Ecommerce strategies to meet consumer digital expectations

Over the last decade, the retail landscape has changed dramatically. Even before the pandemic, ecommerce was growing rapidly, but the onset of Covid-19 aggressively fuelled company digitalization with the transfer to ecommerce triggering major shifts in consumer shopping behaviours.

Data from Statista reveal that internet retail sales, as a percentage of total retail sales, reached a giddy high of 37.8% in January 2021, up from the more standard 19.1% in March 2020. This was the period when consumers stayed at home while the Delta variant of Coronavirus was at its peak.

However, things haven’t simply snapped back to the way they were before the virus. Statista data shows internet retail sales were still at 27.1% of total retail sales in January 2022. This shows that a great number of the consumers, that found themselves with little option other than to shop online during the pandemic, have decided to keep doing so, awakened to the convenience, choice, and ability to easily shop around that online retail offers.

The more online customers there are, the greater the online competition, making it much more difficult for businesses to pierce through the white noise.

Retailers and brands are now under far greater pressure than ever to invest in their digital strategies to market to customers in the right channels, at the right time and with the right products, and then be able to sell to those consumers with ease.

To do that, and to compete, businesses must first understand the new consumers, and then understand what each of those consumer groups want from the digital experience.

And a new report, titled The World View on Digital Retail's New Consumer Personas, from the World Retail Congress and finance platform Railsbank brings together the latest data and analysis to identify the strategies that retailers need to take to attract and retain today’s consumers, from the digitally native to the recent digital arrivals.

Railsbank co-founder and CEO Nigel Verdon explains that now, more than ever, the challenge for retailers is “how to compete for the new digital experienced consumer with digitally native ecommerce merchants”.

Retail’s four new consumer personas

The report identified four distinct consumers explaining who they are, and what they want:

1.   The Digital Arrivals Not entirely new to online shopping, but pre-pandemic preferred physical shopping experience, but now shop online much more. They are mainly older consumers less au fait with commerce and more used to browsing and buying in shops

2.   The Subscribers Those consumers investing in subscriptions, from meal kits to flowers, who are mainly young, affluent consumers living in densely populated cities.

3.   The Ethical Consumer A group of consumers straddling all age groups, but all of whom are passionate about sustainability. They want products produced, marketed, sold, and delivered in a way that aligns with their environmental and social values.

4.   The Thrill Seekers They tend to be a younger consumer, aged under 25, who has not known a world without the internet or smartphones. Technology is second nature to them, and they are enthusiastic about searching out new experiences.

So, what do these consumer groups want from the digital experience, and what strategies should retailers and brands employ to ensure their expectations and needs are met?

Remove friction and deliver best-in-class UX

Last year, Retail Week surveyed 1,000 UK consumers to discover their favourite retail websites and ‘slick interface’, ‘website updated often’, ‘good product pictures’ and ‘easy checkout’ were among the reasons given for their choices.  

The competition online is now so intense, retailers simply cannot afford to allow friction within the customer journey, as every point of friction has the potential for high volumes of lost sales.

This means investment in ecommerce User Experience (UX) and IT infrastructure is critical. So, what does best-in-class online UX look like in 2022? And what is the framework businesses can follow to create a website that drives repeat traffic?

Take British Airways, a £3.7bn business, and one of the UK’s busiest websites with over 13 million visitors in February alone. Clearly, the aviation industry has been fraught with challenges over the past two years, which has required a laser-like focus on customer experience and user experience (UX) online to stay afloat and grow.

Speaking at Retail Week’s Accelerating Ecommerce Week Summit in March, British Airways digital director Jack Smith explained that fixing “broken” user journeys that flipped customers between its mobile app and website was a priority, as well as investing in its digital team internally. Smith asserted that retailers need to focus on the connected customer journey. “We tend to talk about apps and websites in isolation, but it is a big ecosystem out there, so we need to work out where people are coming from.”

The ease of navigation, search, and transaction that Smith talks about is particularly relevant to consumer group, Digital Arrivals. These are consumers who are not used to shopping across digital channels, so every point of friction is a potential for large volumes of lost sales. Helping them to find what they are looking for, easily, is critical.

“I’m a big believer in behaviour-led personalisation. So less about ‘I can work out who you are’, and more about understanding what you’re doing at that point in time,” he says. Smith’s approach at British Airways was to put a big focus on A/B testing at scale and the organisation now runs thousands of variants on its homepage to get to grips with customer behaviour, as well as investing in AI and machine learning, though more on that topic below.

Retailers can’t simply expect Digital Arrivals to shop their websites in the same way their existing, digitally savvy consumers do, and so need to ensure the UX is clear with easily navigable sites, with content tailored to this new group. However, the right messaging for this audience is critical. Digital Arrivals look for ‘traditional’, ‘kind’ and ‘simple’ messaging from the brands and retailers they shop with, according to BAV Group analysis.

Step into the Metaverse

The metaverse is set to change the way consumers live and shop. While this won’t be a key investment area for Digital Arrivals, it will be critical for the digitally native Gen Z, especially the Thrill Seeker consumer group, with some opportunities too for both the Subscribers and Ethical Consumers.

The race is already on among brands and tech giants to develop this immersive digital reality and the economic opportunity it presents. In 2019, Alibaba launched its own virtual world, Taobao Life, now a successful revenue driver for several retail brands; while in December 2021, Nike acquired virtual fashion platform RTFKT. Burberry, Dolce & Gabbana and Louis Vuitton have also all partnered with gaming platforms.

Speaking at Retail Week’s Accelerating Ecommerce Week Summit, Alibaba head of fashion and luxury for UK, Spain and Northern Europe and head of US luxury, Mei Chen, explained: “The metaverse for me is about merging that online and offline experience. From the comfort of your own home or office you can play, you can work, you can transact. It’s a new playing field, not only for customers but for brands to interact with them more”.

Unlike in the West, where NFTs are bought and traded, in China retailers can gift them to consumers, but they cannot buy them for themselves, and they can’t be traded. Mei Chen explained that Alibaba’s recent pilots with seven retailers, including Burberry, Coach and La Perla, where the Chinese ecommerce titan selected certain products from the most recent collections to launch as NFTs in the metaverse, included initiatives such as allowing the first 1,000 customers to acquire the NFT along with their physical purchase.

For some brands it has even become a key provenance check – if the consumer owns the NFT for the product from the retailer, they can prove the authenticity of their item. “We realised around 10-15% of customers, particularly the younger ones, were aiming to acquire the NFT more than the physical product, which is a really interesting trend we are seeing in China,” she adds.

This is the kind of innovation The Thrill Seekers want to see. Chen revealed that Alibaba started this pilot scheme as a marketing project to allow brands to engage with consumers without having a commercial sales goal. However, they realised at the end of the journey that brands made a really high ROI, around 7-8 times their initial investment.

“As you dressed up your avatars you would share that on social media with your friends, and if you wanted to you could buy the full look in real life, so it was a great way of blending the physical experience with digital,” says Chen.

Use data and Ai to enhance customer experience

Personalisation is nothing new, but now data and its application using AI will help retailers offer a service incomparable to those who don’t and appeal to diverse consumers from the digital native Thrill Seeker, through to the ‘trepidatious’ Digital Arrival, and the convenience and product discovery hungry Subscriber. Meet that need and they will repay with loyalty.

Data and AI are not new trends within retail, but the ratcheting up in competition in the online space and within the wider retail market means they are now becoming the differentiator between winning and losing businesses.

Critically, the use of predictive AI has taken retailers beyond analysing historical data to determine future trading patterns, and even beyond understanding real-time data to be ready for tomorrow. Instead, buying strategy can be based around projections of how consumers will shop. Merchandising decisions can be informed both by what the data says about how consumers will shop, as well as external factors such as weather patterns that may affect product categories such as fashion.

AI can also be used to combine data sources, such as scanning the market and customer behavioural trends to establish pricing architecture and make intelligent decisions on when to discount or promote.

The Very Group digital customer experience director Paul Hornby explains the online retailer has been using predictive AI to personalise the customer journey in terms of product and UX, understand customers’ propensity to lapse from being an active customer and to think about the interventions it can make to prevent that, as well as trying to understand when a customer is going to need to replenish an item.

However, it is important to strike the right balance between using AI to personalise and not forcing customers down rabbit-holes. “We see it as a pyramid, and at the foundation is creating a seamless experience for everyone,” says Hornby. “We try to avoid pushing people in an echo chamber. We don’t want to just show them what they have done, viewed or purchased in the past. They need to see our wider offer.”

Data and AI have the power to win the spend of all the consumer personas. Thrill Seekers want curated, exciting experiences. The subscription economy is essentially based on using data to take the headache out of everyday essentials and product discovery for the customer. Similarly, for the Ethical Consumers, it can help them find the brands and retailers that best fit their sustainability and ethical needs. While for the Digital Arrivals, data can be used to make their journeys as simple as possible.