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3g smartphones: the impact on stores and multi channel commerce

With the advent of smart phones and 3G bandwidth, from a consumer standpoint, bricks and clicks worlds are merging fast. What would this mean to the stores of the future and multi-channel commerce?

Many retailers had traditionally kept their stores and ecommerce divisions separate, but several have jumped on the multi channel commerce and are integrating their operations and/ or capabilities. For instance, most store employees were incentivized to close the sales through the stores channel only, but the most progressive companies today have incentivized store representatives to increase e-commerce sales. “Buy online and pick up at store” is the corollary arrangement.

Yet, the paradigm broadly is that the “Attract and Sell” event happens in one channel mainly, which is then supported by “Post-Sale” events in other channels. Post Sale events could be  returns, exchanges and customer service.

Oncoming change: As in-store shoppers start getting quick and easy web access via 3G smartphones, I believe a paradigm shift is happening: the “Attract and Sell” event itself will be split amongst multiple channels. For instance, it will become easier for consumers to shortlist products into a shopping list on their mobile devices, walk into a store, show the list on their devices to the store reps, get store personnel to spend time helping choose the right product, and then go online to find the specific reviews, research the best price, and locate another neighbourhood store (or online retailer) to buy the product from. Throw in the possibility of the consumer getting quick pre-purchase feedback from one’s social network via twitter, and we can start imagining the complex inter-meshing of channels during the “Attract and Sell” even.

The genie is out of the bottle. It is now up to the retailers to decide how they react and manage this change. When faced with this scenario, do they risk losing engaging with the consumer when he pulls out his iphone 3G, or can they do something to quickly redirect such efforts to their own website and close the sale?

Making this happen would mean changes on several fronts, including:

1.       Internal alignment and refining strategies and plans

a.       Internal organization and incentive structures- double counting revenue from cross-channel sales is one viable option.
b.      Pricing and promotion strategies- with the consumer information gap disappearing, store managers would increasingly revisit the question “who are we competing against”, and would need to create innovative in-store pricing and promotion strategies accordingly.
c.       Competitive intelligence strategy- Stores today do perform competitive intelligence on their neighbourhood stores. How can this be made feasible for the web competitors too? Does it have the ROI? The business case is much stronger if a centralized competitive intelligence group, or the ecommerce competitive intelligence group, actively support all stores for the web research. It is important to automate and scale this task though.
d.      Store channel personnel training- including knowledge of their own company ecommerce sites and utilizing the information available from the competitive intelligence groups.
e.      Merchandising strategies- as consumer behavior insights start flowing in through analytics, merchants need to decide which categories can remain competitive in this new environment.

2.       Engaging the consumer
a.       Social listening-  understanding and managing the online chatter about your brand and service
b.      Digital marketing - ensuring the creative, IT and brand managers are aligned in providing a consistent message across channels
c.       Mobile marketing and promotions - the retailer must engage with the consumer early and help build and manage the consumer’s shopping list.
d.      Technology- Hyperlink from the physical to the digital world would be important to quickly get a consumer to refer/ scan an in-store product through his device and quickly be redirected to just the right page on the retailer’s website. Mobile tagging technologies like QR (launched 1994 and more prevalent in Japan today), or “Microsoft Tag” launched last year could help do this, but it is too early to determine what consumers would get comfortable with.
e.      Mobile commerce infrastructure and user experience- must be enhanced to not only convert one’s own prospect, but also the consumer visiting one’s website while at the competitors’ store.

Recognizing some of these imperatives, Infosys is working on helping our clients address these challenges through innovative CPG and Retail focused solutions.



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