The Ultimate Omnichannel for your Online Business

Lets-get-physical

In these exciting days of technological proliferation, many businesses have taken the multiple retail channel route: they have integrated online sales into their brick-and-mortar operations. Online retail channels include regular online sales through desktop- or laptop-optimised websites, as well as mobile sales and mobile app sales. A prime example of a brick-and-mortar store that has embraced omnichannel retail is IKEA. Not only does IKEA have 351 physical stores in 46 countries (as of December 2014), but they have a website, a mobile site, and a mobile app through which customers can browse, purchase and return items. Undoubtedly, turning omnichannel has broadened their already global reach, making shopping a convenient and pleasant experience for all, regardless of their preferred mode of shopping.

But what about businesses that have a rich online presence but do not have a physical store? Are there any benefits of opening a store? Can it boost profits? These are questions worth considering if you operate an online business, and are flirting with the idea of going brick-and-mortar.

The Benefits of Opening a Brick-and-Mortar Store

Even though industry analysts question the effectiveness of high street retail to boost company profits (due to the tendency towards the online omnichannel approach), there is still plenty of merit in opening up a physical store. According to a Tech Crunch survey, 78% of consumers still prefer to shop in-store, and claim to spend 6 times more in-store than online. This is definitely saying something!

Here are a few more reasons why you should consider opening up a physical store:

Multi-sensory experiences

People like to see and hold what they are considering purchasing. Some people like the smell of books, and prefer to leisurely browse the aisles of a book store and take their time rather than searching online. Maybe they don’t know which book they want, and want to see what jumps out at them – this is way harder to do online. Also, it goes without saying that when shopping for clothes, most people like to try on an outfit to make sure it fits and looks good before spending their money.

Under this umbrella is the growing trend of innovative and interactive technology. Canada’s Unique Solutions Design Ltd. has created the Me-Ality body-scanning stations, which are popping up in retail clothing outlets in Canada and the US. Customers who are constantly frustrated by the lack of consistent sizing across different stores can have their body scanned, and receive a unique barcode containing their measurements and a customised shopping guide. It is just a matter of time before these start appearing in stores and malls around the world. Again, this is something you will not be able to find online… yet.

Social interaction, relationship-building and personalised customer service

Humans are social creatures, and we like to interact with other people and build relationships. Although it is not impossible to build strong and lasting brand relationships with customers if you only have an online retail business (such as Etsy), nothing compares to seeing a smiling face of an employee when you are a customer. Going into a store and being greeted and waited on by an actual human can be a positive experience that can determine whether you will transition from one-time customer to returning customer.

Furthermore, a brand can provide immediate and personalised customer service in-store. Online businesses can provide terrific customer support, but again, nothing beats the immediacy of service in a physical store.

Improved logistics and lower shipping/storage costs

Some merchants are opening physical stores that are also being operated as warehouses and shipping centres for their products. One of the biggest online stores, Amazon, is doing just that. They will be located in New York City, in the same neighbourhood as Macy’s, across from the Empire State Building, and will be using their new physical store as a mini-warehouse with a small inventory for same day shipping within the city. This store will also make returns and pick-ups so much easier for local Amazon shoppers in and around the Big Apple. Other online businesses can expect some or all of the same benefits by opening up brick-and-mortar stores. Rather than returning a product via the post office, customers can go right to the physical location of their favourite webstore, and return or exchange a product easily and without the long waits.

Something to Keep in Mind

Although the thought of opening a physical store for all of the aforementioned benefits sounds exciting, you still have to keep in mind that although you may be able to increase your market share by reaching a broader customer base through the omnichannel approach, your profits can decrease due to promotional expenditures and operational and administrative costs associated with a physical store. However, with more intensive distribution of your products thanks to opening a new channel, you might see the opposite happening. If you are willing to take the risk, you may some glorious returns.

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Access Over Ownership: Who Benefits from the New Consumption Culture?

access over ownership

Some are calling it a paradigm shift. Consumers are redefining their relationship with products and seeking greater value and a more fulfilling experience. Because of the nature of online content delivery, this shift in values has resulted in a concept of access-over-ownership, with consumers abandoning the idea of owning content (i.e. the iTunes model) and instead are paying for the right to have access to content (i.e. the Spotify model).

Online content providers have no choice but to adapt to this shift. It’s a consumer-driven trend, so businesses that fail to respond to it will fail to survive it. The biggest challenge to you as a business owner lies in how you can meet the demands of your consumers without harming your suppliers. In an age when consumers are less willing to purchase content directly from its producers, you as a provider need to facilitate that transaction in a way that allows all three parties to benefit.

Payment Models

Access-over-ownership is essentially a subscription-based model. With the ubiquity of free content online, publishers have had to experiment with different ways of making money from their properties. To use newspapers as an example, the New York Times has chosen to hide their content behind a paywall, while the Guardian has gone the route of advertiser-funded free content.

There are other models between those two extremes, the most common of which is the “freemium” model. Freemium products or services provide free access to the bulk of their content but require consumers to pay for additional access. This can take the form of hiding premium features behind a paywall or limiting how much free content a user can consume within a certain timeframe before they are required to subscribe.

An Industry-Agnostic Phenomenon

The discussion of access-over-ownership and what it means for content producers most often centres on either the newspaper or music industries because those are the industries where the traditional ways of making money have been most disrupted. But the shift in the way people pay for products is far more wide-reaching than that.

One of the most successful is, of course, Netflix, where consumers don’t pay to watch particular films and TV shows but instead subscribe to have access to a database of entertainment to choose from. Even Apple is challenging their own iTunes, where consumer purchase and own their products, with Apple Music, an access-over-ownership service to compete with Spotify.

The trend also extends beyond just content – for example, car-sharing services such as DriveNow have cropped up all around the world, revealing how young consumers today are more comfortable paying to have access to a vehicle when they may need it, as opposed to owning a vehicle of their own.

Selling Loyalty

One of the most fascinating side-effects of access-over-ownership is enforced loyalty. When buying products, consumers can compare prices and other variables among several different retailers and then make a one-time purchase for the product. But when paying for access, the consumer is committing to that particular content provider.

What is yet to be determined, as some of the early innovators like Netflix begin facing some formidable competitors like HBO Go, is whether enforced loyalty will prove to be as long-lasting as traditional brand loyalty, which had to be earned and maintained as opposed to subscribed to. What consumers want is seamless and instantaneous access to content, and brand loyalty today may not stop people from switching to whomever can best provide that.

Quantity Over Quality

While content providers are facing their own challenges in adapting to this new paradigm, where does that leave content producers? On the one hand, with the amount of affordable (or free) tools and services available online, it’s cheaper and easier than ever for writers, musicians, filmmakers and video game developers to create and distribute their products. On the other hand, consumers are increasingly unwilling to buy and own those products.

At their best, content providers act as a middle-man between producers and consumers, so as consumers increasingly value access over ownership, producers are reduced in their ability to sell directly to consumers and some of their potential revenue is being scooped up by those providers. At their worst, content providers are struggling to stay afloat and losing their ability to pay for good content, leaving talented producers out of a job.

Just a Phase?

It certainly looks as though access-over-ownership is steamrolling our traditional consumer culture and that there is no turning back, but that may not entirely be true. A Dutch start-up is showing the world that there is still a desire to purchase content even in the online newspaper market.

Blendle, an app that allows consumers to circumvent digital subscriptions and instead pay for individual newspaper and magazine articles in micropayments, just last week announced that it has signed up every major national newspaper in Germany – 18 dailies and 15 weeklies. Blendle’s success shows the world that access-over-ownership is not the only option and that consumers are still willing to buy individual products.

A Proven Model

Even with this crack in the veneer of access-over-ownership, paying for access is a model that will always be a part of the marketplace. It isn’t going away, so producers, providers and consumers of content all need to be prepared to work with (or around) this model.

As traditional attitudes about loyalty, ownership and the value of content are challenged and redefined at a rapid pace, those who can anticipate the minds of consumers, like Spotify, Netflix, DriveNow and Blendle are going to succeed where others fail. But as the market grows increasingly competitive, consumers faced with more choice will only become more discerning, and you as a provider can only succeed by strengthening your ties to your content producers and delivering the highest quality content to your customers.

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