Oleg Shvaikovsky, Executive Vice-President at Nortal, February 10, 2021
According to McKinsey, last year, we made a five-year digital leap in eight weeks (by May 2020) due to the pandemic. This has caused an unprecedented acceleration in digital commerce, requiring businesses to switch gears to stay competitive. However, the race is not only about keeping up with consumers’ growing appetite for online shopping, but the entire customer journey, up to and including delivery.
More people expect to make a portion of their purchases online post-COVID-19 than before, according to McKinsey & Company COVID-19 consumer pulse surveys conducted in September 2020. The data reveals that the shift to digital persists across countries and categories as consumers keep low out-of-home engagement in most parts of the world. Food and household categories have seen an average of more than 30 percent growth in online customer base across countries.
Many of the long-term changes in consumer behavior are still being formed. The pandemic has forced many companies to rethink their business models, carefully examine technology, supply chain capacity and delivery strategies, etc., to keep up with the digital shift and changes in customer behavior. It has also provided e-commerce businesses with an opportunity to help shape the next normal.
This needs to happen at-speed. Thus, e-commerce businesses are rushing to develop and implement new technologies and strategies to stay competitive for customer satisfaction while not overlooking the need to cut costs and increase sales. Technology will be the common denominator shaping e-commerce business in the coming years by innovating how we shop, purchase and receive online orders. We expect to see three large trends leading the way: augmented reality, personalized shoppable content and autonomous delivery.
Augmented reality is an emerging trend in digital commerce, aiming to advance the purchase process within the product groups that require fitting the size or shape, such as clothing, optics, furniture, etc. Visual commerce can significantly enhance the digital buying process by providing a true-to-life experience as a digital possibility. This trend makes product visualization a distinct part of retailers’ product exposure strategy. For example, a recent survey found that 49% of furniture retailers plan to offer augmented reality shopping directly due to the disruptions caused by COVID-19.
Augmented reality solutions bring possibilities to the table and stretch much further than just visual experience. The latest innovation challenge is happening in the field of digital scent technology. This new discipline promises to bring a whole new sensory experience to the customer journey. In other words, next to visual and sound (and also haptic technology providing an experience of touch — more common in games), smell is also going to be provided. This will be an enormous advancement in integrated virtual reality, making it possible to smell a product, for example, perfume, before ordering it.
In a transactional context, however, augmented reality shoulders more than just customer satisfaction; it is also a promising solution in the struggle to reduce the number of returned items. Customers are becoming more conscious about making environmentally sustainable choices and the trend is here to stay, pushing companies to rethink their business strategies accordingly.
Although personalized ads have been around for years, there is still a long way to go to improve the accuracy of their AI. For example, it is a far too common experience, after purchasing a specific technological device, the customer continues to receive targeted ads of the same product. For the customer, this makes little sense, not to mention the risk of a bad user experience.
According to Instapage, 74% of customers feel frustrated with website content when offers, ads, or promotions have nothing to do with their interests. Hence, customers are more likely to transact when presented with offers and ads that resonate with their needs.
To be meaningful, personalized user experiences need to be both relevant and in context. It is not enough to create rewarding experiences based on demographics only. It’s necessary to determine who the customer is and also what the customer needs. The key lies in the right mix of fine-tuned data delivered to the customer at the right time and in the right channel. However, the latter is opening up new exposure possibilities for shoppable content while moving ever closer to the customer.
According to Jason Woosley, VP of Commerce Platform & Product at Adobe, every piece of content needs to be interactive and shoppable at the moment. This customer expectation is conveniently paving the way for shoppable TV, allowing viewers to immediately purchase products seen on their favorite TV programs – right in the comfort of their living rooms. Hence, incorporating products into shows and stories gets viewers emotionally invested and raises the bar for skillful targeting to an entirely new, exciting level. Customer experience futurist, Blake Morgan, believes this to be the future of shopping since storytelling is a much more compelling way to sell products today than traditional advertising.
Primarily propelled by financial and sustainability objectives, we can expect to see a large shift in e-commerce delivery models in the next five years. The way products are delivered will change fundamentally.
The autonomous delivery race is on, and today’s emerging automation technology will become the new normal in the coming years. We’ll start seeing autonomous delivery robots like Starship, drones and self-driving vehicles making many e-commerce drop-offs. The trend is still in its infancy, but the innovation race for consumer package delivery is on. Many companies are already testing and preparing for this new way of delivering.
The trend of change also applies to the velocity of the service. The acceptable delivery window will keep shrinking, and businesses need to increase their drop-off capacity and speed. The trend is largely steered by Amazon, the flagship of digital commerce trends, that has set the bar to one-day free delivery in the U.S. (and even narrowing it down to two hours when it comes to groceries). Such quick delivery will likely become a common customer expectation in the not-too-distant future.
According to Business Insider, speedy fulfillment isn’t just a “nice to have” — it’s the expectation of every online shopping experience. Therefore, to support the last mile delivery promise, many companies are adding crowdsource technology and logistics partners to their delivery strategy to speed up fulfillment. In the case of Amazon, they utilize Uber drivers who use their own transportation to make fast deliveries, dropping off online orders to consumers when and where they want them.
The pandemic has given us a solid push toward a digital lifestyle and even steered Italian grannies toward online shopping, as Economist phrased it. We expect the shift to e-commerce to become permanent.
Although customers’ long-term preferences are still evolving, and the power of habit carries along a brick-and-mortar retail legacy, e-commerce businesses are making strong efforts to cultivate the digital trend and online shopping habits. Technology will remain the main enabler of change and growth and rewarding customer experiences in the post-COVID era. However, to get ready for this new world, businesses need to continue developing robust business processes and examining emerging technological features to meet customer expectations every single time.
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