Take a whistle-stop tour of the future of e-commerce, the Internet of Things and more with Dr Rana Tassabehji.
E-commerce is the fastest growing retail market in Europe according to a report by the Centre for Retail Research. The UK topped the European table of online retail sales in 2014 with an estimated £44.97bn worth of sales constituting about 13.5% of the total UK retail market. Online sales are expected to continue growing in 2015 and beyond but UK store-based sales are falling and are expected to continue to decline by around 1.9% in 2015. As technology continues to increase in power and shrink in size, we are reaching near ubiquity of smart mobile devices and wearables heralding the Internet of Things where everything will be connected to everything else. So Quo Vadis E-commerce?
Such rapid advances in technology suggest that e-commerce as we know it, will change in the next 5 years as dramatically as the changes we have just seen in the past 5 years. The language and concepts of “e-commerce” and “bricks versus clicks” will evaporate. The word commerce pre-fixed by the technology facilitating it will increasingly become dated and meaningless. We have already seen e-commerce (electronic) morphing into m-commerce (mobile) and s-commerce (social) and we wait for the next buzzword from the marketing moguls to emerge. Will it be omni-commerce? D-commerce? Or something else? Whatever it is, it is clear that retailers will have to work much harder to entice shoppers their way, as locating retailers online grows ever more complex.
So while technology is changing rapidly, so the behaviour, attitudes and needs of consumers is also changing. The concepts of convenience related to time and ease will melt away and be replaced by the concept of RELEVANCE. Customers will become ‘guests’ that demand excellent service that is uniquely and individually customised and tailored to them and will be based on how THEY want to buy and how the retailer can locate the best products for their ‘guests’. The technology will enable supply chains to become more intelligent to ensure retailers can provide customised delivery to enhance the ‘guest’ experience.
The chore of shopping for “essentials” will be given up to devices and become a largely automated process running in the background of people’s lives. This is where smart household devices and the internet of things come together When you are about to run out of milk, the milk carton will inform the fridge which will then update the digital shopping list, which will then instruct your supermarket / store / farmer to deliver your milk at a time and place it knows you are going to be available and happy to accept and store the carton of milk and notify you when the job is done.
To take (competitive) advantage of such technological advances and changes in consumer habits, tastes and behaviours means that the boundaries between bricks and mortar retail stores and internet retailers will become even more blurred. The retail industry itself is moving towards a seamless omni-channel retailing experience where pure online retailers will increasingly move to physical showrooms to showcase their goods and bricks-and-mortar retailers will have to make all their inventory accessible online. The future of online shopping is offline and the future of traditional shopping is digital. The physical retail space will have to change to incorporate digital interfaces that include personalisation of products and offers.
For example, Apple’s iBeacon and Google’s Eddystone based on Bluetooth low energy proximity sensors will guide you around the shops, identify items you like, send offers and locate the best products for you, all through your mobile or wearable smart devices. Rather than just focusing on price, Millennials and Generation Y/Z have a strong sense of citizenship where they see their purchasing decisions as a force for good. They are also used to creating content, and have partial attention spans. They are used to being bombarded by visual and audio noise and will tune out of the noise effortlessly, so the instore spaces need to be simple, attractive, creative and uncluttered. They expect to be involved and engaged in the products they buy and expect dialogue with retailers NOT one way broadcasts.
Retailers will no longer be able to control their messages and those that want to survive and thrive will have to embrace the fact that the message of their brand and organisation is owned by others. It is these others that will promote and ‘brag’ about products, services and brands, or not. In 2014, Starbuck’s revenues fell by 3.4% after they suffered a backlash resulting from their reported tax avoidance. ASOS a leading UK online fashion retailer, on the other hand, has made inroads into international markets in Australia, Russia and China purely through the use of social media.
Retailers should also be prepared to provide absolute transparency about everything they do, including details of their true costs, markups, sources of raw materials and products, locations, shipping details, environmental and social impact. Companies such as Everlane provide a breakdown of the makeup costs of their products and ‘guests’ will expect to see this information and more instore and online with one swipe of their device.
So the future for e-commerce is very rosy. It will continue to evolve and develop and retailers must embrace both the technology and the changing demands and behaviour of their ‘guests’. Out of store activity will have to be seamlessly linked in store to create a shopping experience that is unique and continuous allowing the ‘guest’ to progress seamlessly from dreaming of a product or service to exploring and finally locating and receiving that item.