How technology is influencing the shopping experience – Part 2
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Multiple trends are shaping the online shopping experience for customers. D2C brands are gaining ground rapidly across categories with higher personalized choices and prompt digital payments. Deep tech too is fast catching up with IoT, big data, AI and image recognition, chatbots with vernacular text and voice options driving higher penetration levels. Another trend is the traction towards super apps that cover a broad range of consumer sectors. An EY study indicates that online retail adoption is estimated to touch 10.7% by 2024, up from 4.7% in 2019, with the online shopper base in India expected to expand to 220 million by 2025.
We shall look at the factors from the technology perspective that are impacting the retail experience for customers:
1. Brand-affinity
Studies indicate that a large proportion of online shoppers comprising millennials are brand conscious. Further, the easy accessibility to products online with the option to browse and compare alternatives has resulted in a spurt across product categories. A Nielson study shows the jump in average spend of online shoppers since 2018 till now as follows:
• Electronics and accessories: 39% growth
• Mobile and related accessories: 12% growth
• Apparel, footwear, and accessories: 10% growth
• Appliances namely TV, fridge, etc: 9% growth
2. Hyper-personalized experiences
This is being made possible through AI and ML technologies and data analytics integrated with buying trends. An EY study reveals that 77% of customers would prefer a brand that offers personalized experiences based on past purchases or anticipated needs based on customer profiling of age-group, income levels, regional location, etc. Further, it is predicted that by 2021, over 50% of customers would consider it a norm for online retailers to forecast their buyer requirements and make suggestions prior to closing a sale transaction.
3. Omnichannel approach
Besides offline retail, 73% of Indians have indicated that convenience is a priority and that they would be willing to spend more on online shopping including in categories like groceries and medicines. According to an EY study, apparel and fashion have been most flexible in integrating a phygital approach with attractive offers like ‘Exchange of online purchases at offline stores’, ‘Click and Collect’ and ‘Virtual Try before you buy’ etc.
4. Digital supply chains
Besides cost savings, an agile supply chain can significantly contribute to timely order fulfillment and satisfied customers. D2C brands and e-retailers with a presence in perishable goods are adopting best practices like just-in-time inventory management to reduce wastage and save on storage costs. Further, order fulfillment from warehouses located near customer residence or delivery address can boost delivery times while ensuring robust quality.
5. Automated orders and real-time tracking
AI, Big Data and Blockchain technologies can enable real-time tracking of orders and improve operational efficiency. Robust inventory management since the time of order placement, with the updation of records, is vital to ensure timely last-mile delivery and prevention of stock-out situations. Autonomous fulfillment is expected to gain traction in the coming years. With the advancement in robotics, companies might explore self-driving vehicles and aerial drones that deliver goods to customers at their doorstep with transit between the fulfillment centres and consumers’ destinations. While AI may be deployed to manage the logistics and efficient routes, blockchain may be harnessed to ensure a secure supply chain with delivery to the right person.
6. Mobile commerce
With a surge in mobile ownership and the explosion of apps, multiple transactions are being effected on the mobile phone, presenting a huge business opportunity in the mobile commerce space – both B2B and B2C. By including targeted content and products suited to the customer audience, companies can use data analytics to boost sales and offer a seamless shopping experience for customers.
7. Vocal for local
Hyperlocal e-commerce is a trend that encourages purchase transactions from neighbourhood stores. Technology tools like geolocation and contextual marketing with AI/ML functions can enable local shops to estimate optimum time slots for delivery, monitor order status, and improve customer service levels. Alternatively, local shops can launch apps with details of fresh grocery products and pricing with pre-decided delivery times and locations. It is estimated that 1.2% or a value of US$10.5b of grocery sales in India would move online by 2023.
8. Super-apps
Super-apps promises to be the one-stop-shop for all consumer needs- from groceries and essentials, medicines and healthcare, online retail, digital payments or even financial services. The goal is to build a community of loyal consumers and provide a superior customer experience, at optimal costs.
9. Vernacular era
Studies indicate that only 15% of the population in India are conversant in English. A vast portion of rural India and a majority of the population are well-versed and comfortable communicating in the regional language. An EY report reveals that the local language internet users are expected to jump to 400-500Mn by the end of 2021. Further 75% of internet users prefer content in regional languages other than English. Many retailers and brands have recognised this missed opportunity and are rapidly scaling their vernacular presence through dedicated websites and apps in regional languages based on the location of the buyer. This would provide a seamless shopping experience to consumers and help tap the latent demand. It is estimated that the volume of e-tailing customers using Indian languages would jump from 42 Mn in 2016 to 165 Mn in 2021.
10. Purpose above profits
Besides business considerations, today’s consumer is more well-informed and conscious of the value and purpose behind the brand. With deepening social commerce and high social media activity, consumers are well-aware of the sustainability practices and ESG focus of companies and their products. A Deloitte study indicates that 42% of millennials deepened a business rapport owing to ESG reasons, with 37% stopped buying a product due to ethical causes and 36% advocating a product due to its ethical standards. A Capgemini study indicates that 79% of consumers are changing their purchase preferences based on social responsibility, inclusiveness, or environmental impact.
Concluding thoughts
The digital payments space has played a key role in making online shopping convenient, easy and quick for customers. According to an EY study, from INR 2153 Tn in FY20, the sector is expected to cross INR 7092 Tn in FY25. In the coming days, one can expect that digital payments would witness a further digitalized, touchless avatar consisting of voice payments enabled through bots and a surge in pay later options. The key drivers would be mass affordability, flexibility in repayment and instant purchasing power in the hands of online consumers.
