E-commerce goes omni-channel (part 1)The development of online technologies for use in brick and mortar stores

E-commerce goes omni-channel (part 1)

Just a few years of e-commerce development have been enough to get customers accustomed to the notion that everything is just a couple clicks away: additional information, product images, reviews, alternative suggestions and of course offers from the competition. Even in the local store, customers are already surfing the web with their smartphone. But unfortunately, usually only to compare the prices: the customer has learned to combine the advantages of being able to see the product with the advantage of the online price (which is often times much cheaper) and then uses this information to barter in the local store. In general, customers are less willing to accept the limitations between the channels, especially when it comes to the difference in price, amount of information, or service. 

What kind of technologies can brick and mortar retailers install in order to create a type of counter-offer – i.e. to offer the advantage of e-commerce information offline in order to create an online-experience and thus stand up to online competition? 

Spying on the customer: In-store tracking

In-store tracking brings the analytical capabilities of e-commerce into the physical store: Which customer goes which way? Where do they spend a lot of time? What do they buy or not buy? Which customer takes one look in the shop window and keeps walking?

The retailer can gather this information for instance via smartphone localization and can then evaluate customer flows and thus optimize his store.  It is also then possible to help facilitate an individual customer's decision to purchase an item that they are looking at by providing additional advertising and tempting offers.

Yet while the retailers may see this as a goldmine of data, the customers remain of course more skeptical, especially in these times of increasing surveillance and information collection. The improvement of the shopping experience is unfortunately not (yet) a compelling enough argument. 

On the one side there are the customers' fears of being bothered with annoying advertisements and losing control over their own information, on the other side there is the desire to have a shopping experience with all of the online comforts: the quality of the information in combination with data protection are decisive for the acceptance and success of in-store tracking. What is needed are “location services”, not “location marketing”: the offered apps have to possess a distinct value for the customers. 

Clandestine spying is legally problematic; according to German law, personal data can only be stored and processed after receiving informed consent. This is possible, yet questionable, by incorporating it into the Terms and Conditions of the app and assuming that the customer won't read it.

Overall the challenge remains to persuade the customer to participate – because information can only be received from the retailer after the necessary app has been installed and opened and the requisite technology (like Bluetooth) has been activated.

Moreover, many dealers currently offer their own apps, thus abetting a fraying of market – this could cause customers to turn their backs in frustration.

In the following blog, I will discuss which technological innovations are currently available to be used for tracking and what advantages they offer.

Dr. Jochen Wiechen

CEO Intershop Communications

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