With more than 22.4 million consumers each year and $57.6 billion in spending, the on-demand economy is alive and kicking it – hard.
From transportation (e.g. Uber, Lyft), accommodation (e.g. Airbnb, Onefinestay), delivery (e.g. UberRush, Instacart) to shopping (e.g. eBay, Etsy), on-demand, app-based businesses are causing disruptions in multiple industries across verticals.
They’re challenging industry incumbents to change their mindset and transform or find themselves disrupted.
Consumers don’t hesitate to embrace these businesses, as they are doing a much better job at using technology to make services more accessible with
- slicker interfaces
- added convenience where it really matters
- cognitive ease
- and fast, simple, and efficient experiences.
This trend is not that surprising. Consumers will always look for that something new, which lets them do things better and faster. Winners will be those that innovate.
It is similar to the evolution of music distribution from LPs in the 1960s, to vinyl in the 1970s, cassettes in the 1980s, CDs in the 1990s and to digital music today, which allows streaming music from the internet. The need and demand to buy and listen to music never changed; it’s innovation and technology along with disruptive products and new business models that made the delivery faster and more efficient for consumers causing previous formats to lose share and fade.
The secret sauce of on-demand businesses, however, is not the technology alone, as Glenn Laumeister, CEO of CoachMarket, a freelancer marketplace, notes.
“It is the single-minded obsessive focus on solving one big universal problem for the buyers, and removing that friction.”
Marketplaces Transforming Retail
The industry in which the on-demand model will have its biggest impact is the retail sector. Online Marketplaces suit convenience-focused modern shoppers who are now able to receive instant access to a myriad of products, literally in their pocket.
Recognized as part-revolution, part-evolution, online marketplaces are already transforming the entire retail sector as one of the most disruptive forces in eCommerce. Marketplaces, such as Etsy and eBay, already draw in $36 billion each year.
In 2017, experts believe that major retailers will continue to push their way into the marketplace format, with Amazon becoming a majority marketplace ahead of eBay in terms of sales. Additionally, marketplaces may begin to enhance their services, to make themselves even more attractive to sellers and buyers. The marketplace format allows retailers to rapidly expand their product offer by inviting third-party sellers to sell directly on their site.
Adrien Nussenbaum, CEO of Mirakl, a Marketplace solution provider, even goes as far as to say that it’s impossible for any retailer to survive in the digital age without a marketplace approach.
So, what does this mean for brands and traditional retailers? The pressure is on. Adapt or die out.
The emerging trend of marketplaces is placing serious strain on the economic models of traditional retailers, with challenges to the top and bottom lines. According to McKinsey, the largest obstacle will be the channel shift to digital as in-store purchases will grow by only around 2 or 3% per year and some formats will see in-store sales reduce by up to 7%.
To increase revenues, gain share, remain profitable, and manage capital investment over the next 10 or 15 years, retailers have to be more aggressive.
Getting the Digital CX Right
Modern retailers are going to need to make some significant changes and focus more heavily on getting their digital customer experience right if they want to stay ahead of the curve.
Whether retailers decide to adopt the marketplace model or not, they must reinvent themselves and find new ways to deliver new value and convenience-driven experiences to customers.
At the NRF Big Show 2017, Richard Branson told retailers to “not think of only being retailers”.
They need to stop viewing themselves as product pushers but as brands that
- are helpful, trusted advisors
- who provide customers with great, convenient, simplified Omnichannel experiences and personal advice
- that connects them with the right products and services quickly
- and directs them to the right content to make the most out of the bought products after a purchase (e.g. How-to videos, tutorials)
Competing today must center around a range of considerations:
In simple terms, if a retailer can convince their customer to trust and appreciate their service more than anything else available on the market today, then they can win their share back from the marketplaces. After all, 63% of customers would prefer to buy from a trustworthy, authentic brand, regardless of price.
2) Curation and Advice
Your job as a retailer today is to consider the needs of your customers, and consistently go out of your way to exceed their expectations. Curation and Digital Advice allow you to help your customers find the right product or service quickly without sifting through 1000’s of pages.
Giving shoppers a lot of choices is great, but without offering any useful choosing support, it’ll impact sales negatively (Read more)
Again, it’s about convenience, simplicity, cognitive ease a.k.a making shopping easy and effortless.
Historically, eCommerce has been search-based. Customers went online to buy if they knew exactly they wanted. They looked up the online store or marketplace that was most likely to carry the product, put their query into a search bar and purchased the product if it was available.
Today, shopping is not only utilitarian. The element of serendipity is important. Inspiration matters. People shop online not knowing exactly what they want. They might have an idea and browse to get inspired. The future for the digital commerce is to give the customer the best of both worlds:
Help your customers (1) find what they want and (2) help them find something they didn’t even know they wanted.
Your role as retailer is not simply offering choices. You have to start helping your customers find and choose the right products or solutions according to their needs, wants and desires.
See examples of international brands and retailers that use digital advisors to help shoppers choose.
(1) Search and Assortment
(2) Digital Advice, Guided Selling, Curation, Inspiration
Become a memorable retailer brand. To stay competitive, it is crucial to focus on generating greater loyalty and brand recall alongside driving direct traffic. To do this, you’ll have to develop a content strategy and an exceptional brand experience that is relevant, simple, fast, personalized and unique across websites, mobile and social media channels.
But it doesn’t stop there. Ever thought about selling private label brands? This can give you the opportunity to further differentiate and move away from being a typical retailer. Giving consumers not only an experience they can’t get anywhere else but also innovative premium products (not low-priced, low-quality knock offs!) that are only available from you, can be a viable strategy to compete on more than just price.
Invest in the technology your customers want to use. No matter the industry, we consistently see that consumers enjoy interacting with novel technologies provided by their favorite companies.
For instance, a recent worldwide study conducted by “InReality” found that 69% of shoppers would be more likely to purchase in an offline environment if they had access to digital kiosks like interactive displays and self-help tools.
The same study mentioned above found that 63% of respondents would prefer to buy in-store if the sales staff they interacted with had access to digital information for ordering, availability, and product data.
5) Small Data
While everybody talks about Big Data, it’s really about Small Data. Big Data is compelling but it can be overkill when it should actually be about connecting people and building relationships. The focus on Big Data can obscure our view of the actual customer.
Big Data is about uncovering hidden patterns about consumer behavior and finding correlations in enormous amounts of data.
Small Data is all about building rich profiles and finding causation, the reason why. It’s about generating meaningful information that is understandable. It’s about getting actionable insights that can initiate actions that feel natural, not creepy or artificial.
The dialogue-based nature of Digital advice solutions gives you the opportunity to find out about and understand the motivation behind buying decisions. This type of Small Data can be used to enrich your CRM user profiles with relevant information to personalize your customer interactions in a meaningful way.
For retailers who want to offer a unique experience that feels more authentic and genuine, looking at small data, finding ways to generate it, and learning how to use it to connect with their customer on a more intimate level is key.
Dealing with the Marketplace Revolution
It’s impossible to ignore the power and convenience of the marketplace in today’s online shopping environment. However, just because the marketplace has the strength to overwhelm the average retailer, doesn’t mean you should allow it to chase you out of business.
Becoming more than the typical retailer can help you to maintain your share of the market.
By becoming a trusted advisor who offers personalized customer experiences and finds unique ways of advising and assisting your audience, you can provide something shoppers can’t get anywhere else.