In the era of global uncertainty and depressed world economy, one sector has seen some impressive growth trends – that is e-commerce!
Global e-commerce sales reached $1.1 trillion in 2012, up by 21.9% from $893.33 billion in 2011. While North America continued to claim most of those sales. Forecasts indicate that in 2013, total e-commerce sales worldwide will grow by 19.3% year over year to reach $1.3 trillion. China drives most of Asia-Pacific’s e-commerce growth, and is poised to surpass Japan to become the world’s second largest e-commerce market after the United States, this year. India’s e-commerce on the other hand, was worth about $14 billion in 2012, and has close to 10 million online shoppers and this number is growing at an estimated 30%.
This is some good news especially when traditional retailing worldwide is struggling to keep 4% growth rate and many big companies worldwide are pugnacious in defending their market share and profitability.
Advantage e-commerce – but still a long road ahead:
In an apple to apple comparison of traditional retail to e-commerce, the latter stands to gain critical advantage in terms of providing price, value and convenience to customers. Little wonder that the average American Customer Satisfaction Index score for online retailers such as Amazon (87 points) is 11 points higher than the average for physical discount and department stores. It is perhaps worth pushing the parallel even further, if one takes a deeper look at the data on retail, it is a pleasant realization that in category after category the internet format — Retail 3.0 — has accounted for essentially all of the growth over the last decade.
This does not mean forecasting death of traditional retail. E-commerce still has a really long way to go before it can even think of posing a serious threat to traditional retail, simply because the unique advantages posed by traditional retailers is nothing short of discovering the holy grail.
Here are some of the unique advantages that traditional retailers have over e-commerce:
- Instant Delivery – Buy now have now!
- Better Customer Experience – Real is always better than virtual
- Better Customer Support – In person customer support is always better than email, phone or SMS
- Better Retention & Loyalty Policy – The ability to recognize a regular customer from a visitor and associate privileges to loyal / regular customers
- Conversion rates : Traditional retail conversion rates are around 35% while e-commerce is still struggling at 3-4%
- Better Supply Chain & logistics infrastructure – economies of scale acts best with high volumes
Needless to say, many would argue that bridging these gaps is almost impossible because e-commerce is based on virtual presence of goods, services and consumer, while traditional retail is based on real format. However one cannot deny that given an option (all parameters of price & convenience remaining constant) consumers will prefer real to virtual. This is where e-commerce companies have a lot of catching up to do.
Online vs. Real:
Today’s e-commerce companies might be fast in showcasing their products to consumer in real time (24/7) but the ecosystem around e-commerce stills seems to be ruled by old world companies that are using very little innovation and worst still most of the systems work in silos be it logistics, supply chain, marketing, MIS or customer support.
This of course means a host of questions that every e-commerce company is anxiously seeking answers to at any given point in time. For e.g. How many visitors on the website now? What is the conversion probability? How is the demand and supply pattern? Where is the delivery happening now? Where is the customer shipment now? How many return visits are expected? What would be the price of the same product tomorrow? How many happy and unhappy customers created? etc.
These are anxious questions, mainly because most of these questions are based on events and activities, not directly controlled by the e commerce companies; besides one gets to know about the information only after the event has occurred – so there are very little chances of any Interaction.
E-commerce companies can cut many of their anxieties by enabling a tighter integration with their critical operation nodes and enabling real time interactions for critical functions viz. procurement management, delivery logistics, customer experience, cart tracking, customer loyalty, offer management and customer support in a unified omni channel dash board that can offer insights in real time. Enabling real time analytics and interactions at critical processes nodes can increase speed & efficiency of the overall e-commerce site.
Some the critical functions where real time Interactions based on real time analytics can help are:
- Supply Chain, Delivery & Logistics: While conventional stores provide immediate delivery and usage to the products one has bought, e-commerce customers have to typically wait from a day to a week before their product arrives. In other words as the picture depicts, In case of a real store the logistics of goods and customers are inbound while in case of e-commerce the flow of goods is outbound . This provides anxious moments to customers as well as e-commerce companies because every company wants to know what happens after the order is taken. Even if they’re making money, there’s an opportunity to make more if they have access to accurate information in a real-time environment.
Real time analytics can help e-commerce companies calculate the key critical factors that result in providing value to the customer, be it in tracking shipments, returns, transportation routing, cost reduction and price discovery in real time.
The value can be interpreted in terms of:
a) Analyzing in real time the geographic order pattern and warehouse proximity to reduce end user product price
b) Analyzing in real time, the current inventory levels and demand patterns to automatically trigger price reduction / increase notifications on the website
c) Analyze current transportation time for shipping, transportation cost and predict approximate delivery time to the user
d) Detect early logistics situations such as freight delay or loading time and automatically send notifications to the customer with an estimate of delay in shipping
e) Analyze geographic demand patterns and season loads to allocate / coordinate with idle delivery resources in real time
f) Enable seamless transportation routing by analyzing the delivery schedules and returns collection patterns
However, synchronization and optimization of processes in real time requires some integration of many data sources. Organizations who successfully integrate real time analytics into their business process can achieve a significant return on investment, simply by reducing wastage, improving customer experience and building efficiency in processes.
- Customer Experience: The basis of every great customer experience is personalization; today most e-commerce companies are unable to even differentiate between a new customer and an existing customer, let alone provide customization. Hence every e-commerce site provides a one size fits all approach, which might not necessarily be engaging or exciting for all users
In the context of personalization, Real time analytics and engagement tools can provide customization of content, offers, freebies & privileges based on user’s likings, preferences and behaviour in an automated manner. Here are some ways, Real time analytics and Interactions can help e-commerce companies to distinguish, differentiate and add value to their customer experience:
- Content Customization: Based on behavioural targeting e.g. if a user had come to site the previous day and looked at mobile phones – its best time to show case latest offers on mobiles and latest mobiles now
- Real time recommendations & suggestions: E.g. if a user is checking on products, real time suggestions on what other users have bought, user reviews about the product, product demos, delivery & payment options and suggestions on accessories enhances user’s website stickiness and confidence levels in the product
- Privileges to existing customer: If an existing customer is on the site, one can provide personalized messaging, special privileges or customized offers or customized content / videos in real time to enhance their shopping experience
- Offer Customization : Based on geography and source e.g. Mumbai visitors view a different price for the product than a visitor from New York or a special offer just for visitors from New York
- Real time behaviour segmentation and offer customization: Let’s say, if the site has over 1000 visitors and one needs to invoke offers based on loyalty and usage then one can enable cohort analysis to segment users in real time basis their behaviour and automate customized offers for each segment or let’s say first time users get 10% discount and returning visitors get 20% etc.
- Lead scoring for un known users: If the user has not purchased / signed up but visits the site very often, one can gauge customer intention by enabling lead scoring rules and engage with the user with value based proposition in real time
- Customer Personalization: For e.g. Recognize existing users / customers and acknowledge their presence without them signing in and provide customized messaging – even a Hi < Name> banner on home page would be enough to attract their attention and gain engagement
- Content Personalization for undecided users: Show personalized video demos, offers and pages that can help in enabling a quicker decision towards conversion
- Test Creative messages : One can enable A/B testing in real time to test which message / creative gets more preference from users and optimize content accordingly
Real time analytics and interactions can not only help identify and personalize for the new and returning users, but can also help in adapting the website in accordance with the user’s preferences and thereby providing a seamless browsing and transaction experience every time without being intrusive, thereby creating a seamless customer centric experience that improves conversion probability and increase loyalty, referral and review score quotients. However one needs to remember that the foundation / basis of all real time customer experience is the quality and value of Interactions and analytics is the only platform that can enable richer insights in real time.
Engagement: Today about 80% of the customers drop out of the website within first 30- 60 seconds. It’s in the initial few seconds that a user decides whether the site has what he is looking for. These dropouts have huge implications because it is not only an opportunity loss but it also negates the marketing effort and costs involved in driving the traffic to site. Similar is the case with shopping cart drop outs and goal path abandons. Real time engagement and proactive customer support provides website stickiness and sends a message of being a responsive e-commerce company, which rubs off into the brand equity of the e-commerce store. Most of the visitors / shoppers drop out of site primarily because they find difficulty in finding the products, or have doubts, queries, and concerns or are simply not sure of their choice. It is this crucial time that one needs to engage with the prospect in real time just like a sales man does in a real time store. However this is only possible if we have real time data about the visitor online. Real time engagement and personalization can be invoked through real time forms, surveys, ask’s or chats without being intrusive once there is an actionable insight.
Some of the cases where e-commerce companies can engage in real time to drive more conversion and ROI are as follows:
First Time Visitors:
- If a visitor is coming to the site as a result of Adwords or Face book; invoke a special message acknowledging their visit
- If a user is coming to the site from a specific city – invoke special coupons
- If a user has just visited the product page twice or more – invoke a special offer to entice and sign up
- If a user has just added a product from shopping cart – enable an exclusive offer so that he doesn’t drop out
- If a user has just reached the check out page – let the user know that help is just one click away in case of a problem
- If a user is on site for long and still hasn’t not signed up – invoke a real time chat to understand queries or problems
- If a user is on a product page for a long time – invoke a product demo or suggest alternatives
- If the user has come to the site as a result of a campaign, enable custom content & personalization
Similarly for returning visitors:
- If it’s a returning customer, acknowledge that they are special with personalized messaging, and display reward points they have accumulated
- If the user is returning after a long time, enable a personalized “ we missed you” messaging
- If a user is viewing the site through a mobile / hand held device – show him the nearest store location or your best offer/ deal
- If a user is returning frequently but not signing up – enable custom lead scoring based on the behaviour and provide reward points for redemption
- If the user reaches the check out page – pre fill the forms to enable faster check out
- If the users are returning again and again, yet not signing up, invoke custom surveys and try to understand their needs and preferences better
- If a user has dropped out of the shopping cart, email him the offer he has missed in real time
- If a user is searching specific products or depicting interest only certain products – enable content specific to the product (videos, infographics, whitepapers etc.)
- If a customer has a problem related to a product – invoke click to call
Of course there are many more ways of engaging with visitors and customers, but the important aspect of engagement is listening to customers and being there when it matters most for them.
Customer Support : Today customer support and engagement go hand in hand because Customer support is an essential engagement that can resolve queries and change perception about e-commerce experience in entirety. Today most of the customers / users online are impatient and seek solutions to problems in real time and most often, an email or a phone call might not result in speedy resolution of solutions. Research suggests that there are three types of shoppers / visitors to an e-commerce site viz. dependent, semi dependent & experienced shoppers; dependent & semi dependent shoppers require some help or support to complete transactions. Because all users have more options / choices available to them, this does not mean e-commerce companies need to let go of the opportunity that has presented itself at the website doorstep
- The figure shows the scenarios when shoppers / visitors seek real time help. Some of the key worries for every user being :
- “What if there is a problem after I buy the product”
- Is there a better product than this?
- Is this a good brand to be associated with?
- Is this product value for my money?
Its scenarios like these that most shoppers are indecisive as well as vulnerable in. A timely interaction, with sales, quality assurance and or policy pitch provided in real time can help resolve such queries or users and can result in real time conversion with customer empowerment.
Real time engagement and interaction with tools like real time chat or click to call need not be seen as customer support tools but as customer conversion and engagement tools, built on the foundation of real time information and data.
Real vs. Real time:
Using real time engagement with real time analytics as the back bone, e-commerce companies can reduce the perceived gaps between a real store and a virtual store, and bring the user experience closer to or even better than the real store experience.
It’s true that customers are now focusing increasingly on price and convenience, which strengthens the advantages of online retailers but it might just become another bubble if e-commerce companies don’t provide customer centric experience or don’t get real about servicing their real time needs. An ideal marriage of real time analytics with engagement tools can enable such capabilities to e-commerce companies and allow them to their silos out and help integrate their process and systems to real time.