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Enterprise Marketing & Promotions Management

The Future of eCommerce for Retailers: A Throwback and Look Ahead

By / September 2016


As retailers look ahead to capture the hearts and wallets of consumers, eCommerce must be a major focus for investment and innovation. The convenience, immediacy and efficiency of online shopping can’t be denied.

Throwback to Bricks and Mortar Stores

Interestingly, a recent article from The Guardian, “The Future of eCommerce is Bricks and Mortar,” states that physical stores are critical for branding. Sellers of tactile and personal products, such as clothing, eyewear and jewelry, are finding success establishing retail locations or pop-up shops to allow consumers to touch and try on items.

This throwback to bricks and mortar stores for previously online-only merchants – such as Amazon and Warby Parker – reflects the broader industry imperative of omnichannel retailing. Creating a seamless customer experience, whether shopping online via desktop or mobile device or at a traditional retail store, is critical to a successful retail strategy.

A couple of eCommerce trends that were recently spotlighted include the use of mobile coupons and the growing number of millennials buying gift cards for themselves.

Mobile Coupons Changing Buying Patterns

A MediaPost article on mobile coupon users cites an eMarketer study showing the number of adult mobile coupon users in the U.S. will increase to 104 million by the end of 2016. Koupon Media, a mobile offer platform, says customers spend more money, buy more products, and adopt new technologies when they’re given a mobile coupon.

Koupon Media reports:

  • 26% increase in basket size when customers use a mobile coupon
  • 39% of customers spend more if they receive a personalized coupon
  • 42% of mobile users have used a mobile coupon
  • 60% of customers would adopt mobile payments if offered coupons

Additional information about mobile coupon usage was revealed from the Valassis 2016 Purse String Survey:

  • More than half of shoppers say they have visited a store, restaurant or other business after receiving an offer on their mobile device when they were near the business location
  • 72% of consumers say they have looked for coupons or offers while in-store via their mobile device; millennials (90%) and affluent shoppers with $100K+ household incomes (81%) are much more likely to do so
  • 35% of shoppers use print and digital coupons equally while 51% say they print out digital coupons for use in-store
  • More than one-third report feeling “rewarded” by the number of deals/savings received in a given day via email, text, social and app notification
  • Over half would be more likely to shop for groceries online if they could use more coupons, with 66% of millennials agreeing

Millennials Buying Gift Cards for Themselves

Gift cards are a popular choice for young people, but a new report from analyst firm Mercator Advisory Group found a big jump in “retailer-specific” cards among millennials. Between 2015 and 2016, retail refillable gift card sales showed a sharp increase in the 18- to 24-year-old age range, which saw an increase from 44% to 53%; and among those ages 25 to 34, which jumped from 48% to 57%. Millennials are loading gift cards onto retailer apps and using the money on themselves.

“Retailers are introducing more mobile-based apps and offers when using their loyalty and prepaid programs, which may be fueling this growth in retailer gift card purchases,” said report author Karen Augustine. “Young adults continue to lead this mobile revolution and growing use of prepaid cards as a money management tool.”

Starbucks is extremely successful with its coffee cash app. About $1.2 billion of customer cash is now loaded on the app/gift card tool, which means Starbucks holds more cash than some banks. The Starbucks app offers a distinct advantage for busy young adults because those who pay with the app can skip the line, pick up their drink, and go. In addition to increasing customer loyalty, Starbucks cuts its credit card transaction fees.

Based on the Starbucks success, retailers should consider investing more in app development. While plenty of store apps let users check gift card balances or buy and send gift cards, a study by RSR Research called the Digital Gifting Benchmark Study found that few popular apps let consumers store and spend money using the app.

“Too many retailers still offer no option to buy gift cards via mobile web or app,” the report said. Only 12 out of 100 retailers studied allowed consumers to load a gift card into their app.

Looking Ahead A Decade

In 2016, one in three digital retail transactions take place on a mobile device and consumers are increasingly turning to apps to buy things like new shoes for same-day delivery.

Online advertising technology provider, Criteo, teamed up with Ovum to predict the retail landscape in 2026.

In addition to seamless shopping across connected devices, by 2026, consumers will want an environment where shopping is an interactive, highly engaging integration of online and real-world retail experiences. A critical condition for success for retailers in 2026 will be the ability to keep track of users and measure attribution across a growing number of devices and touch points. Retailers also will need to include the sharing economy, focusing on collaborative consumption where technology is used to facilitate the borrowing, sharing, lending, renting and swapping of goods and services.

By 2026, contextual location will be key to the shopping experience, providing a way for retailers to deliver targeted, timely, contextually relevant messages to consumers. Mobile devices will become the platform supporting the entire shopping journey, from product search and discovery to comparisons, recommendations, and payments.

Ten years from now, consumers will be living in a hyper-connected, high-speed world where the IoT (Internet of Things) will enrich consumer engagement in retail and be a data resource for advertisers. Wearables will provide data insights and new types of behavioral and usage data. Augmented reality (AR) will allow shoppers to try on a dress or suit virtually through a retailer’s app.

Now more than ever, retailers need to stay agile by investing in new technologies and being open to partnerships with complementary businesses.

By understanding the customer journey, retailers will identify where sales are happening and focus resources. In addition, retailers can enhance the brand experience, establishing an emotional bond and loyalty to ensure shoppers return again and again – whether to a physical location or eCommerce site.


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