Will ecommerce drive the brick-and-mortar store completely out of business?

August 10, 2016 Christine Wong

Ecommerce technology catapults & drone deliveries are grounded.

Looks like Amazon won’t be using drones to deliver packages in the United States after all.

New rules at the U.S. Federal Aviation Authority have thwarted that plan, for now. Here in Canada, however, the retailing giant is reportedly still testing the drone delivery concept. Even Canada Post recently acknowledged it’s exploring the idea on paper, if not yet pilot testing it in Canadian skies (sorry, we couldn’t resist an aviation pun).

Although the drone delivery idea remains up in the air, there’s still something huge hanging over the entire retail sector: ‘the Amazon effect’. By offering a wider assortment of goods faster and more conveniently than ever before on the Internet, Amazon isn’t just disrupting the retail industry; it’s redefining it.

Last year, Amazon’s Prime Now service introduced free same-day delivery to 20 major U.S. markets for orders placed on Christmas Eve.

If you’re a procrastinator, that’s a lifesaver. But if you’re every other retailer on this planet, it’s a tough act to follow. The speed, scope and convenience of Amazon’s ecommerce experience have sent expectations soaring to nearly impossible levels among customers of all retailers everywhere.

The linchpin of the Amazon story, of course, is its use of online technology. Here’s a look at how the rest of the retail industry is using various technologies to meet sky-high customer demands in a business landscape forever altered by Amazon.

Mobile

Mobile brings a new level of convenience to shopping, allowing consumers to ‘showroom’ (comparing products and prices online while already browsing inside a physical store). Mobile enables anyone with a smartphone or tablet to buy or research products and prices from almost anywhere, at any time.

Recent research by PwC suggests mobile has gained deep traction with younger Canadian consumers aged 18 to 24. Fifty per cent of them use mobile tech to access store coupons or promotional codes, 42 per cent use it to compare prices, 39 per cent use it to research products and 19 per cent use it to pay for their purchase.

Analytics

Analytics data can provide retailers with insights about customers’ demographic background, real-time location, past purchasing and browsing behaviours, along with their preferences regarding products, channels and pricing.

Merchants can use these insights to personalize the shopping experience by sending each consumer customized coupons and offers tailored specifically for them.

Predictive analytics, in particular, is revolutionizing inventory management and pricing. By analyzing the impact of variables like pricing, weather and store hours on historical purchasing patterns, merchants can adjust the volume, selection and pricing of their inventory to meet probable demand more quickly and accurately than in the past.

IoT

Some retailers are using Internet of Things (IoT) and geolocation technology to send offers or marketing content to shoppers’ mobile devices when they enter a store or pass by a certain beacon or billboard. Again, the technology gives retailers the power to create an experience that is more relevant to the shopper’s interests and location in a real-time context.

VR/AR

Bloomingdale’s, Top Shop and Neiman Marcus are among the retailers trying out augmented and virtual reality tools to help customers ‘try on’ clothing.

Neiman Marcus has tested the MemoryMirror in fitting rooms at three of its U.S. stores. Cameras and sensors in the mirror create a virtual 360-degree view of what an outfit would look like on a customer, allowing them to ‘change’ clothing items instantly, compare different looks side-by-side and replay or share a video of the experience.

Changing channels and the fall of brick-and-mortar

Numerous Canadian merchants – including office products retailer Grand and Toy, and Vancouver-based renovation supplier BuildDirect – only exist online.

Will ecommerce drive the brick-and-mortar store completely out of business? No one knows yet. But new research suggests omnichannel retailers can’t afford to neglect their physical stores.

In a recent TimeTrade survey, only one-quarter of retail customers said they receive a consistent, personalized experience across channels. The call centre, in-store and social media channels were ranked as providing the poorest customer experience, cited as worst by 51-, 26- and 23 per cent of respondents, respectively.

It’s crucial for all retailers to embrace digital innovation. For those that continue to maintain physical stores, however, ignoring in-store customer experience could prove to be a costly mistake. 

Read about the rise of robots in retail, and how this fascinating tech is changing the warehouse environment.

About the Author

Christine Wong

Christine Wong is a journalist based in Toronto who has covered a wide range of startups and technology issues. A former staff writer with ITBusiness.ca, she has also worked as a reporter for the Canadian Economic Press and in broadcast roles at SliceTV and the CBC.

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