COVID-19 will go down in history as an event that turned what was once labeled `innovation’ into what is now considered normal.
The once-sacrosanct touch-and-feel experience provided by stores is being replaced by digital commerce. Last year the holiday season witnessed the highest-ever levels of digital shopping and this trend will continue to grow. A United Nations Conference on Trade and Development study reflects this. Global retail e-commerce went up from 14% in 2019 to about 17% in 2020. The growth, says the report, is likely to be sustained during recovery. The most immediate impact of this trend is in the way digital commerce content is being re-shaped and is becoming rich. The experience is becoming exceptional, driven by re-engineered supply chains and powered by technologies like artificial intelligence (AI) and machine learning. Traditional players are being challenged by store-less businesses using advanced technologies. If your business is not using–or has no immediate plan to leverage–technology to disrupt markets, you are already in danger of losing competitive ground.
Digital marketing defines brand and product experience: The changes in e-commerce have been dramatic and quick to unfold, forcing a long-pending correction in outmoded methodologies. For example, the science of traditional segment-based marketing is being augmented by micro influencers and social media platforms. These changes are good, heralding a much-needed thrust towards greater efficiency, faster impact, and better returns. But this also means marketing campaigns can no longer afford to be broadly targeted. They must now use AI-led inferences to ensure they are focused and deliver better ROI on marketing spends.
Go virtual, engage and interact: In a virtual world it is difficult for consumers to understand products and arrive at accurate decisions. It therefore becomes the responsibility of the seller to provide shoppers with ways to interact with the product. This helps set expectations before they make a buying decision. The richer the content and more informative the interactivity, the easier it is for consumers to make a favorable decision. Some ways to improve interactivity is to use rich animation, live videos, an almost touch-and-feel experience using augmented reality, 360-degree product views, and stores as experience centers. Providing interactive digital contact centers with NLP-based voice commerce and advisor-led shopping powered by data and focused around experience are perfect ways to complete the customer journey.
Revolutionary business models: Among the more far-reaching impacts of digital commerce has been its ability to introduce new business models. Note the emergence of subscription models for groceries, personal care products, cosmetics, baby foods and diapers. Witness the rise of drop shipping that directly connects buyers to manufacturers, providing retailers the freedom to offer more SKUs without holding them. Observe the growing interest in disruptive real-time supply chain planning. And wrap your head around livestream shopping that is interactive, providing customers with instant answers to their questions. Livestream shopping even arms them with the ability to buy directly from the live stream with a simple check out link. Finally, there is a reversal of roles between buyers and sellers. Sellers can now become buyers and vice versa anytime they wish. This concept of bidirectional supply chain and re-commence increases the power of digital commerce platforms by several magnitudes.
Emotional loyalty over transactional loyalty: Changing customer lens and demographics–especially a whole new segment of digital-only customers–have heightened the expectations from brands and products. Consumers now want the best price, the best experience and same-day delivery. Many consumers will shift loyalties to anyone who provides better experience or the convenience of faster delivery. Same-day delivery, once considered a specialized offering, has become table stakes. Simultaneously, consumers expect sustainable practices from their brands. This means they will sacrifice same-day delivery for aggregated delivery. They will choose manufacturers who use eco-friendly colors, sustainable packaging, and electric vehicles to lower carbon footprint. Sustainable retail creates a positive brand impression with new age consumers. Many brands already follow eco-friendly practices but, unfortunately, have failed to communicate it to consumers. There could be several reasons for this: They may not have adequate data to support their claims of being eco-friendly or the data could be lying around in bits and pieces across the supply chain. Now is the time to get that data together and make it work to establish an emotional bond with consumers and influence changing markets.
Emergence of B2X: Even acknowledged leaders in the Consumer Packaged Goods (CPG) space have been grappling with these changes. Many are reaching out directly to their consumers, trying to figure out how to sell a single bottle (of say, beer) to the consumer versus sending a truck load of crates to retail partners. Their massive investments in market research have been supplanted by the urgency to understand individual consumers in a bid to launch products quickly and avoid going through complex partner set ups. But the B2B model now demands a B2C experience. After all, why should only retail consumers have the advantage of exciting engagement and convenience? As a result, what is emerging is a B2X mix where no segment can be relegated to the backburner.
The years 2020 and 2021 may count among the most difficult in the history of the industry but in hindsight the future will view them as being pivotal. Now is the time to take the technological leap of faith or risk being left behind.