How to balance the expectations of e-commerce and physical purchases

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When e-commerce activity skyrocketed during the pandemic, many were quick to call it the death of brick-and-mortar retail. But now that e-commerce growth rates of more than 20% have fallen into single digits, many others say it was just a fad.

The problem with both accounts is that they pit e-commerce against brick and mortar as competing formats rather than acknowledging their co-existence as competing or even complementary channels.

It is not the channel. This is the customer.

As new paths to purchase emerge, the customer journey from awareness to sale becomes more complex. Retailers don’t need to pick a winning channel. They must choose a winning strategy.

Customers don’t want to be forced to choose one over the other. They want more options and less friction. Retailers therefore need a strategy that helps customers shop, buy, and receive merchandise the way they want and when they want.

Related: 3 Types of Ecommerce Data Insights Brick-and-mortar Retailers Should Use to See Meaningful Growth

The rise (and plateau?) of e-commerce

When e-commerce came on the scene, it had double-digit growth rates for years. It peaked particularly noticeably during the pandemic. As pandemic-related restrictions eased, customers flocked to stores and e-commerce growth rates returned to levels expected by a more mature industry.

The 2020 pandemic disruption has now stabilized at more stable levels, with e-commerce and retail growth rates expected to maintain single-digit levels for the foreseeable future. It is not a zero-sum game. One does not gnaw at the other.

Retail Endurance

While many retail stores closed before and during the pandemic. Data from Coresight Research shows that store closures in the United States between September 2021 and 2022 fell by 55%. Despite the growth of e-commerce in recent years, only 20-25% of sales take place online. This means that 75-80% of sales still take place in a physical store.

The outlook is that even if the growth rate of e-commerce slows, it will continue to grow faster than physical. Meanwhile, physical sales will continue to grow, but at a slower rate than e-commerce.

Obviously, physical retail is doing very well. But the role of the physical store is changing. Retailers are adapting in different ways. Some have converted stores into e-commerce distribution centers. Others opt for showroom-style stores that display physical products, coupled with e-commerce sales and deliveries. Others just open smaller stores. There’s a lot going on.

Related: Why Brick and Mortar Is Here to Stay

What consumers want

In our Consumer Trends Index – Retail Forecast, released earlier this year, we found that 51% of consumers do more research before buying and 47% wait for items to go on sale. Also, 50% do “showrooming” or browse in stores before buying online or elsewhere. More than half (52%) made a purchase directly from an email (up 4% from last year), while 55% used their mobile to search for potential purchases.

For these reasons, marketers must do everything possible to be more personally and contextually relevant to a consumer whose behavior has become quite unpredictable. This means understanding the role of the store in the buyer’s journey and rethinking the role of messaging, digital media, loyalty, rewards and more in driving traffic as part of an omnichannel customer experience.

Three things marketers can do right now to make this happen are:

  1. Building Relationships: The first step is to build relationships that matter, whether it’s knowing who and what to send or using multi-variant testing, automation and journeys to get noticed.

  2. Strengthen relationships: Getting noticed is just the first step. Then strengthen and deepen the relationships developed, providing multiple sending channels and actionable data to improve and refine content that adds value.

  3. Invest in relationships: Finally, retaining customers means investing in them, through preference and zero-party data that continues to deliver personalized content, as well as offers such as coupons and rewards that build brand loyalty.

Related: Omnichannel Retail: How Combining Online and Offline Channels Proves to Be the Next Big Thing for Startups and MSMEs?

We live in a fluid world. Things change, formats change and technology evolves. Trying to predict or control how consumers react to these changes is a risky way to react. It’s much safer and more productive to focus on the things you can control, which is how you collect, store, and use customer data.

Some consumers will engage in e-commerce. Others will want a traditional retail experience. Yet others will want a mix of the two. It’s not up to you to choose the one “right” path for all. Instead, simply ask your customers (through constant interaction) which camp they fall on. Then you can communicate the right offers and experiences that match the format they prefer.

And when those preferences change, which they often do, you’ll have the information you need to react appropriately. E-commerce versus brick and mortar is not about predictions or picking winners. It’s about data and relationships and eliminating friction between what customers want and what you can provide.

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