This insight is the first in a series of 3 texts that Visagio is launching about Omnichannel. Sign up here to receive upcoming releases of this and other topics relevant to our insights.
E-commerce is growing strongly while total sales in Brazil are weakening. From 2014 to 2018, its participation increased by 2 percentage points. In the last year alone, the growth in total sales was 2% and, on the other hand, that of e-commerce was 10%.
While in Brazil e-commerce has about 4% market penetration, in the United States, this value is 10% while in China it is 20%. Thus, despite its great potential, e-commerce penetration in Brazil still has a lot to evolve, with the customer experience being one of the biggest offenders.
The growth of online retail is a global reality, with a gradual increase in its share of worldwide sales.
Digital retail is much more linked to business objectives than to specific channels. It's much more about people than it is about technology. It's the use of digital technologies to leverage the business and to make the customer experience more fluid and enjoyable across all channels.
Among the various macrotrends currently observed, we can mention the positioning of the consumer at the center of the entire strategy, the evolution of the consumer experience, the importance of the acquisition and good use of data, and the positioning of brands regarding activities and movements that go beyond their business.
The customer is at the center
On the digital platform entitled Lego Idea, consumers can create and choose ideas to be transformed into products, being recognized by the community and receiving 1% of royalties on their creation. With Amazon Prime Now, consumers can receive their products free of charge and with reduced deadlines. Tiffany teamed up with a bakery in Singapore with the objective of transporting the brand's customers to the same experience experienced by Audrey Hepburn in her film (1961). These are some examples of how brands have, in practice, positioned the consumer at the center of the entire strategy: creating connections and a lasting relationship with the brand, with a human eye and processes of collaboration and co-creation.
A new attribute for products and services: experience
A Shopping Revolution it is already a reality and the accelerated dissemination of technologies allows the act of buying to be transformed and redefined, making yesterday's experience obsolete. With the aid of RFID, more than 200 stores in the Chinese convenience chain Bingo Box operate without employees with a self-service process. Stitch&Fix sends garments to the consumer according to their profile, allowing them to buy what they liked and return the rest. With the Ikea Place app, consumers can view Ikea products in the space they wish to decorate through augmented reality.
Data is the new oil
The largest companies in the world are those that know how to transform the data they have into actions. Alexa, Amazon's voice assistant, in an “Echo Look” version, records your daily looks, gives recommendations for the best clothes to wear based on fashion trends and an understanding of your profile, in addition to sharing them with your friends,. The Loomia Token user can now be remunerated in cryptocurrency by providing data on the use of their clothes. Under Armour invested over US$ 500MM in the purchase of apps totaling more than 120MM users to generate data in Real Time of your habits and preferences.
The image beyond the business
Through Brand Activism, brands act on one of the main consumer decision-making factors for new generations: customer-brand identification. Ben & Jerry's was known for embracing social causes, defending LGBT rights, gay marriage, and the Black Lives Matter movement. In SĂŁo Paulo, for example, it took a stand for the occupation of urban spaces.
Another example of this identification is that of a group of companies, led by Ikea and HP, that came together with a commitment to sponsor the collection of plastic from the oceans and reuse it in its value chain, thus reducing environmental impacts.
The macro trends mentioned here only confirm that the consumer is ready for a new and more fluid experience. According to research conducted by Linx in 2016, 29% of consumers visit e-commerce 2 to 3 times a week and 56% buy once a month. According to Google, the search for the term “fast delivery” on the search engine grew by 430% in Brazil. 75% of Brazilians interviewed by the Cisco survey would pick up the product in store for free shipping, while 77% would pay $5 for same-day delivery. In the United States, initiatives of Buy Online Pickup in Store They brought 45% of upselling at physical stores (UPS) and 30% of deliveries are already on the same day or within 2 days after purchase.
In Brazil, omnichannel is already a reality for some companies. One of the main retailers in Brazil and a reference in the implementation of digital technologies, it has implemented a distribution network that allows stores to have the same assortment as e-commerce. In it, part of e-commerce sales are already delivered through the inventories of physical stores, in addition to the consumer having the option of picking up the product purchased via e-commerce at the store.
Another large multi-brand retail group in Brazil registered physical stores as Sellers on the marketplace and deployed Click & Collect Now for your stores.
In the franchises of a shoe and clothing retail chain in Brazil, the virtual purchase at one store to be delivered by another and the integration of physical and digital channels mark the beginning of Omni.
In the Uni.co as Group Pick-up store actions allow the purchase of products online and pick-up in any of the franchises registered at Imaginarium and MinD stores, offering the customer a more fluid experience with the brand, without shipping costs and with reduced deadlines. Today they represent 4% of the sales of participating physical stores in SĂŁo Paulo. With the pilot started in December 2018, sales amount to over R$180k, exceeding the 1450 order mark. Today 25% of the chain is participating, with stores active in SĂŁo Paulo, Rio de Janeiro, Belo Horizonte, Recife and FlorianĂłpolis.
Visagio is a partner of the UNI.co Group in expanding the project, which aims to reach all eligible stores by the end of this year, delivering a differentiated experience to the brand's customers. 1353 different customers have already been taken to stores to pick up their products purchased online and the expectation is that, with the expansion of the initiative, this number will grow. The numbers prove that Imaginarium and MinD clients request a digital experience and, therefore, the implementation of new initiatives in brands is essential for business growth.
“Amazon standard” of consumption
In 1994, Amazon sold books online and today for every dollar spent on online retail in the United States, 50 cents are in its online store. Consumer obsession, innovation, and intelligent use of digital resources are some factors that position Amazon as a prominent player in the technological retail revolution. “She has an absurd knowledge of her consumer, through algorithms and technology,” says Silvio Laban, executive marketing coordinator at Insper. “Behind every product recommendation she makes to you, there is a lot of information that has been processed.”, adds Laban. O Amazon Prime, the loyalty club launched in 2005, aims to improve the experience of its consumers who would receive purchases within two days, while at the time it was common to wait 4 to 6 days to receive them. Amazon stopped earning millions of dollars in shipping revenue.
Amazon's biggest asset isn't what it sells, the quantity, or the platform it uses. The primary concern is to understand absolutely everything about your consumers. Its strategic decisions are based on obtaining data that is organized, analyzed and transformed into information about the behavior of its consumers in the digital world and in the physical world.
With Amazon Prime Air, she intends to deliver products within 30 minutes with the aid of drones. The initiative, which is being tested in a selected area in the United Kingdom, would also allow the collection of customer data, helping to target personalized advertising and offers. To identify poorly maintained trees, for example, Amazon may recommend the purchase of fertilizers.
“The challenge for traditional retail is to approach innovation in the right way,” said Matt Kaden, managing director of MMG Advisors, a retail financial services firm.
With the purchase of Whole Foods for $13.7 billion in July 2018, Amazon confirmed that e-commerce and physical stores are converging to create a better experience for all consumers, contrary to the impression that was had that physical stores would disappear to the detriment of online sales.
Physical stores have proven to be more valuable than ever, not only with regard to the consumer experience, but also in solving distribution problems in the “last mile”, as will be better addressed in the next insights.
It was with these concepts in mind that Amazon Go, Amazon's “supermarket of the future”, was created. The store has no need for attendants: just remove the product from the shelf and have the Amazon app installed. The application identifies, through a system of cameras and QR codes, when the product is removed from the gondola. The amount is charged to the credit card when the consumer passes through the sensors at the exit.
But what now? What to do with so many changes?
Once we understand that the behavioral pattern of consumers has changed and continues to evolve constantly, it is important to understand how to organize practical action for the implementation of digital and omnichannel strategies. These actions include, among other things, a deep understanding of the customer journey and the adoption of agile methodologies, in order to bring consistent and fast results. Here's the next insight in this series: Why Omnichannel? — The benefits of the Customer Journey.
External references
[1] Forbes (2017) https://www.forbes.com/sites/tommcgee/2017/06/16/amazon-and-whole-foods-prime-time-for-omnichannel-commerce/#7830c7dc7919
[2] E-commerce Brazil (2018) https://www.ecommercebrasil.com.br/noticias/amazon-go-supermercado-futuro/
[3] Smart Insights (2018) https://www.smartinsights.com/digital-marketing-strategy/online-business-revenue-models/amazon-case-study/
[4] This is (2017) https://istoe.com.br/nova-era-no-varejo/
[5] E-commerce Brazil (2018) https://www.ecommercebrasil.com.br/artigos/a-tecnologia-que-esta-revolucionando-o-varejo-voce-esta-pronto/
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About the author
Camila Bergamo she is a Visagio consultant. He worked on different fronts within interim management, helping with the digital transformation of one of our partners.
