Why Retail Can’t Beat E-commerce (Part I)
(And why it shouldn’t even try to do so in the first place)
There seems to be an invisible war going on between Brick & Mortar retail and E-commerce business. Some casualties are already gone and buried, like Sears, Claire’s and TOYS “R” US. All of them were once thriving retail businesses with millions upon millions of customers. Many experts point fingers at E-commerce as the number one cause for these, and other retailers, to suffer losses or even file for bankruptcy. It seems like an unfair fight between postmodern retail and into-your-living-room technology-loving E-commerce. Will you still be able to window shop like 50 cent or does that window only refer to the OS you use to visit your favorite online store?
Self-checkouts and home delivery
You can see something happening in retail stores across the globe. They are getting more adaptive to using automation in an effort to become more efficient and modern. In search of competing with online shops, they implement systems and tools that mimic the unique benefits that E-commerce provides. Think of Self-checkout systems that provide the same easy and quick paying solutions (no human interaction, no queue). Another great example is the ability to use an in-store computer device that runs the vendors’ website, so you can look at the item in real life and then order digitally to have it sent to your home. But in order to understand why offline seems to be losing ground against online, it’s good to know how the two differ.
So, let’s put E-commerce and Brick & Mortar in a head-to-head comparison based on their USP’s and benefits for visitors:
The same end goal, different need to fulfill
There’s a major difference in both of these disciplines. E-commerce is built to bring product offerings into the comfort of your home 24/7. You can visit an online store whenever you feel like it, but you’ll have to wait to receive and use your purchases. Brick & Mortar allows you to see/feel/taste/try products and take them home with you straight away (in most cases). The flipside is: they’re not always opened and you’re going to have to travel to that physical location. Which of the two you choose depends on everything: what you need, when you need it, where you need it and who provides it in a way that suits your desire. Now, if you look at the end goal, they’re identical. Both are trying to sell products to consumers. But here’s the catch: There shouldn’t be any rivalry between online and offline, because they’re both servicing a different need. Now your first reaction is probably: how’s the same goal servicing a different need? It’s because the differentiator is not the product they deliver, nor the brands they carry or the product pricing. If you look around you, you can probably get most items both online and offline.
The truth is that the need comes directly from the consumer, the person buying the product and specifically how he/she wished to purchase it. Sometimes a physical purchase is the most sought after way for an individual, as he or she might need a product straight away or is in the vicinity of the store anyway. Other times it might be a midnight purchase with no urgency or something that needs to be delivered elsewhere. There could be thousands of reasons. But this doesn’t take away the fact that E-commerce is still rising and even though they’re officially not in the “offline retail” space, it might still seem they’re stealing market share in that area. They’re not! They’re adding a different service to the same market but in a completely new way.
Trains don’t go it islands
It’s really the same as comparing trains to airplanes. Both are transportation services and either will get you from point A to point B. As a matter of fact, you might even be able to use the same departure and arrival cities for both (comparable to a product that you can purchase both in-store as well as online). However, train companies don’t compete with airlines, because they serve a different need. If I need to get somewhere far away, fast, an airplane might be the best solution. The cost will be higher, but it’ll get you there sooner than a train would. However, if you take the same trip a week later without being in a hurry, you might prefer using the train.
In addition: some destinations are not accessible by train (like Islands), so it might even be the case that an airplane is the only option. On another occasion, the destination might be perfectly suited for a train ride and might not be an option to fly at. Are trains and planes direct competitors? Sometimes but in most cases: no! Could they learn from each other and innovate to better serve their customer’s need? 100%! The vehicle is dependent on the destination, the same as that the type of store (online/offline) depends on the needs of the customer. One time he might need online’s flexible delivery, the other time he might want to see and feel a product in real life first. It’s not a battlefield, it’s the market.
“There shouldn’t be any rivalry between online and offline, because they’re both servicing a different need.”
Don’t just copy, innovate!
Where most go awry is when they gaze at E-commerce and copy what they feel makes the online retailer so successful. Quickly slapping on a brand new 2019 style logo and putting up a bunch of self-checkout systems. However, that is not the sought after innovations that retailers should focus on nor is it what visitors look for. Just look at the Head-to-Head comparison at the top of this article. It shows the aspects and uniqueness that both have and what they can provide their own set of customers. What happens if Brick & Mortar starts duplicating the things that make online so successful? They become offline webshops!
Looking at retail’s own traits, they provide a couple of features on which they can actually innovate. And I don’t necessarily mean just by implementing technology or automation, but by finding ways to exploit that uniqueness and turn it into reasons to visit the store. One of the things I have put down under Brick & Mortar is its social aspect. There’s staff present that can provide a unique and memorable person-to-person experience. One thing we know for certain about shopping online: you’re basically on your own. There might be a number to call or a live chat available, but none of those are face-to-face contacts. If you want to build trust and receive empathy as a brand, nothing builds a stronger relationship than a human being with a friendly face and genuine eye contact. Something a phone call or live chat, heck not even a Facetime call could provide!
Emotions and experience
Just think of the emotions you can see when a friendly employee explains the difference between product A and product B. Online you’ve got a customer service rep who might be just as friendly….but all you see is words in a tiny pop-up window. There’s hardly any emotion, at least not noticeable, so it probably won’t have a lasting effect on your perception of the brand. Therefore it’s much harder for the E-commerce business to establish a relationship, build trust and brand loyalty. This is the reason why online businesses try and optimize product feeds and check-out processes 24/7. It’s their strong suit: providing quick information and sending you straight to checkout.
And that is one of the sweet spots retail should jump straight on. Not blindly copying the easy payment methods online has developed, but to use their human connectivity trait as if their life depended on it (which ultimately it does). People who come into a store have probably made the conscious decision to be there. Whether it’s to browse items or purchase something to take home right away, the fact that they are there provides retailers with numerous opportunities to connect with them. The way people are treated makes a great deal of impact on the decision to revisit a store. If you add a great experience to the mixture, you’re using traits you already possess. More importantly: it’s something that online will never be able to offer, even if they wanted to.
“If you want to build trust and receive empathy as a brand, nothing builds a stronger relationship than a human being with a friendly face and genuine eye contact.”
How to make this happen?
In part 2 of this article series, I’ll explain how retail can use actual innovations to expand on their unique traits. Taking the brand to the next level by delivering quality and memorable experience to the visitors and using modern techniques and technology but most of all: people. You’ll learn how we can exploit the most human of skills combined with technological solutions to create opportunities that we have never thought of before.
Would you like me to give you a heads-up when part II releases?