Demandware invited top managers to the ‘HandelsMacher-Roundtable’
BY ANJA FAHS
(Published in The Produktkulturmagazin issue 4 2015)
I often ask myself how online trade can grow so rapidly without losing the appeal of the physical shopping experience for the consumer. On single's day in China on 11 November, Alibaba, the biggest internet platform in the country, reached a sales volume of $10 billion by midday! The advantages of purchasing online are quite obvious: you can research quickly and extensively, independent of time and place, and get your items delivered where you want at a time to suit you.
But what if you want to touch or try on these products? How can online trade compensate for the personal shopping experience you get with brands or create alternative added value? In order to understand the relationship between in-store and omni-channel better, I attended ‘HandelsMacher-Roundtable’ in Frankfurt recently. I participated in a lively discussion with forward-thinking, innovative senior managers from German retailers who are all working meticulously on solutions for today’s retail challenges.
They debated the values of the in-store experience vs online and what omni-channel retailers needed to do ensure the consumer experience was the same online as it was in-store. A recent study1 by Demandware, a leader of enterprise Cloud Commerce solutions, called 'Omni-channel in Real Life'*, highlights the most important values the store experience brings compared to online shopping. 71.8 percent of participants said being able to touch and experience products was important, 52.1 percent said they like to pay for and have their products immediately and 46.6 percent value the customer service given by experts at the point of sale in a store.
In today’s omni-channel world, how do retail companies and branded manufacturers find solutions to these challenges while enduring price wars and facing constant pressure to innovate to keep up with the pace of change? The 'HandelsMacher-Roundtable' discussed a range of scenarios about how an online brand experience could match the brand experience in-store. Included in the discussion was how to overcome the consumer’s desire to touch and feel products. As online shopping shifts from just being about the sale of white goods, brown goods, books and CDs to fast fashion, footwear, accessories and the outdoor sector, personal style and being able to touch and try on products become the challenge.
Solutions include introducing virtual changing rooms; where consumers can upload a photo and virtually try on the clothes. Although not the same as being in-store, it does allow the consumer to get a feel for whether the cut, colour, style and size would suit or fit them.
Innovative retailers are integrating this online digital experience within the store. Italian fashion brand OVS Spa introduced magic fitting rooms into their Milan flagship stores. Here the customer can take a selfie from different angles via a touch screen integrated into the dressing room mirror and share the photo with friends via social networks to seek their opinions. The customer can also request the item in other colours or sizes through the magic mirror without having to leave the fitting room – the sales assistant is informed via handheld tablet.
Monica Gagliardi, E-Commerce, CRM, Web and Digital Marketing Manager at OVS is determined to make Omni-channel successful. “We want to make shopping easy, cutting edge and amazing,” says Monica Gagliardi, “and that means creating an experience without boundaries.” The shopping experience should be simple, ground-breaking and impressive for the customer. It means creating a brand experience that is seamless across every customer touch point, whether that is online or in-store.
Personalisation of a product offer is just as decisive for a satisfactory consumer shopping experience. Personalisation starts with the online marketing and promotion of the product, and is continued through the customer’s buying journey. Being able to make recommendations online about alternative products that meet the customer’s needs, offering alternatives sizes and colours tailored to the customer based on preferences already known to the brand or retailer all influence conversion and customer satisfaction.
Integrations are also important and necessary to ensure seamless online and offline experience. Technical integrations with ERP and, if applicable, SCM systems are required in order to make delivery and production times visible in real time to the customer. This real time insight into availability of goods and associated delivery times are influential factors to improve conversion rates. Integrations can be complex due to the number of interfaces into back end systems and require the support of experts, like Demandware Partner, Be Excellent.
According to René Helbig, Managing Director of the E-commerce consultants Be Excellent, successful integration of ERP and SCM is elementary for the establishment and smooth running of a successful omni-channel strategy. Many technical solutions, especially those provided by legacy systems, do not deliver the same ease of integration as cloud based products. Due to the open architecture of cloud solutions, integration into ERP, SCM and other complementary solutions such as CMS, PIM and CX systems are much easier, ensuring optimised customer experience and the best possible performance of the online store.
The introduction of click and collect is a way to ensure the consumer has the opportunity to receive their product faster. Click and collect is simple: an item is chosen online, paid for and ordered and then picked up in-store. The collection point could be a logistically central point, i.e. at a packing station, drugstore chain that is close to an underground station or even collection boxes at underground stations. This is standard in countries such as the USA or UK but is still new to the German market. According to Planet Retail, by 2017, 76 percent of all online shoppers in the UK will use click and collect. Last year, 35 percent of all online purchasers in the UK bought online and picked the item up themselves, in comparison to 13 percent in the USA and only 5 percent in Germany2.
Another very important and exciting topic discussed at the HandelsMacher-Roundtable was 'customised logistics'. Michael Gerling, Managing Director of the trade association EHI in Cologne, is sure that logistics tailor-made to the daily routine and location of the consumers will be a substantial driver of retail sales. Above all in branches where delivery by a certain time at a certain destination is important, i.e. to guarantee that cold products arrive cold, individual logistics systems or ‘customised logistics’ are an essential part of the omni-channel experience.
Another important element for retailers to consider is how to replicate the professional product advice provided by in-store experts within the online site. The simplest way is to integrate live communication channels with a competent service centre. It is important that the interaction is easy to find in the user interface and works across all devices, operating systems and browsers.
Using simple product finders, which recommend the ideal product according to personal taste and individual preference can also mimic the role of the in-store expert. For example, the North American trainer manufacturer Brooks Running offers a platform where the consumer can select a running shoe that is personalised to them, ensuring the customer receives a product that suits their running style3. This almost replaces the customer advice in the store, strengthens the brand loyalty and considerably reduces the amount of returns.
User reviews and content generated by the customer, so-called ‘user generated content’ (UGC) provides alternative ‘expert opinion’ and can be made available across channels in a variety of formats. Certified product reviews can also have a considerable influence on the choice of relevant products and impact conversion. The higher the brand value and the lifestyle share of a product is, the more important the integration of visual content is. Ideally this content should be integrated seamlessly via social media hubs such as Twitter and Facebook or via crowd platforms like WeHeartIt, Instagram, You Tube and Vimeo.
Technology solutions alone do not guarantee omni-channel success. Shifting to a sustainable, profitable omni-channel model also involves business transformation. Torsten Waack van Wasen, Managing Director at the top management consultancy Alvarez & Marsal, outlines what he considers the three most important points, these are: business transformation, data based analysis and seamless brand experience.
Business transformation involves considering how to bring the online and in-store business together, it may involve restructuring within the management team and the organisation. This doesn’t have to be realised immediately, but can be introduced gradually as the business evolves to ensure the direct benefits are realised internally as each incremental change is made. Included in the business transformation are ensuring you have the right people with the right skills and DNA. Every manager should ask himself what the right mix of trade and E-commerce experience in his team is. Young, hip digital natives are frequently experts in online marketing or blogging, which are important, but may lack knowledge of processes and market correlations about E-Commerce could be limited.
Leveraging data, such as analysing consumer behaviour from data gained throughout the buying journey, can help influence the business model and strategy. It is fundamentally important to understand the insights data brings to the business and ensuring data analytic skills are embedded in the team. Knowing how the systems you use help provide data insights and what to do with those insights is key to omni-channel success. Data analytics should be a top down management topic and should be lived throughout the organisation.
According to Torsten Waack van Wasen ensuring a seamless brand experience for the customer across all channels is the only way traditional stores will survive. Providing the same experience online and via mobile devices as the customer receives in-store ensures customer loyalty. It can present organisation and technical challenges to the business, but the key is to build the organisation in such a way that it can anchor the goals for Omni-channel across all areas of the company. KPIs should be adapted to the new business model and synchronised across all departments, which may have historically been siloed, so they all pull together to deliver the seamless experience required for omni-channel success.
For Dr Marc Ehlbeck, partner at the E-Business strategy consultation eccelerate, there are simple solutions for the brand experience in online retail: Time. Data. Logistics. From his perspective, current limits to online purchasing are only temporary hurdles which online trade will overcome. In the future, online stores will know more about the customer’s preferences than the sales assistant in the city centre and be able to accurately and quickly offer relevant choices to the customer as a result. Here, a beacon – recognising the customer when they enter the shop via bluetooth technology – is of no help. A sales assistant can not allocate a profile to ten customers who enter an H&M shop at the same time, never mind analysing the purchasing history and providing suitable recommendations. All of this is possible online in real time.
According to Georg Wesinger, Sales Director for German-speaking countries and Scandinavia at Demandware, being able to optimise the shopping experience is all about understanding the buying behaviour of the customer and acting accordingly. Wesinger indicated this was all due to having the right technology platform to run the retailer’s business. The quarterly Demandware shopping index provides analysis into shopping behaviours of more than 200 million buyers worldwide. The index indicates that direct reactions to the range, personalisation or discounts can be triggered. According to Wesinger, having access to this type of data analysis from a large amount of consumers is critical to success for omni-channel managers and helps them to make important decisions with lower risk.
Dr Marc Ehlbeck, partner at eccelerate adds that even the 'instant gratification' of instant purchase, which is still reserved as an advantage of in-store trade at the moment, will also be possible online – at least for customers in cities. Predictive logistics, in other words anticipating orders before they are carried out, and ultra-fast or same-day delivery will make this possible. Amazon already offers Prime members same-day delivery free of charge. Given this, why would a customer want to venture into the city centre to shop? They would be much happier if they could place an order online in the morning, knowing it could be delivered into the office the same day or to their home the same evening. If the customer is delayed and can’t accept delivery, they can re-arrange the delivery time via an app.
The conclusion of the session was that the intelligence in online trade will rise so sharply that the current disadvantages of online purchasing will diminish ever more. The implications for retailers and branded manufacturers are that if you haven’t considered an omni-channel strategy yet, you are at risk of losing out to competitors who have.
Demandware is one of the leading suppliers of cloud-based Enterprise Commerce Solutions. At the current time, 308 Demandware customers are selling their products through Demandware Commerce Cloud in 1,399 online shops in 49 countries. In Germany this includes Lancôme and Marc O’Polo.
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