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Virtual Commerce Upstarts Hit the Bricks

Digital-first commerce pioneers make the move to the storefronts they were supposed to demolish.

In 2007 a new outdoor brand burst onto the scene ready to disrupt the retail world forever. An experienced management team comprised of former Patagonia and Nike executives “...set out to reinvent the way people shop, reshape the outdoor category, redesign the corporation—and inspire the wider business community to do the same”, according to FastCompany. They were going to save the world while reinventing retail as we know it.

15 months later Nau crashed and burned.

Pundits wrote lengthy post-mortems examining Nau’s meteoric rise and fall. It could have been their growth ambitions, feel-good sustainability commitments, the quality and price of the merchandise itself or perhaps it was a new approach to retail they called a “webfront.” In 2007 the concept of walking into a store, paying for merchandise and then waiting to receive it in the mail a few days later was completely foreign (if not somewhat insane.) Today, digital-first commerce legends like like Bonobos and Warby Parker do it regularly.

And they’re not alone. The Big Boys of the digital world are starting to experiment with the physical world as well. During Black Friday weekend Zappos opened up a pop-up shop in Las Vegas just after Amazon opened it’s first permanent brick-and-mortar location in Midtown Manhattan.

This move to the physical world should hardly come as a surprise. Both Montgomery Ward and Sears & Roebuck started out as mail-order catalogs with the intent of circumventing the need for a physical location. According to Wikipedia:

    “Ward also believed that by eliminating intermediaries, he could cut costs and make a wide variety of goods available to rural customers, who could purchase goods by mail and pick them up at the nearest train station.”

Tag this trend under the cliche of: The more things change, the more they stay the same.

We’ve been hearing for years that the physical and digital worlds are colliding in the eyes of the consumer. We shed multichannel for “omni-channel”, and retailers are slowly but surely shifting from a channel-based view of the world to a customer-based view. Cross-channel purchasing (e.g. buy online, pickup in store / buy in-store, ship to home) has graduated from the cutting-edge to the mainstream. Now retailers and brands that invented the concept of online “disruption” are moving offline and bringing their disruption with them.

It almost goes without saying that in order for traditional brick-and-mortar retailers to survive in our post-Mall era they’ll need to do more than just throw themselves online, they’ll need to step-up their in-store game as well because digital-first brands are also disrupting the physical world of retail. A lot of those changes in the physical world of aisles and end-caps are being driven by insights into shopping behavior learned online, from paying close attention to the data generated by online commerce platforms.

Rebecca Minkoff is one brand that is taking the physical world into their own hands. The majority of Rebecca Minkoff bags, clothes and shoes are sold in high-end department stores, leaving the team free to innovate in their handful of high-end boutique stores.

They began by posing a simple question: “What would be the ideal way of shopping that would take away the pain points?” and then answered it with technology that was functional as well as cool. According to the Wall St. Journal, innovations include touch-screen browsing, text messages when fitting rooms are available, and mirrors that double as a touch-screen that can be used to request assistance. ( and, of course the now-obligatory-innovation, iPads, to check out from anywhere in the store.)

Brands with a deep digital footprint have a significant advantage when it comes to making brick-and-mortar decisions. They’re able to use their data as essentially the virtual equivalent of a focus group to inform decisions such as where to build actual stores, what inventory to carry in those stores and the likely personas or types of shoppers who may walk through the door. For brands with a small physical footprint, this data is easy to act on as they’re not shackled by legacy business decisions and existing technical debt.

So how do retailers with a larger footprint do it? How do they prevent the impending physical disruption by digital-first players?

Don’t be afraid of Showrooming

Today, “showrooming” is well known by businesses and consumers alike, with one study claiming that 80% of in-store shoppers check prices online. It’s statistics like these that have led retailers to view showrooming as a threat, not an asset. However, when digging deeper into the realities of how consumers shop, the headline-claiming stats prove to be a little misleading. One study by Columbia Business School says that of those who do commit the act of “showrooming”, more than half continue on to make that purchase while they’re in-store if they are able to find helpful information online. Rather than fighting the showrooming trend, encourage shoppers to visit your site, and then provide them with valuable content.

At last year’s Shop.org conference Brad Brown, SVP of Digital Retail said that REI.com is the #1 site visited on a mobile device by users while in a retail store. REI sees REI.com as a ‘Catalyst for Discovery’, and as such, the brand is embracing showrooming, to support their customers desire for a channel-agnostic experience.

One cohesive experience

60% of retail sales will be influenced by the internet by 2017 according to Forrester Research. Some will purchase online, but most will continue to transact in store. Another study by Deloitte research found that 70% of shoppers “webroom” by visiting a retailer's website before going in store to make a purchase. Many do so to check assortment, inventory levels and prices, and then ultimately drive to the store to make the purchase. In the same study, Deloitte found that millennials, in particular, are more likely to prepare for a shopping experience by “webrooming” than any other demographic. It goes without saying that these customers are expecting the in-store experience to match the online one.

Invest in technology that provides real value to customers

Beacons are cool. 2014 was supposed to be the Year of the Beacon, however that never came to fruition. Not because the technology wasn’t there, but because marketers failed to develop strategies that made interrupting the customer valuable instead of annoying. For a beacon to be an effective marketing tool the customer has to 1) download the store’s app 2) opt-in to push notifications 3) have the app open while in the store 4) actually look at the thing when it vibrates. And then the offer has to be relevant and compelling enough for the customer to take advantage. There are too many hurdles to make beacon technology work as it’s advertised.

According to WBResearch: “The most effective retail technologies of the future will create seamless shopping experiences and integrate with other technologies and services”. Ok, ok, I know. No duh. But how? And what?

  • Empower your sales associates. Give them hand-held technology (iPhones/tablets) that enables them to be true experts on the product and the store while in one-on-one conversations with customers.
  • Know your customers. One of the beautiful things about an e-commerce website is all of the data you’re able to collect from visitors. Entry pages, pathing reports, time spent on specific pages - the wealth of data is enough to excite any analyst. Thanks to new technologies that track wi-fi signals, this data is now readily available in-store as well.
  • Enable cross-channel purchasing. If the customer wants to order online and pick up in store, let them. If they want to pay in a store but don’t want to lug a shopping bag round the city, ship to them.
  • Allow mobile payments. Apple Pay burst on to the scene with much fanfare last fall, and since it’s launch it’s already accounted for 0.1%-1.6% of transactions at top retailers, despite being available only on the iPhone 6. 71% of those responding to the WBResearch survey expect that mobile wallet capabilities will become standard over the next 2-5 years.
  • Invest in kiosks & touch screen technologies for the right reasons. In 2012 Macy’s ran a pilot program to install high-touch kiosks called ‘Beauty Spots’ in the makeup department. These kiosks enabled users to read reviews and browse products, however they completely forgot about the emotional and tactile components that accompany a makeup purchase. The pilot program quietly fell to the wayside.
  • Give the customer what they want. Burberry customers live and breath for brand content, so Burberry set out to bring brand video in store. When a customer picks up a product with an RFID tag and brings it into the dressing room a video will launch on the dressing room mirror that features that product on the runway or on a model.

As consumers grow to love and expect in-store technologies they may be more open to Beacon-type experiences. But until then, the best technologies are behind the scenes, making the consumers life easier and their shopping experience seamless across channels.

Get rid of your cash registers - use your commerce platform as a POS

As the lines between the online and offline consumer disappear, so should the lines between your online/offline technology. New technology is enabling associates to free themselves from the check-out desk and mingle among consumers, interacting with them where they’re discovering product. Thanks to the Apple store and other early adopters, the time has come where there is very little difference between an e-commerce checkout flow and an in-store sales flow. And thanks to Target and Home Depot, customers are getting more and more skeptical of the traditional POS system. As we drop the ‘e’ in ecommerce, we should merge the commerce transaction and in-store POS systems. This will provide your consumers with a truly seamless experience end-to-end, while filling your data warehouse with information unencumbered by channel.

Regardless of the brands’ origins, one thing is clear: today’s consumer is indifferent to the where or the what. They know what they want, they know how they want to get it, and for them it isn’t e-Commerce versus Old Commerce, it’s the search for the right product for them. Today brands need to meet expectations both in store and online. Tomorrow it may be wearables and the IoT, but who really knows? This is why brands have to learn to be nimble, innovative and regularly solicit feedback from their customers.

Mary Meeker spoke of the Internet Trifecta as the intersection of Content + Community + Commerce. As retailers strive to create one experience that crosses the digital and physical channels they need a platform that gives brand the ability to be flexible and nimble. The Acquia Platform does just that. The Acquia Platform can provide brands with the technology framework enabling them to meet ever-growing customer needs and expectations, across devices, across channels and across bricks.

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