2014 was a year of massive eCommerce investment in India. Flipkart raised $1 billion; Amazon announced it would invest $2 billion in its Indian subsidiary; and Snapdeal raised $234 million from private equity firms and an undisclosed additional sum from private investors. These three players are spending approximately 2 billion rupees ($33 million) this season on marketing — and a lot more on improving last-mile delivery and adding fulfillment centers to get a bigger piece of the sales pie.
“A unified platform for content, community and commerce.”
“A complete set of integrated solutions helps you maximize and measure your impact in more ways than ever before.”
“Everything you need to deliver unique and personal customer experiences.”
Unified. Complete. Everything you need. These quotes are pulled directly from the marketing materials of some of the biggest players in the digital experience delivery space. One piece of software that addresses all of your company’s needs in delivering top-of-the-line customer experience. Sound too good to be true?
Yeah. We thought so too.
Vendors are piecing together discrete capabilities to form what we at Forrester call digital experience delivery platforms, which aim to manage, deliver, measure, and optimize experiences consistently across every digital touchpoint. Vendors from content, commerce, and marketing backgrounds are playing in this space, and Forrester clients increasingly mention them together when considering a vendor to act as their delivery backbone (a year ago, we certainly wouldn’t have heard IBM and hybris mentioned in the same inquiry for non-transactional needs, as we did recently).
What lies ahead for the retail store? Yesterday, Forrester published a report that predicts the answers to key questions about the future of the retail store: Which digital technologies currently on the periphery of the store environment will make the leap to the sales floor? How will retailers know which technologies have potential and which will remain gimmicks?
In the report, we outline the utility and predicted chronology of several technologies, including:
Proximity technologies. Retailers will know when and where an associate is needed, by whom, and for what purpose.
Wearable technologies. Associates will access the relevant data to provide optimum customer service with minimum intrusion.
Facial scanning technologies. Retailers will know their in-store customers’ histories, preferences, intentions, and needs and will cater the store experience to them.
Smart countertops. Retailers will embrace consumers’ propensity to do product research while shopping in-store and enhance the utility and experience at the same time.
3D printing. Retailers will make the inventory they need on-site or once it’s been purchased.
For more on Forrester’s take on the usefulness of these and other technologies, and to see our predictions of when we’ll see them enter the retail store, see the report (client access required).
Which technologies do you think will realistically make it into retail stores of the future?
I recently “overheard” a member of our market research online community (MROC) say, “I treat my smartphone like my child and carry it everywhere I go.” It’s official: Smartphones have replaced children. Not really, but the statement speaks to the way that consumers have changed their thinking and behavior because of mobile devices. The rapid adoption and dominant presence of mobile devices speaks to their importance in consumers' daily lives.
As part of our effort to develop forward-thinking research using innovative approaches, Forrester is collecting behavioral data by tracking consumers' activities on smartphones and tablets. By using a passive tracking technology, we now have a detailed, inside look into what consumers are doing on their smartphones and tablets and when they're doing it. Preliminary results have shown some surprising (and not so surprising) data insights.
Cross-channel sales -- also known as web-influenced sales or transactions that touch a digital medium, but are not completed on the Internet -- are now more than four times larger than online sales alone and will reach $1.8 trillion by 2018. This is according to Forrester's just released five-year US cross-channel retail sales forecast. Offline sales -- primarily web-influenced offline sales -- will comprise nearly 75% of the $475 billion in US retail growth anticipated between 2014 and 2018. This growth in cross-channel sales can be attributed to US online consumers increasingly using their phones in retail stores to research products online. Retailers would be wise to see this growing trend as the new normal; if this is the first you’ve heard about your customers’ in-store mobile behavior, you’re already late to the game.
Despite frequent in-store research on the mobile device, the number of actual mobile transactions remains low. Consumers are more interested in using their phone in the “pre-shop” phase, be it searching for a product’s location, comparing prices, or checking online inventory. Many retailers, such as Target, have found it worthwhile to invest more in mobile services that meet customers’ needs in their pre-shop context rather than at the point of sale. Target has helped customers find specific items in its stores via its mobile app: A customer can create a shopping list within the app, which then maps that list onto the floor map of the customer’s Target store location, guiding them through the aisles from one item to the next.
I had the opportunity and privilege to get an early look at the new Amazon Fire phone. It delights in many ways, but I’ll focus on the shopping experience enabled through Firefly.
For those who may not remember, Amazon put a dedicated physical button on the left hand side of the phone that launches directly into image recognition. If the image is recognized, then a web-based mCommerce experience launches. The user can then buy the product or it on a wish list, among other things. From there, the experience is more ‘traditional Amazon.’ The ‘new’ is the image, email, URL, etc. recognition.
Why is selling mobile phones important for Amazon? mCommerce in the US alone will add up to nearly $100M by the end of 2014. The new battleground for retailers is in the mobile moment – the point in time and space when a consumer pulls out her phone to get something she needs immediately and in context. Amazon’s FireFly service facilitates two core types of mobile sales moments:
Impulse Sales Moments – these are often flash sales (e.g., WTSO.com, SteepAndCheap, etc.) or spontaneous purchases (e.g., Groupon). The opportunity for Amazon here is in minimizing the friction between consumers seeing something they want, and enabling them to buy it before they forget about it, or find it later in a store nearby.
Replenishment Sales Moments – the phone (or something like an Amazon Dash) is with me when I realize a shampoo bottle or milk is empty or I need more toothpaste.
One of my first jobs was as a sales associate at a clothing store, after which mall shopping lost any of the leisurely appeal it once held. I still find myself folding clothes I didn't unfurl and fixing hanger hooks to all face the same direction.Chalk it up to knowing how the sausage is made, or perhaps a logical side effect of working in eCommerce research, but I do most of my shopping online these days.
The store shopping experience hasn’t changed much since my time as a sales associate. But that’s all about to change. We’re at the beginning of a retail transformation: The growing percentage of retail revenues driven by eCommerce and the influence of digital technologies on consumer behavior and expectations alike means that retailers are being forced to reevaluate the value proposition of the store. The result? A digitally enhanced retail store.
Today, a mix of technologies are coming together to marry the online and offline experiences to revolutionize in-store shopping and the role of the physical store. However, we’re still in early stages. Many of these initiatives remain in experimental phases, and glaring success stories are few and far between. Despite the rarity of iron-clad business cases for these initiatives, eBusiness professionals and their colleagues in store operations are forging ahead.
Together with eCommerce technology analyst Adam Silverman, I recently published a report laying out the current state of digital store initiatives and the promising opportunities a digital store overhaul represents for retail. Some of the ways retailers are transforming retail stores include:
A long list of European pure player retailers were put through a rigorous Shop Experience Audit by GfK to identify a short list of five players that six jury members evaluated. The short list of candidates included Net-a-Porter, ASOS, Amazon, Zalando and Yoox.
It's been a tough choice because all candidates are very strong players. But, we the jury persevered and evaluated the candidates based on innovation, customer engagement and consistent multitouchpoint presence. Here are the winners:
Winner Gold: ASOS. Jury Assessment: ASOS goes beyond purely generating sales. They work to be present at their customers’ moment of need at every stage in the customer life-cycle, including engaging customers so they come back again. Their content and communication is consistent, as is their presence across devices. They have strong growth from international sales and a multi country presence. They've also launched innovative features like the 'fashion finder' function and a pilot program for changing rooms at pick up points.
Contributed by Bryan Wang, Di Jin, and Vanessa Zeng
JD.com, the second largest online retailer in China, went public on May 22, listing itself on Nasdaq after merely 11 years of existence. At the time of IPO, JD had a market value of nearly $30 billion. Despite its size however, JD still managed to increase its customer base by 62% in 2013. How did JD manage to continually achieve business growth? I believe this is due to three key factors that differentiate JD:
■ Comprehensive logistics network for online retail in China. JD.com invested heavily in a last-mile strategy to ensure that customers receive products as quickly as possible, establishing 82 local warehouses with 1,620 delivery and 214 pickup stations across nearly 500 cities in China. This has made same-day delivery available in 43 cities — far ahead of the capabilities of Google Shopping Express in San Francisco. To better reach customers in lower-tier cities, JD is also collaborating with local convenience store chains in provinces like Shanxi and Guangdong to further strengthen its last-mile delivery capability.
If I had a dime for every time I heard the question “Isn’t eCommerce taking over retail?”, it wouldn’t make me wealthy, but I’d certainly have a few hundred dollars more than I do now. Nonetheless, it’s a question that is unfortunately misguided and has permeated our zeitgeist. The truth is that yes, eCommerce is growing - but physical retail is far from doomed. Let me take the two parts of that last sentence and address them each separately.
First, the fact that eCommerce is growing. Forrester just released the latest five-year online retail forecast and to no one’s surprise, the numbers are big. We’re projecting $294B in eCommerce sales across 30 retail categories in 2014, expected to grow to $414B by 2018. The web keeps doing what it has always done well: it provides huge assortments of products, at comparable, often lower, prices than physical stores, with 24/7 access and often free shipping. For many categories like media products or electronics, we’ve already observed a heavy shift to the web channel away from physical stores. Add to that the ubiquity of mobile devices and that drives even more shopping in more instances and places. In fact, we’re projecting that $87B of that $294B will happen on phones and tablets in 2014, and that doesn’t even include another $28B in additional mobile transactions on sites and apps like Uber and Domino’s Pizza that aren’t even in that aforementioned mobile commerce number.
But all this growth certainly doesn’t mean that stores are dying. Here’s why: