Tag Archives: online shopping

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

Personalization of Marketing Communication – not just for your Customer’s sake

Personalization of marketing communication is not just a good practice for retailers, but also a way to help their businesses survive. The advent of the internet has rendered retailers the opportunity to offer their customers products specifically customized for them. This is in direct contrast with mass marketing where the objective is to broadcast product offerings to reach the largest number of people possible.

Personalization of marketing communications is to treat each person as a unique individual with distinctive needs and to provide them with customized solutions 1. To be able to personalize marketing communications, retailers need to learn about the customer’s individual needs and preferences in terms of the types of content that the customer is willing to receive and other person-specific characteristics.

The strategic use of data collected during the online buying process and social media sites may be a good starting point for retailers to know their customers better.

Data – the foundation for the personalization of marketing communication

The digitalization of the entire advertising industry is generating ever increasing amounts of data that must be collected, analysed and interpreted 2.  Lying hidden in all this data is information, potentially useful information that is rarely made explicit or taken advantage of. We must just find the data.

The data we need is right before our eyes. Says Woopra: “Social media interactions, email marketing, landing pages, surveys, customer relationship management (CRM) tools, and re-targeted ads are all customer touch points that can tell you about your customer’s needs and interests”.

Once the data are sorted and tabled, retailers can segment and target their customers and also position their products accordingly. However, here the process is done for each customer specifically according the individual’s unique needs, desires and behaviors (customization). So, once customization has been achieved, it makes personalization of marketing communication possible.

Personalized marketing communications used by online retailers

Online shopping has become an important channel for retailers. Unfortunately, it does not afford facile development of an interpersonal relationship or facilitate easy interactions between buyers and sellers 3.  Even worse, many retailers use the online channel to send generic marketing messages via email or text, to the annoyance of their customers. This, however, is not personalized marketing communication.

Retailers need to collect and analyse data about the buying behaviour of individual customers. The profile of the customer will provide guidelines for the retailer how to personalize his/her marketing communication message. Daniel Newman, CEO of Broadsuite Media Group suggests the following ways brands can use data to build personalized marketing tactics:

  • Capture complete data – are you collecting every piece of data that you possibly can? Brands today have more consumer information at their fingertips than ever before, and they can use that data to get to know their customers in depth.
  • Social data – social cues and signals are excellent ways to figure out more about customers than traditional sources like email, demographics, or purchase records.
  • Segmentation – you need to segment your audience into smaller groups for more accurate targeting.

What does a personalized marketing message looks like?

You’ve done all the hard work by sourcing and sorting your customer data. Now it is time to create a personalized marketing message for your customer. Below is an image from GIGYA, a customer identity management agency. The ad shows beauty products that are specifically recommended for a customer with a unique skin type and facial features.

Note that the narrative is in the second person – thus the ad is addressing the individual personally.

The advantages of personalized marketing communications

Retailers that personalize their marketing communication may enjoy the following advantages says Infor Marketing Management:

  1. Improved Return on Investment (ROI) – one study found that personalized website experiences resulted in an average 19% increase in sales. For email, personalization is even more powerful, generating transaction rates and revenue six times higher per email than non-personalized emails.
  2. Outflanking the competition – with personalization, retailers can increase the impact of each interaction to get consumers’ attention and time online – at the cost of the competitors.
  3. Customers expect it – most consumers said it’s important to receive relevant offers when shopping online. And, almost a third wants more personalization during their online shopping experiences, reports Infor Marketing Management.

Concluding

“Personalization is retail’s future; especially as more advanced technologies allow marketers to handle personalization more effectively”, suggests Infor Marketing Management. However, retailers have to invest in the right technology, including marketing automation, CRM, social media management and data analytics tools, as well as more advanced e-commerce platforms.

Bringing the person back into the marketing message may help soften the total onslaught of marketing atomization by means of the internet of things, big data and bots.

Have a peek at this short video from Evergage re personalized marketing communication.

Notes

1 Järvinen, J. and Karjaluoto, H. 2015. The use of Web analytics for digital marketing performance measurement, Industrial Marketing Management, 50:117-127.

2 Grether, M. 2016. Using Big Data for Online Advertising Without Wastage: Wishful Dream, Nightmare or Reality? GfK Marketing Intelligence Review, 8(2):38-43.

3 Lee, Y.J., and Dubinsky, A.J. 2017. Consumers’ desire to interact with a salesperson during e-shopping: development of a scale, International Journal of Retail & Distribution Management, 45(1):20-39.

Read also:

  1.  Chatbots in Retailing – a Fact or a Fad?
  2.  Retail and the Internet of Things

Images and video

  1. Pixabay
  2. GIGYA,
  3. Evergage

Generation Y, Showing the Way for Retailers in the Digital Age

Generation Y or Millenniums, comprises of individuals that were born between 1980 and 1994, and make up about 25% of the world’s population. Gen Y is therefore an important cohort for retailers to target because of its size and purchasing power. Retailers, as with the other generational cohorts (Baby Boomers, Generation X and Generation Z), need to know what the shopping behaviors of the Gen Yers are. But first we need to know who Generation Y is?

Who is Generation Y?

Generation Y individuals came of age during a period of economic growth, a strong emergence of social media and reality television, and the disappearance of modernist values, supported by internationalization and strong influences from popular culture 1. They are perceived as more focused on living large and carefree compared to more serious previous generations.

Some describes the Millenniums as most diverse; underemployed; lazy; entitled; self-centered spoiled brats. However, most of them feel frustration, fear, doubt and even anxiety taking their first steps “in the real world”. Since they are most of the time connected to the internet, Generation Y hears the ‘bad’ news about inflation, unemployment; changes in public policies in real time. Digital communication technology is part of Gen Y’s existence.

The Millenniums have grown up with technology and it has captured their lives. Hussein 2 (2016) stated that 87% of Generation Y always had their smartphones at their side, day and night. Further, he said, 78% of them spend over 2 hours a day using their smartphones, and 68% considers their smartphone to be a personal device.

“Gen Yers are multi-taskers who use their mobile phones for just about anything: social networking, to find a job, and to get grassroots-generated information about products, services, schools, employers and travel destinations” suggests Parment 1 (2013).

Also, Generation Y actively contributes, shares, searches for and consumes content – plus works and plays – on social media platforms 3.  The table below, published by the American Press Institute, indicates how and when Gen Yers use different social media network sites.

How Millennials use different social media network sites

Used daily Used occasionally
Facebook 57 31
YouTube 29 54
Instagram 26 23
Twitter 13 21
Pinterest 10 25
Reddit 8 15
Tumblr 7 14

 

Fifty seven percent of Millenniums indicated that they use Facebook daily, while 54% used YouTube occasionally. How can retailers engage with this tech savvy and connected cohort?

The shopping behaviour of Generation Y

Retailers that understand the shopping behaviour of their customers may enjoy an advantage over their competitors. Generation Y are generally not loyal customers. Therefore retailers should provide them superior customer value or any other advantage, such as a lower price 1. Gen Yers are very flexible in terms of buying expensive and cheap products – to define themselves.

Gen Y buyers select and consume products that helps to define them. The products must show what is important to them and what they value in life. They will choose products that express some aspect of their own personality or image. Hence the Millenniums visit numerous shops regularly, in effort to stay in tune with what is ‘in’ at the moment. As a result they often visit clothing stores without having a pronounced need.

The Millennials – the largest generation in US history – are entering their peak spending years. Lindsay Drucker Mann, a vice president in Global Investment Research at Goldman Sachs, explains how companies are responding to their growing economic influence:


However, the Y Generation is  the cohort that does most of their shopping online.

Online shopping behavior of Generation Y

The association that Gen Y has with digital communication technology makes the internet an obvious channel for retailers to interact with them. However, cautions Parment 1 (2013), Generation Y wants to decide when, where and how companies communicate with them. They take the opinion of others into account when making a buying decision.

Retailers should note that Generation Y freely discusses various issues with their friends on social media platforms like Facebook. Gen Y considers friends to be credible sources that have a big influence of how this cohort evaluates products and brands4.

Jaz Frederick, writing in PFSWeb.com highlighted some trends among Millennials and online shopping:

  • the average consumer aged 18 to 34 invests $2,000 per year on digital retail sites;
  • millennials show the highest growth (32%) in mobile sales;
  • smartphones are the most-used shopping device for the Y Generation.

Retailers need to be found online and make sure that Millennials have great experience when visiting their pages.

Concluding

The Generation Y is a complex cohort. Nevertheless, they are the generation who must lead humanity into the digital age. The Millennials will dictate to retailers what technology to use and what content they want. Ultimately, Gen Y is paving the way for all of us to face the realities of the digital age. Please have patience with them…

Read also:

  1. Selling to the Young Ones, Generation Z
  2. Know Your Clever, Less Distinctive Customers – Generation X
  3. Shopping Behavior of The Baby Boomers
  4. Demographic Segmentation – Dividing the Market by Generations

Notes:

1 Parment, A. 2013. Generation Y vs. Baby Boomers: Shopping behavior, buyer involvement and implications for retailing. Journal of retailing and consumer services, 20(2):189-199.

2 Hussein, Z. 2016. Assessing the purchase intention of Malaysian Generation Y in mobile shopping. IJASOS-International E-journal of Advances in Social Sciences, 2(5):424-431.

3 Bolton, R.N., Parasuraman, A., Hoefnagels, A., Migchels, N., Kabadayi, S., Gruber, T., Komarova Loureiro, Y. and Solnet, D. 2013. Understanding Generation Y and their use of social media: a review and research agenda. Journal of Service Management, 24(3):245-267.

4 Viswanathan, V. and Jain, V. 2013. A dual-system approach to understanding “generation Y” decision making. Journal of consumer marketing, 30(6):484-492.

Image:

Pixabay.com

Know Your Clever, Less Distinctive Customers – Generation X

Generation X, which refers to those born from the mid-sixties to late seventies is one of the most highly educated generations in history and is characterized by technological and media savvy, skepticism and pragmatism 1. Above all, these shrewd customers usually make informed purchasing decisions and often search the internet for the best deals. So what makes Generation X different from other generational cohorts?

Gen X grew up with both parents in the workforce, or in a divorced household, causing many of this generation to become independent at a young age 2. This generation is described as experiencing social insecurity, rapidly changing surroundings, and a lack of solid traditions. Members of this cohort are said to have the following characteristics 3:

  • Value autonomy and independence
  • Thrive to open communication
  • View work from an action-oriented perspective
  • Do not believe in “paying dues”
  • Seek to acquire skills and expertise
  • Do not have long term loyalty to a company (but are loyal to individuals)
  • Believe in balancing work-life objectives
  • Are reluctant to take on leadership roles

“Like their namesake suggests, Gen Xers are less distinctive than other generations. And they know it!” says Paul Taylor, executive vice president for special projects at the Pew Research Center. Therefore retailers should  know how Generation Xers behave when shopping…

The shopping behavior of Generation X

Generally, generation X shoppers can be categorized by their keen understanding of marketing and media. Indeed, research is crucial for these individuals – they use the web to reinforce their existing opinions on brands and products, rather than to form them to begin with (RetailPro). Nelson Baber 4  did a study  on how marketing practices should be adapted to today’s technology-driven culture. He found that Generation X spend half their time watching television – more than they spend on the Internet.  However, Gen X will respond to television advertising as well as research information on the Internet. Therefore, Barber suggests products targeted toward Generation X should have informative advertisements on both venues that contain detailed advertising copy.

Generation X shopping online

Generation Xers are known to be shrewd online shoppers that spend nearly 40 hours per week shopping online. Therefore retailers with internet shopping sites should avoid too many pictures or advertisement copy that would cause skepticism among this group. Barber 4 suggests that advertisers present product information in a straightforward manner and allow users to share the site or product-specific selection with friends through e‑mail links or connections to social media. The table below lists some of the facts regarding internet use by Generation X.

Facts on Internet Usage among Generation X (Statista, 2013)

Internet Profile
Internet users in the USA 58.2 million
Mobile internet penetration (worldwide) 66%
Social Media
Facebook account ownership (worldwide) 81%
Number of social network sites in the US 44 million
Median number of Facebook friends (US) 200
Online Shopping and Spending
Average online spending in the US $561
Share of making purchases worldwide 68%
Books are the most purchased item 38%

 

The data as shown in the table indicate that Generation X loves the internet, social media and online shopping. Importantly, online – and Bricks and Mortar retailers targeting Gen Xers should take their behavior and outlook on life into account to achieve their lasting patronage.

Concluding

The last say about the shopping behavior of Generation X is best summarized by Lissitsa 1 and Kol, 2016. “Gen X is highly sophisticated in its buying behavior and is turned off by slick and generalized promotions. They still makes purchases based on traditional search and decision-making methods. They want to hear the features of the product as well as an explanation of why these features are necessary. Moreover, Gen X have an attitude of risk avoidance and a low capacity for risk. Lastly, as consumers, Gen X looks for customer convenience, community relations, and branding. They have a reputation of being incredibly disloyal to brands and companies.”

Read also:

  1. Selling to the Young Ones, Generation Z
  2. Shopping Behavior of The Baby Boomers
  3. Demographic Segmentation – Dividing the Market by Generations

Notes:

1 Lissitsa, S. and Kol, O. 2016. Generation X vs. Generation Y–A decade of online shopping. Journal of Retailing and Consumer Services, 31:304-312.

2 Acar, A.B. 2014. Do intrinsic and extrinsic motivation factors differ for Generation X and Generation Y. International Journal of Business and Social Science, 5(5):12-20.

3 Ordun, G. 2015. Millennial (Gen Y) consumer behavior their shopping preferences and perceptual maps associated with brand loyalty. Canadian Social Science, 11(4):40-55.

4 Barber, N.A. 2013. Investigating the potential influence of the internet as a new socialization agent in context with other traditional socialization agents. Journal of Marketing Theory and Practice, 21(2):179-194.

Images:

Wikimedia.org

Pexels.com

 

Shopping Behavior of The Baby Boomers

If you were born 50 to 70 years ago, you’re a ‘Baby Boomer’. Yes, most of you are still alive and do most of things you did as a youngster, but doing it differently. Retailers should realize that you are different from other generations and therefore behave differently when shopping. If they make your shopping trip a pleasant one, they may find that you (Baby Boomers) can be a profitable customer niche. Similarly can retailers with an online presence achieve more sales and positive word of mouth once they recognize Baby Boomers is a valuable consumer segment.

The Baby Boomers is part of a cohort – that is people who are born within a certain time frame and who are consequently subject to similar environmental influences. Other groups in this generational cohort are “Generation X or Millennials”; “Generation Y” and “Generation Z”. The Baby Boomers and how they shop will be discussed in this piece.

Who and what are the Baby Boomers?

Baby Boomers were born between 1946 and 1964, the period after World War 2. The number of Baby Boomers peaked in 1999, but has decreased since then and their number will continue to decline. Boomers make rational consumption decisions and their decisions are influenced by experts and close friends. They are more ethnically diverse, more highly educated, more likely to be employed in professional and managerial positions and spend more of their adult years working than previous generations 1.

They also differ in their personal and social lives from other generations as they are less likely to be married and to have an available spouse or adult children. Many Baby-boomers face triple dilemma of burdening care-giving of parents, financial support for offspring, and their own future older life 2. Such an overburden can lead to insufficient preparation for old age and may lead to depression. Boomers however, are not unfamiliar with the internet.

The Baby Boomers is the first generation that enters retirement with an extensive knowledge of the internet 1. Lee Rainie and Andrew Perrin of the Pew Research Center reported the following about the adoption of technology by US Baby Boomers:

  • 76 – 83 % are internet users;
  • 60 – 66 % have broadband at home;
  • 87 – 91% own a cellphone;
  • 45 – 54% participate in social media;
  • 46 – 52 % use Facebook.

Apart from being users of the internet, Baby Boomers also spend a lot of time on the internet. Ian Barker of BetaNews reports that Boomers spend the longest time on the internet compared to the other generational cohorts.

Now that we know a little more about Boomers and their use of technology, it is time to see how they behave when gone shopping.

The shopping behavior of Baby Boomers

Retailers can use cohort analysis in market segmentation because each cohort shares values, attitudes, consumption patterns, or an ability to use technology 3. Shopper age affects the shopping behavior of consumers. It is not different with Baby Boomers – Baby Boomers are direct when shopping; they know what they intend to purchase and plan their shopping trip 3.  They are more deal prone than other generational cohorts. Atkins and Hyun 4 suggest retailers do the following improve the shopping experience of Baby Boomers:

  • Marketers must understand the importance of saving time/effort and money for these consumers;
  • In-store directional signage, information kiosks or in-store product pickup will increase the convenience of the shopping experience;
  • Offer frequently purchased products such as pharmacy and staple food items closer to the entrance;
  • Provide promotional savings such as senior discounts and coupons that will entice and satisfy the older consumers;
  • When targeting older customers, who value getting the right purchase, it is important to offer product assortments that meet their needs

Baby Boomers also shop online.

The online shopping behavior of Baby Boomers

Baby Boomers use the internet a minimum of 10 hours per week. Importantly, they use those hours to connect with friends and family (66%), to read the news online (about 37%), and to shop (35%) 3. eMarketer interviewed Lori Bitter, consultant at The Business of Aging and author of “The Grandparent Economy” about “How Baby Boomers Make Purchase Choices Online and on Mobile”. Some of the comments Lori made are the following:

  • About Boomers browsing the mobile web and using apps – “The ones who have smartphones do use the mobile web. Boomers like peer reviews of restaurants and store experiences, and are beginning to use tools like Yelp or OpenTable. But they still mostly choose to search [the web]. In focus groups, boomers seem to be confused about when they’re actually in an app vs. when they’re online on their phones. Apps are not part of their adoption curve yet.”
  • Getting Boomers engaged on mobile devices – “For younger generations, their smartphone is their life, but boomers have to be led there. For example, some consumers can’t keep track of their rewards programs, but marketers can remind them to use those points at checkout. Baby boomers think about points and coupons differently than younger populations, but that doesn’t mean they don’t like a deal. Building in reminders through mobile is a [good idea]. “
  • What Baby Boomers think about the value that new technology offer them – “The baby boom generation has probably seen more change than arguably any generation in history. I don’t think they’re afraid of it, but they do have a “been there, done that” mentality. They might not have bought the iPhone 4, and skipped right to the iPhone 6. They’re willing to wait. In general, creating urgency is very difficult with this population.”

Baby Boomers that get older, and get less mobile, may shop more online. The products can be delivered on their doorsteps.

Concluding

Baby Boomers were a decade or so back the cohort that was targeted most by retailers. They were plentiful with lots of cash to spend. Age, however, has started caught up with them. They are still a profitable consumer niche if retailers recognize their needs and make the shopping experience a happy one. Retailer’s main target nowadays is the Generation X or Millennials cohort. Read this piece “Demographic Segmentation – Dividing the Market by Generations “for more on generational cohorts.

Notes:

1 Genoe, M.R., Liechty, T.,Marston, H.R. and Sutherland, V., 2016. Blogging into Retirement: Using Qualitative Online Research Methods to Understand Leisure among Baby Boomers. Journal of Leisure Research, 48(1):15

2 Park, Y.J. and Kim, Y.J. 2016. The Relationship among Financial Support for offspring, Care-giving to Parents, Preparation for Their Own Old Age, and Depression of Baby-boomers, Advanced Science and Technology Letters, Vol.131

3 Sullivan, P. and Hyun, S.Y.J. 2016. Clothing Retail Channel Use and Digital Behavior: Generation and Gender Differences, Journal of Business Theory and Practice, 4(1):125

4 Atkins, K.G. and Hyun, S.Y.J., 2016. Smart Shoppers’ Purchasing Experiences: Functions of Product Type, Gender, and Generation, International Journal of Marketing Studies, 8(2):1

Images:

Pixabay.comFlickr.com

 

Drop Shipping Retail in 2016

The author of this blog has previously reported on hard lessons that he’d learnt when trying to do drop shipping (How-not-to-start-your-online-retail-business). Has anything changed with drop shipping since three years ago?

What is drop shipping?

Just a quick reminder what drop shipping is:

Drop shipping, according to Shopify, is an online retail model where a retailer doesn’t keep the products it sells in stock. Instead, when a retailer sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the retailer never sees or handles the product.

What are the advantages and disadvantages of drop shipping?

Joel Padi, writing in the Market Mogul has recently commented on drop shipping. He mentioned the following advantages and disadvantages:

Advantages:

  • It is easy and cheap to start an online drop ship business – you only need an e-commerce website;
  • No capital is needed to secure a premises and to buy inventory;
  • The costs for the retailer only starts when the customer has paid for her order;
  • The drop ship retailer can operate from anywhere at any time.

Disadvantages:

  • Low margins – because entry is easy and many of the products is from the same manufacturer;
  • Intense competition – thousands of websites offering the same products. Drop ship retailers must invest many dollars and lots of time for prospect customers to buy from them;
  • Lack of quality or brand control – drop ship retailers are totally depended on the drop ship suppliers for quality or brand control;
  • Availability – most of the drop ship retailers purchase their products from a few suppliers. Retailers can occasionally expect to find products are out of stock after an order has already been placed;
  • Shipping issues – the cheapest source of drop ship products is from countries such as China. Typically this results in a month-long wait on deliveries.

Has anything changed with online drop shipping retail the past three years?

To answer my own question – no! The alternative to drop shipping is for retailers to find a niche product to trade online. Customers are looking for niche products online because they have a specific need for them. Retailers may therefore ask a premium price for satisfying those specific needs…

Visit eBizplan for more on online retailing

Image: nchannel.com

The Retail Warehouse – Getting the Right Product to the Right Customer

The function of the warehouse has changed substantially for Bricks and Clicks retailers. Brick and Mortar retailers traditionally used their warehouses to receive and store their merchandise to later put it on the shelves to be sold.

Now, in the age of online retailing, the role of the warehouse has changed from a dusty storage facility to a dynamic customer fulfillment center.

The role of the warehouse as customer fulfillment center

A fulfillment center is a place where retailers receive incoming orders from customers, and where the products are picked, packed and dispatched. It may also be used strategically  to enhance your online business.

Amine Khechfé writing in SupplyChainDigital shares the following tactics that companies are using to grow their online success.

  • Drones in the warehouse.  Walmart suggests it may soon be using drones to inspect labels and inventory. It is a process they say usually takes about a month to complete with handheld scanners.
  • SMEs transform storefronts into warehouse space. The retailer Target are now converting some of its storefront space to mimic warehouses in order to increase sales and adapt to the changing needs of the consumer.
  • Amazon builds urban warehouses. Amazon can now cater for customers who want one- and two-hour delivery time-frames by taking their fulfillment centers into urban areas, .
  • SMEs are using predictive data to pinpoint new warehouse locations. Predictive technology allows small businesses to meet consumer expectations. It may help small businesses figure out the best place to build a new warehouse. The technology also supply shoppers with a more accurate delivery window, and identify where to stock products.

Multi-channel shoppers have high expectations. However, getting the right product, at the right customer, and quickly may allow you to stand out above your competitors.

Visit eBizplan for more on business- and marketing planning.

Image: Zappos

Retail Customers use of Social Media Sites

Social media have created one of the most exciting and efficient opportunities for retailers to reach their customers. It also offer great opportunities for the owners of social media networking sites to get ‘pay per click’ income  when retailers post ads on the sites and visitors click on the ‘buy’ buttons to buy stuff.

That is why all popular social media networking sites such as Google, Facebook, Instagram, Pinterest and Twitter recently have added the ‘buy’ button to their sites. They did it to make online shopping easier for their users, and to make some money…

According to Anna Torres writing in the ChannelAdvisor, Twitter is backing off the easy-click purchase strategy. Maybe retail customers don’t like doing shopping on Twitter’s site?

How do retail customers use social media sites?

The customers of retailers visit specific social media sites for the following reasons:

  • Facebook – as of the first quarter of 2016, Facebook had 1.65 billion monthly active users (Statista). So retail customers use Facebook because everyone else is using it.
  • Google Plus – is an interest-based social network that is owned and operated by Google Inc. Similar to Facebook, Google Plus allows customers to add events, invite people, and then share photos and media;
  • Instagram, owned by Facebook  is a free online photo sharing and social network platform. It is a fun and quirky way for people to share their life with friends through a series of pictures.
  • Pinterest was founded by Ben Silbermann, Paul Sciarra and Evan Sharp. It is a visual bookmarking tool that helps customers to discover and save creative ideas.
  • Twitter, founded by Jack Dorsey – is a service for friends, family, and co-workers to communicate and stay connected through the exchange of quick, frequent messages. Fifty nine percent of Twitter users turn to the platform to catch up on news.

Retail customers use Twitter  differently compared to what they do with the other social media sites. By mainly reading, listening to and viewing the latest news, they seem to have less appetite for shopping, avoiding Twitter’s buy buttons…

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How Direct Mail can help you to market your Website

Remember the ‘good old days’ when your post-box was filled to its capacity with flyers, brochures and promotion letters? For the most part you can now use direct mail to inform your customers and other consumers what they can find on your website…

Summer Gould writing in Target Marketing proposes 13 ways on how to use direct mail best to promote your website.

Direct mail to promote your website

  1. To generate traffic to a location, a website or event. It is equally useful if  you want to direct customers/prospects to a store, event or online location.
  2. Generate sales leads. You can target and reach qualified and interested leads easily with direct mail.
  3. Counter a competitive offer. Direct mail has some secrecy to it, unlike online.
  4. Customer loyalty. Reaching out with direct mail to customers with special offers and giveaways is a great way to reward your customers.
  5. Customer acquisition or referrals. Include these in your mail as a way for your message to be passed on to friends and colleagues.
  6. Improve customer service. Sending a thank you note to your customers is a great way to make people feel appreciated.
  7. Cross sell or upsell. You can mention other things you offer that they may be interested in based on what they have already purchased.
  8. Announcements.  Is a great way to get important information out to people quickly.
  9. Augmenting other media efforts. Direct mail ties in with so many other channels like email, web, social media, mobile, and so much more…
  10. Improving sales efficiency. Sending out mail that helps to qualify and clarify people before you sell to them is extremely important.
  11. Catalog, custom publications or newsletters. Direct mail give you the ability to showcase new information or offers to the people most likely to buy from them.
  12. Combining mailings with other companies. Co-branded mailings work well when each brand has the same target audience.
  13. Building brand awareness. Direct mail can be used to strengthen your brand’s awareness.

There is a great opportunity now to use the postal service to promote your online business because of the lower postal volumes.

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Image from Wisegeek”

Trends that Bricks and Clicks Retailers Should Take Note of in 2016

Software AG identified ten disruptive trends that Bricks and Clicks retailers should take note of this coming year. Here is the first five trends to watch out for:

Trends that Bricks and Clicks retailers should take note of

1. Fewer stores, more stuff

Bricks and Mortar retailers will add fewer new shops as they dramatically reinvent themselves to address multi-channel issues. To be honest, I’ve read ever more about retailers closing shops never mind not adding new ones! The Bricks and Mortar retailers that are remaining will serve more as pick up and fulfillment centers. The “endless aisle” concept will extend shelf space to the brand’s full catalog of products and accessible content.

2. Focusing on the individual customer – you

Customer-centric personalization will differentiate retailers by making their CRM strategies more targeted. Retailers may deploy customer-centric technologies such as easy sign-up, and RFID-tagged loyalty cards, which can send personalized rewards over mobile phones when in-store. The technology allows retailers to tap into internal information, known preferences, and social media data to better understand and delight their customers.

3. The right price

Differentiation by price will be much more dynamic in nature in order to beat the competition as customers become more aware and more sensitive to price.  Also, real-time electronic shelf pricing will replicate customers’ online experiences, as well as optimize inventories and reduce labor costs. Real-time personalized discounts and special offers will further motivate shoppers to head to stores.

4. A master system to control cross channel activities

Today’s customers expect to get what they want—where and when and how they want it—and they achieve it by using multiple (Omni) channels for retail and marketing communication. Therefore the complexity of omni-channel processes and how these interact with multiple systems may require a kind of “mission control” center where retailers can see and control every activity across all channels.

5. Predicting your customer’s buying behavior

Predictive analytics in retail will enable stores to know, with a great deal of certainty, what customers are going to want and when. Predictive analytics tools, especially when combined with streaming analytics, offer retailers the ability to manage queues, customer expectations and inventories before there is an issue.

Finally, Bricks and Mortar retailers are battling to survive on their own.  Retailers therefore need to integrate both the physical and digital systems to prosper and grow during 2016. The next five trends that Bricks and Clicks retailers  should take note of will be discussed in a follow-up article.

Visit eBizplan for plans to integrate your physical retail shop with an online retail channel.