The future of ecommerce - convenience vs. discovery
The shopping experience is the future of commerce. In order to capitalize on this knowledge, however, you must understand which kind of shopping experience is optimal in a given context and how you can provide it.
Analyses regarding the future of sales focus on the increasing importance of technology, putting a refrigerator with Android, VR goggles and mobile technologies in one line. This is why the Walker analysis, which asserts that by 2020 the shopping experience will be more important to brand selection than the price or the product itself, should not be overlooked in the practical realities of everyday business.
The future of commerce depends primarily on the type of goods being offered. For the purpose of discussion I have broken goods into two classes: "discovery" and "convenience".
Convenience goods - what we need
The convenience category includes all articles such as food, cleaning products, office materials, and fuel, whose selection is motivated not out of any emotions, but of necessity These are items for which most customers do not want to spend a lot of time shopping. Buyers already have a good idea of what they want, and they just want to be able to obtain it without any hassle.
In the convenience category, the goal is to make shopping easy. The shopping experience may therefore be moving toward the disappearance of interfaces, with shopping shifting towards the "background" of everyday life. The goal is to reduce the time spent on shopping for things which are necessary-- to make it less tedious -- so that acquiring these products is as simple as possible.
Amazon has recognized opportunity in the simplification of everyday shopping. In December the American giant opened a grocery store without checkouts. Customers take the products they need from the shelves and walk out; the amount due for the groceries is charged to their Amazon account. Just like that, the inconvenience of standing in the checkout queue disappears. Tesco has introduced to selected Polish stores the "Scan&Shop" service, which allows the customer both to scan the products they put in the basket with an app or a borrowed scanner and to settle the bill on their own.
Fridge and computer-designated shopping basket
In our consideration of a strategy for selling convenience products it is particularly interesting to consider the motif of a connected world in which various devices cooperate within the Internet of Things. As early as 2015, there were been 15.4 billion electronic devices connected through the Internet. It is estimated that by 2020 there will be 30.7 billion different machines. Equipped with proper sensors, a refrigerator may assemble a grocery basket on its own, based on the products consumed. The buyer will have only to confirm the desire to buy. The computer, upon detecting lack of toner in the printer, or a car low on fuel will also be able to chime in.
Fuel may be sold "in the background", for example, thanks to services of such startups as Filld, which delivers fuel to homes and businesses so that car owners do not have to waste time at gas stations.
There is a tremendous opportunity for development in the convenience category with the application of voice-controlled personal assistants such as Apple's SIRI or Amazon's Echo, which would process a simple command to "buy ham, tomatoes and bread" into an order to be delivered to the doorstep the next morning. This scenario moves the task of grocery shopping to the background, making it unnoticeable and completely effortless -- the best possible convenience shopping experience.
Discovery goods - pleasure from shopping
The factors which create an optimal shopping experience for bread or fuel are not equally desirable for buying clothes, perfume or jewellery. These (latter) discovery purchases should be a pleasure for the customer - an adventure even!
Excellent shopping experiences in the discovery category are provided by companies like Zalando or Zappos, which have raised the care for the customer's welfare to a new high. However, it would be a mistake to think that presence of such players in the market would leave no space for new stores.
Take Wish for example. Amazon wanted to buy this clothes-shopping app for $10 billion. Its creator, Poland-born Canadian Peter Szulczewski, refused to sell it, however, feeling that his niche was worth much more.
The success of Wish's business model relies on its offering of large discounts. The very short duration of these discounts compels customers (most of whom are women) toward impulse-buying. The prize is not the piece of clothing itself, but rather the “scoring” of the great bargain, a fact which in its own way proves Walker's thesis.
Haggling is also an art
Another interesting example is Garmentory, which allows its customers to negotiate the price of a product. Each transaction is anonymous and independent of previous ones, which gives the shopping experience a flavour similar to that experienced in the setting of a bazaar. This variation introduces another element of fun to shopping.
OnlyAtoms, a store with clothes for running, implemented a similar strategy. Shortly after it started, OnlyAtoms offered its customers a short-term deal: they should pay whatever price they believed most appropriate. However, the store identified some pricing thresholds; one price covered manufacturing costs, another covered also promotion costs, and a third allowed the company to make a profit. This strategy sought to create a bond between buyer and producer, similar to the one in crowdfunding initiatives, in which a community takes upon itself some of the responsibility for the effort being funded. In the parallel case of OnlyAtoms’ event, the relationship involved customers’ taking on some moral responsibility for the company owners' profit in return for their fair service.
In the case of discovery class goods, vendors will also have to provide customer service in a more traditional meaning - answering questions and considering complaints. This is where cognitive technologies, like IBM's Watson or Microsoft's Luis, which can process natural language, may come in handy. As customer service representatives, robots do not get tired or irritated and are available around the clock. Moreover, they can search an entire database in an instant and deduce what a customer may expect based upon that customer’s buying history together with models based on machine learning.
Brick-and-mortar stores re-imagined
The marketing strategy for discovery class goods may lead to a true renaissance of shops in the form of interactive showrooms, using extended or virtual reality. The best illustration of this is Alibaba, the Chinese e-commerce hegemon, which allows its online customers to visit the most famous shops in the world through the use of VR goggles. Customers can enjoy these showrooms virtually and purchase items available on display. Eight million Chinese tested this technology on last year's Singles’ Day (11 November) and were transported from their computer screen to an exclusive showroom, an integral part of the purchasing experience for luxury goods.
Would shopping for clothing not be simpler without one-minute promotions (Wish), haggling (OnlyAtoms), or virtual strolls (Alibaba)? It would be, but the shopping experience would suffer. We must remember that the marketing of goods in the discovery class is all about providing the best shopping experience. Therefore, some complexity is justified in the online presentation of goods for sale.
Goal and technology
Division into convenience and discovery goods is not strict. Wine may be drunk with every dinner (convenience) or tasted (discovery). A store may also offer goods in both of these classes. Tchibo sells coffee with its coffee machines in the discovery model, with help from employees and in elegant showrooms. But the same coffee can be bought in a (convenience) subscription model avoiding the inconvenience of a morning without coffee, because a new bag is delivered every month.
The key to a business’s success in the commerce of the future is the right strategy for promoting and selling its products. Once a company has defined its own style of selling, it is just as critical to employ the right technologies so that a misunderstood shopping experience does not bury its chances at the very start.