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How the lines between online and offline retail are blurring, and how to capitalise on this trend

November 23, 2016

Let’s start with a sobering statistic: Retailers opened the lowest number of new stores in the last 5 years in the first half of 2016. What’s more, 15 stores pulled down their shutters for the last time every day. Altogether, that means nearly 2000 more stores were closed than opened in that six-month period.

Today, as bricks and mortar shops seem to struggle more than ever before, embracing online has become all the more important. Even retail giant IKEA, who for a long time stuck to their bricks and mortar roots and resisted expanding its online presence for years, has recently announced that they will be launching a Click & Collect solution.

So how can smaller retailers take advantage of the changing ways we shop?

Convenience is king

Despite what the statistics might appear to show at first glance, the trend is not just a straight move from offline to online. Increasingly, retailers are recognising that they can no longer view online and offline channels in isolation, and they are working to offer a service that is more flexible in order to be convenient to each individual customer, wherever and however they prefer to shop.

Customers have made it clear that they want options. The 2016 MetaPack State of eCommerce Delivery report highlighted this, with 45% of consumers having abandoned their basket online as a direct result of insufficient or inconvenient delivery options.

It seems customer expectations have shifted. As the leading retail giants offer the flexibility to enable consumers to shop online and pick up in-store or to shop in-store and have goods delivered to their home or other convenient location, they come to expect such levels of service as a standard.

This, of course, presents a challenge for smaller independent retailers looking to compete with huge brands.

A consistent experience

Retailers looking to combine their online and offline presence face the challenge of creating an experience that feels seamless to customers, no matter how they access it. Consumers are increasingly expecting to be recognised and treated as individuals, with wish lists and baskets to be available everywhere.

Delivery choices also play a key role in this, and should be accessible and convenient whether in-store or online. From fulfilment systems to branding, the experience should be consistent across touchpoints and deliver the same level of customer service whatever the environment.

The power of data

There are benefits to traditional retailers who move online, over and above meeting customer expectations. Obviously their potential customer pool expands from their local catchment area to a global market, but what is potentially more powerful is the level of information the digital world can reveal about customers.

Online retailers have the potential to gather data about their customer base that would not be possible if they were limited to physical environments. Retailers can quickly collect preferences based on location, buying habits, ways of accessing the service, and levels of engagement with specific products.

A virtual environment can even lend itself to impulse buying, targeting consumers at specific times with the right marketing and removing any friction points.

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The crucial final step

No matter how successful and satisfying the virtual shopping experience is, getting the physical goods to the consumer is still the vital final step in the customer journey. This is something many bricks and mortar retailers have struggled with when they move into selling online, as they need to set up a strong infrastructure of fulfilment, shipping and delivery that meets customer expectations in terms of cost and convenience.

For many businesses, delivery is an afterthought, but its importance should not be underestimated. Studies show that 56% of UK online shoppers rated choice of delivery options as the most important factor when deciding on a purchase, while 38% said that a negative delivery experience would mean they never returned to that retailer again.

Aside from the cost of losing customers, a substandard delivery infrastructure can also have significant direct costs. Failed deliveries currently cost retailers up to £780 million per year in the UK, and 312,000 deliveries were missed every day in 2016.

Offline adding value to online

One of the most significant trends in the online shopping experience in recent years has actually been the growing importance of the offline world. Click & Collect has quickly been embraced by many bricks and mortar retailers, with customers enjoying the ease of picking up their parcels at a local shop.

In fact, Click & Collect has now arguably become the third most popular digital service in the UK, and is forecast that 76% of all consumers will use Click & Collect in 2017. The UK’s leading retailers like Sainsburys, Tesco, Boots, IKEA, ASDA, Marks & Spencer, John Lewis, and many more have all implemented Click & Collect as a way to combine online choice with offline convenience.

This of course provides the High Street retail giants with a strong competitive advantage, being able to leverage their offline footprint to offer a more convenient service online. However, small independent retailers with no offline presence are fighting back, utilising the physical stores of other retailers as convenient collect points in the neighbourhoods of their customers.

At HubBox, for example, we work with a nationwide network of more than 1000 collect points in pharmacies, dry cleaners and convenience stores that can be used by any online retailer to offer Click & Collect at checkout, and in turn, these local stores benefit from increased footfall, supporting the local High Street.

Improving conversion rates

Studies have showed that just by offering customers the option of Click & Collect at checkout, online retailers see an increase in conversion rates and a reduction in basket abandonment. Of course that makes sense, given that 48% of consumers say they’ve abandoned an online shopping basket due to a lack of delivery options, and 71% want to collect their parcels locally.

Increased conversion rates and reduced basket abandonment are both something of a holy grail for online retailers, but any uplift in sales volume must of course outweigh development costs in order for it to be commercially viable.

Integration needs to be fast, easy, and light-touch and integrate seamlessly with whichever e-commerce platform they are using. The service cannot be too expensive – even the biggest retailers watch their profit margins.

Most of all, an online retailer considering adding a Click & Collect delivery option must ensure it will really add value for their customers.

The locations need to be convenient, and you need to have confidence that the customer service will be high quality in order not to tarnish the overall experience of your brand. The service must be truly simple and intuitive to use – if it is too difficult, complicated or time-consuming to use, you are making the customer work harder than they need to, so they will never use it again.

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The future of retailing?

Years ago, many people argued that the Internet could be the death knell for traditional bricks and mortar shops. Today it is clear that is not true, and in fact, an online presence can actually drive in-store purchases, as well as vice versa.

Consumers want to shop in-store, and many still find it reassuring that there is somewhere they can go to get advice and talk to real people. For certain kinds of retail goods, like furniture for example, being able to interact with it in a physical space is a vital part of the buying process.

The technology is well-established for bricks and mortar retailers to move smoothly into e-commerce without huge disruption of their business models, but it is also now easier than ever to make it work both on and offline, whatever the size of your business. Retailers just need the vision to embrace it and move forward.

About the author

This article has been written exclusively for ByteStart by Sam Jarvis, the founder of innovative Click & Collect service, HubBox. For further information go to www.hub-box.com.

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