In the past couple of years, we’ve seen about a decade’s worth of transformation in ecommerce retail. And we’re not done yet. Brands that can’t keep up with shoppers’ rapidly evolving expectations will get left behind.
But with so much change going on, how can you identify the most important trends to understand and to act upon? That’s what Brian Kilcourse, managing partner and co-founder at Retail Systems Research, discussed with Coveo’s Diane Burley over two episodes of the Ecom Edge podcast: Ep 2, The Next Generation of Retail, and Ep 3, Co-exist or Compete with Amazon? Strategies to Differentiate Your Value Proposition Online.
Shoppers See Brands, Not Channels
One big development in ecommerce retail that will make more headlines in 2022 is the move by some brands to separate their online and brick-and-mortar operations. This, however, is a trend that Kilcourse does not believe you should follow.
“They’re still stuck in this channel-specific paradigm,” he said. “And they’re not taking a look at how consumers really shop.”
Shoppers don’t view a store’s website and brick-and-mortar locations as separate entities, Kilcourse said. “They don’t see the channel. They see the brand.”
In other words, shoppers want omnichannel experiences. The National Retail Federation asserted the same thing in their retail trends forecast for this year: “Customer expectations for an experience that is relevant across physical and digital channels is the 2022 iteration of loyalty.”
Relevance across channels means that shoppers get a seamless, consistent experience no matter which channel, or (increasingly) the combination of channels, they use to make a purchase. “Consumers begin many of their shopping journeys in the digital space even when they fully expect to go to a store to fulfill it,” Kilcourse said.
Relevant retailers don’t just support shoppers who want to research or even order online before heading to a physical store. They should also enable consumers to use their digital channel to enhance their experiences inside the physical store — for example, by telling them where the item they seek is located, or by recommending other items to add to their cart.
“You can empower the consumer in the store with the same technology she uses in her home,” Kilcourse said.
What’s Your Value Add?
Another issue confronting ecommerce retailers in 2023 is how to deal with digital giants like Amazon. Instead of competing with Amazon, some brands make their full product range available there. “If you need to sell through Amazon to reach the most customers, go right ahead and do that,” Kilcourse said.
Other brands take a different approach. They have realized that it’s just about impossible to compete with the Amazons and Walmarts of the world on price and convenience. “It’s kind of like trying to hit more home runs than the 1927 New York Yankees,” Kilcourse said.
Instead, they focus on “creating a value proposition which is more complex,” he said. To do this, start with getting clear about what your value add really is for your customers. If you’ve ever taken a psychology class, you probably remember Maslow’s Hierarchy of Needs. Sometimes foundational needs drive shopping: A customer needs to schedule a curbside grocery pickup today because their pantry is bare. Or they need that coat for their son shipped quickly because he’s outgrown last year’s.
But many times we shop to fulfill needs that are farther up Maslow’s hierarchy. For example, a shopper who buys a Burberry trench coat is probably seeking more than protection from the elements. Their need for esteem from themselves or others might motivate them to buy from the storied and prestigious brand. Or the purchase could address the shopper’s need for belonging. (“The coolest people on my campus wear brands like Burberry, so I will, too.”)
“One of my favorite things to see is retailers that really emphasize this notion of belonging as part of the value proposition,” Kilcourse said. “Community is really important, and it’s a value add that Amazon and Walmart are not trying to duplicate”
Selling an Experience
After you understand your value add, the next step is intentionally shaping your customer experience around that value add.
“You need to understand what it is that you’re trying to sell your customer,” Kilcourse said. “And you’re not just trying to sell products. You’re trying to sell experiences, and you’re trying to sell a solution to a set of lifestyle needs. Do you know what those are? Do you know what the customer wants to experience?”
To stay with the example of Burberry, the brand seems to well understand that their value add is helping their shoppers feel chic, hip and classy. So their website echoes that vibe with a sleek design and polished photography. There are no banners proclaiming deep discounts or rock-bottom prices because that’s not what the Burberry shopper is looking to get from the brand.
As far as brands that promote a sense of belonging through their customer experience, Kilcourse points to REI and Dick’s Sporting Goods. Each clearly knows who “their people” are and creates experiences that make them feel at home.
Community and belonging can be created online, too, of course. This is where content and social media play a role. In fact, one of the important ecommerce retail trends of 2022 is selling directly from social channels — the buyer doesn’t even have to go to the retailer’s website to make a purchase.
Create a Culture That Drives Relevance
Finally, ecommerce retailers must shape their cultures to focus on delivering experiences that are relevant to their shoppers.
“You have to start aligning your people and your processes to support the values that are differentiating and not be so focused on those things that are not differentiating,” Kilcourse said.
Another important shift to make in 2023 is “developing a technology roadmap that moves information to a strategic position as opposed to the tactical position that it is currently in,” Kilcourse said. Granted, most brands don’t have the vast reams of data that help Amazon create relevant customer experiences. But there is a lot of information they do have — and a lot they can do with that information.
Using data to increase relevance requires breaking down organizational barriers. When you free up information that’s been trapped in individual silos (for example, marketing or merchandising) it becomes a much more powerful tool to create the seamless, relevant omnichannel experiences that customers want.
Take a deeper dive into these topics and more of Kilcourse’s insights on ecommerce retail by checking out his two episodes from the Coveo podcast: Episode 2, The Next Generation of Retail Ecommerce, and Episode 3, Co-Exist or Compete With Amazon? Strategies to Differentiate Your Value Proposition Online.