Online retail – a real struggle for bricks and mortar players

online retail
Image credit: Zapp2Photo | shutterstock.com

We are used to seeing big numbers in predictions about ecommerce and retail and the latest Juniper Research report into online sales does not disappoint. According to the report ‘online retail sales will exceed $6 trillion in physical and digital goods by 2024’.

The bulk of that number (almost 80%) will be spent on physical goods, says the report and, not surprisingly the mobile will be the device of choice, leaving laptops and PCs far behind. The report also points to a sharp rise in mobile ticketing.

The target for the report is the bricks and mortar sector and examines what these companies need to do in order to compete with the likes of Amazon. The answer is to implement a proper omni-channel strategy and, interestingly, the leader at the moment is American store, Home Depot.

Home Depot is already leveraging customer analytics and is beyond initial trials of Augmented Reality tools within its stores.

The reality, however, is that to compete with Amazon and Alibaba bricks and mortar stores need to reinvent themselves, constantly and quickly.

Which is easy to say but the agile online giants are reinventing themselves between breakfast and lunch and are themselves being chased by companies such as Rakuten. Their advantage is that, while Home Depot or Walmart (or Ikea and Costco, both of whom were mobbed when they launched in China recently) might sell you a TV but Amazon, Alibaba and Rakuten will sell you a huge range of content to go with it.

Further, the experience in using analytics is heavily weighted in favour of the online companies. Amazon first started experimenting with ‘recommendations’ some years ago now and their offerings have become so sophisticated and intuitive that they now resemble something we have discussed before in relation to the future of advertising.

Vendor Relationship Management (VRM) is something that people crusade about. These people are sick (and represent millions of others who are sick) of being followed around the internet and social media by inappropriate adverts. We have cited examples of people researching the best way to get to Sydney, say, and looking at Quantas (say). It proves impractical and you do not buy a ticket. Then for the next two weeks, every time you look at a site an advertisement for Quantas (say) pops up and you go from not caring about Quantas, one way or the other, to actively not wanting to fly Quantas because they are just annoying.

VRM, in principle, works like this: you want a toaster, or a dog bed or a padlock for the garage. You tell a third party who sends a message to purveyors of toasters, dog beds or padlocks and you are presented with a range of options, offers and delivery deals.

Wouldn’t that be great?

Except, isn’t that pretty much what Amazon and the like does now? You want something. Your instinct is to see if Amazon/Alibaba/Rakuten/Other has it and lo and behold you are presented with options, offers, delivery deals and (buyer beware) product reviews from other customers.

We may be nearer to the VRM goal than we thought which means the bricks and mortar guys might have even more of a struggle than they thought.

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