A new global situation has inevitably caused a revolution in consumers’ approach to online shopping. Many brands have noticed an increase in sales, varying from a dozen to even several hundred percent. Consumers who have just discovered online shopping tend to stay with it for a long time, even forever.
Author: Rafal Wasyluk, head of EMEA Commerce Centre of Excellence, VMLY&R Poland
In the digital age, it is getting harder to look at e-commerce separately, not connected to other marketing communication channels and trade. The whole market needs to be viewed as interpenetrating spheres, an omnichannel. As consumers, we moved a long time ago from “I’m going shopping” to “I’m constantly shopping”. As a result, it does not matter if the final transaction is done online or in-store.
The ROPO effect (Research Online Purchase Offline) in many product categories, exceeds 40% or even 50%. Around 50% of purchases in bricks and mortar shops have constant “assistance” while shopping in the form of product searches or online offers, especially on seasonal or occasional purchases (i.e., fashion, electronics, or interior design).
Consumers who have only shopped online occasionally, especially in e-groceries, will discover the benefits of a new way of shopping and hopefully will continue to use it.
We might say that we are used to online shopping, however, the pandemic has put pressure on undecided customers. On the one hand, consumers unfamiliar with online shopping have felt the necessity and discovered new opportunities that they will cultivate. On the other hand, Consumer Package Goods producers have started to understand that leaving the placement of their products on the digital shelf to online shops (the biggest brands), means giving away control of their products to their competitors. At the same time, food, homecare, and beauty/personal-care producers will have to:
have a better understanding of consumer behavior during shopping (path-to-purchase analysis),
modify products range to satisfy consumer’s expectations: work on having their products present in the “first basket”, offer multipacks, functional or occasional sets or subscriptions for reoccurring shopping lists,
maximize potentially highly lucrative channels such as D2C (Direct-to-Consumer) or Delivery platforms more and more often offering delivery from shops, or just anything from anywhere.
A brand manager’s expectation will increase in order to keep e-commerce under constant brand communication.
E-commerce no longer plays a part in just sales, but also educates about a product and supports the final decision making in each of the sales channels brand is leveraging. At the same time, it allows collecting and analyzing data to improve every aspect of a brand offering to the consumer.
Change in consumer behavior
In an era of uncertainty, as we still do not know what impact the economic slowdown will have, there are conversations about rapid changes in shopping priorities. Clothing and electronic brands are losing profits, meaning that everything which is not considered as a first need product is decreasing in sales. However, food, home, or beauty care products are gaining in sales, and everything that keeps our sense of security is in high demand. As a result, the shopping approach would be to create in our homes stockpile with products of longer expiry date. Also, consumers will concentrate more on accumulating their capital and considered spending rather than “show-off” shopping, which previously was more about social status, to fulfill material or beauty needs.
We will permanently keep reserves of products with a long expiry date at our homes such as detergent and hygiene products.
It is worth considering that e-commerce is not only a mechanism for offering and trading physical items in online shops. It also has a wide range of services (i.e., SaaS) and entertainment (i.e., VOD). The sector that is currently gaining popularity is gaming and all products connected to the industry, i.e., virtual goods (games items, subscriptions, or even games to download). All kinds of streaming platforms are also extremely popular nowadays. As a strong branch of the digital economy and a way to spend free time, online entertainment will continue to grow dynamically, especially with the younger generation, which is their only natural environment. For the middle-aged, everything that can be moved online will be transferred there, in line with their understanding of social distancing as well as looking after their health.
Social distancing, as well as individual self-care awareness, will cause everything that can be moved online to be transferred and developed there.
The need of the moment has already opened (or refreshed) new areas: counseling, fitness training, business counseling, coaching or live yoga; and general online education (as a necessity rather than an option, which causes expectations to revise the methods and tools used, the reliability and efficiency of platforms, and also the honesty in marking grades). We can also expect an increase in the popularity of telemedicine tools and services: remote contact with GPs will become standard, and contact with specialists will develop. Even now, the Internet of Things allows us to check our heart rate, perform telescopic lung examinations, or remotely test our sugar level. Let us not forget about monitoring our sleep quality, step counts, or any other physical activity, which allows us to track our daily calorie expenditure and provide food consumption recommendations.
You do not have to be a specialist to understand that any device monitoring our health will become as popular as smartphones. Markets, as a natural progression of trends, will offer a wide range of services, which for many of us from a household budget perspective develop into high priority services.
Strategy for online shops
E-commerce brings many smart shopping solutions, however, purchasing decisions are primarily made on physical contact with a product. It might be current or previous, but both are gained experiences and habits, worked out by brands' competitive attitude. Bearing this in mind, online shops, together with brands, must pay attention to the consumer’s offline physical experience and how to transfer them to an online visual experience. Presentation is the key – visual elements such as pictures, animations, videos, VR or AR and whole content optimized by analysis of product searches (SEO practice) will determine a high position of the product in search results, as the search is the new shelf. It also has the other side: perfect and executed in full product presentation, uplifted by clear messaging on the purchase process helps to release customers’ fear, uncertainty, and doubts during the shopping. In return, it will minimize product returns and costs attached to that.
The key investments in new features supporting qualitative forms of offer presentation: content, visuals, and interactive.
In this area of investment, from Polish and European perspectives, online shops should also consider product presentations in the form of live streaming (presentation and live sales) or replicate the sales of chosen products in social media (shopping cart/ checkout features on Facebook and Instagram portals).
Online shops have to ensure that the advertising budget is allocated thoughtfully: spending on the paid campaigns must be balanced with an investment in qualitative content. Here shop should cooperate with the manufacturer on content improvements, positioning in SEO, especially in correlation with consumer’s habits. Product searches are more and more often performed directly on the shop’s platforms or marketplaces. It is happening in the face of constant changes in Google algorithms (preferred results from shops, predicting shopper intent). Large shopping centers or important players in online trade should strengthen their cooperation with the marketing departments of brands with whom they are trading. Market research shows that the information most valued by consumers during the shopping process, besides the price, is the qualities and values of the product and the promise given by a brand. In this respect, both shops and brands need to cooperate.
Together, shops and brands must concentrate on building a qualitative consumer database, personalized communication, and valuable loyalty programs. This kind of cooperation will bring mutual benefits in a short time.
Further investments include direct customer service. Recently popular intelligent (chat)bots will not be enough. They must be supported by telephone conversations with a consultant, which will answer all the customer’s questions in detail. It is also important in times of isolation, due to the increased need for contact with another human being as well as in resolving all obstacles blocking the sale. It also could lead to the development of video call helplines with specialist/customer consultants, which would, for example, help to set up a new electronic device or conduct live cookery class with the products recently bought by the customer.
Author: Rafał Wasyluk, head of EMEA Commerce Centre of Excellence, VMLY&R Poland