Tech Vision: The emerging world of bricks and clicks
By Manoj Menon June 8, 2015
- How technology is driving the transformation of the retail industry
- Bricks-and-clicks can help consumers get best of both online and offline shopping
THIS month we take a look at how emerging technologies are likely to impact our favourite past-time, shopping.
At the onset of the Internet revolution, the shopping or retail industry was amongst the first to be touted to have the most transformative impact of any industry. It was a key driver of the dotcom bubble.
It’s been over 20 years since one of the first e-commerce companies, Amazon.com, was founded. By 2014, sales for Amazon have reached approximately US$90 billion.
The e-commerce trend is catching up around the world. In the last three years, we have seen a spike in growth in Asia. There are a plethora of participants, from online shopping marketplaces to specialised stores.
The competition has moved from being local to being global. The biggest beneficiary is the consumer. Some of the key market drivers include:
- Convenience: 24x7, anytime, anywhere;
- Ability to compare prices;
- Infinite choice;
- Consumer reviews; and
- Personalisation and recommendations.
As we look into the immediate future, mobile and social commerce are emerging as next growth areas. They will get better integrated into the overall e-commerce platforms.
By the end of 2015, various estimates suggest that e-commerce will account for approximately 7% of total retail sales. With continued strong growth, these numbers are likely to reach about 19% of total sales by the year 2025.
The biggest opportunity, however, lies in the integration of online and offline commerce, a trend we call ‘Bricks and Clicks.’ This presents immense innovation opportunities for companies.
How can traditional world retail companies bring about the benefits of e-commerce in the existing shopping environment? How can online companies bring about the benefits of a real-world shopping experience onto their platforms?
A closer look at our current shopping experience reveals there are several unmet needs or levels of dissatisfaction.
- Trying out various clothes and getting the right sizes, colours;
- Greater degree of personalisation in recommendations and service;
- Comparison with the best prices in town or even around the world;
- Feedback from friends or family on the product (customer reviews);
- Queuing up at check out and simplification of the payment process (Amazon patented the One-Click purchase process for online); and
- Instant gratification, which is difficult in an online environment.
Let’s start with shortlisting some of the emerging technologies that are likely to play a role in driving this transformation of the retail industry.
- Augmented Reality: This allows the user to experience real world environments, augmented with virtual information. In short, it can be called a mixed reality. It enriches live user experience, acts as an assisting entity to real environments and caters to a wide range of applications.
- Smart haptics and touch: This offers intuitive and efficient user interface for electronic devices using a combination of touch, gesture and physical objects.
- OLED displays: Organic-based display technology which offers high resolution, large viewing angle, and good colour gamut, provides the advantage of high image quality, low power demands, and thin dimensions. A large number of displays will be used across stores to help provide some personalisation, interactivity and information.
- Predictive data: Providing the ability to analyse large tracts of data, and find patterns that can help predict purchase trends to help drive supply chain efficiency.
Some early trends on the use of these technologies:
We have already seen some early innovations around these technologies and new business models.
Home Plus (Tesco) in South Korea was amongst the first to use digital signage to simulate the aisles in the supermarket. It used signage outside train and bus stations. The focus was on bringing the store closer to the consumer rather than have the consumer walk into the store.
Consumers could start their shopping while waiting for the bus or train and continue their shopping on their mobile devices.
We expect that existing digital screens at our homes can also be used to simulate physical store fronts. Companies like Snapshop allow you to visualise furniture in your own living room using your iPhone. This will soon be extended to other display screens.
Amazon’s patent for anticipatory shipping
Amazon, which is now more of a technology company than a retail company, is always exciting to watch for the patents that it files. Its One-Click purchase patent filed in early 1999 really helped simplify the process of buying online.
In January 2014, Amazon filed another interesting patent titled ‘Anticipatory Shipping.’ It is basically the use of predictive models to pre-ship items closer to the warehouse locations or even directly to the eventual recipient.
Amazon even plans to measure the length of time that a user’s mouse will hover around an item to indicate an upcoming purchase.
The integrated bricks-and-clicks environment can help consumers get the best of both worlds. In an ideal scenario, the consumer will start his shopping experience online or through a mobile platform. He will browse through a large number of options and select a few of options to try using an augmented reality solution.
Digital signage and very soon 3D television screens in our homes will enable us to get a good perspective of how the product looks and feels with our persona. The user can choose to complete his shopping at a physical store where he can try the physical product if needed.
Predictive/ anticipatory shipping will most likely mean that a product may be waiting outside our door as soon as we complete the purchase. This complete integrated experience will likely evolve over a period of time.
In the immediate future we are likely to see point solutions being deployed to address the specific challenges. Some of these include:
- Ease of checkout: Technology will enable us to use cameras and sensors to identify what items a shopper has picked and eliminate the need to queue to make payments.
- Digital Personal Shoppers will help provide much needed real-time information on the product, price, reviews and availability to enhance the shopping experience.
- Digital signage/ kiosks: Large digital displays and/ or kiosks will let consumers try out products without necessarily wearing each individual piece.
All of these will be further integrated with new business models around social, co-creation and personalisation.
The digital disruption will necessitate existing retailers to move quickly if they want to defend their current positions in the market place.
Manoj Menon is senior partner and Asia Pacific managing director at Frost & Sullivan.
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