The line between e-commerce and physical retail has blurred (for the better)


It has taken the best part of a decade, but retailers are finally moving beyond the distinction of physical and e-commerce operations.

This kind of blurring can only be beneficial, but – at least in Australia – breaking down the walls between physical and online could take some time despite the fact that an Australia Post Consumer Survey 2017 report found that 35 per cent of people anticipate they will buy more online in the future.

Target Australia recently detailed how it is tackling the challenge. On a recent webinar, Target Australia’s head of digital experience Sally Lennox said that “more and more what would once have been seen as ‘online’ is no longer about online – it’s about commerce and serving the customer.”

“We’re here to serve a customer and it doesn’t matter where that order has come from. If you’ve got product to sell and a customer who wants it, and you can provide a high level of service, that’s what we’re here to do in retail,” she said.

When a customer places an online order with Target, it is fulfilled in a retail store that is closest to the customer’s home, instead of at a central warehouse. Theoretically, this should mean the customer gets their order much sooner, and also helps the store understand what customers in their area want.

For the moment, Target still has separate online and store-based teams, but they are now working far more closely together to understand each others’ interdependencies and work out how best to serve the customer.

The same sorts of questions are being asked by retailers worldwide, suggesting it is only a matter of time before similar treatment of sales becomes more widespread.

US technology retailer Best Buy is following a similar model. It has a sizable footprint, but is also heavily investing in customer experience across all channels.

Like Target, it is leveraging its network of stores to complete purchases and fulfill orders, as well as provide services that make its brand central to acquiring and understanding new technology.

This strategy has recently led to increased revenue from a more streamlined customer experience and better utilisation of physical inventory and locations.

However, while you may think of Best Buy as a physical retailer, the way in which goods are purchased changes how they are accounted for in this physical vs. e-commerce representation.

For example, products bought online and picked up in store (BOPIS, for those in the retail industry) would count toward the e-commerce figures, despite the fact that it’s the physical store that is central to fulfilling the customer experience.

And since this is part of the strategy retailers are using to maintain relevance, combining the ease of online purchasing with the immediate fulfillment of a local store, forcing those transactions to sit in one place when they clearly span both worlds misrepresents what is driving these results.

Retail success from blending digital and physical is a common thread shown in recent earnings reports from other retailers as well, but as you look across their statements, e-commerce isn’t broken out as an “other”; it’s an equal part of the strategy.

Retailers are well aware of the need to infuse digital into their physical experiences as well as the fact that their stores, once seen as unnecessary overhead ready to be crushed by the tsunami of e-commerce, are now a way to differentiate with digital-only retailers, with exclusive products, in-store expertise, and the immediacy that even courier shipping can’t provide.

This point is emphasised by analyst firm Gartner. They have started promoting the idea of replacing “multichannel” and “omnichannel” with “unified retail experience”, since the focus is becoming less about the individual applications and technologies and more about how retailers use the collective insight, context, and design elements to anticipate customer needs, understand their preferences, and create an ongoing relationship across their entire brand. Essentially, the experience is everything.

A key part of getting that personalised experience right is customer insight, which has been built into individual digital technologies but is more complex across other channels.

High-performing retailers are using digital technologies like cloud-based unified communications to maintain the context of conversations with consumers across phone, online chat, email and social channels. This is also generating a huge amount of data that can be put to use to personalise customer service and better understand what it is that customers want.

Whether allowing retailers the ability to more quickly address customer inquiries through greater context and access to expertise, it’s not the technology that’s driving these results, but how it is being used to prioritise a more customer-centric experience, no matter where that interaction takes place

Much like the modern retail consumer experience, the internet has become so deeply ingrained that we’re not even conscious of where it begins and ends.

Consumers just shop wherever they want using the medium that’s most convenient with the retailer that best fits their needs.


Brendan Maree is Vice President of Asia Pacific for 8×8.