Know This About Modern Consumer Behavior or Forget Reaching Your Revenue Goals
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Lots of special dates are just around the corner. July 4 is almost here. Then, it’s back to school and planning for Halloween, Thanksgiving, Black Friday and Christmas. Next thing you know, you’ll be looking back on 2016 sales numbers trying to figure out how to do it all better next go around.
That’s how quickly the retail industry moves. Sure, summer is a slow period, but it’s a great time for planning. If you are anything like most of the retailers in the country, the first half of this year hasn’t been the most profitable. The crazy thing is, economists don’t know why. We are years out from the great recession. Retailer discounts are at an all time high. People have money to spend. So, why aren’t they spending it? Or if they are, why aren’t they spending it with you?
The answer to that question is rather simple. Consumers aren’t shopping like they used to. The solution to that problem is where the complexity comes in -- and very few brands are properly addressing it.
Today’s modern shopper is omni-channel. Now, before you throw your hands up in frustration at yet another trendy term, let’s be clear. Omni-channel is real, and it’s disrupting your sales funnel. In short, omni-channel describes a retailer or a shopper experience which exists across all possible sales channels, including, though not limited to, brick-and-mortar, independent websites, online marketplaces, wholesale operations and more.
Why does any of this matter? Because it doesn't to the shopper. Consumers today will buy anywhere and on any device convenient to them when they have the desire to push that buy button. It doesn’t matter to them if they are in a physical store, online, on Facebook, at work, or heck -- even drunk.
By the time that shopper has gotten to the purchasing decision mindset, they have already done their research -- unless it's an impulse purchase, and then desire to buy is truly the only factor that matters. They have compared prices. It's very likely if they are buying in your store, they compared your prices to your competitors right there on their phone. Some of them even walked out after buying a similar item on Amazon for cheaper, with delivery later that afternoon.
This is the retail reality you live in. This is the retail reality your brand must compete in. And, if you want it to win -- or at least have a chance -- you need to go into the game with your head on straight. This means you need to have data and a clear channel strategy. After all, distribution is the first step to profitability. The next step is conversion -- actually getting someone who found you to like you or your product enough to take some kind of action, ideally buying your goods.
Let’s start with distribution.
Years ago, Amazon was seen as the enemy to small businesses and haute couture brands alike. These days, Amazon Fashion is booming and most luxury retailers have a presence on the marketplace. It’s been a slower adoption for small and mid-size brands. After all, there’s more to lose if Amazon was the enemy. But it's not.
Amazon has done a fabulous job of earning consumer mindshare -- and the company will continue to innovate and improve on that. This is no story about David and Goliath. This is the moment you join them because it is impossible to beat them -- nor would you want them to lose.
Amazon can be your best channel. Nearly half of all shoppers begin their product search there. And Amazon’s algorithms reward unique products and brands with extraordinary customer experience (i.e. fast shipping and low prices). Sure, there are challenges to be had, but that’s true of all channels. If you aren’t on Amazon, you are losing out on even competing for half of all online product searches.
Beyond Amazon, there are dozens more channels -- eBay, Google Shopping, Facebook, Pinterest and Wholesale (opening your smaller brand up to the bigger ones, i.e. Nordstrom's and Macy’s and Anthropologie, for instance). Each of these channels requires a strategy, and each one will have a different return investment. But all of them will increase your chances of discoverability. No consumers today shop through only a single channel. That is what makes discoverability any brand’s biggest challenge. If you succeed, though, it will be one of the most financially rewarding accomplishments. That is, given you can get those customers to actually finalize checkout and pay.
More than 60 percent of customers abandon carts across the web. This means that more than half of customers, no matter the channel, are putting a product in their basket and then X-ing out of the page. Is this a case of shopper ADD? Did the Hulu ad just end? Did the Uber drive just drop them off? Did they get yet another group text from their gaggle of friends, and are now scrambling to turn off the notifications lest the phone vibrate incessantly for the next half hour? Yes, it's probably all of those things.
Online attention spans are less than that of a goldfish. Plus, some customers abandon cart intentionally, looking for an email from you offering discounts and coupons to encourage purchase. Yes, they’ve learned your game. How do you get them back? Follow them around the web with retargeting? Send an automated email reminding them on their forgotten basket items? Both are good ideas for starters.
Here’s the key though -- you have to make them remember you, and similar to the strategies in the last paragraph, there is only one place on the web you have full control over your capability to do that -- your website.
Ideally, your products are cool enough to make a consumer remember they wanted it. That’s how you’ll win back customers or close a sale on marketplaces or social channels (that, or you have the lowest price). But customers these days, especially millennials, are spending more money than ever on experiences. If your brand wants to grow and cash in on that trend, then you must offer what they want.
Did you know that Apple considers its stores to be its “largest product?” That’s right. Apple stores aren’t there just to sell. They are there to engage, to inspire, to draw you into the ideal world of Apple and leave you wanting more.
Lowe’s is doing the same. In some of their stores, you can walk into a large box with an tablet in hand and redesign your entire bathroom -- and then purchase those goods either in-store or online, whichever you prefer. It’s called the Holoroom, and Ikea is launching something similar.
The experience is what ultimately converts customers. And no, not necessarily in that first interaction. You have to build trust. You have to build a relationship. Ecommerce hasn’t changed that. In fact, with so many selling channels, it’s only made it ever more important to do so.
Merchandising for various channels.
How, then, can you put all of this information to merchandising use? Well, you need to know how consumers shop on various channels. Here you go:
Marketplace shopper characteristics and trends
Shoppers on marketplaces search for products online more often and spend more online, too.
The marketplace shopper is more likely than the average shopper to enjoy taking their time to find the right deal (62 percent v. 54 percent).
The marketplace shopper is also more likely to research brands before making a purchase (61 percent v. 48 percent).
Average amount spent per year by consumers on marketplaces: $488.
What marketplace shoppers buy: Book, movies, music (44 percent), clothing, shoes and accessories (43 percent), computers and electronics (34 percent), health and beauty products (29 percent).
Large retailer shopper characteristics and trends
Shoppers on large retailer sites are high spends and are less likely to shop elsewhere.
Those who have ever shopped at a large online/offline retailer are less likely to research brands before making a purchase (53 percent) than those who shop at small/speciality (58 percent), marketplaces (61 percent) or category-specific (61) online retailers.
Average amount spent per year: $409.
What larger retailer shoppers buy: Book, movies, music (28 percent), clothing, shoes and accessories (47 percent), computers and electronics (32 percent), health and beauty products (24 percent).
Webstore shopper characteristics and trends
Shoppers on webstores enjoy shopping and visit a variety of retailers.
Small/speciality online shoppers spend the majority of their budget elsewhere — a yearly average of $501 on marketplaces and $404 at omni-channel retailers.
Those who have ever shopped at a small/speciality online retailer are more likely than the average shopper to say they enjoy shopping (55 percent to 45 percent).
Average amount spent per year: $182.
What webstore shoppers buy: Book, movies, music (15 percent), clothing, shoes and accessories (27 percent), flowers and gifts (15 percent), health and beauty products (19 percent).
Use this data to inform your merchandising strategies. Test it out before the holidays begin. Use this summer to optimize your copywriting, pricing and photography. Figure out what experience you will offer come fall. And most importantly, have fun! It’s a crazy interesting new retail world we live in. Between AI, robots, drone and same day delivery -- nothing is off the table.