Imagine with me for a moment. As you enter the local shopping centre, the excitement is palpable. You hear and feel the buzz amongst shoppers, and you sense that each shop invites you to explore the latest product drop or event. You walk into a shop and a shopkeeper greets you, guides you, and assists with your needs. You sense a connection with the people, the products, and the ambience. You want to linger. This interaction, this engagement, makes you want to spend money.
Now, cut to later that evening. You sit at home browsing the web. Suddenly, you’re ambushed by an in-your-face promotional banner. In stark contrast to your earlier brick-and-mortar shopping excursion, this experience aggravates you. …No buzz, no excitement, no warm greeting from a shopkeeper. Whatever good exists in the latest product drop or online event is obscured by the onslaught of retailer promotional noise. It feels detached and intrusive, so you log off and listen to your favourite podcast. You didn’t spend a dime.
We can’t dismiss the 58% of Australian consumers who say ‘promotional noise’ bombards them when they shop online. Adding to shoppers’ irritating ad experiences, online retail lacks the necessary element of engagement - that therapeutic element - which we all seek and thrive on. It’s this engagement that opens our pocketbooks, time and time again.
The striking contrast between the online and on-site shopping experience exists for a reason. As I wrote in a previous article (link), retailers have become obsessed with improving conversions by pursuing the status-quo strategic goal: reduced consumer time on site. Yes, they can slightly enhance conversions by encouraging the customer to check-out faster, but retailers overlook the enormous missed opportunity in this myopic strategy.
Online shopping undeniably lacks the engagement of a physical store - and shoppers notice; 50% say they could be better engaged by retailers online. In fact, 48% of existing customers say they would seek out retailers’ websites more often if interactivity and engagement were improved. This comes as no surprise, given that a third of Australian consumers find the on-site retail experience therapeutic. This neglect of customer engagement has created a $695 million market gap in the Australian online retail industry.
Let’s dig deeper. Why do consumers feel so disengaged when the online shopping experience has progressively improved since its inception (despite the current misguided paradigm). The reason is that 46% of consumers still compare online shopping to on-site shopping. As expected, 55% of Australians find the brick-and-mortar shopping experience superior to that of e-commerce.
Behind the Problem
In the brick-and-mortar world, retailers spend thousands on strategic architectural planning of their ideal in-store experience. Neil Arrowsmith, CEO of the design-led retail consultancy Greater Group, describes optimal store design principles. The core principle is that every square metre of the store should work to satisfy the shopping mission of the customer. The science of retail store design aims to create a journey for the customer, a holistic invitation to understand the retailer’s brand, the meaning of their lifestyle, their mission, vision, and values. All roads on this journey lead to increased consumer purchasing. And this extensive planning is in the store layout and design alone, it excludes the numerous added-value components of excellent in-store engagement, such as décor and customer service.
Naturally, when the in-store sales pipeline is compared to that of online sales, it is more effective in reaping the most value from its customer base. Clearly, in-store strategies are far more likely to generate sales: 65% of consumers say they’re more likely to purchase when they are in a physical store than when on the retailer's website. Furthermore, a smashing 70% of shoppers would spend more in a retailer's physical store than on their website. It’s safe to presume a large proportion of this increase in spending results from cross-selling, an intrinsic component of high-level customer engagement. So, where does this engagement deficit leave online retailers?
While it’s not time to drop your entire strategic plan and devote all resources to improved customer engagement, it is time to start taking this problem seriously. If the $695 million market gap that exists here is not enough incentive, consider the expanding Amazon impact. To be sure, Australian retailers will initially struggle to compete with Amazon’s business model. One way to combat this is to motivate customers to be loyal to your brand - through therapeutic, comforting, and holistic engagement. Retailers are well-positioned to innovate online shopping through improved engagement. No market gap exists forever. To quote the Australian Financial Review, “Australian retailers… the time to invest is now”.
The $695 million question is, “What are the online retailer’s first steps toward providing holistic engagement?”
I’ll be posting more insights about the paradigm shift toward a holistic shopping experience emerging in the e-commerce landscape, which I’ve written about in a previous article entitled, “$695 million Market Gap Found in Australian Retail Industry” (link. If you’d like to chat about it or contribute to the ongoing conversation, please feel free to connect with me.
Sources: 1. The 360 Mall Online Shopping Survey February 2016 (<5% margin of error). 2. The 360 Mall Online Shopping Behaviour Survey May 2017 (1000 Australian online shoppers). 3. The 360 Mall Online Shopping Research November 2016 (825 Australian 18-34yr old online shoppers, 6% margin of error). 4. The science of retail April 2015, Marketing Mag