Statista predicts the number of digital buyers will grow from 1.32 billion in 2014 to 2 billion by 2019.
This increment progression in the number of buyers is mainly due to the worldwide penetration of the biggest internet companies i.e. Google, Facebook, Baidu, Amazon, Alibaba et. all. Per Lightspeed, a fast-growing POS startup, Retail giant Target discovered that 98% of their customers shop digitally.
Today, you can’t be a global company serving a billion consumers without having a deep online presence.
And its just not for the mega-tech companies, every person with access to internet at has the potential to sell their ideas, services, products to the large global audience.
Over 3 billion people have online access, and with Facebook planning to bring the next 3.5 billion online with initiatives like internet.org, the world is positioned to become even ‘more flat’. WhatsApp made us all a ping away, and we gradually are moving towards a location agnostic world where cross-border transactions and business deals will be a click away.
A consumer report from Business Insider mentions the number of users shopping online has gone up from 208Million in 2015 to 224Million in 2016. Same goes with the amount of spending with US consumers, has gone up from $61Billion in 2015 to $68Billion in 2016.
Its fascinating to think the impact Internet has brought in our lives. Internet has fundamentally changed the way we learn, think, communicate, shop, operate and work.
When was the last time you remember buying anything beyond $100 without researching online?
We Google everything we don’t know to quench our curiosity. We Quora for public opinion and Tweet our own opinions. So, the consumer journey itself starts very much in the digital world. This is a big industry shift from the mid-90’s, when Amazon and eBay just started selling online. Researching online is a major pre-purchasing activity for the digital buyer.
Yelp reviews have become a very important norm before walking into a restaurant or a small business in big cities like New York, Chicago, DC and San Francisco. Bottega Louie, a famous Italian brunch and dessert place in downtown Los Angeles has close to 13,500 Yelp reviews. Customers comment on the dish and their overall experience with a rating. TripAdvisor is another great example where customers heavily rely on reviews and experiences before booking the hotel or making the dinner reservation.
Another interesting chart below from True Venture’s Partner Om Malik’s blog talks about the time it took for companies and products to hit the billion-user mark. MAU (Monthly active users) is the main value metric used to measure growth for consumer-facing apps. As you can notice, time to enter the billion-user club has been drastically decreasing with increase in mobile adoption rates across the globe. What took windows 25.8 years, took WhatsApp’s only 6.8 years.
Network effects play a crucial role in scaling platforms to reach a billion users. After getting the initial set of users, the more people use it, the more it would make sense for others to sign up and use the product. A true test to a network effect is when the value of the product is heavily dependent on the number of others using it.
Telephone is a classic example of a network effect. The more people owned telephones, more valuable it became to the owner. LinkedIn, Twitter and Facebook become incredibly exciting platforms when they started to gain critical mass.
One of the biggest unspoken paradigm shift startups and disruptive technologies are trying to solve ties back to universalization, individual empowerment and standardization i.e. bringing back the decision-making power from people in power to the Average Joe.
From Blockchain expected to disrupt the process of financial transactions and asset movements, from Artificial Intelligence and Machine Vision positioned to take over redundant natured jobs, we certainly must stay tuned to watch the excitement of democratizing and disrupting companies, business models and consumer thinking to create a new future.
Retailing = $23 trillion-dollar global industry.
eMarketer forecasts worldwide retail sales to touch $28 trillion by 2020.
These markets are HUGE.
To maximize the opportunity, every global retailer needs to ask a three-part question:
I) What is our Omni-channel order fulfillment strategy?
· i.e. Speed deliver anything, anywhere, anytime.
II) How do we enable a seamless working model at scale?
· i.e. Ability to market, sell, fulfill product to billions worldwide.
III) How do we stay relevant to ensure the needs of every customer?
· i.e. Offer personalized messages, coupons, items at an individual level.
Another big reason for the emerging digital buyers is the constant access to the global internet platform. The below schematic shows the American device usage per household. Gadgets being next to individuals’ bed side is a terrific opportunity for the e-tailers.
In other words, digital stores are open 24/7/365 service in the 21st century.
Simple fact: An online store never closes.
Google shopping is a great example where buyers can price check an item across several websites to opt for the cheapest price. Google alerts is another valuable check a buyer can do to know latest information about their searches. With voice enabled bots like Alexa, you can just shout out “Hey Alexa, order me the conditioner” and soon you will have the conditioner you bought last time on its way to your doorstep. Such discrete retailing techniques has eliminated the physical store concept and cashiers from the network structure.
Werner Reinartz, Professor of Marketing at University of Cologne, categories purchasing patterns into 3 ways in a HBR article: 1) Instant purchasing E.g. Amazon Prime and Pinterest 2) Automated purchasing E.g. Amazon Dash Button and 3) Subscription-based purchasing E.g. Harry’s or Dollar Shave Club.
24–7 shopping is the new normal e-commerce and m-commerce have blessed the modern consumer with. Consumers did not have this luxury a decade ago. Stores used to open at 9am and close by 6pm. A sale would only happen when a customer drives by the near store, parks the car, walks into a store and comes out with a purchase. This entire process is just replaced with one click from a user on the smart phone sitting on the living room couch. To compete and beat this phenomenon, mom and pop stores in India are extending store hours to play catch up and not get hurt by the online and mobile channels. In theory, 8 hour open stores will need three shifts to compete with the online channel. Analyzing this basic logic can tremendously help retailers re-think their store operating strategies. For example, retailers with a large store footprint need to extend store hours to sell more product. To further solidify the offering, they can also experiment with Same-Day or Next-Day Delivery options.
A study from ForeSee reported: Price, Product, Description, Merchandise and Navigation to be the drivers for a great web shopping experience.
eCommerce is a growth engine for any retailer. Canada’s eCommerce for instance, is growing at 15% everyday compared to 3% growth in the brick and motor business. This slow shift is taking place is all consumer-facing businesses. Consumers get attracted to digital experiences that leave an impression. In 2015, 78% of all holidays sales were influenced digitally, coming from desktop, laptop, tablet and mobile devices. And to create such an experience, design thinking and technology must be the core of their thought leadership. So, when you reverse engineer this process you would notice that: “engineering led companies are software companies focused on delivering digital experiences that amaze their consumers”.
And most of the times the customer experience journey begins with an online interaction, putting the website as the face of a consumer facing businesses. Great websites attract sales while the low-quality websites struggle. Study from internet retailer shows over $3Billion is lost in annually with slow sluggish websites and 28% of the customers won’t return to a slow site.
There are many tools available that retailers can use to check their general health of a website. Sometimes it can be as small as fixing broken links from an old campaign or enhancing the SEO (Search Engine Optimization) capabilities. E-tailers are constantly pressurized to reduce load times, and the risk of not doing it is losing the customer to the site that has the lowest load time. Between 2014 and 2015, the average load time has reduced from 3.8 seconds to 2.4 seconds. So, looks like the consumer will only want a shorter load time in future. This will also start affecting the bounce rates as they are directly proportional to each other.
Internet retailer reported, pages that loaded in 2 seconds had 25% less bounce rates than pages with 10 second load times.
SEO can be leveraged to capture wide range of opportunities. Moz, an online community with over a million marketers emphasizes on the important of websites for companies for travelers on their internal blog post.
According to the U.S Census Bureau, 14% of the population have moved in 2016 and 35% have planned vacation over 50 miles. Such a market will be heavily dependent on internet for find local needs like schools, medical facilities, banking services, dining and entertainment information. SEO plays a key role here. It can be as small as ensuring consistency in name, address, title and contact details across all your site content. Google, for instance, gives high important to titles while listing on its search platform. Not having a well-thought keyword severely reduces the chances of ranking. Relevant, apt and fresh content catch a consumer’s eye faster than lot of traditional retail jargon.
Soasta is a contextual intelligence software to help e-tailers understand the relationship between user experience, IT and revenues. Their comprehensive dashboard provides a unified view of their website’s digital performance. analyze advanced analytics to continuously monitor and measure their website.
The retail environment is intense ; business can get brutal if retailers don’t match up to the consumer expectations of super fast websites.
An average unplanned downtime could cost a Fortune 1000 retailer $1.25Billion.
Insight: This could be a decent sized opportunity for a unicorn to enter the space.
Leveraging Google and Facebook ad-words can work very well to maintain relevancy and monitor eye-ball behavior. Salmon, a UK based eCommerce consultancy advices retailers to focus on the “Online First” model.
The first point of contact going forward for retailers should be online and then store should support the backend operations and logistics necessary to fulfill the order. Consumers have already made this shift, and retailers must catch-up to internalize the philosophy of engaging online with the customer first, before driving them to the stores.