best summarised by ‘I want it all, and I want it now’.
In digital retail wanting it all means, more specifically:
- 24/7 ability to buy a product
- Buy from anywhere, anytime
- Choose when, where and how it will be delivered
- Ideally, get it delivered for free
- Return it for free if you don’t like it
- No waiting in lines at the cashier
- Super-informed sales staff in stores
In fact, thanks to the internet, today’s consumers are often so well-informed that they expect sales staff to answer highly specific in-depth questions that a couple of hours of online research were unable to satisfy. They also expect staff to be aware of what’s happening on social media and what’s considered a ‘hot’ product, and to be able to see whether a product is in stock at another store and what shipping options are available.
This is just the beginning and based on what European or German consumers currently expect. Looking to Asia, to China in particular, expectations are very likely to further increase in future – I’ll elaborate on Alibaba’s cooperation with Intersport in a moment.
Let’s first look at a few recent case studies of how brands and retailers are implementing the online consumer needs around convenience in their brick & mortar store formats.
Amazon Go
No line at the cash register 100% guaranteed. How do they do it? Easy, they just got rid of cash registers altogether. The store tracks what you buy automatically via cameras and weight sensors in shelves. Would you like to know more about this? Head over to my recent article where I wrote about my visit to the Amazon Go store in Seattle.
‘Speed Shop’ Lockers at Nike’s flagship store (Photo: Nike)
Nike Flagship Store, 5th Ave. NYC
Nike offers what they call the ‘Speed Shop’ process. They provide lockers in-store where you’ll find the products that you have pre-selected via the Nike app. You pick up your chosen products, try them on, return what you don’t like, and pay for what you want to keep via ‘instant checkout’ on the Nike app. No interaction with sales staff required. Fast in and out with a focus on those products that interested you the most in the first place. For an in-depth intro to the store and its functionalities, check out this 4-minute video on YouTube.
Product Information: Info Overload for Consumers and Sales Staff
The amount of product information available at your fingertips seems endless. Be it info from the manufacturer or brand, information provided by comparison-shopping portals, or consumer reviews on retailer websites and social media. As a result, it has become increasingly difficult for sales staff to be more informed about their assortment than any consumer walking through the door. Let’s look at examples of how retailers have responded to the online consumer need for information.
Intersport / Alibaba Cooperation ‘New Retail’ in Beijing, China
All along the shopping process, from the moment you approach the store, technology has enabled the retailer to show you relevant product information. This begins with the store window, where a large screen can show products relevant to you to lure you into the store. All you need to do is scan the QR code in the store window with your smartphone and recommended articles based on your past shopping experiences will show up on the screen.
Smart Shelf in Intersport’s Beijing store (Photo: Alizila)
Once inside the store, you can scan the barcode of any product and see additional details about the product on your smartphone (via the Taobao App). Combining this feature with the option to pay via the app addresses the need for detailed information and the convenience aspect of skipping the cash register.
There are many more fascinating features in this store, see for yourself in this 3-minute video on YouTube or read about them here.
Amazon 4-star, Soho NYC
Amazon provides yet another example from a digital-native retailer on how to combine online elements into an offline store format. Here, the online consumer need for product information is addressed by combining detailed product info with consumer reviews in very smart ways.
Amazon 4-star store in New York (Source: Invidis)
Amazon displays information from reviews provided by its online customers next to the product in-store to increase store customer’s level of confidence in their products. Additionally, Amazon’s store only displays products that were of particular interest to (online) customers in the physical vicinity of the store, in this case New York City. The customer ratings are also integrated in the fully digital price tags, which, by the way, allow Amazon to change prices at any time.
On top of that, the store features areas displaying products that are ‘frequently bought together’, which you’re probably familiar with from your online shopping experience. That’s another smart way to use peer-shopper information to satisfy consumers looking for additional information around their specific purchase.
Choice: Online Marketplaces Set the Bar High
Internet marketplaces are the largest digital distribution channel. They offer huge choice and that’s the key reason why consumers like to shop there. In that respect, the digital consumer retail need or choice behaves in similar ways as information: the more the better.
What can you do, to compete? Basically, you have two options. You can curate a very specialised assortment that is unique enough to make it worthwhile for shoppers to come to your store. Or, you can go where your consumers already are by linking your stores’ stock to online marketplaces to benefit from their great reach.
Typical examples for this are Amazon’s seller and vendor central, or Zalando’s connected retail initiative. It is, of course, in the interest of such marketplaces to have a large assortment and they therefore actively pursue a strategy of providing access to their platforms. Zalando, for example, had 600 retailers connected via its connected retail initiative in Germany by the end of 2018. Intersport group follows a similar approach to drive its online business and allows its partners to display their stock on the Intersport Group online shop.
Zalando connected retail (Photo: Zalando)
Priorities for 2019
Clearly, there are many opportunities and challenges on the path to satisfying the needs of today’s digitally savvy shoppers. 3 elements are key for me, especially if you are not a digital-native retailer and/ or have endless amounts of cash available to spend.
Consumer Needs
Focus on consumer needs to evaluate if a new technology is suitable for you and your position in the market. If the technology does not directly enable you to better fulfil core online consumer needs, it may be time to rethink where to spend your money!
Smart Execution
Does everything require a costly hig-tech solution? How can you integrate what you already know about your customers shopping habits into your store format? Is there perhaps a simple way for you to adapt what Amazon does in its 4-star format to your own stores? After all, you and your sales teams have a large amount of information in your heads and systems, and with a bit of structured consolidation will be able to create a more information-driven presentation.
Digital Ecosystems
Embrace digital ecosystems offered by online giants to extend your reach and offer consumers convenience and breadth of assortment. Do you know what it would take to integrate this into your processes and systems? There are many options to either integrate your stock into a particular platform. Or, if you want to increase your reach (and spread your risk) even further, find ways to connect to multiple platforms, for example via marketplace connectors like onquality.
As you can see, there is a lot to do. But if you stick to the online consumer needs as your compass, they will guide you in your efforts to maintain your current customers and maybe even gain back a few that have migrated their hearts and wallets to your digitally native competition.
If you have more smart ideas on how to meet some of these online consumer needs, I would love to hear from you. Comment below or email me with your thoughts and we can follow up and expand on this exciting topic in an upcoming article.
About the Author:
Christoph Berendes has a passion for building brands and helps businesses grow them. You can read more articles from Christoph here or get in touch with him via his LinkedIn profile or email. If you leave a comment below, you will put a smile on his face and he will certainly get in touch!
