Digital retail channel (e-commerce) is the fastest growing retail segment in the world. eMarketer analysts provided some data on the pace of this development in the United States. In their opinion, smartphones are the most important sales channel in the face of stagnant retail. More precisely, they refer to smartphone applications.
The key conclusion that eMarketer draws regarding the planet’s most commercially attractive retail market is not bravely optimistic. In general, it is predicted to grow by the end of the current year up to $ 5.6 trillion, but this is only 2.0% more than in 2019. Let’s recall that the average annual inflation in the United States last year was selected from below to 2%, and in December it reached 2.3%. So far there is no solid reason to believe that inflation will be lower in 2020, amid growing domestic political fervor and frenzy ahead of the presidential election. So, taking this amendment into account, the size of the retail market at the end of the year is good – in case if it remains the same, or even slightly decreases.
At the same time, the share of e-commrece in the total volume of American retail sales is steadily growing. In 2019, according to eMarketer, it was 12.1%, in 2020 it should already exceed 13.5% and by 2023 it will increase to almost 19%. Moreover, already in 2022 sales through smartphones – mainly through mobile applications – will account for more than half of all American e-commerce turnover.
American experts see the average annual growth rate of e-commerce turnover in the interval until 2023 as stable, about 12.5%. That is because today the mass consumer trusts mobile technologies much more than just three or five years ago, and from year to year this trust rate is steadily growing. And along with it, the share of e-commerce in the total volume of retail sales is naturally growing. The client gradually and smoothly shifts from offline to online: starts trying various applications, acquires accounts on various Internet sites, tastes personal discounts and regular price reductions in connection with the next “Black Fridays” or “Cyber Mondays”, etc.
The first time consumer doesn’t know where to look first like any neophyte. Install the application of a trading platform, create an account, attach a discount card to a smartphone – what could be easier? As a result, attention inflation is progressing, Emotional bonds between the seller and the buyer do not have time to form properly – and those are the basis of consumer loyalty. More and more often purchases are made according the principle of checking prices at some e-commerce service, choosing what is cheaper and with faster delivery – and making an order.
In such circumstances, generous offers for personalized discounts simply do not have time to form, and an ordinary client will not see them until they enter the application of the corresponding store. Sophisticated systems of both predictive and post-facto analytics are mostly working idly as it is becoming more and more difficult to keep the client’s attention. Drawing on the experience of American e-commerce, which has been facing similar challenges for quite some time, eMarketer experts give some advice in this regard:
- There is no need to redeploy mobile applications. Support of functionally rich, heavyweight applications is expensive and the vast majority of customers will actually use maximum 20% of the features they provide (keyword search – image search – viewing order history – feedback chat). Some highly specialized brands like Sephora can afford an application with elements of augmented reality (it allows you to virtually apply the selected makeup to your own face, shot with the front camera of the smartphone) and not to lose a loyal audience of 25 million people. But this is definitely not an option for a multi-vendor online retailer platform.
- A key metric for a mobile retail application is the monetization gap, which needs to be narrowed. This refers to the difference between the number of visits to a page of a certain product and the number of sales generated from it. As eMarketer statistics share, in the pre-holiday season in the USA 75% of successful visits to product pages in online retail were made from smartphones, but only 40% of completed orders were placed on the same mobile devices. Other buyers began to fill the baskets from the smartphone, but then for one reason or another closed the application, after which they entered their account from a PC, tablet or other device and completed the ordering process there. And this is a cause for concern from the point of view of the retailer: a buyer distracted from the basket may well be tempted by a better offer from another dealer and not complete the order. This is exactly where it makes sense to rely on Artificial Intelligence – particularly on chat bots that will accompany the process of filling the basket and will offer their help to the client in the case of a rather long hitch (either switch the channel to a live consultant if the client suddenly wants something strange or just gets confused).
- Omnichannel is good but mono-channel is better. Many paths leading to the same goal can confuse an unprepared buyer that will eventually go to a less sophisticated, more direct competitor. Experts recommend focusing all the power of high technologies available to aim at the formation of a synergistic, mono-channel experience of consumer interaction with the store. In particular, make sure that the history of previous purchases and the bonuses accumulated under the loyalty program are as easily accessible to the buyer when contacting a consultant at the shop as online.
In the end, a distribution network is an intermediary between a producer and a goods consumer. In the current realities of information overload, the retailer who manages to make their presence on the vendor-client channel less noticeable and at the same time more useful to the buyer will win in the long distance from their rival colleagues. Consumer attention is a finite resource and if you find a way to give them opportunity to spend it on a retail channel at a minimum, the clients will appreciate it voluntarily or involuntarily. And at NIX Solutions we know how to help you do it.