It seems though, with the arrival of pandemic, online shopping has finally arrived. Even though E-commerce has already become one of the primary ways to shop, with the pandemic, every retailer is scrambling itself to become an online first destination and its because their business survives on it. With user confidence at an all time high in online shopping, businesses and startups can now take chances and risks with new ways of digital retail, one which improves upon the current “click & buy” model of shopping. Online shopping for the past decade or so has been mostly about making it functional i.e how do you make sure a product that is sitting somewhere can be discovered easily, ordered online without too much hassle and then be delivered to the consumer in a reasonable amount of time. The fact that it took close to two decades to make E-commerce functional from not-functional shows how difficult the journey has been and also begets the next evolution where its more than just functional. This article explains makes a very strong case as to what’s next.
We’ve seen great companies form at layers one (Taking a simple action) and two (Moving or converting a resource, transacting). Now, incredible businesses and brands are creating value and carving out identities at layers three (Understanding;comprehending or learning) and four (Trusting a person or entity). The “Transitional Tech Generation,” now building and problem-solving alongside younger counterparts, is awakening to the less obvious, more abstract opportunities for friction-reduction.
Although its getting a little abstract here; I believe the article is trying to convey the essential point that we have seen businesses being built and getting successful at layer one and two which in case of online shopping has made it usable. The third and fourth layer is what we are seeing next. For instance, Amazon has improved its business to such an extent that people easily understand every part of it and user experience at every level is close to perfect. The fourth layer is when businesses will empathize with the user and make it possible to deliver products that are customized and personalized for the user.
To empathize with user is a difficult thing to do especially at scale. Right now we mostly see it through algorithmic recommendations or through other self directed methods like user ratings or reviews. But as shopping is transitioning itself towards a better experience, we are seeing companies with more pro-active ways to serve consumers.
Own the experience
Companies have been traditionally built around selling products for a particular need and leaving the job of how to use those products to users themselves. With the rise in number of products, the information available around those products and to some extent the shrinking of physical communities due to the pandemic; asking users to find the best way to use products is a lot to ask. For instance, in case of Peloton, just building a great fitness bike wasn’t enough, the company built a community around using the bike with top notch fitness trainers live streaming high intensity fitness classes. This article explains it well –
Peloton doesn’t see itself as being in the fitness business, which is crowded with competitors. Foley and his team see themselves as being in the fitness experience business, which is distinct and differentiated. Peloton sees itself in the relationship building business as well. Customers get to know their instructors personally and become part of each other’s lives. As they compete with other cyclists spinning remotely in their homes and apartments, Peloton sells the motivation and the energy of a live spin class. And Peloton gains data with which to constantly improve further.
In the end its not just about delivering the products, its also about the experience. We see more and more companies adopting this approach. For instance, Lululemon, the clothing brand recently bought the fitness startup Mirror and Nike was able to save its sales during the pandemic by offering workouts and fitness classes through its app.
Art of personalization
Another way to empathize with the user is by adding a personal touch or providing expert help to whatever the customer is buying. Although, when you are serving millions of customers and you have to make sure each customer is being treated personally, it becomes a different problem altogether. With the wealth of digital information that is now available and the improvement in machine learning, its now becoming possible to personalize shopping at scale. For instance, clothing or food are some of the areas where every person can be considered to have his/her own taste and companies like StitchFix and HelloFresh are working to solve this problem. With AI, the opportunities are tremendous; understanding simple things like what kind of jeans a person likes or more complicated things like what do they want to wear for a night out does seem within reach. Besides the improved experience for the user, the company also benefits in other parts of its businesses as well. For instance explained in this article about StitchFix –
Stitch Fix is also bringing innovation to suppliers. The brands it works with—including Kate Spade, Karl Lagerfeld Paris, Sam Edelman, John Varvatos, Toms, and Rebecca Minkoff—receive not only a vehicle for mainlining merch directly into the hands of new customers but also a trove of unprecedented marketplace insights, such as whether plus-size women find their pants too long or men over 40 consider a shirt “too Brooklyn.” Stitch Fix offers brands an alternative to declining department stores, fading specialty chains, or Faustian bargains with Amazon, while increasingly becoming the place to make their styles better, no matter where they’re sold.
Subscriptions are a great way to develop long term customer relationship and at the same time offers a pro-active approach to deal with user’s expectations. On the face of it, its a win win situation for both the buyer and the consumer. The buyer will comparatively spend less for the same number of products if bought otherwise and also at the same time enjoys a varied selection of products. On the other hand, suppliers are able to get a consistent stream of demand and also data insights about the consumer. But the biggest advantage to a brand or retailer is the customer relationship. As explained in this HBR article –
Even if the primary benefit is convenience/replenishment, subscriptions present an opportunity to create an ongoing relationship with the customer, redefining the conventions of traditional retailer/consumer engagement. Subscription is a form of partnership, a new dimension that moves beyond the transaction. Subscription is therefore not simply a replacement of the in-store experience but rather an expansion to the way a retailer or brand can engage.
The best part about S-commerce that it can be customized as per the needs of the both the brand and the customer. For instance, you have a no holds barred type of subscription model like the recent Panera bread subscription service which gives you unlimited coffee for $9 a month. The model helped Panera’s customers to save money by paying less for a frequent need like coffee and it helped Panera to gain the loyalty of customers and at the same time expose them to the food options they have in their cafe. A company can also pro-actively help customers explore different products through a subscription. For instance, a subscription service like FabFitFun is an excellent way to keep the surprise element and help its users buy top quality varied selection of products at relatively less price. It also takes away the burden of making a choice from a customer plus with the ongoing relationship, the brand can understand what a user might like or dislike. As such S-commerce compliments the personalization strategy and allows the company to understand the customer in a much better way.
One thing to consider and analyse is what might facilitate the growth of more proactive ways to shop ? What are some of the key factors that can make this possible at a large scale and not just for a subset of the population. The simplification and automation of logistics might be one of the factors. For anyone looking to build an online brand, there are now multiple ways to outsource the delivery part which is probably the most difficult thing to by yourself. With platforms like Shopify fulfillment network for delivering over long distances or Doordash for Merchants which enables local stores to fulfill local products delivery; the brand can now just focus on customer relationship and product quality. Similarly, setting up an online shop is considerably easier with platforms like Shopify, Wix and other no code platforms. Another important engine of growth is AI. AI makes it possible to churn out recommendations as per the preferences of the users and if a company has an ongoing relationship with the customer, it can collect a wealth of data about them which further improves the algorithm. Besides these advancements, we might also see one of the general human tendency playing a huge role; choice paradox. With increase in number of products and the information available around those products, the effort required to make a decision might become too much of a hassle. If the brand is able to take that decision for you and improve with time; it might just tip the scale in its favor.
Shopping traditionally has been restricted to physical stores which meant a company cannot really integrate shopping in the daily life of users besides marketing. But with online shopping; it is possible for a brand to facilitate the purchase of a product at the click of a button from their home. This opens up a lot of opportunities in different forms and experiences besides the one listed above. But, the trend of shopping becoming personal and integrated with the life of a consumer will get more important with time.