The next revolution in retail has already begun: see how new technology is driving omnichannel retail forward.
Before omnichannel retail could even be predicted as a future consumer-driven trend, we had a long line of smaller, less disruptive approaches to the marketplace.
Right around the time I would go back to school as a kid, my mom was ordering Christmas presents from catalogues like Lands End and L.L. Bean. Often, the item she wanted to give as a gift was out of stock, and would take an additional month or two to reach us. That was one of two reasons she’d order early (the second was her incredible organization that allowed her to be that far ahead of the game).
I had honestly forgotten about this channel consumers had to traverse to get the products they wanted. It was weeks or months before the catalogue products showed up. More times than not, I remember my mother sending things back because the order wasn’t filled correctly.
But with technology moving at the speed of light—and perhaps faster in retail than most other fields—online ordering has just become a part of the fabric of our lives.
Today ordering from Amazon, Walmart, or any other store with half of an online marketplace presence allows procrastinators to wait even closer to the last minute to get gifts and necessities. The move towards free shipping and one-day delivery has taken a lot of the hassle out of shopping, and consumers are turning more and more to online options for shopping.
One-day delivery has taken a lot of the hassle out of shopping, and consumers are turning more and more to online options for shopping.
Little Money in Online Sales…For Now
It might surprise you, then, to know that big retailers with strong and seamlessly integrated online stores—the direct-to-consumer channels—do not see much of a monetary benefit from this space. Early 2015 saw the likes of WalMart, Target, and Bed Bath & Beyond making less than three percent of their revenues from online sales.
It’s pretty clear that the online channel alone doesn’t do much good for retailers, who have traditionally served their customers via brick-and-mortar stores.
There has been growth in the marketplace, and there’s certainly more to come. In 2006, about two and a half percent of net retail sales in the U.S. were from online. Experts expect this to increase to nine percent in the next five years.
But turning the online venue into a meaningful business and revenue stream takes a lot more work than just directing customers to a website. Retailers know that not being online is pretty much certain death in this day and age, but a large majority also realize a consistent customer experience across all channels is incredibly important for brand credibility and for consumer understanding and repeat business.
Omnichannel—Anytime, Anywhere
And by all channels, we do mean all. Brick-and-mortar, online stores, social media, VR—if you can figure out a way to use the space effectively, it can be part of your business’s tools. Omnichannel retail isn’t just the future, it’s here, it’s growing, and your business needs to get on board, ASAP.
It goes both ways too. As web giants like Amazon realize the impact of omnichannel retail, they too want to branch out beyond their traditional online space into brick and mortar stores. With its continuing strategy for pop-up stores, and the recent announcement of brick and mortar bookstores, Amazon is committed to the omnichannel approach.
This next evolution of the retail space is full of benefits for those businesses who subscribe to a seamless, integrated buying experience for their consumers.
This next evolution of the retail space is full of benefits for those businesses who subscribe to a seamless, integrated buying experience for their consumers. Multichannel shoppers have a tendency to spend more than regular shoppers, as they have access to a wider range of products and opportunities for additional discounts.
And while some businesses are struggling to come online with their products, most others aren’t quite succeeding at adapting to this notion of consistency across channels and product availability anytime, anywhere. The lynchpin to a successful omnichannel retail strategy is, by far, an effective, efficient supply chain.
What Does a Successful Omnichannel Retail Strategy Need?
Improving efficiency is absolutely necessary to be able to pull off a seamless omnichannel presence, and there are several different ways this can happen. In the future, packaging could include embedded intelligence such as GPS technology and digital displays instead of printed shipping labels. This will enable packages to “know” their destinations and communicate their locations and status as they flow through the supply chain
Big data will also continue to be be important for omnichannel success, both from a supply chain and marketing perspective. But at the end of the day, it’s important to remember that the trend towards omnichannel retail is being driven by the consumer’s wants and needs.
Technology advances that aim to get products to consumers faster, make payments easier, and allow consumers to traverse a store from the comfort of their own home are also driven by consumers in the omnichannel debate.
Drones Gathering Consumer Confidence
Although the national debate over their safety continues to rage on, surveys show that a majority of consumers seem to be ready for the commercialized use of drones.
As of early 2015, only Amazon was researching the opportunities for using the unmanned aircraft to make deliveries, but Google and Wal-Mart have now also joined the fray.
A staggering 80 percent of consumers have said they would be more willing to shop with a retailer if it offered drone delivery.
It’s counterintuitive, especially in an age when most consumers demand free shipping. It’s become a marketing expense: the cost of doing business in e-commerce. The catch to drone delivery, however, is that most consumers are only interested if the drone could make the delivery within an hour of placing the order.
Consumers believe drone delivery will happen in the next five years, but whether that’s possible or not is entirely up to the FAA. The government organization is moving slowly with approving commercial drone flights, and for good reason. There are a lot of concerns, ranging from the safety of people on the ground and other aircraft to the threat of their proximity to airports.
It could be a while until commercial drone flights are approved, but in the meantime interested omnichannel retailers can continue to research better technology, and interested third parties can begin assessing the feasibility of creating drone delivery service for retailers not big enough to spend precious R&D money on its own fleet of drones.
Mobile Payments Capturing the Market
And while drones are waiting to take to the skies, another key part of omnichannel retail is already transforming the space. Mobile payment use has skyrocketed, which many attribute to Apply Pay and its ability to legitimize the market.
There are just as many challenges in this market as there are for drones seeking approval–there are so many different options that it poses challenges of adoption, point of sale terminals aren’t consistent, and many retailers aren’t will to swap out their PoS hardware until they know which system will prevail.
But there are two things surging this payment system forward: the decline of the use of cash, and the increase in mobile payments for retail purchases, grocery shopping, and in restaurants.
Virtual Reality Building a Store—In Your Home
Although retailers’ presence in virtual reality is few and far between—limited to some car manufacturers, Ikea, and a few others—the potential in this market is astounding. The in-store experience at home or on a mobile device could be invaluable for consumers who are looking for the easiest possible way to shop.
VR technology will eventually let consumers try on clothes, mix and match products, and customize their purchases. It will also give the opportunity to upsell the consumer in a new, innovative way.
Consumers are definitely interested, but for many it’s still a foreign concept and will take a while to permeate the market. But the possibilities are endless.
“Virtual reality is developing quickly and in five to ten years it will be an integrated part of people’s lives. We see that virtual reality will play a major role in the future of our customers. For instance, someday, it could be used to enable customers to try out a variety of home furnishing solutions before buying them,” said Jesper Brodin, the managing director at IKEA of Sweden in a statement.
The personalization consumers crave, effective supply chains, and these transformative technologies listed above are helping omnichannel retail make shopping less frustrating, retailers more efficient, and marketing more effective.
“The retail industry is expected to change more in the next 10 years than it has in the past 50,” shared David Roth of The Store WPP.
If this is the case, retailers need to research every advantage possible to not only keep up with the trends, but hopefully get ahead of them.
