Capmark Financial Group’s newly combined companies generated more than $1 billion in 2014 e-commerce sales.
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4. Channel Blurring:
Retailers clearly deserve a great deal of credit for improving consumers’ comfort and confidence by providing opportunities for shoppers to easily spread the shopping experience across channels. One indication of consumer response to these efforts can be found in a comScore Media Metrix analysis that found most leading multi- channel retailers are turning in tremendous traffic gains of up to 90% from April 2004 to April 2005.
Consumers have high and diverse expectations when they interact with these retailers. In the “Evolution of the Multi-Channel Consumer” research, jointly conducted by Fry Inc., The E-tailing Group Inc., and comScore, fully 97% of online consumers told us they want a consistent retail experience across touch points. And depending on the nature of the product, the role of each channel will vary significantly. For example, only 42% of respondents would be most likely to buy a Home Electronics item online and have it shipped, while preference for online buying and shipping jumps to 71% for gift items overall. And while many consumers report an overall positive experience with in-store returns, they are still spending more time than they expect in the process, highlighting room for improvement.
Multi-channel retailers need to step back and ask themselves: “Are we delivering the consistent multi-channel experience that consumers expect?” For instance, if a customer enters a store with printed descriptions of a product he or she is pursuing, the customer should be handled differently from one who enters with no background research at all. Store associates need to recognize educated shoppers who should be respected for their hard work, not returned to the starting line. The training required for this can, of course, be a challenge. But even incremental progress is better than ignoring the issue, and some retailers have certainly managed to make inroads here.
5. Search and Comparison Shopping:
For tens of millions of consumers, search engines and comparison shopping sites are the starting point for any purchase or life decision-large or small, online or offline. Proof is in the numbers. ComScore qSearch shows online search volume to be up 40% or more compared to last year. In some categories, the importance of comparison shopping sites is particularly noteworthy. For example, more than 90% of online consumer electronics buyers in Q1 2005 visited a comparison shopping site at some point during the month-up from less than 60% three years ago.
What do these sites mean for online retail in the long term? For one thing, these sites represent a massive marketplace, connecting millions of sellers with in-market buyers. Broadly speaking, it’s difficult to argue that this phenomenon isn’t good for online retail overall. But in a world in which consumers can instantly navigate from retailer to retailer, creating lasting loyalty has become a far greater challenge than ever before. And for many consumers and categories, price is likely to carry greater weight than ever in the broad mix of purchase decision drivers.
A promising outlook
First, the good (if old) news: our research points to continued, strong growth in online spending, with no sign of slowing in the near future. With each year, consumers are turning to the web for a wider range of categories and purchase occasions. However, the trends suggest increasingly fierce competition for each dollar, through the tools available to consumers, the range of retailers that consumers will consider and the price, service and other performance thresholds that retailers will have to cross.
In this context, retailers will have to develop and execute strategy with greater creativity, precision and discipline than ever before.
A few thought-starters:
Segmentation is the name of the game. Use every meaningful and reliable set of data you’ve got to differentiate consumers as well as competitors, product categories, and other key dimensions of your business. A one-size-fits-all approach holds far less water when consumers are as empowered as they are today. Develop a hierarchy of needs for each key consumer segment to help work toward delivering the right communications and experience to each.
Monitor cross-shopping relentlessly; invest surgically. Understand what your customers are doing when they’re not on your property. You may be surprised to learn which other retailers are your true competitors (we see this all the time). Analyze the search and comparison shopping sites that reel customers onto your property and competitive sites. On comparison shopping sites in particular, make sure someone on your team is regularly checking customer reviews-even a short-lived hiccup in performance or fulfillment can create negative word of mouth that haunts you after you’ve fixed the problem.
Multi-channel retailers must work toward delivering a consistent experience. Continuously measure and benchmark customer satisfaction in a way that is comparable across all consumer touch points. Ensure each channel is talking to the other. Make sure that store and call center associates know to look for cues that a shopper has done her research online, potentially resulting in a very different level of knowledge, service expectations or readiness to buy.
Today’s multi-channel consumer has evolved into a precision shopping machine. At a high level, dealing with this reality entails delighting customers at every turn and making no assumptions about their satisfaction with and perception of your brand. In the history of the trade, retailers have never confronted such a complex environment. Yet one timeless reality is the importance of creating customer delight-and the right mix of market insight, strategy, creativity and execution goes a long way to doing so.
Dan Hess is senior vice president of comScore Networks Inc. He can be reached at email@example.com.