Retailers spent the past couple of years investing heavily on in-store experience as a way to engage consumers and slow down the transition to a full online retail process. But then came 2020 and the coronavirus pandemic. As we write this post, in the middle of summer, cases are still rising, and some states are going back to restrictions that were placed in March and April to control the spread of the virus. In short, retailers have no clue to when they can go back to a “normal” operation or if they can survive until this new normal is here.
That means the online retail transition that was expected for the next 5 years has just accelerated in a way that no one expected at the beginning of the year. And how small businesses embrace this process in the coming months is crucial for their survival and growth.
Changing consumer behavior
Consumers were already used to buying online. If you look at the evolution of the Amazon stock price from $500 in 2015 to $3,000 today, or the Shopify stock price from $37 in 2015 to more than $900 today, you can see that online purchasing has been a reality for quite some time in the American economy.
However, as customers were stuck at home since March and stores could not open, there is a behavior change that is becoming permanent as states are having a hard time controlling the cases, and even some retailers that opened in April and May are now facing new restrictions on their business hours and operating procedures.
To have an idea how the market share for online shopping has spiked during the pandemic, online sales were $73.2 billion in June 2020, a 76.2% increase over the same period last year (and this number is lower than the $ 82.5 billion reported in May 2020 by Adobe’s Digital Economy Index). This represents a $52 billion (!!!) difference from the sales forecast at the start of the year.
So, in addition to millennials and Gen Z individuals, who concentrated a lot of their purchases online, now Gen Z and Baby Boomers, out of necessity, learned to prioritize an online retail experience, from groceries to apparel. After 4 months, and probably longer, as the best estimates for vaccine are the end of 2020, consumers are building a new habit that will be difficult to change.
For example, if before they thought that the only way to get fresh fruit and vegetables was selecting themselves, but they now see that the Instacart shopper can do an even better job, why would they go back to the old model, which presents more risks and is more time consuming?
Online retail product return policy
Combined with a seamless online shopping experience that even small retailers can now provide with well-established platforms such as Shopify and Wix, the product return policy is probably the biggest factor to close a sale in a digital environment for those consumers who are just now migrating from physical stores to ecommerce.
These customers who were used to go to different stores, try on different clothes, for example, and only buy those items that fit perfectly, must feel comfortable on replicating this experience online. They don’t want to be stuck with a $80 skirt that they actually won’t wear because it’s shorter than they expected.
This does not mean that retailers must have an open-ended strategy that is just not profitable. But allowing time for customers to return their merchandise and facilitating this process is key to establish a smooth transition for those consumers that bought at your physical store and want to remain loyal to your brand in an online world.
And the best example on how to provide excellent customer service for online shopping is not something new. Zappos has been doing it for many years, way before it was an industry trend.
Expanding your online presence
Probably most small business owners reading this post already have a social media marketing strategy and some have already implemented an online store. The barriers for adoption are increasingly smaller. Even if you don’t have the budget now to implement a full ecommerce platform, there are options like the Facebook Marketplace that can be used to generate sales from your existing followers and new users. You can even make sales on Instagram or through messaging apps like WhatsApp or Facebook Messenger. There are no excuses to providing a true omnichannel experience to your customers.
Even in the middle of a pandemic, retail sales are recovering, as shown by the 7.5% increase in May as people are stuck at home and those who maintained their jobs and wages are wiling to spend more of their disposable income.
For local businesses, delivery is another way to differentiate your brand. Short deliveries can be done by bike, something that resonates to those focused on sustainability. If possible, you can also offer delivery in 1 or 2 hours. Maybe there is an extra cost in this procedure but as a small business strategy it can be a competitive advantage that makes you close more sales.
SME’s that can provide this hybrid experience of in-store and online can also offer benefits such as curbside delivery, special appointments to have a personalized experience and try the clothes they chose online in the store, as well as an easier and faster return process.
The Number: 7.5%
The Action: We are not saying that in-store experience is dead. But it cannot survive on its own, small retailers need to strengthen their online presence to cater to a consumer base that has changed its behavior during the biggest economic crisis of our lives. Selling your products online, even as a complement to your brick-and-mortar store is paramount for business success.