The post-COVID world has led to a lot of confusion surrounding physical and digital sales. How can brands make the most out of these changes and challenges?
It is no secret that the global market changed during the pandemic. Much like how the Industrial Revolution imputed changes in Western society’s values, shopping habits and the distribution of people and resources, the pandemic has done much of the same between 2020 and 2022.
People who never shopped online — or, at the very least, were reluctant to — did so for the first time. Amazon reported a 38% increase in sales in 2020. And in a sink or swim move, major retail businesses invested in online storefronts and omnichannel marketing strategies to keep customers.
Now that we’re edging out of the pandemic, the questions popping up include: how and where should brands make goods available for consumers? Will customers predominantly shop online now? What does the future of physical storefronts look like? How will online and physical shopping coexist?
At CMSWire, we decided to look into these questions.
Outlooks for Digital and Physical Sales
In-store shopping was a popular choice pre-pandemic because consumers could get an item right away, return the product if necessary and there was more perceived safety in the transaction.
The pandemic, however, changed 67% of shoppers’ habits, according to NielsenIQ. And 92% of people who tried online shopping in 2019 became ecommerce converts. (McKinsey) Part of the reason for this change was because, during COVID, businesses made a point of attempting to negate the cons of online shopping, instead turning to safe transactions, easy returns and fast shipping.
Morgan Stanley predicted that the ecommerce market could increase substantially in the coming years — growing from $3.3 trillion today to $5.4 trillion by 2026. Other sources, however, have a more conservative outlook on post-COVID digital sales. Insider Intelligence, for example, predicted a 16.1% growth over this current year.
With predictions like this circulating and people returning to physical stores over the last several months, which of these suggested outcomes is more accurate? And what does it mean for your business?
For companies purely online, digital sales indeed still seem to be rising — even in countries where online shopping was popular pre-pandemic. But it would still be wise to play it safe by not expanding your business too quickly, as some previous increases in the market may have been overestimated.
Annie Wissner, CMO for Avenue 10 and VP of marketing for High Level Marketing, agreed with this sentiment. “My personal view is that overall, ecommerce will continue to expand and grow, but that companies need to be thoughtful on how and where they invest to support this future growth.”
She pointed to Shopify laying off 1,000 workers (10% of its workforce). Tobi Lütke, Shopify’s founder and CEO, said in a memo that the layoffs were due to consumers resuming old shopping habits and pulling back on the online shopping that fueled the company’s recent growth.
For businesses wanting to maintain a physical presence, this can seem like good news. But while it’s a boon for certain brands that people are physically shopping again, numbers still aren’t as close to what they were pre-COVID, according to Harvard Business Review. Physical storefronts will still have to work hard for their customers — perhaps even harder than they did pre-pandemic.
Related Article: Is Ecommerce the Antidote to Ongoing Retailer Challenges?
A Shifting of the Purchase Point
When talking about this subject with John McClymont, who has 15 years of experience in distribution, he said it’s all about the shifting of the purchase point (referring to the physical location where consumers decide whether or not to buy a product).
“Before the pandemic, stores held the advantage on the purchasing point because you could go out and have what you wanted fairly quickly” and be assured that you could physically return the product if necessary, said McClymont. But he added that most customers don’t actually need the product immediately.
“Now,” he continued, “consumers have been trained to shop online for the last three years, and they’ve become familiar with it. With how easy it is to purchase, just a tap of a button, with the product delivered to your door and returns as easy as they are, online stores now have the advantage over physical stores.”
With both online and physical stores having their own cons that need to be navigated in different ways, it’s reasonable to start thinking about how companies can overcome these problems.
Omnichannel Customer Experiences Lead to Sales
This is usually where discussions around hybrid business plans come in. In the past, businesses would typically skew one way or the other: more resources poured into their physical stores and less into their online ones and vice versa.
Now in 2022, it seems appropriate to pour equal resources into both sides of one’s business. The internet is not going away anytime soon, and the aforementioned digital sales are only going to increase. This is even more relevant when one considers that Gen Z, the most technologically literate generation to date, will soon start participating en masse in the economy.
Yet, at the same time, people are still going to want to shop for things in physical stores.
How will businesses balance both storefronts? And how will these stores direct traffic to each other? There are a couple of ways to think about it.
Focusing on Omnichannel Connections
Before COVID, having an accompanying app might have sounded extreme and unnecessary depending on the business. Now, many companies are considering it or have partnered with a company that has one — like InstaCart, Caviar, etc. — to provide better services.
This option may work well for some businesses, especially those in retail or data, but Wissner cautioned against relying on apps as the main source of digital traffic for stores.
“Personally, I see mobile app fatigue among consumers,” she said. “Unless someone is a loyal shopper to, say Amazon, or they have a favorite food delivery service, people prefer not to be bogged down by downloading more mobile apps.”
Instead, said Wissner, companies should adopt an omnichannel strategy that utilizes existing apps, like social media, text and multimedia messages. “That way, they reach people directly on their mobile devices with apps they already use regularly.”
Regardless, if a company does decide to develop and use an app, having a good website for your company with clear point-of-sale options is non-negotiable going forward.
Omnichannel and Seamless Experiences
Ultimately, what customers care about is a seamless and personal customer experience, whether your business is physical, online or both.
Due to the pandemic, customers have come to expect a level of fluidity and ease between online and physical interactions. We’ve seen iterations of this through QR codes, digital vaccine cards for checking into venues, ordering online to pick up items in person later, social media giveaway campaigns and more.
These expectations won’t go away anytime soon. Society is only becoming more and more technology literate, yet customers like to still be physically grounded and crave a personal touch.
One of the ways to provide an excellent customer experience — besides the ones that have already been mentioned — is to have an omnichannel marketing strategy in place. By embracing omnichannel, companies can intentionally prepare for customers to enter into their sales funnel from any point while still providing a personal touch.
And due to the information overload that customers face, it may actually steer them back to your sales funnel. If done correctly, omnichannel could help your sales increase up to 10% or more according to Harvard Business Review.
Wissner had some great tips on how businesses can implement omnichannel strategies:
- Abandoned shopping cart programs encourage shoppers to return and make a purchase. Since these instances are common and growing daily, it’s essential that any business making sales online has a comprehensive strategy in place to increase purchase conversions.
- Customer loyalty programs recognize your top customers and encourage them to continue to buy. You can offer special discounts, inside track information or early access to sale items.
- Customer surveys give customers the opportunity to express their thoughts and recommend modifications. The key here is to share survey results with participants and demonstrate to customers that the feedback was used.
McClymont, on the other hand, had some words of caution. “Distribution, inventory and logistics have obviously been an issue during the pandemic, and it will continue to be. Customers make more returns when shopping online, which then messes with the inventory and how a company chooses to ship and fulfill an order. If that affects a customer’s wait time or they are unable to pick up their order, the purchase point will be given to another company.”
Wissner agreed, saying it is paramount for companies to track their inventory between business channels.
“The key is to embrace a digital tracking system if you’re going to have any online retail experience,” she said. “This ensures all inventory is digitally scanned and kept up-to-date in real-time.
“If companies don’t want to invest in this technology, then I’d say, it’s going to be increasingly difficult for them to straddle these two worlds in a way that doesn’t alienate and frustrate customers. One recommendation is to reduce the amount of inventory on the online storefront so that it’s more manageable.”
Related Article: Extensible AI Is Key to Delivering Great Omnichannel Experiences
Final Thoughts: Digital Sales in a Post-COVID World
This is the year that businesses can finally come out of the wildness that was the pandemic and determine where best to focus their resources. Any business looking to maximize its sales, both digital and physical, should consider some of the ideas above.