In 2019, the average consumer has evolved into a multi-channel purchasing machine. As the traditional customer buying journey continues to grow, retailers and wholesalers need to consider opportunities to cater to a new, savvier buyer.
The question is though, where should retailers be investing to ensure they are front and centre in their customers’ buying process, and what changes can they make today to begin moving towards an accurate omnichannel focus.
So, what is omni-channel retail?
Omni-channel is a term given to standardising and streamlining a customer’s buying experience across all potential points of purchase. Whether in a bricks-and-mortar store, online, on the phone, ordering from a catalogue, door to door, or on social media, the focus of omnichannel is to provide a seamless transition between all points of engagement.
The good news is that in 2019, giving your customers a genuinely engaging and valuable omni-channel experience is easier than ever with the help of modern technology, eCommerce solutions and cloud ERP.
That being said, the key to minimising the difficulty in managing this technology platform is investing in a single, business-wide solution. This platform should cover from eCommerce, POS through to order fulfilment, warehouse management and pick-pack-ship automation.
When retailers invest in a single system, they are consolidating the mass amounts of data they collect into a single database, which means automation, workflow, reporting and business intelligence becomes standard, not the exception.
Rise or fall? It’s up to you.
Retailers who are reporting strong growth and stable revenue streams have already made a significant investment in technology ecosystems to support the changing needs of their modern consumers. Retailers indicate that the unification of their management into a single cloud system has not only streamlined their operations and increased their efficiency, but it has also made it possible to begin trialling bleeding edge retail strategies, and it is paying off.
In 2019, one in every three dollars of discretionary income in the USA is spent online, and Australian consumers are quickly catching up. In a recent report, consumer behaviour trends state that the number 1 thing customers do before making an in-store purchase is to check both product and seller ratings online. Customers are searching for information to confirm from other buyers that the product is as described and well received.
Discretionary income spent online in US.
In consumer electronics, this is especially so with 82% of consumers who purchased goods over $500 reporting that they had researched the product online either before coming to the store or whilst in the store.
Research online before purchasing.
Consumers are not just looking for positive or negative product reviews, they check additional information about the product and make price comparisons with other distributors of the product.
What does this mean for retailers and wholesalers?
It is quite simple. If you are not focusing on gaining positive online reviews, providing additional information online about the products you sell as well as ensuring that your products are competitively priced, then you will lose your buyers either at the point of sale or worse, before they even walk in your store. Also, if you are not offering your customers an easy way to purchase online, you might be losing the battle before it even starts.
In an increasingly competitive retail environment, every sale is hard won. The retailers that are providing customers with the path of least resistance are experiencing increased sales, marketing visibility and leaving their competitors in their wake. Omni-channel customer experience is crucial.
The stakes are rising for omni-channel retail companies.
In a recent study on online purchasing behaviour, researchers discovered that consumer willingness to buy online had almost doubled in the past five years, and the amount they are willing to spend online had also nearly doubled to an average of $720.
When asked what drove a customer’s decision to complete their cart and make their purchase the results were mixed, which means retailers need to be willing and able to satisfy many different purchasing criteria’s to fulfil the consumer psychology that essentially drives people to buy online.
Online shoppers expect to return one in every four online purchases. Online stores with generous return policies are experiencing higher levels of sales. A popular incentive is providing “free shipping for returns”.
Industry giant, ASOS pioneered this strategy more than four years ago and immediately saw a sharp rise in both their online orders by dollar and unit value, but also the average total purchase and number of items purchased in a single transaction.
Many online retailers have followed suit and are now providing their customers with the same incentive, and the results are positive. Their trials of omni-channel retailing examples have given them enough information to make key decisions towards continued investment into all things omni-channel.
Whilst there is a cost incurred to cover returns shipping, as well as administrative and operational costs to process, inspect and restock returned items, businesses that have taken the time to invest in the right ERP software have optimised their internal systems to minimise the overall impact and net cost of offering this incentive.
Realistically, without a single integrated ecosystem of software and technology, retailers and wholesalers could find this type of incentive challenging to manage. However, when you have a system that is designed to simplify your operations, then the options for experimenting with new and enticing customer incentives becomes manageable, and potentially, more importantly, MEASURABLE.
Designing your omni-channel retail strategy.
To ensure success with any significant realignment of strategy is to research, plan carefully and execute, but the journey shouldn’t stop there. Smart retailers understand that we are now operating in a market that changes faster than ever before and to be able to compete and stay relevant they need to have a system that is as agile as consumer trends.
The key outcome of a successful omni-channel retail strategy is giving the consumer what they want. To succeed, companies need to define what they want to offer and then design a plan to deliver it. It seems simple, but even slight changes in strategy can have significant impacts operationally. Having the right technology ecosystem to support these changes is vital.
Define the Key Motivation Factors for your customers, and you will be able to design a correct strategy that appeals to them. As with traditional marketing efforts, accurately profiling and segmenting your market will offer many rewards. The things that motivate one demographic of shopper won’t necessarily motivate another.
A recent study into the motivations of different generations buying online revealed some interesting insights:
53% of Generation Z's were highly motivated by shipping, but only 23% of seniors listed this as a critical factor.
52% of Millennials stated that limited time discounts more enticed them, a tactic not as effective on Baby Boomers.
The key driver for both Baby Boomers and Seniors was data privacy and website security. 50% said that if they found it difficult to trust a web-store and would only consider purchasing if they had a friend or family member who had already purchased there.
Retailers and wholesalers need to not only understand these key consumer behaviours, but they need to plan and execute strategies in line with research data. If they don’t, they are limiting their chances of successfully converting customers, or worse, not even getting them to the online cart stage in the first place.
Using omni-channel to support in-store sales success.
While most retailers are focused on increasing sales and conversions online, successful retailers understand that their online presence should be designed to engage, inspire and provide real value to a customer, even without the intent of purchase.
The sky is the limit when it comes to engaging with your customers, and there is no one answer on the best way to do this. Innovations in retail have seen Artificial Intelligence and Virtual Reality starting to creep. New technology like 3D body scanning, virtual change-room and augmented reality experience are beginning to sneak into the mainstream marketing tactics of more astute retailers, and consumers love it.
Starting right with success in mind.
In 2019, new competitors to the market have the benefit of being able to choose modern technology and ERP platforms to support their businesses not only in the start-up phase but well beyond. Solutions like NetSuite SuiteSuccess Starter and Emerging Markets edition are designed to give a growing retailer a platform to manage their immediate requirements and continue to evolve and scale as their business grows.
With functionality covering Sales and Marketing Automation, Wholesale Distribution and Warehouse Management, POS and integrated eCommerce, small wholesalers and retailers can more effectively compete in an increasingly crowded and noisy market.
Many old retailers have grown on top of a legacy and outdated on-premise technology platforms, and are unable to migrate to a modern solution without a significant upheaval. Smaller and newer retailers have the opportunity not to make the same mistake as the software available in 2019 is more integrated, modern, scalable and modular.
A smart move for retailers is to invest in technology that puts the customer in the centre and provides real-time data about their responses and buying behaviours. Start with an omni-channel focus but keep things simple, invest in a solution that can grow with you in the future.
Retail trends 2020 and beyond.
The state of omni-channel retail trends has changed. More and more companies accept that omni-channel is not part of an innovative strategy, but a critical factor to stay relevant and deliver competitive customer service.
At Klugo, we have helped many Australian retailers and wholesale distribution systems modernise their IT strategy, with the world’s leading omni-channel Retail ERP platform, NetSuite. This cloud platform provides an opportunity to streamline and accelerate your growth, with a focus on simplifying your data management and customer service. As a single system solution, NetSuite was born omni-channel. From web-store to bricks-and-mortar retailers have access to a single platform of technology to manage their entire customers’ buying cycle, as well as have access to key metrics and data that help them differentiate in an aggressive market.
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