E-commerce is growing. The chunk that is mobile-driven is exploding. But the big picture is still the big picture.
While total retail e-commerce sales will hit $2.8 trillion in 2018, total retail sales are in the neighborhood of $23 trillion to $25 trillion. So while massive growth rates are forcing retailers and brands to pay attention to both e- and m-commerce, the in-store story is also critical for success.
Here's how global brands like Home Depot, Walmart, Unilever, eBay, and Citi are succeeding in the new retail reality. (Full disclosure: this is based on research I conducted with TUNE; the complete report is available here.)
Let's start with the big picture
M-commerce is way up too, but there's a catch. Globally, mobile commerce will hit $1.8 trillion in 2018 ... but China makes up 67.1% of all m-commerce. North America and Europe are different. Bricks and mortar is still 88% of all retail.
But shopping is definitely changing
Brand encounters are typically mobile today, because that's where we (digitally) live. So between 60% and 90% of all our meetings and interactions with brands are mobile.
The equivalent number for desktop? 46%.
So desktop isn't unimportant, but there is significantly less action there.
That changes somewhat when people move from encounters to research: when they're checking out a brand or product in depth. Mobile still matters -- 70% are researching products on mobile -- but desktop creeps up to 57%. (Smart speakers, by the way, are at 13%.)
And it changes even more when people research complicated or important purchases, like travel and vacations. Now desktop and mobile are in a dead heat at 63%.
The conclusion is obvious: the more expensive, detailed, and complicated the purchase, the more likely consumers want to use a big screen to understand it, see it, compare it, and judge it.
But even so, they're using multiple methods ... including in-store.
And buying is changing too
People really, really like physical store. In my survey of 2,700 U.S. and UK consumers, 49% picked stores as their favorite places to buy even simple, repetitive items such as toilet paper.
As people age, they tend to prefer physical stores more, and as they buy more complicated, expensive, or special products, they tend to gravitate to physical stores as well.
The reason is simple: In spite of considerable effort by marketers to use augmented reality, virtual reality, virtual sizing tools, and other technological marvels to entice consumers to experience products without physically being in contact with them, people still want to feel, touch, smell, and experience them.
Taps, clicks, bricks: converging digital and physical channels
People are increasingly buying digital, but they overwhelmingly still prefer stores ... so much so that even Amazon is building physical locations.
The company has been experimenting in old-fashioned bricks-and-mortar retail for years. Amazon only recently started breaking out physical store revenue: $1.3 billion in Q3 2017, and a cool $4.5 billion in Q4, thanks to its new grocery subsidiary. The Amazon Books stores that it opened in malls have helped to sell the company's tech goods, sure, but could also have been a response to the 6.1% increase in sales at physical bookstores in the first half of 2016.
"Physical goes digital then back to physical: brick to click to brick," says technology industry analyst Jeremiah Owyang.
I recently experienced this personally.
Coming off the ice after a hockey game, I discovered that my skate blade was cracked -- broken in two, even. That was the first time that anyone on my team, including me, had seen that kind of equipment failure. And it meant I immediately needed a new pair of skates.
Mobile: After hearing the news, my wife checked her email on her smartphone, sure she had just seen a promotion from a sports store that we frequent. Jackpot! She found a 15% off coupon for online orders at Sport Chek, a local sporting goods store.
Desktop: Needing more screen real estate to evaluate skate options, I jumped on her iMac and found a high-quality pair from Bauer, a brand I've bought in the past. Last year's model was an additional 40% off, which tipped the scales. My credit card got some exercise.
Delivery: Three days later, I had the skates at home. I put them on: instant pain. Either I'm a hobbit, or my feet had expanded. I needed the extra-wide size.
Phone/Call Center: I called Sport Chek and explained the issue. The call center employee found the exact same skates in a nearby store and reserved a pair for me.
Store: I visited the store, tried on the new skates (heaven on my feet!), and made the exchange. Then we did the heat-forming process, in which the skates are heated and form-fitted to the wearer's feet. (It's possible to do at home, but significantly more difficult.)
Five touches, four media: In summation, we touched the brand five different ways, in four different "media," including delivery and in-store, and twice on mobile. Alternatively, the brand touched us, making itself available -- and top of mind -- via both promotions (which are important) and availability (which is critical).
Omnichannel in action
That's a true convergence of capability: seamless digital and in-store experiences. And that's what I call Taps, Clicks, Bricks.
It's been popular to assume that physical stores are white elephants: increasingly obsolete remnants of an earlier age. And it's true, for certain segments of the population, that the combination of e-commerce and cheap, speedy delivery has been irresistible.
But the data suggests that's not a massive slice of the population. And there's evidence from hip young retailers like Warby Parker and b8ta (a physical discovery and trial product center/store) that even young, tough-to-reach customer segments are open to retail in a multitude of media.
How big retailers and brands are winning with Taps, Clicks, Bricks
The trends around mobile, apps, and m-commerce are fairly clear. At the same time, the data highlights that consumers still prioritize physical location as a core method of seeing, comparing, and purchasing products, as well as getting post-purchase support and service.
But as we've also seen, relationship trumps all.
The good news is that different brands in varying circumstances have found multiple paths to success. Here are some noteworthy examples that showcase how different strategies have worked.
Brand spotlight: Citi is mobile-first
Citi is a $2 trillion organization with 3,500 employees, and its customers range from seniors who bank in its 4,600 branches to millennials who bank exclusively via app. All channels are important, Citi's Chief Experience Officer Alice Milligan says, but not equally so.
"We built our solutions to be omnichannel ... that said, some are more important," Milligan explains. "For us I definitely believe mobile is the most important ... and in particular mobile app. We're focused there because of what it enables."
And what does mobile app enable for Citi?
Simple: invaluable customer engagement. And, as a result, stronger relationships with known, understood clients.
"Consumers that bank via mobile interact with Citi seven days a month on average, and for millennials, it's about 10 days a month ... there's much higher engagement," Milligan says. "We had 21% growth among mobile users versus last year ... the highest growth among our competitors."
Brand spotlight: Home Depot covers web + app + store for complete omnichannel
With 2,300 locations and almost 400,000 employees, Home Depot is big -- just like the products they sell. Large items make online ordering and delivery challenging, and have provided a moat against e-commerce giant Amazon and others.
But it's an integrated strategy across web, app, and store that has been the true driver of the company's recent growth.
"Customers move seamlessly between our stores, online, and mobile," says VP of Online for Home Depot Pratt Vemana. "They're using mobile within the store, and texting aisle location from their desktops to their phones."
Interestingly, about 15% of Home Depot's mobile app usage occurs within the company's physical locations.
It may seem redundant to use the Home Depot app inside a Home Depot store, but there is method to the madness, Vemana says. Customers who do are accomplishing multiple tasks on the app, not the least of which is checking their Home Depot shopping lists.
"They are wayfinding, quickly finding the product they want," Vemana says. But it goes deeper than that: "You're ... looking at a product and you want details and reviews ... so people go to the product detail page in the app and interact with product reviews."
While the app is important, Home Depot remains aggressively omnichannel.
A single digital Home Depot experience exists across all channels, Vemana says; signed-in customers can see their shopping lists, saved items, pending orders, and other details across desktop web, mobile web, and app.
Of course, that's the key: signed-in customers. Only when customers sign in can Home Depot provide the experience and resources that customers want. And only when customers sign in can Home Depot get the customer data it needs.
Brand spotlight: Walmart goes from store assistant to shopping lists to home deliver
Walmart is a retail giant with 2.3 million employees and a strong desire to take on upstart online competitor Amazon. Recent acquisitions have bolstered both the company's overall technical capabilities and its mobile chops, and the results have recently become apparent.
Similar to Home Depot, Walmart's app now automatically shifts to Store Assistant mode when opened within a Walmart location, which can be 200,000 square feet or more in size.
Store Assistant gives customers new capabilities, such as locating a product (down to the aisle and shelf) on a detailed store map.
Walmart is also making its in-app shopping list smart, with services that calculate the total cart cost and real-time item stock availability at a given location.
Add it all up, and you get two major wins for Walmart's mobile strategy.
First, if customers use the Walmart app more frequently and in-store, they become more likely to use Walmart Pay. Think Starbucks, the preeminent example of a brand and retailer achieving huge wins in customer loyalty, purchase frequency, and deep customer knowledge thanks to a mobile payments strategy. Walmart is hoping to see the same benefits.
Second, if customers use Walmart's app to shop (building in-app shopping lists) and pay (Walmart Pay), they're just one short step away from ordering online and having their shopping list delivered. In both scenarios, Walmart is incentivizing known customers in two ways: convenience, and lower prices.
Brand spotlight: OceanX is customization + relationship to drive profitability
While you may not know the name OceanX, you've more than likely ordered a product or subscription from one of their clients.
OceanX runs weekly and monthly product subscriptions for 30 top global brands, including retailers and CPG companies. All told, the company's 60 engineers and 40 data scientists generate over a billion dollars in annual revenue through product subscription services -- think along the lines of Dollar Shave Club, Proactiv, and Birchbox -- for their clients.
Interestingly, almost all of that billion dollars in revenue is done via mobile web.
"Our world is all mobile," OceanX CEO Georg Richter says. "Today at least 85% of our orders come in via mobile web ... there are no native apps, just web apps."
Product subscriptions are a unique and recent niche in commerce that bridge the world of physical products with the economics of software-as-a-service business models. Add in a direct, one-to-one relationship with a brand's end customer, and the result is both lucrative and predictable -- enough so that a young upstart named Dollar Shave Club sold for $1 billion to a major brand.
And this niche has unique characteristics.
"Customization is the most important way you understand how happy people are," Richter says. "The more they customize, the longer they stick."
Brand spotlight: Unilever enables research online and purchase everywhere
The British-Dutch conglomerate Unilever owns more than 400 brands, employs 170,000 people, and has annual revenues of over 50 billion euros. Dove, Lipton, and Ben & Jerry's are just a few of the brands that the company says over 2.5 billion people use every day.
"Mobile is now the first touchstone," says Unilever's Global e-Commerce Experience Design Director Ollie Bradley. "We actually need to start with mobile rather than start with
Desktop commerce still accounts for more business than mobile commerce in the U.S., but that's not the case globally. And the U.S. is at the tipping point where m-commerce will soon surpass e-commerce, according to Bradley.
To prepare, Unilever has developed a game plan and set of standards for communications, images, and brands that prioritizes mobile. And also, of course, enable commerce anywhere: on a phone, on a desktop, in a store, via voice, on a social platform, or anywhere else a consumer wishes.
"Research online, purchase anywhere," says Bradley.
Brand spotlight: eBay is mobile first ... but mobile is multichannel
Nearly 400 million people use eBay, spending close to $90 billion a year via the web's original auction site. That's huge volume, and it's accompanied by huge diversity in channels -- even though most of them are mobile.
It starts with apps. eBay's mobile app is critically important thanks to innovations the company has made that make both buying and selling simple.
"We give customers the opportunity to find and purchase an item that they see in a photo," says James Meeks, Head of Mobile at eBay. "Image Search allows shoppers to take a photo on their mobile device and then eBay will quickly search for and surface items that are the same or similar for purchase."
But there are also integrations and other channels.
Mobile web has its place, as the company's "Find It On eBay" feature enables Pinterest, among other shopping destinations, to point potential buyers to goods on the site. Voice-first interactions with AI assistants are available: eBay customers can ask Google Assistant to find products or check the value of an item they want to sell. And eBay didn't forget messaging platforms: Facebook Messenger users can chat with ShopBot to find the best deals from over 1 billion listings, Meeks says.
eBay doesn't operate a physical store. But the company is working on technology that it thinks can appease the desire that a majority of consumers have to physically interact with a product: augmented reality.
"AR technology can bring to life many of the benefits that still drive shoppers to the store, such as trying on clothes, getting inside a car, or seeing home furniture at scale," Meeks says. "In the past, many customers considered these things to be barriers before they were comfortable with completing their purchase, but with AR technology, customers can interact with the products online through computer-generated content. Ultimately, AR should engage e-shoppers and encourage more browsing and inspirational buying online."
Omnichannel is important to eBay, but most important is an integrated, logged-in experience.
"We are focused on making a more personalized, seamless online shopping experience across multiple screens, giving our customers the freedom to shop online anywhere, when they want and how they want," says Meeks.
Summing up: Taps, clicks, and bricks is the way retail is winning
Buying is changing and customer behavior is changing, but the core of successful marketing and selling is not: a close connection with the customer.
The challenge for brands and retailers is to execute on that age-old goal in new ways across multiple channels, many of them mobile-centric, so that customers connect naturally in known, signed-in experiences. Only then can brands and retailers both serve people the way they want to be served and optimize for customer satisfaction, retention, and share of wallet.
This doesn't mean every brand needs to be everywhere.
It does means every brand needs to be available and accessible on the key platforms. More than accessible, even: personalizable, via logging in to get up-to-the-minute information on products, services, and orders.
That's omnichannel customer engagement, and that's the new superpower merging taps, clicks, and bricks: mobile, desktop, and the real, physical world.
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My full report is available, for free, here.