Given the average shopper is no longer happy with the average shopping experience, and with omnichannel a key focus for retailers this year, digital technology is providing a powerful catalyst for change for digital and traditional retailers alike.
For some, frictionless shopping is the most important focus, with attentions set on optimising shoppers’ visits to local stores and online sites. And with the rapid rise of messaging apps like WhatsApp, interest in social selling – selling through comments on social platforms, or via user generated content galleries – is turning to ‘conversational commerce’.
For others, monetisation of their content is a growing issue. As Mondelez recently began working towards its declared goal of up to 10 per cent of its global media investments breaking even or turning a profit by 2020, rival retailers are watching closely the decision by Asda to start selling unsold ad units programmatically across three of its major websites in anticipation of launching its own private ad exchange.
Meanwhile, there has been a rapid uplift in interest among retailers in how best to engage with emerging technologies in order to inject tech-lead innovation into their operations and business models. Recent high profile announcements from major retail brands such as John Lewis with its two year-old tech hub JLab and Topshop’s collaborations with startups a cross every area of its business are just two indicators of this growing trend.
So in the lights of these trends already impacting on the world of retailing and e-commerce, how should retailers react?
The rise of ‘conversational commerce’
“We are moving towards a point when every media and channel will be shoppable so retailers must think of themselves as an API that can plug into any platform – quite a mind shift,” says Simon Hathaway, global chief retail officer at Cheil.
Conversation commerce is the latest manifestation of this. It uses chat, messaging or other natural language interfaces to allow people, brands and services to interact. So, rather than download a retailer’s app, a user can interact with and even make a purchase via a messaging app – a frictionless transaction experience with obvious brand benefits.
Chinese messaging app WeChat, for example, enables users to pay bills, undertake online banking and buy selected items through the app. Elsewhere, brands have recently begun exploiting Facebook Messenger for Business which lets businesses communicate with customers directly – in Uber’s case, to sign up and request a ride from within the app.
“On-site functionality to chat while someone is browsing a retailer’s site in order to enable a more considered purchase – say, of a higher ticket item – is an obvious opportunity,” says Damien Bennett, head of digital strategy at NMPi. “Cross-selling and upselling is another.”
A number of key considerations will dictate retailers’ ability to capitalise on this, however. An essential starting point is understanding just how and when consumers want to be talked to given messaging apps have so far been used primarily for conversing with friends, Hathaway points out.
For this reason, many currently testing this area – brands such as Dutch airline KLM and Hyatt Hotels – have focused on using Facebook Messenger for customer service or, in the case of Uniqlo, distributing coupons for gifting to drive footfall into store.
Speed of response will also be important, as will be the style and tone of communication retailers use within the messaging environment – both of which remain, as yet, unclear, according to Th_nk associate partner Lee Allen.
“The true potential of conversational commerce lies in the scale and reach of messaging apps given the numbers and frequency of those now messaging via mobile,” he believes.
“For this reason, retailers should start playing in this space now to identify best approaches and common failure points. While it’s too early for numbers, the quantity of startups in this space suggest there is customer interest and it won’t be long before we see more transactions conducted in this way.”
From content creation to content monetisation
Asda’s plan to create a private ad exchange is seen by many as a logical extension of the evolution of retailers’ approach to content creation and publishing which began long ago with the first customer magazine. Yet the potential value of monetising content – and customer data – in this way is anything but clear cut.
“Once you move into the content space you have a different relationship with users, who become your audience, so there is an opportunity to monetise,” says Somethin’ Else managing director Steve Ackerman.
“But the obvious challenge once you open up your own channels to third parties is just how do you protect your brand?”
Opening a private network is a risky move – a retailer must be totally confident in both its product and its price, Bennett points out: “Which is why the safest approach is to limit access to third party brands that are complimentary.”
Marina Cheal, chief marketing officer at Reevoo, voices concern that the value programmatic can offer over the long term in terms of enabling better and more targeted message could be weakened by short term efforts to monetise views.
“Whether or not this happens will depend on the value of your content. And at the moment, many retailers struggle to create interesting content,” she says.
Startups, labs and other techno-collaborations
Topshop’s recent tie-up with L Marks to launch a startup programme for wearable technology is the latest in a growing number of retail/tech collaborations fuelled by a belief that for a retailer to become more flexible and agile it must understand and embrace iterative development, the value of failure and rapid learning.
While it’s hard to argue with the logic of this, however, a number of considerations will dictate the extent to which such collaborations generate clear, tangible and wide-reaching business benefits.
An important starting point for any retailer before experimentation with the latest piece of tech should be to optimise its current offering, believes Jamie Allen, partner at Intermarketing.
“Regardless of the technological opportunities that lie ahead, on and offline offerings should first be aligned around a single customer view. But this is not yet the case for all – often due to legacy in-store systems that don’t link with online e-commerce,” he observes.
Another consideration is how best to structure tech innovation – whether to collaborate through an external partnerships, for example, or bring in experts to create an in-house lab or hub, according to Phill Blundell, chief executive officer of Eagle Eye Solutions.
“Given the complexity of today’s retail marketplace, trying to innovate from within is not enough,” he believes. “Collaboration is also essential because internal IT functions will often be preoccupied not with new trends but getting the day-to-day running of the business to work.”
Larger retailers can find collaboration tricky due to legacy systems and structures – especially when working with a far smaller, more flexible and agile startup, others suggest.
“The value of any output will depend on what that retailer does with the innovation that results and how far they are willing to take it,” Hathaway points out. “Looking at the bigger picture is critical. This means thinking not about just the immediate impact of one idea on part of the business but across the board. It may be a challenge, but it’s also the big opportunity.”