The ‘Ex’ Factor Of Offline Commerce

What can visiting a physical retail store offer a consumer that shopping online cannot?

Often, the answer to that question can tend towards negative aspects that actually favor the latter: having to deal with traffic, weather or — god forbid — other people. Putting pants on, standing, engaging in general mobility … all things that, at one time or another, even the most active of consumers don’t feel like doing. And — thanks to the advent of online commerce — these are all things that they largely don’t have to do in order to shop.

Beyond the distinct advantage of convenience that eCommerce holds over brick-and-mortar retail, the area of product offerings is, at best for physical retail, a draw — if not another tick in the “win” column for online. Not only is just about anything that a person can buy in a store also available on the Internet, finding out that a product is currently out of stock at an online retailer is a lot easier for a consumer to take than getting that bad news after they’ve made the trek to a store. (And clicking — rather than walking or driving — to another location is, naturally, a significantly less onerous task.)

With all that online retail seemingly has to offer over physical retail, how is it, then, that physical retail is still part of the omnichannel conversation? Why is the very category that this article falls under on PYMNTS named “Online-to-Offline (O2O) Tracker” and not, say, “Online-to-Even-More-Online (O2O2) Tracker?”

It’s because offline commerce has something that online commerce does not. Call it the “ex” factor — “ex” being short for experience.

Savvy retailers — whether they began as physical stores before expanding online or vice versa — understand that the customer experience at a brick-and-mortar location, if sufficiently attended to, provides a substantial potential differentiator over the competition that is not available in the online space. Adding all the bells and whistles that one can to a retail website (hopefully, not literally; that would evoke a Geocities-ized nightmare) doesn’t change the fact that, at the end of the day, browsing-and-clicking is browsing-and-clicking. Outside of variances in the basic competency of a site’s online checkout process and mobile-friendliness (which are larger differentiators in cross-border commerce than they are within the United States), the customer’s tangible experience of online shopping remains essentially the same from one retailer to another.

That is not to say, however, that to build an effectively unique in-store experience, retailers can disregard the ever-increasing propensity of digital elements. On the contrary, those are essential factors in the new world of offline commerce — i.e., the one in which physical retail stores have to compete with online offerings, as well as with one another — to be incorporated in designing experiences powerful enough to draw customers away from their desktops and laptops (but they can keep their mobile devices handy) and into the world.

Barneys New York, for one, kept all of these factors in mind during the planning of its flagship store in Manhattan’s Chelsea neighborhood, which just opened this week.

As Digiday reports, the new location — which marks a return for Barneys to where it was first founded (at the time, as a menswear brand) in 1923 — features a beacon network that communicates with shoppers’ smartphones, a sales staff equipped with iPads to help them better personalize the shopping experience (as well as offer mobile checkout) and same-day delivery, an offering that is fast becoming table stakes in the realm of online-to-offline commerce.

Expanding in the other direction (but with the same purpose), meanwhile, is Amazon, which — having opened its first brick-and-mortar bookstore in November of last year — is rumored to be planning hundreds more.

Regardless of the exact number of locations that Amazon intends to open, many observers are questioning why the very (digital) company responsible for effectively annihilating bookstore chains (hang in there, Barnes & Noble!) would quite literally move into that space.

The answer, very likely, is the customer experience.

As Mad Mobile News posits, the eCommerce titan recognizes that a general failing of online retail compared to physical retail is the lack of ability for shoppers to interact with products firsthand before they make a decision to buy. Establishing locations that would offer consumers that valued opportunity would address that gap for Amazon, thus strengthening the retailer’s position along the O2O chain.

Even the automotive industry — which deals in products that can’t exactly be dropped off at a consumer’s doorstep with ease — is not immune to the pinch that offline retailers are feeling from online competitors.

Joseph Michelli, the author of a book on the history of Mercedes-Benz, told 1to1 Media that the biggest competitors to the luxury car company “in terms of experiences” are not other auto brands but “companies like Google and Apple,” which put technology — both in the online and offline spaces — at the forefront.

“Mercedes-Benz understands the importance of evolving with its customers and is a leader in the use of technology to create seamless experiences,” Michelli tells the outlet. “The challenge for all brands is how to take all their data and turn it into knowledge and how to help people go from online to offline experiences.”

As the saying goes, you can’t put a price on experience. But that doesn’t mean retailers won’t try.



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.