Offline/Online Retail Landscape
Experiential Commerce Addresses New Trends in (Online/Offline) Retail Shopping
Or imagine a fashion store full of VR/AR tools to help you see how you would look like wearing one or another set of clothes. Warby Parker’s AR tool, for instance, allows you to see how your face will look like with various types of glasses. By implementing these concepts focused on experiences rather than on selling things, the retail stores become the experience distribution centers, and such approach should presumably appeal to the demanding millennial customer. All the stuff people want to buy can be shipped to them later – today or tomorrow, - but the connection that consumers build with the store, the brand or the company is much more valuable than a one-time sale. The customer will be coming back if she likes the experience.
It’s hard for e-commerce companies to achieve this type of connection with the customer because their connection is not emotional, it’s not physical (aside from nice packaging or some story telling techniques used on the website). And it’s harder to establish such connection when you don’t have a physical point of contact. Maybe that’s why pure e-commerce players like Amazon, Alibaba, Warby Parker, Bonobos, Harry’s, Modcloth decided to open physical stores or invest in companies which have offline presence. All of this gives rise to the so called O2O commerce (online-to-offline), which seems to become another important trend to watch. So even though e-commerce is growing faster than expected and entices customers away from offline retailers, offline industry still has a pretty good chance to succeed and beat e-commerce competition if they adapt and change quickly.
Amazon vs. Walmart
Amazon has been perfecting e-commerce for the past 24 years and, to a large extent, shaped the global e-commerce industry. Will Walmart be able to succeed by just trying to catch up with Amazon in the online space? I think it’s unlikely, but what it can do to successfully compete against Amazon is to use its offline presence to its huge advantage and potentially convert its offline stores into experience distribution centers while giving customers an opportunity to order both online and offline. Also, Walmart has perfected (and pioneered many concepts in) its supply chain, so it will be difficult for Amazon to catch up with Walmart in the offline world if it chose to do just that. Basically, the above comes down to the following:
Even with its 11,500 stores in 28 countries, Walmart, however, is still limited geographically more than Amazon because its business is mostly offline. Walmart’s acquisition of Jet.com gives it a chance to expand and diversify globally. With Amazon moving from online to offline and with Walmart moving from offline to online, we will see more direct competition between these two dominant players. Hence, we will also see more convergence between offline and online concepts. It would be interesting to see what will happen if (or when?) Walmart transforms its stores into experience distribution centers, creates exceptional customer service (the cost of doing this is negligible as compared to Amazon’s getting into the offline business) and integrates with its e-commerce arm Jet.com. It seems that doing so could give a strong competitive edge to Walmart in the e-commerce battle field because Amazon doesn’t have the advantage of physical connection with the consumer. An interesting article about strategies of both companies was posted here.
Experiential Commerce’s Success Components
Though there are still not many people talking about it, experiential commerce is becoming a visible trend among offline retail stores. According to PSFK’s Future of Retail 2018 report from November 2017, 55% of the 400 retail executives surveyed will spend part of their marketing budgets on in-store experiences by 2020. E-commerce companies are also experimenting with a number of tools and technological innovations to create unique customer experiences. Convergence of offline and online sales channels will become an important consideration in the companies’ strategies, while selling things will become a by-product, a logical extension of fully immersive, emotional and personalized experience a customer will have with the brand or the company (source).
That said, I went to Target, Modell’s, Home Depot, Staples, TJ Max and Macy’s in New York just to see if there have been any changes in the shopping experience towards experiential commerce or customer personalization. And I didn’t see any. Not much has changed as compared to what I saw 10 years ago. These companies are still not using tools or techniques to learn more about their customers’ preferences or desires, so hopefully we will see and feel these changes in the near future as they enhance our lives and enrich our life experiences.
Life Explorer and Startup Consultant. Moving quickly towards total happiness. :)