October 13, 2016
Authored by: Bryan Cave, Carol Osborne and Paula Levitan
Retailers are increasingly under pressure to evaluate their business models and, in particular, the mix of their in-store, online and mobile offerings. Just as there are few pure-play e-tailers, there are very few retailers solely operating a bricks & mortar strategy because today’s customer wants to access their favorite brands in an omnichannel way: browsing online to get a sense of trends, dropping into a store to check the fit and shopping via mobile for impulse or last minute buys. But how do retailers find balance within the omnichannel world?
In our experience working with national and international retailers, getting the online and mobile experience right requires critical focus and serious investment in the three Ds: Distribution, Delivery and Data.
Successful ecommerce platforms require well located (and well managed) distribution centers capable of handling the nearly 24-hour demand profile.
Careful consideration needs to be given to whether an existing distribution center supporting stores can also support online, or whether it would be better to invest in an expanded footprint of distribution centers while reducing the number of stores. Retailers prepared to serve an international online market also need to understand the logistics landscape and either partner with a logistics expert with a solid track record of supporting international online retailers or build in-house expertise to manage not only export and customs issues (so customers can enjoy a hassle free experience) but also local law compliance relating to product labeling and hazardous materials.
Retailers shouldn’t underestimate that customers want an instant buzz with online shopping – which means they want delivery of their purchases virtually immediately.
Not surprisingly, this is one area that has seen the biggest experimentation by retailers in the last few years. From expedited shipping options like Amazon Prime, to same day delivery by Net-a-Porter, to “click and collect” by John Lewis, online retailers are trying to replicate the instant gratification of in-store shopping while managing the non-trivial expense of rapid delivery. However, retailers cannot neglect the flipside: an efficient return process. Customers want to be able to return a product and receive their refund quickly. Similarly, retailers want to return the product to stock with minimal delay or damage. Getting delivery and returns right can accelerate the growth of ecommerce for most retailers.
Finally, online and mobile shopping create a tremendous opportunity for a rich and personal relationship with customers.
Shopping online is not the anonymous in-store experience and retailers need to develop effective (and legal) strategies for capturing and using all of the rich data generated by online shopping. Privacy policies, cookie policies and website or mobile terms and conditions are just the basics (although they should be reviewed at least annually to keep up with ever changing consumer protection laws). Marketing initiatives and customer loyalty programs also require careful assessment to comply with data protection laws – especially for retailers exploring international strategies. In the end, careful collection and management of the data generated by ecommerce transactions will allow retailers to customize shopping experiences to such a degree that each customer will feel like they have the store all to themselves and it is stocked with all of their favorite things.
It is not surprising that IMRG, an online retail industry association, is predicting that online shopping will eclipse shopping on the high street within five years. As a result, many retailers are suddenly thinking they should trim their store portfolio while investing more in their online and mobile offerings. Focusing on the three Ds will help get them there successfully.