The rise of the “Physical + Digital = Phygital” Stores and Commerce.
"Phygital" is the new-born strategy associated with the retailers who have adopted an online presence in addition to their previous physical retail store. The most important purpose of introducing this technique is to make the existing brick & mortar defend the eCommerce effects.
Monday May 27, 2019,
7 min Read
This revolutionary integration of internet to the world of physical commerce has enabled a brand new experience for the customers and for the retailer him/herself. There have been many retailers which felt that adopting a phygital approach would bring in better and successful business.
Naturally, there will be an ocean of customers waiting outside your store. More the customers, lesser will be your focus towards inventory, and hence will come inventory automation into the picture.
Why move online from physical stores and vice versa?
Retailers moving from in-store to online
Ro Bhatia from LimeLight says,
“I don’t see inventory as a major challenge for retailers trying to move online, though there are certain adjustments to make.”
The challenge for retailers going online is how to compete with the new crop of direct-to-consumer brands built from the ground to sell online. These “digitally native, vertical brands” (like Glossier, Warby Parker, Casper, Ritual Vitamins, and many others) were built on technology that didn’t exist when many in-store retailers were founded.
Retailers going online need to:
- Leverage this technology to improve their in-store experiences
- Use their stores as a unique asset that most of these new brands don’t have
If they look at their online and offline businesses separately, they won’t be successful.
Walmart is a great example of a big-box retailer implementing a successful online strategy. Their online sales grew over 40% last year. They drove growth by adding more than 700 in-store locations for online shoppers to pick up merchandise. For Walmart, the benefits are threefold:
- They cut shipping costs, making their online business more profitable
- They make their online store more attractive to shoppers who want the convenience of in-store pickup
- They bring online shoppers to stores, potentially driving up in-store purchases
When expanding online, they’ve made acquisitions to get expertise and technology from young brands, purchasing ModCloth, Bonobos, Moosejaw, and Hayneedle.
Retailers moving from online to in-store
Retailers with thriving online businesses who want to go offline face a whole host of challenges. Opening stores require expertise in staffing, commercial real estate, cash flow, assortment & inventory management, and other domain areas where online businesses don’t have experience.
Many online businesses grew based on a “test and learn” philosophy, which works online -- but doesn’t when you’re making a commitment to open a brick & mortar store.
Warby Parker was founded online in 2010 and now has 64 in-store locations. They are a great example of a successful online brand opening stores, the right way.
They started small with showrooms and popups. One of their first pop-up campaigns was an 18-month tour in a converted tour bus that went to 15 different cities. At each city, they showed up at 3-4 locations to see which was the most popular -- a way to continue their online “test and learn” philosophy instead of going full on and opening a store right away.
They used online data from their existing customers to open stores in areas with high concentrations of loyal customers, increasing their chances of success.
Stores turning into fulfillment centers - Saddleback Leather
Dave Munson, the CEO of Saddleback Leather says,
“We had strictly been an online direct to consumer business for 15 years and just recently opened our first store. Thousands of customers have told us that they wanted a store hold and feel our bags so they could make a better decision on buying one of our expensive bags.”
If you are a manufacturer cum retailer, you have to make sure that your customers are taking a feel of your product before they purchase it. Dave had put in all his leather bags online for purchase, and as he said that the customers couldn't feel it, so they backed off from making a purchase.
Dave then added,
“Since we have opened our store, we have sold far more bags than we ever could. And a surprise to us is that people are finding things that they didn't know they needed because they saw it on the shelf.”
There is a growing trend of brands with loyal followings to open destination stores. As they are strategically opened in the right geographical locations, each store becomes a fulfillment center to save on shipping and offer one- and two-day delivery, thus competing with Amazon. The beautiful thing about this is that it is forcing mediocre companies to either step up their quality or their brand experience. If there is nothing noteworthy about them, then opening its own brick & mortar is a fool's errand.
The story behind how Wishibam welcomed phygitization...
a case study...
Let's see how Flore Dutronc describes the falling of physical commerce at Wishibam,
“We started from the observation that today's trade needs to reinvent itself. Indeed, physical commerce is falling, and online sales are exploding. And we do not want a world where shops close in favor of huge warehouses owned by e-commerce giants. Why? Because Charlotte (CEO, Wishibam) comes from a retailer family and grew up watching her grandmother run her store in Paris. Has always seen her succeed in sales because she took the time to listen and talk to her customers.”
Flore, on how Charlotte ‘zoom(dle)ed’ her retailing journey...
“2015 took over an online sales application that was intended to be the Shazam of fashion, Zoomdle. This one didn't take off, and very quickly did Charlotte transform it. Zoomdle didn't take on because the customers were lost. They would take a picture of a garment, come to our eShop and then nothing. For clients, there was not enough interaction and they felt left out. That's when Charlotte thought about her grandmother and all the advice she heard her give.”
Was ‘Zoomdle’ a bud out of which ‘Wishibam’ bloomed?
“Zoomdle became Wishibam and saw the emergence of a Shopping Assistant service available via chat 24/7. And the sauce took on. Customers rediscovered online shopping and conversion rates rose rapidly.”
“Building on our success with our B2C site, we have decided to support retailers and real estate companies. In 2018, Wishibam fully digitized ‘The Village Outlet’ (shopping center) and became the world's first phygital outlet.”
We delivered for the center its digital mirror: an eshop on which the customer can find all the offers that he can book or order online.
How important was it to go phygital?
“To go phygital was for us the future and ‘The Village Outlet’ has confirmed our idea since everyone agrees with it: customers have a unique shopping experience, shops see their traffic and turnover increase, and so does the real estate company.”
How is Social Media assisting phygital retailers?
As they say, communication is the best method that can help you attain more influence on your persona. But this is critical; you might never know what exactly your target audience is thinking about and what products might make an impact. Here, social media comes into the picture.
Instagram has always been a perfect platform to visually brand your products, let that be from an outlet or your storefront. In addition to that, Instagram and Facebook, both have introduced an eCommerce feature that enables you to directly put up your product on sale, even though you have a physical store. The customer reach is simply doubled!
The biggest thing, social media can always bring in tactics to action if your business is suffering. You can introduce customer loyalty programs, provide them with good offers on the products that you are selling, execute ad campaigns on social media channels to make the unknown aware of your products.
All you need to do is, bring in the concept of omnichannel marketing, choose a correct social media channel, and your phygital experience will be wonderful.
In the end and ultimately, going phygital not only means that you touch both the offline and online points but also work on customer experiences. Try to digitize your physical store. For example, if a customer needs something and couldn't find, let the store map-app/locator make him/her identify the location of the product and then a quick checkout. Bringing in phygitization is exhausting, but burning calories will eventually show you the results, guaranteed!