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Evo-Commerce
Shoppers are evolving amid rapid environmental changes.

With online retail currently growing at rates three times faster than overall market and supercenter rates, the path to growth has clearly shifted from new store openings to e-commerce. According to a report by MasterCard Advisors, e-commerce sales increased 15.2 percent year-over-year in June 2011 — the eighth straight month of double-digit growth and the 23rd month in a row that online purchases have grown.

Such rapid change can lead to extinctions. So what will go the way of the dinosaur — the mall, the supercenter, the big-box category killers? Perhaps only vending machines are safe from the digital onslaught.

It is important to remember, however, that shoppers are shoppers, and that while the number of online transactions per buyer is increasing, the number of online sites visited and the average dollar-value of an online purchase has declined. This confirms that shoppers are still cautious and surgical in their approach to shopping, both online and in-store.

And yet, shopper adaptation to digital commerce is unmistakable, as was abundantly evident during the 2010 holiday shopping season. Holiday shoppers went online to research and shop. They came, they shopped and have stayed. Why? Because online delivers against what they want, as documented in a Hub magazine survey (What Shoppers Want, March/April 2011).

The Hub survey illustrated many of the reasons why shopper behavior is evolving away from stores and toward shopping online: it is convenient and efficient; offers a whole new world of choices; pricing is transparent; information is almost perfect; and customer service is often better online than it is in stores.

Today, information on both needs and wants comes directly to the shopper where they are — in front of a screen. That screen isn’t always located at work or home: Twenty-seven percent of US mobile internet users turned to social media to compare or check prices before, during or after shopping, while 24 percent checked reviews and 16 percent received discounts, according to Knowledge Networks.

Brands and retailers increasingly are using Twitter as an awareness tool along the path-to- purchase. Now, with Twitter’s “Early Bird Exclusive Offer” service, time-sensitive special offers, events and information can quickly move the shopper from awareness to incentive to purchase.

Facebook is also at the forefront of the evolution of social shopping. When consumers are asked what they want from brands on Facebook, shopping and deals rise to the top. A 2011 study by Compete.com found that more than half of shoppers are visiting a brand’s or retailer’s Facebook page to keep up-to-date on sales and promotions.

The next logical step is to allow the shopper to move along the path-to-purchase by including a “shop now” tab. Procter & Gamble launched its first test of Facebook commerce — or F-commerce — by pre-selling Pampers from the brand’s fan page using the “shop now” tab, linked directly to Amazon.com. The success of the test has resulted in this capability expanding to multiple P&G brands, as well as interest from other retailers.

Shoppers are now armed with an abundance of information and input from online reviews and postings, and Amazon has become the shopper’s online barometer for both reviews and pricing. As reported by PowerReview in its “Social Shopping Study,” more than half of shoppers use Amazon’s reviews and ratings as part of their research “all the time” or “very often.” Sixty-three percent think the reviews and recommendations found at Amazon are “extremely or very credible.”

Because of this, retailers are exploring the next generation of social commerce as a way to engage shoppers with a more personal shopping experience, complete with recommendations, shopping tools and the retailer’s personal guarantee.

For example, Walmart has created a new division called @Walmartlabs that is charged with creating and integrating the online and in-store shopping experience. One of the first challenges for this new division is to leverage social networks in a way that connects people with real-time information that matters to them. Meanwhile, Target’s reinvention of Target.com will focus on greater personalization capabilities, expert advice, additional product information and much more compelling visual content to transform the online shopping experience.

With poor economic conditions causing a reduction in customer service at stores, online provides compelling one-to-one service. Online retailers such as Amazon, iTunes and Pandora connect with consumers on a personal level, recognizing them, remembering past purchase history and making personal recommendations.

To aid them on-the-go and in-store, shoppers increasingly are using their mobile phones along the path-to-purchase. Booz & Company’s 2010 “Mobile Commerce Survey” reported that more than half of shoppers use their phones to help determine if a product is needed, while 42 percent use them to better understand product benefits and approximately a third use them to comparison shop — most often checking pricing against Amazon.

This mobile trend is not lost on Best Buy, which has partnered with Shopkick to launch a new application that detects when shoppers are in or near stores and delivers targeted rewards.

Meanwhile, a host of services are being developed that leverage online to shorten the weekly supermarket trip by bypassing the supermarket altogether. This began with services like Peapod, but now the real growth is among packaged-goods replenishment e-tailers for commodities such as diapers, household and pet products. Now there is a multitude of ways to create a standing order for favorite brands and receive them on regular intervals via Alice.com, Soap.com, Diapers.com, Wag.com, Beautybar.com and Amazon.

Naturally, brick-and-mortar retailers are responding to this threat. The “Walmart To Go” test lets online shoppers order basic household items as well as fresh produce, meat and seafood, frozen foods, bakery and baby, and have the order shipped directly to their homes.

With much of the online focus on bulk and club-size packages for non-perishable items, club stores are taking note and building their online presence, as well. BJ’s Wholesale Club is revamping its website as part of a plan to increase its online business. Alternatively, some retailers are allowing shoppers to order goods online and pick them up in-store. This approach is quickly gaining momentum — it now comprises 40 percent of purchases on Walmart.com.

While these trends clearly point toward an evolution in online shopping behavior, it’s also important to remember that not all shoppers are created equal. Not surprisingly, the Millennials are doing most of the online shopping. As these younger and often more affluent shoppers move to online shopping, they will continue to pull a critical base from store-based retailers. By 2015, they will be a bigger proportion of the population than the Baby Boomers.

Many online retailers are capitalizing on key periods when consumer habits traditionally change. They are luring consumers in with “mom clubs,” which promise information, education and savings, while creating a connection with other moms. This connection, combined with the motivation of saving on and never running out of diapers, can create permanent behavior change.

So, how do brands and retailers win in this new era? They must understand, evolve and integrate their online presence seamlessly with their in-store presence.

Brands must offer solutions for shoppers wherever they are and should consider expanding into e-commerce through Facebook, Twitter and other such emerging platforms. Brick-and-mortar retailers must provide a more convenient, informative and engaging in-store experience — one that provides all the benefits of online shopping, in combination with the advantages of being able to touch the product and purchase it immediately. Instant gratification still matters to shoppers, and here the advantage usually goes to traditional stores.

Above all, act now, because evolution occurs more slowly in nature than in retail. Don’t be a dinosaur.



RANDI MOORE is vp of shopper marketing for Marketing Drive, developing best practices and program recommendations for leading brands. Randi can be reached at randi.moore-@-marketingdrive.com.

SEPTEMBER / OCTOBER 2011| PDF | Subscribe | Home