Commerce 2.0: Retailers Move Away from Transactional Thinking

In the old days commerce strategies revolved around single, isolated transactions. Brands and merchants constantly bombarded customers with messaging spewing the lowest prices for “must-have” and “state of the art” products and services. The mentality was sell, sell, sell.

Procter & Gamble was one of the first-movers in shifting away from this mentality and looking at the customers’ entire journey with the brand. The company’s Chief Brand Officer, Marc Pritchard, who also happens to be the manager of the world’s largest advertising budget, made a statement to the world in 2012: his company would make a fundamental shift in how it operates, and sells to customers.

The idea was that building long-lasting relationships through engaging and useful content, stories and experiences would eventually lead to sales – sales to a more connected, loyal customer.  

Fast forward to present day and customer experience (CX) is top of mind for all brands, regardless of size. A study by Gartner found that 81 percent of companies expect to be competing mostly or completely on the basis of CX. Nowhere is this more evident than in the retail arena, where CX now rules the roost both online and in-store.

Below, we take a look at some of the biggest developments in commerce today, which all point to a bigger trend towards the customer-centric business transformation currently happening in retail and other commerce-driven industries.

The Digitization of The In-Store Experience  Sharper Image. Blockbuster. Toys R Us. A&P. What do all of these retailers have in common? Missed opportunity. In today’s digital age, there’s actually no better place to surprise and delight your customers than in the brick and mortar retail space. After all, customers have already expressed interest in the brand just by walking into the store.

There’s a reason why Walmart is thriving now while other retailers are closing up shop. The brick and mortar giant has rolled out several initiatives over the years to help streamline the in-store experience for customers. From touch-screen, tire-search kiosks to allowing customers to use their mobile devices to scan products on Walmart shelves and checkout quickly and efficiently via “Walmart Pay,” the retailer is certainly redefining the in-store experience and what is possible.

Nike, too, has made big strides with more engaging customer experiences in stores. For example, the company’s London shop uses an AR experience to help customers design and personalize their sneakers.

Indeed, the digitization of the in-store experience is blurring the lines between physical and digital, while also letting consumers shop on their own terms. One popular tactic – buy online/pick up in-store – saw a record 65% increase in usage during the 2018 holiday shopping season (Nov. 1-Dec. 31). This spike signals that retailers are increasingly fulfilling consumer expectations for integrated cross-channel experiences.

Mobile Revolution

In 2008, KPMG’s Internet trend-seeker Mary Meeker made the bold prediction that mobile would overtake desktop usage by 2014. While this did happen in the later part of that year, one thing Meeker left out of her prediction was the visit-to-conversion gap that would plague the mobile industry, even today. And while conversion on mobile continues to grow, albeit slowly, it is nowhere near as high as mobile traffic to retail websites.

To help brands monetize consumers’ time on mobile devices, the Magento Community recently launched the Mobile Optimization Initiative with PayPal and HiConversion, which offers retailers a complimentary mobile checkout funnel assessment, optimized campaign design and implementation, and professional services during the program.

In addition, with developments like progressive web apps (PWAs), a hybrid of regular websites and a mobile application, we may finally see substantial increases in conversion on mobile. PWAs are the future of the mobile web and critical to ensuring blazingly fast shopping experiences that convert as well as – or even better than – desktop.

Retailers like Ikea are proving that mobile can also help enhance the in-store experience. Its mobile companion app, which boasts scanning technology, wish list capability, as well as useful features like in-store maps (very useful for the maze layout of each Ikea), ensure that customers have the best possible experience when they are in store.

Nurturing Post Purchase

In another move towards customer centricity, retailers are paying much closer attention to delivery and other “last mile” customer experiences. For example, Target acquired same-day delivery platform Shipt back in 2017 to bolster its fulfillment capabilities and bring same-day delivery to shoppers across the country.

Additionally, Amazon’s Photo On Delivery service, which provides a photo to customers when their package is delivered, is another example of how companies are trying hard to impress customers post-purchase.

And, lastly, Wayfair’s return policy, which states that if Wayfair can’t replace damaged parts of a product that someone’s purchased, they will have a carrier pick up the original package and send the customer a full replacement free of charge, shows that retailers are committed to building loyalty (even if it means not charging for return shipping) in order to bolster profits in the long run.

And that’s really what post-purchase nurturing is all about: It’s a long-term growth strategy that won’t just give you short-term success. 

Emerging Technology Emerging technology like augmented reality and voice, to name a few, are completely redefining customer experience from a retail lens. Case in point: Nieman Marcus’ Memomi Memory Mirror, which allows customers to try on makeup in different lighting, without having to use unhygienic testers. The full-length versions of the mirror have a built-in screen and camera to give shoppers 360-degree views of outfits and even do a side-by-side comparison of several outfits. 

Warby Parker takes this idea one step further, allowing consumers to use their phones to virtually try on glasses from the comfort of their own home or on the go.

Experts expect voice technology to take off. By 2022, a majority–55%–of all U.S. households will have at least one smart speaker in their homes. We’re still in the early days of voice, and most people aren’t yet buying directly via smart speakers, but they are aiding consumers in the early stages of the shopping process. Nearly half (47%) of smart speaker owners report using one to initiate product search and research, 43% of people surveyed said they use them for creating shopping lists, and 32% do so for price comparison.

An early mover in the space, retailer Kohls, launched voice search functionality within its mobile app in hopes of encouraging spur-of-the-moment purchases. Additionally, retailer Macy’s allows customers to use voice services to find store locations, hours, and special store events, and to give shoppers information on its return policy and Star Rewards program. Expect many more developments over the next 12-18 months.

Bottom Line

We live in the age of CX, where your customers expect fluid, delightful and useful experiences from the companies that they buy from. This is commerce 2.0. It’s experiential. It’s customer first. It’s omnichannel. And, the retailers that ignore these demands from their customers will suffer the perils. Evolve or die, as they say.