Author Archives: Douw G Steyn

Douw G Steyn

About Douw G Steyn

Always a student with a passion for digital business and -marketing...

Making Money Online Requires Analysis, Planning, Effort and Lots of Patience

It seems that right now is the best time for making money online. According to Statista.com, retail e-commerce sales worldwide amounted to 1.86 trillion US dollars during 2016 and online retail revenues are projected to grow to 4.48 trillion US dollars in 2021.

Ashwin Ramasamy writing for PipeCandy estimates that there are between two and three million eCommerce websites, excluding websites from China, on the web. So, if you do the calculation, taking the numbers of 2016, the average annual revenue per eCommerce website could be around 740,000 US dollars.

And with an online retail revenue of 4.48 trillion US dollars projected for 2021, there seems to be a lot of spare capacity to take up. Is making money online that easy? Not really…

“eCommerce has about an 80% failure rate. Other researchers claim it’s as high as 97%. One of the reasons the failure rate is so high is because an eCommerce business can be easy to set up, for a small amount of money. Creating a store front is easy. Making it successful, on the other hand, not so much”, says Dianna Labriem in Tech.co.

So, the Trillions of US dollar revenue generated each year by online retailers is shared by a handful of eCommerce websites.

Making money online the hard way

From the moment that you’ve activated your ecommerce website, you need already to know what value you’re offering your customers. In other words, what is your competitive advantage in the online market you’re targeting?

A sustainable competitive advantage may be defined as ‘the ability to deliver superior value to the market for a protracted period of time’ 1. Here, superior value refers to the fact that the consumers of a product or service must be convinced that they are getting something of value for their money. The value proposal for Bricks and Clicks retailers was previously discussed in this blog.

The hard way of making money online starts with analyzing your online market.

Analyzing your online marketplace

To make money successfully online, you need to know everything about your market. Your market consist of your customers, suppliers and intermediaries and your competitors.

Analyzing your customers:

  • Who are your biggest customers?
  • Who are the most profitable?
  • Where can you find your customers online?
  • Do your customers have any unmet needs?
  • What are the benefits they seek from your products?
  • And what price are they willing to pay for your products?

Analyse your intermediaries:

Intermediaries have captured a significant proportion of the profits available in the online retail market 2.  Therefore, their impact on your business’s marketing mix should be analysed.

  • The place (delivery) – most online retailers are dependent on logistic service providers to do the ‘last mile of delivery’ to their customers. Retailers should analyse the different service providers and choose one that is the most reliable at the best price;
  • Your product – only source products of the highest quality at reasonable prices from reliable suppliers;
  • Your promotion – which marketing intermediary will deliver your marketing messages the best? Google’s AdWords or social networks such as Facebook or Twitter?
  • The price that intermediaries charge – analyse the offerings and choose those who deliver the best service at reasonable prices.

Analyse your intermediaries

Analyse your competitors:

You need to find out how to satisfy customers better than the competition. By doing a competitor analysis you may begin to understand the level of competition that exists in your target market and it will help you to make the right pricing decisions.

The strategies and actions of your competitors may well determine if you will be making money online:

  • Who are our present and potential competitors?
  • What are the positions that they have established in the market?
  • What are their strategic objectives and thrusts?
  • What are their present and future strategies?
  • What are their strengths and weaknesses?

The next step to do to get your online business on its way, is incorporating all the data you’ve generated with your analysis into a strategic plan.

A strategic plan to make money online

By now you should know who your customers are; who the intermediaries are that you’re going to use; and whom you’ll be competing against. Now you should develop a competitive strategy.

The competitive strategies available for online retailers to obtain and maintain a sustainable competitive advantage are 1:

  1. The differentiation strategy – value is added to the product or service through differentiation to make it different from competitors’ products and services.
  2. The low-cost strategy or overall cost leadership – this implies that an organisation will supply a product or service more cost-effectively than competitors.
  3. The focus strategy – here you can focus on a special product/market niche that you may later monopolise.
  4. The pre-emptive move or first-mover advantage – this strategy can be pursued by an online retailer who takes a calculated risk by being the first to enter a market with a new product or service.
  5. Synergy – this means that all the components of an organisation are working together and so creating a sustainable competitive advantage. For example a physical retailer that adds the online channel to its business.

It takes a lot of effort to make money online

Mostly, money doesn’t just start flowing in because you have an ecommerce website. You may need to spend many hours a day to monitor the happenings on your, (and your competitor’s) website. You need to follow the trends in your market, negotiate with intermediaries and confront your competitors. You definitely need to create quality content for your website and also get a presence on social media networks.

Furthermore, you should manage the finance of your business and identify the risks of the business. Your online customers demand a 24/7 service – and that is what you need to deliver. For your customers, the alternative is a click away…

Concluding

Although the internet offers us billions of potential customers, anywhere at any time, it will take some time for your online business to show substantial profits. That is especially true for small retailers with a limited marketing budget…

However, if you do the right thing and do that right, with lots of patience and belief, you’re online business may be part of the 3% that make money online.

Notes:

1 Du Plessis, P.J., Jooste, C.J. and Strydom, J.W. 2001. Applied strategic marketing, Heinemann.

2 Laseter, T.M. and Rabinovich, E.  2011. Internet retail operations: integrating theory and practice for managers, CRC Press.

Images

  1.  Featured image: Pixabay
  2. Image in body: Pixabay

Instagram Marketing – Telling Stories about Your Brand with Pictures and Videos

Instagram is the fastest growing social network site and is expected to have one billion active users this year (Mediakix, November 2017). As a result, Instagram marketing has really become “essential” when it comes creating a following for your brand.

People love Instagram. They find gratification by posting photos and videos for their friends to see and react to. Also, users consume photos and videos mostly by viewing a core page showing a “stream” of the latest photos and videos from all their friends, listed in reverse chronological order 4. They can also ‘like’ or comment on these posts.

Instagram marketing is valuable tool for retailers. This is evident because retail brands are prominent users of Instagram. They frequently use persuasion, self-efficacy, relational, emotion and symbolism strategies to get users to interact with the brand by ‘liking’ or commenting on the content 3.

The more ‘likes’ and followers a retail brand achieve on Instagram, the more will users become aware of the brand. However, in order to secure online sales, retailers should make the user’s journey from ‘awareness’ to ‘purchasing’ as smooth as possible.

About Instagram

Instagram is an online, mobile phone photo-sharing, video-sharing, and social network service (SNS) that enables its users to take pictures and videos, and then share them on other platforms 1. It also allows users to add hashtags and geotags, graphical stickers, Augmented Reality objects, as well as apply multiple graphical filters to alter photos. Instagram quickly became popular because it’s not only a handy photo-sharing app, but also a social network.

What is most powerful about Instagram is that it is geared entirely towards mobile use, allowing users a simple interface to upload photos that they have just taken or captured in the past. “It’s like Twitter with followers, only instead of real-time text updates, you provide photo updates” explained Zohra Ashpari for PC World in 2012.

Instagram user statistics (Hootsuit)

  1. Instagram has over 800 million active users.
  2. 80% of Instagram users come from outside of the U.S.
  3. Instagram is used by 38% of women in the U.S. and 26% of men.
  4. 59% of Instagrammers in the U.S. are under 30.
  5. Teenagers love Instagram.
  6. Facebook and Pinterest are Instagrammers’ other favourite networks.
  7. A lot of Instagram users have pretty deep pockets.

It took Facebook not long to purchase Instagram in 2012 for one billion US$. Maybe they did it because Instagram was potentially a threat to their other business (Facebook) 2. Furthermore, Facebook  owns the social media apps WhatsApp, and Facebook Messenger. The parallel that Zohra draw between the two social media apps then is happening even more today, as was pointed out in Redcode.

Kurt Wagner and Rani Molla write in Recode “The world’s most popular social apps are starting to look a little … similar. As companies like Facebook, Instagram, Twitter and Snap have evolved, they’ve started to borrow product ideas from each other in the hope of building an all-in-one experience.”

So if Facebook is similar to Instagram, and all the other social media apps appear similar to each other, how on earth can retailers decide what social media app to advertise their products with?

However, with more pictures and videos that are used to share stories and experience, retailers may first consider “how to market” rather than “where to market” on these social media apps.

Cadbury’s use of Instagram

Developing an Instagram marketing strategy

Instagram marketing is derived from social media marketing. Therefore social media marketing can formally be defined as “The utilization of social media technologies, channels, and software to create, communicate, deliver, and exchange offerings that have vale for an organization’s stakeholders.” 5

Alicia Johnson writing in SproutSocial.com suggests the following to create an Instagram marketing strategy:

Step 1: Determine Your Objectives

  1. What will Instagram allow you to do that other platforms don’t?
  2. Who is your target audience and which members of your audience are active on Instagram?
  3. How will Instagram integrate with the other networks in your social media strategy?

Step 2: Develop an Instagram Content Strategy

Content is the foundation of your Instagram presence. For that reason, many B2C businesses use Instagram to make their product the star of the show.

  1. Build content themes – review your objectives and determine what aspects of your brand to showcase in your Instagram content.
  2. Determine content medium and ratio – consider a balance of content types that will work best for the resources you have and the engagement you want from your audience.
  3. Set a (flexible) content calendar – to establish and maintain an active presence on Instagram, determine the frequency with which you will post.
  4. Curate user-generated content – it allows you to foster audience engagement and create an incentive for your audience to share posts.

Step 3: Establish Clear Team Guidelines: Style, Publishing and Workflow

On a visual platform, the need for a clearly defined aesthetic is key.

  1. Maintain a brand aesthetic – review the existing visual representations of your brand: your logo, website, graphics, stock photography and other collateral.
  2. Understand your brand’s composition – to create a sense of visual harmony when a user looks at your profile.

Step 4: Foster engagement and set guidelines for community management

Instagram offers huge potential for engagement.

  1. Optimize your bio and link – focus on what’s important about your brand. Your bio is also a good place to educate.
  2. Follow industry accounts and Instagram influencers – what kind of content do you want to keep a pulse on through Instagram?
  3. Use Instagram stories to test content – make this content easy to read, view and understand so users don’t skip you the next time you publish a story.

Step 5: Analyze Your Results

Tracking how well your content performs and your follower growth will allow you to adapt your Instagram marketing strategy over time. For that reason it allows you to deliver more content that your audience will respond to while helping you optimize for future campaigns.

Concluding

As digital communication technology improves, and we can communicate with speed and download quality images while moving, the visual content will become more import for retail brands. For that reason Facebook and Twitter are moving towards the business model of Instagram by incorporating more pictures and videos on the sites.

But we need to be reminded about the value of text: “Whereas a single picture may convey a thousand words, a single word may stimulate vivid images that may move consumers to attend, prefer, or buy 6.”

Notes

1 Sheldon, P. and Bryant, K. 2016. Instagram: Motives for its use and relationship to narcissism and contextual age, Computers in Human Behavior, 58:89-97.

2 Andrew Apostola and Simon Goodrich, 2013. Taking Back Retail, Transforming Traditional Retailers Into Digital Retailers, ©Portable Australia Pty Ltd.

3 Hassan, A. 2014. Do brands targeting women use instamarketing differently: a content analysis, In Marketing Management Association 2014 Annual Spring Conference Proceedings, 62-64.

4 Hu, Y., Manikonda, L. and Kambhampati, S. 2014, June. What We Instagram: A First Analysis of Instagram Photo Content and User Types, In Icwsm.

5 Tuten, T.L. and Solomon, M.R. 2014. Social Media Marketing, SAGE.

6 Wedel, M. and Pieters, R. eds. 2012. Visual marketing: From attention to action, Psychology Press, Taylor & Francis Group, LLC.

Images

Pixabay.com

Flickr.com (Ell R Brown)

How the Fourth Industrial Revolution Shapes the Retail Industry

It seems to almost happen overnight, the Fourth Industrial Revolution. “Something’s coming. It’s picking up speed and will overtake most of us in the coming years. Industries will be disrupted, lifestyles will be altered, economics will be shattered as this revolution takes hold”, according to a press release by the Digital Journal.

The revolution started almost unnoticed, very quiet and extremely swiftly. It’s also clean, unlike the first industrial revolution that was noisy, dirty and very slowly – just imagine the coal gobbling steam engines, 3 centuries ago…

Don’t make any mistake. The 4th Industrial Revolution wouldn’t have happened without the 1st (coal); the 2nd (oil and electricity) and the 3rd (internet technology and clean energy) Industrial Revolutions.

However, the Fourth Industrial Revolution is busy happening right now and it’s having a profound effect on our businesses and our lives. Indeed, the Fourth Industrial Revolution and the future of core technology trend are expected to result in an all-new era of automated industries 1.

Also, the retail industry and its customers are already part and parcel of this revolution.

So what is the Fourth Industrial Revolution?

The internet and Information Communication Technology (ICT) have facilitated the advent of cyber-physical Internet-based systems.  These systems offer innovative capacities that can benefit industry and other economic sectors. This phenomenon is happening now and is known as the 4th Industrial Revolution.

The Fourth Industrial Revolution is a fusion of all current technologies to create a cyber-physical system 1.

Floridi 3 (2014) explains the 4th Industrial Revolution as a space where smart and autonomous agents no longer need to be human.  Therefore, a society that’s fully dependent on third-order technologies and thus are human-independent. Here, learned machines that communicate with each other, are taking over the thinking and doing of humans…

Or, as Oosthuizen 2 (2016) recently described it: “Consider the possibilities of mobile devices connecting billions of people driving unparalleled processing power, storage capabilities and access to knowledge. In addition, the overwhelming convergence of emergent technology such as, among others, artificial intelligence (AI), robotics, the internet of things (IoT), autonomous vehicles, 3D printing, nanotechnology, biotechnology, materials science, energy storage and quantum computing.”

The retail industry is one of the spaces in business that the 4th Industrial Revolution is seen working and it is experienced by many.

How the Fourth Industrial Revolution shapes the retail industry

The World Economic Forum 4 (2015) identified six software and services mega-trends which are shaping society:

People and the internet

How people connect with others, information and the world around them is being transformed through a combination of technologies. Wearable and implantable technologies will enhance people’s “digital presence”, allowing them to interact with objects and one another in new ways.

Bricks2Clicks recently discussed how the multi-purposed smartphones of customers that are AI empowered can help them to connect, communicate, recognize and experience the digital world of the 4th Industrial revolution.

Computing, communications and storage everywhere

The continued rapid decline in the size and cost of computing and connectivity technologies is driving an exponential growth in the potential to access and leverage the internet. This will lead to ubiquitous computing power being available, where everyone has access to a supercomputer in their pocket, with nearly unlimited storage capacity.

The use of the mobile smartphone has grown exponentially since its introduction a decade ago. In fact, just over 36 percent of the world’s population is projected to use a smartphone by 2018, up from about 10 percent in 2011, according to Statista. For retailers the growth in use of smartphones by their customers may result in opportunities and threats. Read more: Bricks and Mortar Retailers Need To Be Smart With Smartphone Customers.

The Internet of Things (IOT)

Smaller, cheaper and smarter sensors are being introduced – in homes, clothes and accessories, cities, transport and energy networks, as well as manufacturing processes.

“Connected devices and products provide retailers with the opportunity to help optimize operations in the face of a more complex supply chain. That’s  increasingly important for digital channels, and a more demanding customers.  By utilizing the IOT, managers can track inventory more easily, and adjusting pricing in real time using smart tags”, says Douw G Steyn (Bricks2Clicks).

Artificial intelligence (AI) and big data

Exponential digitization creates exponentially more data – about everything and everyone. In parallel, the sophistication of the problems software can address, and the ability for software to learn and evolve itself, is advancing rapidly. This is built on the rise of big data for decision-making, and the influence that AI and robotics are starting to have on decision-making and jobs.

Retailers will have to decide where and when Artificial Intelligence has the potential to replace human intelligence. Cost and scale will drive these decisions. Future decisions about AI by retailers will probably be about the ethics of using the technology and the effect it may have on society. Further reading: Artificial Intelligence – Digital Outcomes or Digital Disruptions for Retailers?

The sharing economy and distributed trust

The internet is driving a shift towards networks and platform-based social and economic models. As a result, assets can be shared, creating not just new efficiencies but also whole new business models and opportunities for social self-organization. The Blockchain, an emerging technology, replaces the need for third-party institutions to provide trust for financial, contract and voting activities.

Here we are talking about crypto-currencies such as Bitcoin. “There is the potential for a lot of demand for crypto-currencies from a consumer perspective. But right now it’s a pretty complex process to set up a digital wallet, gain access to a crypto-currency exchange, and start buying up coins”, according to Nikki Baird (Forbes).

The digitization of matter

Physical objects are “printed” from raw materials via additive, or 3D, printing, a process that transforms industrial manufacturing. Consequently it allows for printing products at home and creates a whole set of human health opportunities.

3D printing technology for retailers is now emerging as an outcome for small localized retailers that are facing closure. However, as it is with most disruptive technologies, the advantages that 3D printing offer for retailers should be weighed against its potential pitfalls. Read more: 3D Printing Technology for Retailers – An Opportunity or a Waste of Money?

Conclusion

The 4th Industrial Revolution is not only about digital technology and gadgets, but also about us. How should we prepare ourselves and our children to survive and prosper in this digital, robotic and information rich space? And what about retail? Not only need the structure, operations and organisational cultures change at retailers, but retailers also need extraordinary leaders (Read: Success in the Digital Age Requires Extraordinary Retail Leaders).

The last words are from Albert Einstein: “The distinction between the past, present and future is only a stubbornly persistent illusion.”

Notes

1 Chung, M. and Kim, J. 2016. The Internet Information and Technology Research Directions based on the Fourth Industrial Revolution, KSII Transactions on Internet & Information Systems, 10(3):1311-1320.

2 Oosthuizen, J.H. 2016. Entrepreneurial intelligence: expanding Schwab’s four-type intelligence proposition to meaningfully address the challenges of the fourth industrial revolution. In proceedings of 28th Annual Conference of the Southern African Institute of Management Scientists, University of Pretoria, South Africa.

3 Luciano Floridi 2014. The Fourth Revolution, How the Infosphere is Reshaping Human Reality, Oxford University Press, USA.

4 World Economic Forum 2015. Deep Shift: Technology Tipping Points and Societal Impact, Global Agenda Council on the Future of Software & Society, Survey Report, World Economic Forum, Geneva, Switzerland.

Images

c1.staticflickr.com and pixabay.com

Product Returns may Destroy Small Online Retailers

Product returns is getting unaffordable for most small online retailers. However, online retailers who don’t accept product returns will hardly sell any products – especially if it is clothing. That is because retailers need to accommodate the risk of their customers for buying their products online.

A reasonable return policy will give online customers ‘peace of mind’ since they can return products that they don’t like or can’t use.  Yet, this reassurance that retailers give their customers usually comes at a high price.

Retailers spend big money to get unwanted products back from their customers because the “last mile” of fulfillment needed to be reversed. As a result retailers must arrange for the collection of unwanted products from customers.

Also they need to dispose of the products or, alternatively, refurbish, restock and resell them through their own channels or through an inventory liquidator. And they’re losing lots of money and time in the process.

Moreover, there are criminals that can use your lenient product returns policy to their advantage. The costs are sadly for your account…

The cost and occurrence of product returns for online retailers

The occurrence of product returns is indeed a big headache for online retailers. Adam Minter, a columnist at Bloomberg reported recently that about 25% of all the products that are sold online are returned. And, continues Adam, 50% of these returned products are clothing.

In fact, online retailers have little choice but to offer lenient return policies to their customers. They can’t expect buyers to take the risk of buying clothes or shoes online that doesn’t fit. Moreover, the shape and color of clothing looks sometimes much different in real life as what it appear on a computer screen.

Therefore some online retailers receive as little as 15 c to a Dollar spent back on returned good (Bloomberg).

Reasons for product returns

So why is the incident of product returns so high with online retailers?

  1. Customers aren’t happy with the merchandise because it looks and feels different as what they have expected;
  2. With clothing, it may be the wrong size or colour;
  3. It may be an unwanted gift from somebody;
  4. Or it may be that a wrong product has been send;
  5. Or, more sinisterly:
    1. The customers are wardrobing – they purchase the product, use the item once only to return it again to the retailer (e.g. an expensive evening gown);
    2. Sometimes criminals return stolen goods to retailers that are willing to accept goods without a receipt.

How can online retailers solve the product returns problem?

The occurrence of product returns can impose substantial costs on online retailers. If the returns are getting out of hand, it may even cause the closure of the retailer. Here are some suggestions to tackle the problem:

  • Get a physical store – if you are a pure play online retailer or if you plan to include the online channel in your retail start-up. A Bricks and Mortar store can serve as a place where online customers can return their purchases and gives them a chance to try and buy other product in the store.
  • Use outsourced drop-off spots – it’s a service that most Logistic Service Providers offer;
  • Identify those customers who tend to abuse your return policies. Don’t sell anything to them. However, make sure you don’t penalize customers who have legit reasons to return their products.
  • Make your return policies more stringent. You will most probably have fewer returns and unfortunately also fewer sales. Your customers won’t take the risk of buying your products online if they can’t return it.
  • Charge for returns. It seems the logical answer to all your product return problems. However, one comment read the following “Unless amazon takes away free returns I doubt anybody else will be able to.” And that says it all…
  • Incorporate the cost of your returns into your pricing. You can do it only if you run your business cost-effectively. If you price your products too high, your customers will find the same product at a better price online.

Concluding

Much has been said about how the advent and growth of online retailing have caused the demise of Brick and Mortar retailers. The huge cost of product returns may however prove to be the greatest leveler in the retail industry.

It’s no surprise that pure play online retailers, for example Amazon, are now acquiring physical stores.  They’d realized that their customers need to feel and fit their products and a Brick and Mortar store may at the same time serve as a collection hub for returned products.

Lastly, if your competitor doesn’t charge for product returns, so should you.

Read also: Order Fulfilment in Omni-Channel Retail – the “Last Mile Delivery” most Retailers Fail to Complete

Note:

Laseter, T.M. and Rabinovich, E.  2011. Internet retail operations: integrating theory and practice for managers, CRC Press.

Image:

GetThatWholesale.com

AI-smartphones

Very Clever AI-Powered Smartphones Empower Customers

AI-powered smartphones is the latest attempt by phone manufactures to differentiate themselves from their competitors. They argue that customers will ultimately only buy the smartest phones. But how will the retail industry react to this new gadget?

AI-powered smartphones involves machine learning – the ability for a system to learn outside of its original programming. Furthermore encompasses AI-powered smartphones deep learning, which is a type of machine learning that tries to mimic the human brain with many layers of computation (David Nield, contributor to The Field Guide).

IT-Onlne reported research results by Gartner that identify 10 high-impact uses for AI-powered smartphones.

10 High-impact uses for AI-powered smartphones

  1. ‘Digital Me’ sitting on the device – smartphones will be an extension of the user, capable of recognizing them and predicting their next move. They will understand who you are, what you want, when you want it, how you want it done and execute tasks upon your authority.
  2. User authentication – security technology combined with machine learning, biometrics and user behaviour will improve usability and self-service capabilities.
  3. Emotion recognition – emotion sensing systems and affective computing allow smartphones to detect, analyse, process and respond to people’s emotional states and moods.
  4. Natural-language understanding – continuous training and deep learning on smartphones will improve the accuracy of speech recognition, while better understanding the user’s specific intentions.
  5. Augmented reality (AR) and AI vision – one example of how AR can be used is in apps that help to collect user data and detect illnesses such as skin cancer or pancreatic cancer.
  6. Device management – machine learning will improve device performance and standby time. For example, with many sensors, smartphones can better understand and learn user’s behaviour, such as when to use which app.
  7. Personal profiling – smartphones are able to collect data for behavioural and personal profiling. Users can receive protection and assistance dynamically, depending on the activity that is being carried out.
  8. Content censorship/detection – restricted content can be automatically detected. Objectionable images, videos or text can be flagged and various notification alarms can be enabled.
  9. Personal photographing – personal photographing includes smartphones that are able to automatically produce beautified photos based on a user’s individual aesthetic preferences.
  10. Audio analytic – the smartphone’s microphone is able to continuously listen to real-world sounds. AI capability on device is able to tell those sounds, and instruct users or trigger events.

What implications will AI-powered smartphones have for retailers?

Retail customers with AI-powered smartphones may now connect with AI-enabled stores and online eCommerce sites from anywhere. That may cause the already mobile customers to demand enhanced shopping experiences in every store they visit. Customers with these phones may change their buying behaviour towards retailers that are AI-enabled.

However, the high prices of AI-powered smartphones may see a gradual adoption of the technology and so give retailers enough time to adapt to the phenomenon.

Concluding

Some commentators has labelled 2018 as the year of Artificial Intelligence. So does this means the end of the small local retailer? I don’t think so. Indeed, it may provide an opportunity for smaller retailers to start a digital free retail niche. A niche where you still can use your own senses and decide for yourself when, what and why you want to buy something…

Read also: Webrooming and Showrooming – Buying Behaviors of Retail Customers in Virtual and Physical Environments 

Image:

maxpixel.freegreatpicture.com

 

Hi, I’m your Emotional Customer. Can you please help me?

There’s an emotional customer in all of us. In fact, emotional experience connotes the whole range of our feelings, including anxiety, fear, apathy, euphoria, depression, sadness, anger, and grief 1. I’m sure we’ve all experienced some of these feelings as a result of our emotional state.

Our emotional state is important because it affects our decisions before and while we’re shopping 2. And all retailers need to know it…

Now, picture yourself as an emotional customer. So, one morning you wake up, and, getting out from the wrong side of the bed, and you feel miserable. But wait, maybe it’s the perfect day to go shopping, I’m sure I’ll feel better…

You’ve made an emotional decision because – hey you’re only human…

The shopping behavior of an emotional customer

Of all the behaviors we possess, the decision to go shopping is one of our most purposeful 3. Apart from buying the products that we need, we also shop to experience entertainment, recreation, social interaction, or intellectual stimulation.

Although purposeful shopping suggests that we should do thinking and planning before purchasing, that’s not always the case. Most of us still relies on our “gut feeling” when we decide to go shopping.

So, in spite of us being so clever and having all the info, technology and tools, we mostly cope with our lives by making emotional decisions. “Decisions cannot be made solely based on logic as they may have pros and cons on both sides and simply may be too complex”, suggests Kane Simms in Guided Selling.

Now retailers need to depend on their customer’s “gut feeling” to make their shopping experience a memorable one…

Selling to an emotional customer

Every customer that walks into your store is in a specific state of mind. Indeed, Robert Taibbi in Psychology Today lists the six most common states of mind as follows:

  1. Rational. This is the gold standard, the middle of the road, the prefrontal lobes fully engaged; where you use emotions as information.
  2.  Anxious. We all know this one. It’s about the future, the what-ifs, disasters and butterflies in the stomach.
  3. Depressed. If anxiety is about the future, depression is often about the past – mistakes, regrets, roads not taken.
  4. Angry. We plot revenge, we say over and over how unfair this is, in place of anxiety’s butterflies this is a raging volcano.
  5.  Fear. Anxiety is worry; everyday fear (not battle-zone fear, surgery fear) is often tied to easily-activated little-kid fears. It’s here where you feel intimidated by someone even though in your rational mind you realize there’s no sane reason to.
  6. Rebellious. Like fear, there’s usually a little-kid element to this as well. There’s resentment and a bit of passive-aggressiveness or simple digging in of heels.

How do retailers cater for the states of mind of an emotional customer?

To create a store atmosphere conducive to buying, a retailer should establish in the consumer a frame of mind that promotes a buying spirit.

A fix retail setting may be perceived differently by every individual customer entering the store. It has mostly to do with the store’s psychological environment. In essence, a store’s psychological environment is the mental image of the store produced in the customer’s mind 4.  Also, our emotional reactions can be guided by sensory information.

Here’s how a retailer can use sensory appeals to affect a favorable store image and a pleasant shopping environment for an emotional customer 4

  • Sight Appeal. The sense of sight provides people with more information than any other sensory mode. For example: Lighting is used to highlight merchandise, sculpt space and capture a mood or feeling that enhances the store’s image.
  • Sound Appeal. Sound can either enhance or hinder a store’s buying atmosphere. For example: music in supermarkets affects the average time spent in the store.
  • Touch Appeal. For most products, personal inspection (handling, squeezing, and cuddling) is a prerequisite to buying. Before buying a product, the average consumer must at least hold it, even if it cannot be removed from its package. The chances of a sale increase substantially when the consumer handles the product.
  • Taste Appeal. For some food retailers, offering the consumer taste appeal might be a necessary condition for buying. This is often the case with specialty foods such as meats, cheeses, and bakery and dairy products.
  • Smell appeal. Smell has the greatest impact on our emotions and retailers add fragrances to enthuse a certain mood in shoppers. For example, some retailers are using a chocolate scent at the entrance of their stores in an attempt to entice customers to enter the stores.

However, for retailers to use sensory appeals to influence the mindsets of their customers there need to be customers in their stores. Physical retail stores are losing most of their customers to the online channel.

How does the online retail channel appeals to an emotional customer?

Just as with the retailer owning a physical shop, the online retailer wants to create a pleasant emotional online experience for her customers. Indeed, everything about your website – from the colors to the copy – should work to arouse the emotions of customers, according to Virginie Kevers in Emolytics.

The online channel doesn’t (not yet) offer a way for retailers to use sensory experiences like touching, smelling and tasting to influence the buying behaviors of their customers. However, the use of visual and audio sensory experiences can, with the help of a variety of online marketing tools, help convince customers to buy products online.

That’s not all. The internet is an ideal platform for customers that are highly involved in the purchasing process. These customers are interested in gaining more information about the product and processing product information in greater detail, presumably because they are more concerned about making the right decision 3. Therefore, an emotional customer’s need for intellectual stimulation can be taken care of by online retailers.

The online social media platforms are great for the emotional customer to announce her state of mind: : She’s rational; anxious; depressed; angry; afraid or  fed-up. Wow, here the savvy retailer may get to know his products and customers better with little effort…

Concluding

There’s no doubt that your customer’s state of mind has a huge affect on where and what she buys. Because we are all customers, I think we can easily relate to that. It’s a pity that the contribution that physical stores made in catering for the emotional needs of their customers is diminishing. That’s because of the massive closures of physical retail shops.

However, the online retail channel offers additional and more focused opportunities to satisfy the emotional needs of retail customers. And, together with that, can retailers now communicate personally with their emotional customer, online of course.

What is next? Only time will tell if retail customers will bond emotionally with robots and other AI devices. Then again…

Read also: The Joy of Shopping

Video: 8 Emotional Triggers That Get Customers To Buy


Notes

1 Goetz, C.G. ed. 2007. Textbook of clinical neurology (Vol. 355), Elsevier Health Sciences.

2 Sherman, E., Mathur, A. and Smith, R.B. 1997. Store environment and consumer purchase behavior: mediating role of consumer emotions, Psychology and Marketing, 14(4):361-378.

3 Puccinelli, N.M., Goodstein, R.C., Grewal, D., Price, R., Raghubir, P. and Stewart, D. 2009. Customer experience management in retailing: understanding the buying process, Journal of Retailing, 85(1):15-30.

4 University of South Africa 2009. Course in Retail Marketing and Merchandising, Practical Merchandising, Only study guide for CRMM02-X, Centre of Business Management, Pretoria.

Image

Wikimedia.org

An Icon Department Store Closes its Doors in South Africa

Another department store has lost its battle to stay open. “The end of Stuttafords: After 159 years, ‘Harrods of South Africa’ shuts shop” screams a headline in The Sunday Times.  Wow, so after almost 160 years of guts and glory, Stuttafords has decided to throw in the towel.

What a shame, some of us would think. However, think again. Most people probably didn’t even notice that they are gone… and that’s maybe the reason why they are gone…

Department stores around the world are closing down in heaps. Let’s consider why? The marketing mix (or 4Ps), which is a foundation model in marketing, may help us to explain what went wrong with department stores.

The Marketing Mix (4Ps) as a tactical marketing tool for a department store

In marketing practice, the 4Ps have endured because they provide the four fundamentals of marketing planning and management 1. The 4Ps represent the following 2:

  1. Product – this is the bundle of benefits that the seller offers and the customer receives. The particular set of benefits on offer will appeal to a specific group of customers;
  2. Price – this is the total cost to the customer of adopting the product;
  3. Place – is the location where the exchange takes place;
  4. Promotion – is the marketing communication package used to make the offer known to potential customers, and persuade them to investigate it further.

When I did my reading on this subject, it was quickly evident that department stores start using the 4Ps as strategic marketing tool long before McCarthy 2 introduced his 4P model to the world in 1960. In fact, since the opening of the first department stores in the nineteenth century, retailers had to decide what products to sell to their customers and where to make them available. A department store owner needed to sell her products at the right price and then motivate customers to visit their stores again or to buy more products.

So, after all these years of cumulated business experiences, what went wrong with department stores?

The Products of a department store

Products are at the heart of a department store. As a result, department stores usually are arranged into specific departments carrying lingerie, perfumes, men’s clothing, and so on. Thus, the stores have long aisles with shelves full of products that are arranged by categories. The shelve racks carry only a handful of products with recognizable brands e.g. Levi jeans, and masses of home brand products. But is this what their customers want? Not really.

Because of the lack of customer focus, department stores have lost share to specialty apparel retailers that offer narrower but more focused, easier-to-shop, lifestyle-relevant assortments 3. The growth of specialty stores targeting midlife, up-market women has been particularly problematic for department stores because they precisely target the department store’s traditional core customer…

Apart from losing customers, department stores have a 40% overlap. Same old, same old says Phil Wahba in Fortune: “A shopper can visit four department store “anchors” under one roof and it won’t take long for an expert eye to notice that they were selling much of the same merchandise.” Department stores failed lately to recognize what products their customers want.

Pricing with department stores

As far as the pricing of their products goes, most department stores found it hard to let go of their conventional habits. They accumulate masses of products every year only to sell them later at heavy discounted prices.

Maya Mikhailov, co-founder and CMO of GPShopper described in QUARTZ this discounting dilemma of department stores: “Focusing on meeting quarterly budget expectations has caused retailers to overload on sale-based strategies. This means that American shoppers are addicted to regular discounts, and retailers are paying a heavy price in the form of breaches of trust and brand dilution.”

But this’s not only the commodity-like products that department stores are discounting. The luxury brands are now also in the discount cycles of department stores.

“How desperate are department stores to get shoppers in the door and spending money?” asked Laura Northrup in Consumerist. According to Laura, department stores tried discounting prestige makeup for the first time. She wrote “Like drugs of abuse, discounts are addictive and can require ever-escalating dosages to get the same effect that you got when you first started using them. This has prompted established brands, like as Michael Kors to stop supplying department stores with their products.”

Rather than discounting themselves to obsolescence, department stores should think and do smaller. “Successfully selling a smaller line of products rather than letting a larger line linger into discount obscurity is the new way of doing business” suggested Maya Mikhailov (QUARTZ).

The Place where department stores do their business

The biggest problem with the place where department stores do their business at is that their customers are shopping elsewhere. Also, shopping malls, the bastion of department stores, are getting out of favor with retail customers.

“Shopping malls, once ruled by stores like Macy’s, J.C. Penney, and Sears, are seeing fewer visitors as consumers see them as overpriced and inconvenient. With many U.S. malls on a downward slide, some analysts predict nearly 33 percent will be closed within the next few years” wrote John Houck, contributor at Inquisitr. But closings shopping malls are not their only concern…

The online retail channel has ‘opened new doors’ for the competitors of department stores. Just like Amazon, who has been quietly putting pressure on retailers that specialize in apparel and fashion as it pushes into the market once dominated by brick-and-mortar stores (John Houck, Inquisitr). Some industry experts believe the online giant will own almost 20 percent of the U.S. clothing market in four years.

Now let’s consider the Promotion element of the marketing mix for department stores

Promotion at a department store

Not so long ago, a department store exploited its location, its quality of service and its quality range of products to convey its marketing message. However, the market environment of the department store has changed disruptively over the past decade or so. The bad news is that this changes will continue. Sadly, the department store failed to react to it.

During the past ten years the exponential growth of online shopping was facilitated by advances in ITC and digital technology. Just think of the impact that broadband WiFi and affordable smartphones had on the retail industry…

And it hurts department stores. They’re wondering where their customers have disappeared to, and they seem reluctant to go and find them. If you look at the numbers, you’ll know where their customers are – they’re shopping online. Though the U.S. retail average growth rate in the first half of 2016 was just 2% for total retail, it was 16% for e-commerce (Jonathan Camhi, Business Insider).

Changes in the demographics of the department stores’ customers have affected them badly. The middle class, who in the good old days made up the bulk of a department store’s customers is contracting writes Helaine Olen in Slate. In fact, some of those former middle class folks are now upper-middle-class folks. And those whose income went the other way, are favoring more inexpensive options.

So department stores remained with the middle class – which is not visiting their stores. Well, the rest is history, as the saying goes…

Concluding

Bricks and mortar retailers, many that are now battling to stay open, can take note of what is happening with department stores. Using the 4Ps retailers may consider the following tactics:

  1. Product – less is more, make them unique and part of a positive customer experience;
  2. Price – know what your customer value and don’t sacrifice your brand – give your customer a reason to pay a premium price;
  3. Place – know your customer’s preferences. Follow them where they hang out. Online presence is a must;
  4. Promotion – know your customer better so that you can personalize your marketing message.

Remember that the principles of marketing stay the same, in spite of all the disruption that is taking place in the retail market.

Read also: The State of Retail 2017 – The Unstoppable Force of Change

Notes

1 Donovan, R. and Henley, N. 2010. Principles and practice of social marketing: an international perspective, Cambridge University Press.

2 Blythe, J. 2009. The Marketing Mix, In: Key Concepts in Marketing, SAGE Publications, Inc.

3 Whitfield, M.B. 2004. Department Stores: Smarter Strategies, Chain Store Age, 80(8):26A

Images

  1. Business Live
  2. StaticFlickr.com

The Dawn of Autonomous Cars, and the Demise of the Car Driving Experience

The phenomenon of fully autonomous cars has begun. “Self-driving cars without a human behind the wheel could run freely on UK roads from 2021, the chancellor is set to announce”, according to AutoCar. Unfortunately, by replacing human drivers with robot drivers, the end of a rather emotional relationship that we are having with cars, will begin.

Cars, for many people, are more than a just means to an end. “The type of car you drive tells a story about your personality. It may not be obvious, but people do share a lot of things in common with the cars they drive, and will choose a vehicle that represents their own particular talents and interests and reflect their values in life” suggests Joel Wong in TOC.

I wonder what autonomous cars can reveal about my personality?

Autonomous cars

Wikipedia defines an autonomous car (also known as a driver-less car, self-driving car, robotic car, autos) and unmanned ground vehicle, as a vehicle that is capable of sensing its environment and navigating without human input.

Just like us, self-driving cars need to have sensors to understand the world around them and a brain that collects, processes and chooses specific actions based on information gathered. Therefore, autonomous cars are fitted with advanced tools to gather information, including long-range radar, LIDAR, cameras, short/medium-range radar, and ultrasound (Chris Giarratana, ReadWrite.com).

The data collected are analysed and by using complex algorithms and digital maps, the autonomous car is steered clear of mishaps and hopefully reach the destination it was programmed for.

The use of autonomous cars can have the following advantages and disadvantages (Paul Goodman, AxleAddict):

ADVANTAGES

DISADVANTAGES

  •  No driver means more space and more entertainment;
  • No bad drivers, thus less road accidents;
  • Traffic could be coordinated more easily in urban areas to prevent long tailbacks at busy times;
  • Sensory technology could potentially perceive the environment better than human senses, seeing farther ahead, better in poor visibility, detecting smaller and more subtle obstacles, more reasons for less traffic accidents;
  • Speed limits could be increased to reflect the safer driving, shortening journey times;
  • There would be no need for drivers’ licenses or driving tests;
  • Autonomous cars could bring about a massive reduction in insurance premiums for car owners;
  • Efficient travel also means fuel savings, cutting costs.
  •  Driver-less cars would likely be out of the price range of most ordinary people;
  • Truck drivers and taxi drivers will lose their jobs, as autonomous vehicles take over;
  • A computer malfunction, even just a minor glitch, could cause worse crashes than anything that human error might bring about;
  • If the car crashes, without a driver, whose fault is it: Google/the software designer, or the owner of the vehicle?
  • Hackers getting into the vehicle’s software and controlling or affecting its operation would be a major security worry;
  • Reading human road signs is challenging for a robot;
  • How would the police interact with driver-less vehicles, especially in the case of accidents or crimes?

So, there are many pros and cons that we have to consider when we decide to buy autonomous cars. But sadly, there’s a lot that we will leave behind, like the feeling of driving a car…

Real cars and the joy of driving them

The ribbon of shimmering asphalt curved between the mountains of the Peloponnese and the azure Aegean, which glittered in the late afternoon sun. The engine of the Audi A3 growled – a satisfying, syrupy growl – as I pressed the accelerator. As the car started to shift, I realized in a moment of clarity that I was very, very happy

Pirelli & C


The nice feeling that you get when driving a car, as the narrative above of Pirelli & C suggests, may soon only be a faint memory because of autonomous cars. “Where’s the thrill?” asks Giancarlo Perlas in BenzInsider. He later proposes: “Self-driving systems will likely be optional at first, and mandatory later. By that time, the only way to feel the thrill of driving will be through VR simulators (that will become mainstream by the time) and casual games like the AllSlots’ Racing for Pinks.”

That’s scary – we’ll lose the sensation of driving a car because of robots doing it. And, wait for it – we then have to rely on robots to simulate the feeling of driving a car that we are craving for. It’s a strange place, this digitize world.

Cars and humans – like men and their horses…

A very long time ago, before cars and trains even, people had horses to get them from A to B. There were horses of all shape and sizes, most with an owner and many with a name. But it was how humans bonded with horses. “Both the horse and the human become attuned to each other’s physical and mental ways, thus developing the state of co-being” according to Horsetalk.co.nz. Then cars started replacing the horses.

“Car consumption is never simply about rational economic choices, but is as much about aesthetic, emotional and sensory responses to driving, as well as patterns of kinship, sociability, habitation and work” suggests Sheller, (2004). Sheller, in explaining the “feeling of cars” proposes that pleasure, fear, frustration, euphoria, pain, envy (i.e. emotional responses), to cars and feelings about driving are crucial to the personal investments people have in buying, driving, and dwelling with cars.

So, as previously with horses, humans did found a willing emotional partner in the form of their cars. And now the robot is starting to replace the car, and it is impacting on business. Viereckl, Ahlemann, Koster and Jursch (2015) had this to say about the ‘promise of autonomous driving’: “It’s a disruptive technology that will upend traditional auto industry structures, usher in new business models, and change the nature of the business. “

Concluding

It’s not easy to comprehend an emotional bond between robots and humans. Maybe it’s because robots can be learned to predict your behaviour. After all, who better than to ask Jeremy Clarkson for an opinion on autonomous cars: “I drove a car the other day which has a claim of autonomous capability and twice in the space of 50 miles on the M4 it made a mistake, a huge mistake, which could have resulted in death”, reported Holly Christodoulou, The Sun.

Like horses had to make way for cars, so will cars have to make way for autonomous cars. What a pity…

Read also: Retail and the Internet of Things

Notes:

Sheller, M., 2004. Automotive emotions: feeling the car, Theory, culture & society, 21(4-5):221-242.

Viereckl, R., Ahlemann, D., Koster, A. and Jursch, S. 2015. Connected Car Study 2015: Racing ahead with autonomous cars and digital innovation. Strategy& http://www. strategyand. pwc. com/reports/connected-car-2015-study

Image:

  1. Wikimedia

 

The State of Retail 2017 – The Unstoppable Force of Change

What is the state of retail in 2017? What are the movers and shakers doing? And are there any retail stores left to close?

You can hardly keep up lately with all the news, good and bad, about the state of retail. News about customers shopping more online, and using mobile phones to do so. The expansion of Amazon.com to the physical retail channel and Walmart’s effort to mimic Amazon’s online business are also headlines.

Reports of thousands of retail stores closing in the US and elsewhere keep industry commentators and opinionists busy. Many suggest that retail technology may help to stop the rot…

Let’s look further at the matters that influenced the state of retail during 2017.

Retail customers continue to shop more online

There is no doubt that more retail customers are shopping online. The U.S. online sales are expected to reach more than $459 billion in 2017, rising 14% from last year and accounting for 12.9% of the anticipated $3.56 trillion in total retail sales, according to Forrester Research.

And retailer customers shop more online using mobile devices. In fact, according to Justin Smith, CEO of OuterBox,. He said that significantly more people are accessing the web from a tablet or smartphone than a desktop, and they’re doing it with more eCommerce intent than ever before.

The online shopping experience clearly has a major effect on eCommerce sales: The Forrester 2016 Customer Experience Index found that digital retailers delivered 17 positive experiences for every negative one, compared with just 13 among traditional retailers.

Amazon.com is making big moves while Walmart is trying to stay relevant

Amazon.com has made huge progress towards establishing Bricks and Mortar businesses during 2017. According to Dennis Green, writing in the Business Insider, Amazon.com has opened bookstores in major cities like Seattle, Chicago, and New York. He says that the stores operate exactly the same as Amazon’s online bookstore, since they allow visitors to browse a curated selection similar to how it appears on the site. There are currently 11 stores open, with two more on the way.

Even more significant was Amazon.com’s acquisition of natural foods store Whole Foods. Whole Foods was already a national chain with more than 450 stores, but with the power of Amazon behind it, it has the potential to be something even larger (Business Insider).  By the way, Amazon.com paid $13.7 Billion for Whole Foods (Bloomberg). However, with the acquisition of Whole Foods, Amazon.com was entering Walmart’s territory.

So what was Walmart doing during 2017? “Walmart has an annual turnover of $170 Billion and has largest share of US grocery retail sector by far” writes Phil Whaba in Fortune. That means that they really needn’t have to worry about Amazon.com, or do they? Walmart is worrying, and doing something about it…

Walmart is taking the battle with Amazon.com on the latter’s own soil – ecommerce.  “The e-commerce competition between Walmart Stores Inc. and Amazon.com Inc. is heating up, and Walmart executives are saying “bring it,” with plans to continue investment in its online and multi-platform capabilities” reported Tonya Garcia in Market Watch.  For the second quarter, e-commerce sales, which include purchases that are shipped to customers’ homes as well as transactions that are fulfilled in stores, such as the online grocery service, were up 60%, conclude Tonya.

But what was happening with the other retailers during 2017?

The apocalypse of retailers

The apocalypse of retailers refers to the closing of a large number of American retail stores since beginning in 2016, according Wikipedia. There was no respite for the industry as the apocalypse of retailers kept going on during 2017. Derick Thompson (The Atlantic) suggested that there are three explanations for the demise of America’s storefronts:

  1. People are buying more stuff online than they used to.
  2. The USA built way too many malls.
  3. Americans are shifting their spending from materialism to meals out with friends.

However, there are different opinions about the severity of the apocalypse of retailers. Glenn Taylor in Retail Touch Points writes that the retail apocalypse is more like a retail transformation. He suggests that while many retailers remain in flux, it appears more brands are getting the right tools in place to engineer a turnaround. Some commentators recognize that retailers shouldn’t seek the answers for the problems outside their organisations…

Matt Townsend, Jenny Surane, Emma Orr and Christopher Cannon suggested in Bloomberg that the problems with US retailers are of their own making: “The reason isn’t as simple as Amazon.com Inc. taking market share or twenty-somethings spending more on experiences than things. The root cause is that many of these long-standing chains are overloaded with debt—often from leveraged buyouts led by private equity firms. There are billions in borrowings on the balance sheets of troubled retailers, and sustaining that load is only going to become harder—even for healthy chains.”

If the retail apocalypse can be countered by turning your company around, which usually involve spending more money, but there is no money, well then…

So, will retail technology keep the retail apocalypse in check?

How did retail technology affected the state of retail during 2017?

The adoption of the latest retail technology is proposed as one way to stop the demise of retail stores. Especially is the use of learned machines, data, and virtual- and augmented reality seen to make the in-store shopping experience of customers more pleasant. That, some says, will bring the feet back in the stores.

“With shoppers’ expectations rising, the proliferation of data and new touch points, and increasing competitive pressures, retailers must focus on delivering the most relevant customer experiences possible in order to succeed”, concurred Jeff Barret in Inc. That’s where the problem is with retailers – they have the data, but they don’t know how best to use it…

“Many businesses are failing to make the most of the technology available to them, gathering only a tiny fraction of the available data. They are using valuable manual resources to process and analyze the data they do get and presenting the findings in an incomplete or unnecessarily complicated way”, writes Patrick Reynolds in his blog eTech.

Thus, although retail technology was around during 2017, it seems that most retailers missed the opportunity to use it effectively.

Concluding

Now you might be asking: “What will the state of retail be in 2018?” It may be ‘same old, same old’ or a barrage of new pleasant (or unpleasant) surprises. I don’t know. May it is time that we go back to our customers and ask them. I’m sure they will know the answer…

Happy 2018!

Images:

  1. Georaph.org.uk
  2. Pixabay.com; Pixabay.com
  3. StaticFlickr.com

Read also: Crossing the digital threshold – adding Clicks to Bricks for sustainable retail outcomes

My Avatar and Me – Coping in the Virtual World

I got it when I discovered the virtual world, my avatar. It’s like jumping into an uncomfortable spacesuit and then free-falling from the physical world into the digital world. This is a world full of zeros and ones, to which they answer only yes or no, which should be only right or wrong. How on earth can we ever comprehend this abstract environment? We need to digitize ourselves. Hence may avatar and me…

What is an avatar?

Your Dictionary defines an avatar as something visual used to represent non-visual concepts or ideas. Or it may be an image that is used to represent a person in the virtual world of the internet and computers. Peachey and Childs, (2011)1 suggest that taking on the form of an avatar within a virtual world is resembling a literacy of crossing down from the real into the digital. Consequently, many of us created our first avatars when we start playing games online.

With online gaming, virtual worlds are three dimensional environments in which you can interact with others and create objects as part of that interaction. How do you do that? You appear as an avatar in the virtual world: an avatar is a virtual representation of you (a ‘virtual ego’) which can take on any shape or form as you so wish (Virtual Reality Society). Just like my avatar and me…

My avatar and me going shopping

Now we move from gaming to shopping. How will my avatar help me shopping in the virtual world? It can be done with the help of your online retailer… According to De Mesa, (2009) 2 brands can, by being three-dimensional and interactive, move past the ‘show me’ paradigm of other media and get into the ’touch me’ world of true interaction.

Take for example shopping online for clothing. From the start this was a potential minefield. “The issue of getting the correct size remains a serious drawback for buying clothing and footwear online. Sizes vary from brand to brand, and since you can’t try out the products before buying them, selecting the size is always a gamble”, says Tarun Mittal, YourStory.com.

However, the industry is pouring millions of dollars into developing and trying technological solutions. Augmented reality, avatars and algorithms that approximate your size based on measurements you provide are already in the marketplace (CBC News).

So, my avatar (and me) can now click on an app to select my body shape and click on a piece of clothing I want to try. My avatar will appear in a 3D image wearing the item in the comfort of my own home. That’s really cool, isn’t it!

How can using avatars help retailers?

Just as we are using avatars to ease into the virtual world, so retailers use avatars to target their audience better. They call these avatars personas. Retailers, for example, create personas to help them understand their customers better. “It’s not who comes to your website that is important it is how they behave when they get there that is key to your success”, say Jackson (2009) 3.

Jackson (2009) 3 also suggests when designing personas, retailers should look at a number of different sources of data to define how to get to their role models. These are:

  1. Demographic data – age, gender, geography (data acquired from customer surveys, CRM data or other sources).
  2. Customer psychographics – what the customer does in the pre-purchase phase found by looking at a number of different sources in addition to the demographic data, such as web analytics keyword data.
  3. Market data – such as how the branding and market place effects the decisions of the persona. Web analytics keyword data, Google Trends and data from doing a competitor analyses are good sources of information.

Once a retailer has all the data about her customers, she can create an avatar or persona for customers that are interested in a specific product or product line. Below is an example of a completed buyer persona.

Concluding

The advent of the internet and technological advances thereafter have plunged us all in a new world. It’s a new world with a new economy and new rules – for most an exciting though scary space. By creating avatars and personas, machines and humans can meet on common ground – each wearing a spacesuit to make sense of one another.

Notes:

1Peachey, A. and Childs, M. 2011. Virtual worlds and identity, In: Reinventing ourselves: contemporary concepts of identity in virtual Worlds, 1-12, Springer London.

2De Mesa, A. 2009. Brand Avatar: Translating virtual world branding into real world success, Springer.

3Jackson, S. 2009. Chapter 6: Developing and Measuring Motivational and Behavioural Personas, In: Cult of Analytics: Driving online marketing strategies using web analytics, Routledge.

Images:

  1. slidesharecdn.com
  2. Pixabay

Read also: Chatbots in Retailing – a Fact or a Fad?