Ecommerce has grown rapidly in the last two years driven by lockdowns, social distancing, and remote work. Two years ago, only 17.8 percent of global sales were made from online purchases. That number is expected to reach 21 percent in 2022, a 17.9 percent increase in ecommerce market share over two years, according to ecommerce platform Shopify. Growth is expected to continue, reaching 24.5 percent by 2025.
In the Philippines, revenue in the eCommerce market is projected to reach US$20.182 million in 2022 and expected to show an annual growth rate of 17.45% until 2025, according to Statista.
Does this mean that the physical store as a channel is reaching its demise? Not quite. But it is transforming to be part of a renewed omnichannel strategy that companies need to investigate as consumers are changing the way they buy online and offline. This is why business leaders need to adopt new omnichannel strategies in order to succeed in the future.
Omnichannel has been abuzz the last decade. It was first introduced to the marketing world in 2010 to describe a shopping experience that would be accessible to customers on all platforms – from traditional brick-and-mortars to the digital world of text message, emails, and online shopping.
In 2013, the concept of omnichannel reached hype status due to the growth of smartphones. This meant setting up online stores part from the brick-and-mortal outlets to compete against the likes of Amazon.
In the ensuing years, business leaders adopted an omnichannel strategy as part of an overall digital transformation strategy. But in the developing countries like the Philippines, it only meant setting up an online presence – may it be a website or social media – to promote the companies’ products and services.
Now, companies are compelled to revisit, if not, adopt, a new omnichannel strategy based on new consumer behaviors and demands. In fact, Shopify has observed shifting consumer behaviors that require companies to tweak their omnichannel strategies.
For one, consumers want in-person shopping after the pandemic. “Consumers are hungry for in-person shopping experiences and the camaraderie that comes with them,” according to a commissioned Forrester Consulting study conducted on behalf of Shopify. “Over the next year, 59% of consumers say they’re likely to look at a product online and buy in-store. This is otherwise known as webrooming.”
Conversely, 54 percent are likely to “look at a product in-store and buy online—a.k.a. showrooming”. This means that retailers will need to consider launching a pop-up shop or opening a brick-and-mortar store, by keeping the in-person shopping element in mind.
Another trend is the growing need of consumers for seamless shopping. Digital and physical shopping experiences are blended in such a way that “retailers can no longer find the dividing line”. Shopify observed that this seamless shopping phenomenon manifests itself in a few ways.
First is the buy online, pickup in-store (BOPIS). The Forrester Consulting study revealed that “43% of brands are focused on enabling the ability to see available inventory in nearby stores, something 56% of consumers find valuable”. This means shoppers can see product availability across multiple store locations to hopefully find the product and size they want.
Second is buy in-store, ship to home. In 2022, more brands are embracing the showrooming trend literally—they are opening product showrooms rather than traditional stores, according to Shopify. Showrooms typically carry less inventory, a strategy on its own. This strategy offers customers the option to buy products in-store and ship their purchases directly to their house.
Last is buy online, return in-store. Stores are now offering customers the ability to return unwanted items in-store, effectively saving on return shipping costs which is a large cost component in ecommerce operations. According to the Forrester Consulting study, “51% of consumers said the ability to check out online and return items to a physical store had a significant or very significant influence on their decision to order a product online.” Close to half of the brands in the study said that they planned on prioritizing this in 2022.
These trends point to the urgent need for retailers to adopt new omnichannel strategies. This is the only way to survive in the coming years.
(Originally published in The Manila Times, February 18, 2022)
Tag/s:Business TransformationCOVID-19 Digital Disruption