What is Local e-commerce and it’s key role in the new Retail Store Stack

If you’re a local retailer, regardless of the product line, one of your top questions is “what should my marketing strategy be?” You’ll be receiving incoming sales calls daily from people offering the same SEO services from all over the world as well as individual websites trying to sell you listings and promotion. On top of that are the consultants, generalists and specialists in your specific industry.

And of course things change every day, so no matter how much time and resources you put into the strategy it’s not going to stop or get any easier. Well, you’re not alone! in fact the majority of local retailers, even the largest of retailers that I know of, are in the same boat.

The challenge is to invest in the foundational activities first and then move to improvements on top of the foundation. This is where understanding the practice of “local e-commerce” becomes critical for retailers.

Understanding “local e-commerce” is critical for retailers!

It’s not a secret that the the retail industry has, and continues to go through fundamental change. Since the mid 1990’s two factors have enabled and expedited these changes for local retailers:

1. Online players have increased in number, size and effectiveness.
2. Consumers are finding visiting stores in person harder and harder.

Time is a scarce resource for all of us as consumers and the potential of saving time will be an increasingly powerful addition to any company’s value proposition. On top of this most of us consumers prefer to shop locally, IF, we find the products close to where we live or work at a reasonable value and quality.

According to the Local Search Association 76% of consumers search online with varying frequency before making a trip or purchasing from a local retailer and this trend is increasing every year. So it’s obvious investing in “local” is a wise decision, a must for local retailers.

Why is local so important?

Today, many consumers use smartphones and online searches to find products, services, deals, and business locations near them. Results from a Google study indicate that 50 percent of consumers are more likely to visit a store after performing a local online search via their smartphone. In fact, nearly 1 in 5 local searches are followed by an in-store purchase within one day.

On the other hand 85% of consumers still prefer shopping from local retail stores. Some interesting findings from the study:

• 69-percent of Americans prefer to support local retailers, however 71-percent say they prioritize shopping where prices are the lowest…
• 63-percent of respondents report that they are more likely to make a purchase from a store if they see a discount for that store on social media…
• 55-percent of respondents say they are more likely to support a retailer that has a charity component…

And according to a survey by ComScore for the fourth annual UPS Pulse of the Online Shopper survey which for the first time included some questions about shopping at local businesses found that over 90% of consumer prefer to shop from a local store for a variety of reasons.

What is Local E-commerce?

Local ecommerce (also known as hyper-local commerce) falls under the umbrella of Offline-to-Online commerce (O2O). O2O means that retailers with physical stores can (should) offer their inventory and sell to local online shoppers in the same way online pure plays sell to online shoppers. The terms don’t actually make sense any more because even a physical store is now online and there are really no “offline” stores but we’ll use it since it’s a recognized term. Actually P2O or Physical-Online is more accurate.

It make logical sense to sell to local customers before going out into the whole world. Many stores make the mistake of trying to sell online to the entire world before maximizing the local part. Local is typically your 50 mile radius around the location of your store — the distance where a shopper may actually drive or local delivery can be quickly provided. The radius depends on the population density around your store location so for example in Manhattan Local might be a 5 mile radius and in rural Idaho it might be 100 miles.

Local e-commerce strategies:

Think With Google is also investing heavily into educating retailers about the importance of online-to-offline (or O2O, although Physical-to-Online or P2O is more accurate) dynamics and how local retailers can take advantage of digital to earn more business locally.

Some of the ideas Think With Google recommends are:

1. Bring your real-world magic to your online experience
2. Video can boost e-commerce and in-store sales, and
3. Fish where the fish are.

As we can see Google’s first recommendation is to add your personal, real life, touch to your online experience, what they call “real-world magic”. Truth is even though we are all shopping online at the same time we are looking for real-world experiences.

Consumers want the convenience of the digital tools AND the experience of the real world.

So how do we translate the real-world magic into a local, or hyper-local, retail store? Firs we need to decide what the overall strategy for the store is going to be. The strategy needs to be focused and as narrow as possible to begin. The wider you try to reach the less effective each channel will become. And the decision is almost entirely based on Google’s third point “Fish where the Fish are!”

Are you in Alaska and your customers in every other state, or country? If you’re a travel-related company most likely that is correct. But if you’re selling Jewelry or furniture or food or a physical service the reverse is the case — the majority of your customer are NOT in other states or countries. Yes, you might have customers from other states but it will not be a large part of your base and your relationship with them is not going to be as strong as one with a customer living 5 or 20 miles from your store.

Unless your specific product is designed specifically for people living outside your local radius your first and top priority should be to capture the local demand before they go buy your products from across the world.

Fish where the fish are, unless the water is full of SHARKS!

Google recommends “fishing where the fish are”, remember e-commerce waters are also full of sharks. Large, massive sharks that a small fish will never be able to compete with. THe sharks will have you fish before you even notice they’re there. Who are the sharks in the online commerce world, the 800 pound guerrillas, the elephants in the room? They are the top retailers and online ecommerce players, the Amazons, Walmarts, Macys.. they have millions, sometime billions of dollars in advertising revenues and hundreds of people in marketing departments. You don’t want to be fighting them for page 1 or even page 2 or 3 of the keywords they are going after. You won’t win that battle, so don’t even start.

Luckily, you don’t need to! Because even though they are massively strong the can not reach into every community, including your community. Definitely not the the way you can. But to stand out from the rest you have to do things differently. Don’t follow the herd, blaze your own path, and don’t be afraid to experiment and learn, just make the experiments small and inexpensive.

And there are other dynamics that consumers go by preventing a large company to get access to all of a consumer’s business. For example even tough most people are on Facebook or Instagram, a much smaller percentage actually are willing to give their credit card information to them because they are concerned about the privacy and “how” their data will be used.

What are the “foundational” investments you should be making? Here are a few:

1. Setup a website and get yourself known to your local online community. This goes without saying in today’s business world but some stores are still either not doing enough or doing too much online before they have the foundation covered. Key is to make your presence as personalized as possible using genuine content. And yes the best stories are usually the ones told by the owners and founders of the store.

Question: Should you have e-commerce on your website? probably, but understand how online commerce impacts your physical store before doing this. If you don’t have an integrated system you’ll be just taking customers away from your local store, and land sales which are likely not from highly loyal customers. Bottom line, if you invest too much into your ecommerce and not enough in your website, content and personalization your expectations on the ROI may not be met.

I’m sure consultants and website companies are loading their guns for me but I’m happy to see real evidence of a local retailer’s e-commerce investment clearly benefiting the store and the overall business. I know they exist but are far less than the examples of stores who setup an e-commerce website and which never turned a profit.

2. Another strategic move for local retailers is to list their products on online marketplaces and most modern commerce platforms have automated tools to handle this. But set your expectations right that none of the large marketplaces are local optimized and will not contribute to your local power factor. There are new “local marketplaces” where their goal is to sell your products to your local audience before going to the whole country or world. As local becomes so much more important and difficult to master these “local marketplaces” will play an increasingly more important role in the local store stack (more on stacks later).

Look into “Local Marketplaces” as another differentiating tool for local retail.

3. Strengthen your position and reputation on local review sites. Consumers rely heavily on reviews and are getting better in detecting fake reviews. Sites like Etsy and Google reviews can be very helpful in attracting local customers to your business. But understand that your competition may also be there so this is not a set it an leave it proposition, you need to engage with reviews and provide considerate, meaningful solutions to the customers, specially the ones with less than perfect experiences with your business. Responding positively to negative reviews is a key true factor for consumers evaluating your business.

4. Email marketing is essential in “engagement” and “retention” of customer and directly impact LTV (Lifetime Value), one of the key KPIs (Key Performance Indicators) for retailers.

5. Invest in some form of non-digital engagement. Of course over 80% of consumers find you online and may even shop from you online but people don’t make decisions from only one or two interactions with a new business and many offline methods can improve the success and conversion ratio of your overall customer acquisition efforts.

Automation can be your friend, if you will be its friend!

6. Automate (without reducing services). Unfortunately most people, specially retailers and people working in retail are afraid of automation. This is a result of mis-informed and traffic-seeking journalism that does not understand the world we live in and thinks that we can stop or control change. Truth is the only thing for sure is that jobs will change, for all of us and the sooner we come to terms with this and learn how to work in the new career dynamic the more successful we will be. This is Critical for retailers to try and automate without reducing services.

If you automate one person’s position and you let them go you just reduced your services, whereas if you automate a mundane and physically demanding role, the person who was doing that work can actually perform a much more meaningful and valuable role in providing personalized service to your customers, or a range of other tasks automation enables.

7. And last but not least, Listen to your customers. instead of listening to news articles predicting the “death of retail” and “software eating the world” listen to your customers! You customers are going to tell you the truth you need to pay attention to. Do you have the tools in place to listen to your customers? If not this should be high in your store stack.

What is a stack?

The Stack is the combination of integrated tools, products and services any company (or person) uses to perform, and ultimately automate internal and external processes. For example your marketing stack can be your website, google ads, twitter, your email and all the software that enables seamless integration between these services and your ability to make decisions based on the performance of your different channels and consumer behavior. Even with all the technology at our disposal building the right Stack is more art than science in 2019. This will change in the coming years but if history is any indication it will become even more complex as more tools and channels come into existence. I’ll talk more about the Retail Store Stack in future articles.

Conclusions:

1. 90% of commerce is local.
2. 80% of consumers search online first for local shopping.
3. A “touch point mix” is required by retailers to capture and keep the local business.
4. “Local e-commerce” should be a key part of the new Retail Store Stack.

Local (aka hyper-local, aka physical, aka bricks-and-mortar) retailers need to understand the new Retail Store Stack. The changing consumer habits and needs dictate a multi-touch-point mix to keep them engaged and loyal. Local e-commerce, including local marketplaces, is key part of the new Retail Store Stack.