Recent developments in online shopping are challenging two general assumptions about digital technology’s effect on retail. I suspect that these two assumptions came from the early years of digital disruption and haven’t been completely abandoned.
One assumption is that, for convenience’s sake, shoppers will prefer to purchase on digital channels instead of traveling to stores, and retail will transition steadily from offline to online. Mobile shopping, through mobile wallets, adds to this convenience, and allows consumers to shop anywhere.
Instead of this scenario, “traditional” offline channels and brick-and-mortar stores, in fact, continue to hold a significant place in the buying process, even and especially for younger shoppers with time on their hands.
As it now stands, flourishing digital channels create a more complex landscape where shoppers can be “promiscuous.” They skip around, compare prices, and get more educated. Mobile ads engage consumers on an important piece of real estate in their pocket, wherever the shopper is – but they also drive traffic to brick-and-mortars, alone or cross-channel with out-of-home.
The offline shopping experience remains important, and with the added complexity of how digital channels interact with the physical world, one would think that consumer data is abundant.
This is the second assumption. Unfortunately, consumer data, or at least the right kind that is actionable by marketers, is not abundant.
An increasing number of touchpoints, and a lack of organized data, have left marketers scrambling in pursuit of their customers.
Matt Nitzberg, global head of commercial development for customer data platform Nepa, told me, “Marketers are trying to catch up to our shoppers. This is as true for retailers as brands in CPG (consumer packaged goods), food and beverages. Whether you grew up as a young person as a digital native, or are picking up the habit of being a savvy shopper online, shoppers are really embracing omnichannel.”
Understanding the omnichannel shopper point of view
Shoppers of all ages move fluidly between channels, leaving behind marketing teams stuck in old structures. “Most big organizations are really struggling with their own compartmentalization between online and offline,” Nitzberg said.
Nitzberg’s career took him from marketing pasta brands at Borden Foods, to consumer data consulting at IRi and dunnhumby. In the nineties, he saw Walmart and other retailers pull out of syndicated data services like Nielsen.
Read Next, to see how syndicated data is used for dynamic pricing: Right Price, Right Time
Today, we think about Facebook and Google as “walled gardens” of vast customer data generated from their users. Nitzberg reminded me that big retailers and brands became walled gardens of their own first-party customer data when they stopped using syndicated data.
While each big player knows their customers’ behaviors within their own channels, their customers are using outside channels increasingly. For instance, Nitzberg sees more and more shoppers using retail sites purely for gathering information about a purchase, with little or no intent to actually make their purchase from that retailer. They’re just using that site the way they might have used Google in the past. In fact, half of product searches begin on Amazon, instead of Google, today.
“Shoppers visit another retailer’s website purely as a search for information,” Nitzberg explained. “The retailer would misread that as a missed sale. One of the reasons they’d miss that is because, as eCommerce began to bloom, [retailers] created an eCommerce function completely separate from in-store, that was even competitive [with the rest of the organization] for sales and resources.”
He added, “The nature of how accountability is assigned in big organizations means for a great majority today, they are not operating from a shopper-led point of view, but from a channel-led point of view, or online/offline point of view.”
Since in many categories, 95 percent of sales are still made in-store, marketers need to understand “digitally-inspired physical sales,” Nitzberg said. “The way to optimize physical sales is to make sure the digital channel is easy and intuitive. Even if in-store, more and more shoppers are checking you out. Don’t neglect the online experience. Depending on the category, a majority of customers will check you out before, during or after their trip.”
Precious data in pursuit of seamless experiences
Tapad CEO Sigvart Voss Eriksen recently told me, “As shoppers increasingly go online and expect a robust online retail experience, the need to personalize and tailor the experience is increasing as well. This in turn means increasing demand for robust identity solutions that can create seamless experiences across devices.” He pointed out that 85 percent of consumers start an online purchase on one device and complete it on another.
Voss Eriksen described brands using first customer data (for instance, on a CDP) as looking through a keyhole. A third party data solution expands the view, with an aim at creating a unified view of the customer, linking customers across devices.
Data privacy regulations also play a role in data scarcity, beyond internal obstacles at organizations.
“The scarcity of data is going to increase,” Voss Eriksen said. “The reason is because it’s harder to stay compliant with the regulative framework. It makes the legitimate processing and exchange of data more difficult, but for a good reason. That will help make the industry better.” He added, “You have to set the right bar.”
Voss Eriksen explained, “You can dramatically improve user experience if you can increase the degree of personalized experiences.”
To get closer to a shopper experience that’s seamless, brands need to cast aside the old offline/online distinction so they can keep up with all the devices and physical locations that current shoppers frequent.