Digital Commerce: Reaching New Customers
I was watching the television thinking about the project I was working on earlier in the day. I thought how much the right tool would help finish the job. It then came to me that I would look on the web to see if I could find the right tool, and once found how expensive it would be.
I went to Google and searched for the tool using the best description I could come up with to define the needed tool. To my amazement, I found exactly what I needed and could have it next day for a lot less than I ever thought it would cost. Instead of spending hours walking my local home improvement store, I unleashed the power of the endless aisle and searched all potential sources to get the tool I needed as quickly and efficiently as I needed it.
Welcome to the new world of digital commerce, where retailers can market the same items to a broad customer base with an image and presentation that best suits that customer group. No longer does a retailer have to develop a single image—they can now micro-market their products to a diverse customer group, reaching them where they are, when they are there.
To execute this strategy, however, a business needs to prepare and be ready to unleash its power. Having this flexibility does not come by chance. It takes a focused team understanding the infrastructure needs and having the components ready and available when called upon, including:
- Content Management: Probably the biggest single component to channel flexibility is the ability to understand the product specifications and deploy it as needed to any channel with minimal effort. The adage of getting it right the first time could not apply more than developing a product management protocol that collects and manages item profiles precisely and completely.
- Inventory Availability: An endless aisle strategy is only effective when there are robust inventory management practices ensuring that only items where inventory is available is presented to a customer for purchase. Once inventory is depleted, the process must be capable of removing the item from availability.
- Pricing Management: Customers often trade service and convenience for price. Understanding the competitive marketplace and that balance point between price and convenience is critical to capturing your selling opportunities. We believe using a very robust market validation of competitive position is critical to responding to pricing shifts and ensuring you are not underpriced.
- Order Management: The business must think ahead and define the response to customer orders and the missteps that may occur. Having a robust order management approach ensures orders are routed to the optimal location, missteps are resolved and customers value your interaction.
- Delivery Optimization: At Tompkins International, we believe that the distributed logistics network provides the optimal supply chain solution to ensure you have the ability to select the lowest cost site to minimize delivery costs and deliver a high service level.
- Branding: Do you sell products that are attractive to teenagers, 20-year-olds and 40-year-olds? Do you present these products with other goods that are attractive to these different demographics? By recognizing the need for micromarketing, you can expand your offering and your selling opportunities. This may materialize in several website formats (i.e. channels) from which customers can buy.
The International Monetary Fund (IMF) in April reduced its 2019 estimate for world real GDP growth from 3.5 percent to 3.3 percent (following 2018’s 3.6 percent) noting the slower growth was prevalent in 70 percent of the world’s economies. At the same time, Amazon reported North American sales were up 20 percent to $38.7 billion, while international sales grew 12 percent to $14.9 billion in Q2 of 2019. Their ability to bring endless aisle is helping position their business to drive growth.
How is Amazon seeing dramatic sales growth when the rest of the world is seeing strong, but tamed growth? How has your business competed in these economic times? Are you seeing price erosion or product and price expansion?
Advent of Micromarketing
As businesses recognize that the world no longer requires them to limit to a single brand and image for all customers, they will unleash the power of micromarketing, which ensures they cater their story to unique subsets to expand their brand. We expect microbrands will emerge where the shopping experience caters the same products to a broader set of audiences.
Best practice microbrands have figured out how to place the appropriate content in front of the ideal target audience, which has made their efforts widely successful. It is today’s version of positioning yourself at eye level in the grocery store or an end cap in traditional retail. It helps you position your products where various target markets show, as they shop.
The historic expectation that customers will shop your website are gone. Customers today are bombarded with social media “recommendations.” The response by the recipients are reviewed to determine future offers and/or client sites to offer.
Are you still using the “Sale of the Day” or “Best Deal Ever” to attract customers? Enhance your long-term position and repeat business by unleashing the power of micromarketing and the endless aisle capabilities. Ensure you position your products where they can get you maximum profit and selling opportunities.