Towards the digital retail future – contextual influence versus cart abandonment
- Mark Skilton
- Nov 21, 2014
- 4 min read
The growth of Fast Moving Consumer Goods industries is a feature of the modern world with consumer products and services in every part of our daily lives. Whether we are purchasing a train ticket, buying a soda drink, picking up prescription medicine from the pharmaceutical drug store or buying food in the retail outlet, these experiences are increasingly part of the “on-the-go” lifestyle.
Economists describe this as the rise of “consumerism” that has been enabled by the development of modern manufacturing and packaging processes supported by sophisticated sourcing and distribution logistics. This is nothing less than a transformation in society over the last fifty years that has seen the supply chain adapt and grow to meet consumer buying habits and led to the rise of large supermarket malls and an increasingly diverse range of goods and services.
Yet the physical logistics and mass product availability is now rapidly changing and expanding to include online business and social networking models driven by emerging digital technologies. The term “eCommerce” that described this online sales and electronic purchasing activity has spread from the basic online websites into a whole revolution of digital marketplaces and electronic trading that now span complete supply chains end-to-end. In the food and drink categories in retail, the opportunities are seen in the use of online technologies to improve the consumers desire for convenience and drive higher product logistics efficiencies. With online services such as “Click and collect”, “delivery slots” and “ third party delivery locations “ such as “drop and pickup zones”, consumers are expected to increasingly using ecommerce services in the coming years ahead.
A recent report in June 2014 by the Kantar Marketing survey organization forecasts that ecommerce account for 5.2% of global FMCG sales by 2016 – up from 3.7% at present (1). At first sight these seems a small fraction of the total market accounting for $53 billion of global FMCG sales by 2016. However, this is an increase of $17 billion (47%) on the current $36 billion. These trends are seen in many latest surveys across several countries and trade regions, all pointing towards a rapid growth of online retail purchasing.
Conversely, the rise of digital purchases has also created a myriad of consumer choice and the emergence of phenomena of cart abandonment is also on the rise, when shoppers fail to complete online purchases they put into their digital shopping basket. Recent studies confirm this is become more prevalent and yet a BI Intelligence report suggest 63 percent of abandonment online shopping could be recoverable with good online retail practices (2).
The growth of online ecommerce is significant in some subsegments such as consumer products for fashion, gardening, health, and lifestyle that are seeing double digit growth of online ecommerce purchases. In the IMRG Capgemini e-Retail Sales Index forecast shows a 17% increase overall, up from 12 percent last year, representing £91 Billion spent online globally in 2013 (3).
Professional industry digital marketing practitioners see this as a wider trend in social media and multi-channel that sees digital as the way of owning the relationship between relationship with the shopper and the brand and total experience. Digital is an accelerator to business and the new order of digital enterprise capabilities. The digital shop and digital marketing are enabling new ways that involved both the non-digital world of physical locations as well as the online virtual engagement through brand advertizing that understands how it works in the digital world.
A recent report by Coca Cola Enterprise supported this idea that almost 50 per cent of in-store sales are somehow influences – a purchase could start online and end up offline, or vice versa (4). Social media can be used to develop profiles on consumer shopper spending habits that can be supported by tailoring business plans for online that worked in a multi-channel way. This explode the myth that the online world will cannibalize the physical world sales (4).
The effect on online and off-line influence can be further enhanced with the practicegamification, a concept for applying game design to engage and motivate people to achieve their goals (5). Coca Cola Enterprise in a another report, had successfully used gamification in mobile smart phone apps rather than cardboard in-store displays. The apps could be used as the method for promotional offers direct into the hands of the potential consumer. In one campaign, a “point to win” game is used on a mobile phone in the Tesco One-Stop convenience stores had average personal usage playing over three times (6).
The digital influence and effectiveness works all along the supply chain that represents the value network of the retail enterprise. Digital technologies can help optimize and expand into a new digital retail that embraces new capabilities from open innovation, crowd sourcing an crowd funding to drive new capabilities to exciting new way to create customer experience and vendor partner engagement. This is beyond the simpler view of vendor relationships management that is a tactical digital fix. It requires and deeper professional practitioner perspective of how generative value works using digital platforms, networks, devices, content, and services work in the real world of the digital enterprise. Success will drive the digital economy of the future.
At the core of all these, the need is to understand the shoppers behavior and to meet their needs through relevant content and brands. Taking the right advise, using the right metrics and technical and business competencies, and making the right digital strategic choices will be critical.
Kantar Global FMCG ecommerce Survey 16 June 2014http://www.kantarworldpanel.com/global/News/Accelerating-the-Growth-of-Ecommerce-in-FMCG
Shopping Cart Abandonment: Online Retailers’ Biggest Headache Is Actually A Huge Opportunity http://www.businessinsider.com/heres-how-retailers-can-reduce-shopping-cart-abandonment-and-recoup-billions-of-dollars-in-lost-sales-2014-4#ixzz3Jiib4pCc
£91 billion spent online in 2013 – IMRG Capgemini e-Retail Sales Index, January 2014 Press release Capgemini Website http://www.uk.capgemini.com/news/uk-news/ps91-billion-spent-online-in-2013-imrg-capgemini-e-retail-sales-index
The Retail Network: Social media and shopping, Business Reporter, 7 March 2014 http://business-reporter.co.uk/2014/03/the-retail-network-social-media-and-shopping/
Gartner Redefines Gamification- Brian Burke, April 4, 2014http://blogs.gartner.com/brian_burke/2014/04/04/gartner-redefines-gamification/
Coca-Cola accelerates online sales growth with digital shopper marketing, Retail Times, 19 October 2012, http://www.retailtimes.co.uk/coca-cola-accelerates-online-sales-growth-with-digital-shopper-marketing/
Extract from my new book “Building the digital enterprise, Palgrave Macmillan 2015.
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