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Traditional retailers crush ecommerce giants in omnichannel shopping

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July 1, 2015

Omnichannel shopping gives traditional retailers a boost

Omnichannel shopping gives traditional retailers a boost

Ecommerce retailers such as Amazon and eBay are doubling down on mobile-driven omnichannel shopping experiences, but struggle to deliver the same level of convenience that traditional retailers can harness and which smartphone-equipped shoppers are demanding.

For years, traditional retailers took a drubbing at the hands of ecommerce pure-plays as online shopping grew, providing efficiencies that helped keep prices low. However, with the growth in mobile, the scales are evening out – and even tipping back in favor of retailers – as shopper interest grows in being able to shop anywhere, anytime, from a device of choice.

“Omnichannel shopping experiences help retailers win over ecommerce pure-plays, and we’re already seeing it,” said Jason Goldberg, group vice president of commerce strategy at Razorfish. “Nordstrom, Walmart and many others are now growing their ecommerce businesses faster than Amazon.

“Pure-plays are clearly losing market share in the U.S., which is a primary reason that the majority of formerly pure-play retailers are transforming to omnichannel,” he said. “Even Amazon is likely to evolve, and five years from now I doubt there will be such a thing as an exclusively online, home delivery retailer.”

Flash sale trucks
Ecommerce retailers continue to look for ways to gain a physical foothold. For example, Amazon and eBay both recently made a push into flash sale delivery trucks.

Amazon was supposed to launch a mobile-enabled service called Treasure Truck recently, but it has been postponed with no new launch date scheduled (see story). When it is up and running, the service will put Treasure Trucks in Seattle with a limited SKUs of one discounted item, which customers can purchase through the Amazon mobile app and pick up at one of the scheduled locations.

EBay is trying something similar on the East Coast.

Screen Shot 2015-06-30 at 3.59.23 PMAmazon’s Treasure Truck launch has been delayed

Beginning July 4, shoppers can visit eBay’s deals site or its mobile app to access a curated sale with deep discounts on items such as sunglasses. Shoppers will also be able to visit the eBay Airstream travel trailers to browse and buy featured items.

The eBay Hot Deals for Hot Days promotion will offer discounts on new merchandise based on the temperature outside.

The trailer will travel from Montauk, NY, to New York.

Social tracking
These services take advantage of the interest in food trucks, which offer the merchant low overhead while consumers are able to follow their travels via social media.

However, Amazon’s struggles with getting its service off and running suggests that building a physical presence can be a challenge for digital retailers.

“I haven’t seen any of the ecommerce players doing a fabulous job of an omnichannel experience, however, we are just seeing the beginnings,” said Sheryl Kingstone, Toronto-based research director for Yankee Group. “Anyone can have the upper hand when it comes to flash sales. It’s all about the right price at the right time.

“Mobile and social can help get the word out to gather success and momentum,” she said.

eBay_Deals_Airstream

Digital, physical divide
One of the more significant consumer behaviors that has evolved with the growth in mobile is the use of smartphones to engage with a bricks-and-mortar store. This includes the ability to reserve products online try on in store, to complete purchases online to pick up in a store or to browse a retailer’s Web site while inside the store.

An important takeaway from this behavior is that while ecommerce has its appeal, consumers still very much like some parts of the physical aspect of shopping. Which is where pure-plays, given their nature as digital-only entities, are lacking.

“Retailers like Best Buy and Walmart are dramatically reducing their shipping costs by shipping orders from stores, while Amazon is seeing shipping expenses double every year,” Razorfish’s Mr. Goldberg said. “Best Buy went from its average delivery being a day slower than Amazon, to a day faster when it begun shipping from stores.

“Many omnichannel retailers have the majority of their online orders picked-up in a store where customers invariably spend more – 25 percent more in the case of Macy’s,” he said.

“Having a physical presence also drives ecommerce. For example, in every market where a Warby Parker or a Uniqlo opens a new store, they see their ecommerce business dramatically increase.”

Next-generation experiences
Pure-plays continue to try to establish shopping services the bridge the gap between digital and physical retail, including opening their own physical locations.

At the same time, many physical retailers are being forced to downscale the number of stores they operate and/or the size of their stores. In part, this is because, as more browsing takes place online, less physical space is required.

While physical retailers may have the upper hand in omnichannel experiences at the moment, it is still early days in terms of figuring out how mobile is impacting the path to purchase and what new shopping experiences will meet shoppers’ needs.

“When it comes to traditional bricks-and-mortars, there is still lots to be improved to leverage mobile in an omnichannel experience from everything from better inventory and reserve capabilities to improved payments and coupons,” Yankee Group’s Ms. Kingstone said. “The good news is that mobile shopping has take a big leap forward in 2015.

“Mobile engagement for shopping is now a critical requirement for many businesses,” she said. “Retailer’s must shift their thinking quickly toward a mobile-first approach.

“The data clearly illustrates that in just one year, there was roughly a 15-point gain in usage by female shoppers for both coupon and commerce usage. Additionally, there were also huge spike in usage from the 18-34 age bracket. These gains are the biggest one-year spikes we have seen over the last few years.”

Final Take
Chantal Tode is senior editor on Mobile Commerce Daily, New York

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