By digitizing core business, retail companies could see a 15-20 per cent increase in revenues, according to a report.
#DigitalErra Thought Corner
Digitizing the business can help retailers with early trend detection, real-time feedback, customer-centric buying, optimized merchandising and end-to-end supply chain management, among other things. Besides, the report also pointed out that retailers can get 3-5 per cent margin uplift if they shift to higher margin categories based on data-driven insights.
The increasing ecommerce scenario has led the charge for retailers to compete in a more digitalized way and yet collaborate with marketplaces to sell products.
“Retailers have to collaborate with marketplaces to sell private brands, leveraging the reach of these marketplaces. For this, retailers need to make smart operating choices and deepen engagement with marketplaces,” the report noted.
What does the statistics say?
In the last three years alone, digital buying has increased from 3 per cent in 2013, to 23 per cent in 2016. The overall digital influence on consumers has increased from 9 per cent to 30 per cent during the same period. The report notes that convenience has overtaken discounts as a key driver for buying online. From 40 per cent in 2014, the report notes that more than 55 per cent purchase online due to convenience.
At the same time, while setting up their own online store, retailers have to provide a significantly superior value proposition than e-retailers to help consumers make a more informed buying decision.
Importance of Digitalization for Retailers
Digital engagement with the consumer can give near to or accurate knowledge and idea of consumer behavior. Personalized content which involves mailers, content marketing, artificial intelligence application, etc. can make the life of consumer easier without getting on to private space. This eventually drives sales besides enhancing the convenience and creating brand resonance.
Core part of work for retailers
India’s retailers have understood the need for digital push to increase sales. The core part of a revamp amongst retailers involves learning to engage in a world of exploding social networks, how to use search, how to use catalog, how to optimize and how to engage.
“Two-thirds of our customers are digitally influenced in some way or the other and, hence, it is imperative for us to ensure a strong digital footing,” said Maneesh Mittal, head of ecommerce at Tata Group’s Infiniti Retail, which owns the Croma chain of consumer electronics stores.
Apparel brand Biba, which went online in 2014, generates 35-40% of its total online sales from its own website. From its recent omni-channel initiative, which allows customers to select items from a store and get these delivered at home or buy online and collect from a store, Biba has been generating revenue of 3-4% of its total sales, said Biba managing director Siddharth Bindra.
Similarly, Shoppers Stop, the Indian fashion retailer, is on a digital expansion drive targeting 2 million mobile app downloads and 15 per cent sales through its digital touch points by 2020.
Can e-commerce inspire?
E-commerce has been incredibly search based utilitarian function. Search is incredibly important asset for any eCommerce business. But as you bring your product assortment on the platform, you are trying to spur imagination. Now if you have a retail store, customers who might have searched on your platform can end up into your store buying more than what he or she thought while browsing.
“Stores will always carry the element of serendipity. And inspiration matters, particularly in emotional categories like fashion,” Devin Wenig, CEO of eBay.
Digital shopping for retailers can be both utilitarian and inspiring. Data can get you the required know-how of customer-behaviour but it is the inspiration that will further drive shopping.