Re-defining e-commerce sales

What defines an e-commerce sale? This may seem like a question with an easy answer, “sales made online”, right? Not necessarily. A recent article in the Harvard Business Review by Darrell Rigby titled “The Future of Shopping” points out that the influence of e-commerce on sales is not simply about the daily report you receive about yesterday’s on-site sales.

The article asks “is it an e-commerce sale if the customer goes to a store, finds that the product is out of stock, and uses an in-store terminal to have another location ship it to her home? What if the customer is shopping in one store, uses his smartphone to find a lower price at another, and then orders electronically for in-store pickup? How about gifts that are ordered from a website but exchanged at a local store? Experts estimate that digital information already influences about 50% of in-store sales and that number is growing rapidly”.

These scenarios and many others highlight the blurring lines between e-commerce and traditional bricks and mortar shopping, yet this is a topic that many traditional retailers have not begun to understand.

This blurring of the lines creates a host of issues for traditional retailers. How do you market to consumers in the digital age? How do retailers properly track what sources are driving revenue? In terms of marketing to digital age consumers it is apparent that the days of viewing digital channels, in-store marking and traditional advertising in isolation are coming to an end. A focus on creating the easiest and most rewarding shopping experience for the consumer will need to take precedence across retail marketing, creative and advertising agency offices with a focus on coordination of messages.

Marketing efforts will specifically need to increase for mobile and tablet devices as consumers are becoming increasingly savvy at utilising the power of these devices as tools help them shop for the best deals.

The article points out one particularly interesting example of this, citing Tesco’s brand in South Korea called Home plus. In an effort to “bring the store to the consumers at a point in the day when they had time on their hands… Home plus covered the walls of Seoul subway stations with remarkably lifelike backlit images of supermarket shelves containing orange juice fresh vegetables and meat, and hundreds of other items. Consumers wanting to do their food shopping could simply scan each product’s Quick Response code into their smartphones, touch an on-screen button, and thereby assemble a virtual shopping cart. Home plus then delivered the physical goods to the shopper’s home within a few hours”.

In addition to changes in the way retailers market themselves, another aspect of the traditional retail approach must also be addressed. How will various stores, the retailers’ website and marketing channels be credited for sales?  Most retailers still approach sales reporting on a per store basis with the website being counted as one store. As the example above clearly shows this approach is not necessarily relevant in the digital world.

If one store, for example, has a great sales staff but limited stock, it is very possible that consumers could be purchasing online as result of their experience in store. Who gets credit for this? Shouldn’t the great sales staff get some credit? Retailers that think of how to model a reporting system that gives credit where credit is due will likely be ahead of the game in relation to their competitors. They will be in a better position to encourage sales staff to meet all of the consumers’ needs rather than only the needs that can be met within the confines of the walls of the store.

As we can see the definition of an e-commerce sale is changing at a rapid pace and will continue to do so over the coming months and years. Retailers that look ahead and begin to address these changes no are likely to be at big advantage in the years to come.

Blog post by Mike Jennings Director at Reform