In the age of Netflix and Uber, retailers fail omni-channel convenience test
Note: This post for the Neatly Folded Sweater is written by Dileepan Siva (dileepansiva)
While retailers today think about serving customers through various channels –- offline, online or both –- customers simply want to discover, purchase and experience the brand and its products as conveniently as possible. For all the talk about omni-channel, customers care less about the means –- the channel –- and more about the end –- the experience. It is up to retailers to make the experience as seamless as possible so that customers are compelled to return and not only buy more but also spread the word.
Countless customers have related stories where they walk into a brick-and-mortar retail store. The customer finds what she wants but the store does not have the right color or size. More to the point, the salesperson cannot quickly check to see if other stores have that item –- she has to call each individual store directly. And let us not assume that online is always easier. Customers routinely order items online only to find out that the product does not fit or work ‘as advertised’.
Sure -– there are those customers that discover online at home before purchasing offline; or the reverse, discovering in store and purchasing online at home on their couch. But is the experience that much better than it was a decade ago? To be fair, a big part of the expectation of convenience is that many other aspects of our lives are easier. Whether it is media from Netflix, transport in an Uber or any number of other products, technology has provided us with both choice and convenience. Except in retail.
We have got much more choice than we did before and retailers have more ways to reach customers — but has this translated to more seamless experiences? Arguably no. While retailers are investing in ways to make the customer experience more seamless — more of the focus seems to be on payments than anything else. Is how to pay the customer’s key pain point? As an example, are mobile wallets that much more convenient than my credit or debit card?
Customers care less about what happens at the point-of-sale –- again, the means –- than they do about the time after the purchase where they’re experiencing your product and deciding whether to return it or not. Granted, seamless order and return processing and fulfillment -– and most importantly, customer service -– is not sexy but it is exactly what provides customers a reason to come back and buy more. It is precisely the reason that Amazon has succeeded in selling not just books and electronics but products in virtually every category.
What does a seamless customer experience require? It is relatively easy for Bonobos, Warby Parker or any number of vertically integrated, online-first retailers to provide a seamless experience across channels. Whether it is Bonobos’ guideshops or Warby Parker’s home try-on, retail was shaped to the new digital landscape — the entire value, not just supply, chain is connected from start to finish so that data on customers flows easily throughout.
Where does this leave ‘old-world’ offline-first retailers like Nordstrom and others? These companies have to contend with their physical infrastructure — whether that is the warehousing that is usually not co-located as well as retail stores that are built for an offline only world. Revamping this setup requires not just money but also time. And retailers are starting to do so even though it is coming at the expense of profits.
One way to look at this near-term increase in costs is not only does this make a retailer more competitive but it also focuses the retailer on those customers that matter the most -– i.e. the ones that shop the most regardless of channel. Some retailers like DSW note that customers who buy their products through multiple channels spend two or three times as much as those who exclusively in-store or online only. Not to mention that focusing on your ‘best’ customers, results in lower acquisition costs -– they are already bought into your products.
To better serve them, omni-channel warehousing and fulfillment is critical. Retailers are not only more likely to have the product in stock but also deliver it faster –- upstream choices impact downstream customer experiences. And a connected and coordinated value chain allows you to engage with a customer not only at the time of purchase but also when they receive -– and engage with your product.
For all the investment in advertising and marketing to lure new customers in at the top of the funnel, why not focus on those who already bought from you? Promoting similar products and/or providing discounts on the same to customers post-purchase –- in an order or shipping confirmation email is the first step. Why not also consider slipping in promotional materials based on customer preferences in the package?
Or taking it one step further, ship a size up and down to the customer based on what she purchased. And make returning the incorrect sizes exceptionally easy –- online or in-store. This is obviously easier said than done and requires retailers to keep close tabs on inventory but if you can get a handle on flow and turns –- why not make it that much easier for customers to engage with brands.
Even if a retailer can’t get around to investing in omni-channel warehousing and fulfillment in the short-term, focusing on the post-purchase customer experience through online methods is doable. Look at how The Limited is leveraging technology from innovative start-ups like Narvar Returns to help give customers personalized recommendations based on their stated reasons for returns as well as real-time tracking of returns and refunds.
Weighing the costs and benefits won’t be easy but it is undoubtedly true that the longer retailers wait to make these decisions –- the more likely a competitor or for that matter an upstart online-to-offline retailer wins. Focus and invest in the customer experience and the pain points up and down the value chain. For most customers -– it is post-purchase, not at point-of-sale.
About the Author
Bio:
Dileepan Siva leads strategic partnerships for Twitter Commerce and previously served as Head of Business Development for Symphony Commerce, a growth stage e-commerce platform startup, helping emerging consumer brands scale their e-commerce businesses including warehousing and fulfillment.
Prior to this, Dileepan advised eBay on mobile and social commerce as well as Fortune 50 companies including PepsiCo and Unilever on retail expansion in emerging markets. Dileepan received an MBA from Harvard Business School and a BA from the University of California at Berkeley. Find him on Twitter: @dileepansiva
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