When Shopify laid off 10% of its employees in July 2022, CEO Tobi Lutke emphasised the continued dominance of offline as a channel: “We bet that the channel mix—the share of dollars that travel through ecommerce rather than physical retail—would permanently leap ahead by five or even 10 years…It’s now clear that the bet didn’t pay off. What we see now is the mix reverting to roughly where pre-COVID data would have suggested it should be at this point.”
In a world where purchase continues to remain an omni-channel experience, unified commerce i.e., a personalised, consistent experience on every channel (online or offline), as a strategy for consumer-facing brands, whether retail or F&B, is critical.
Whether for digitally-native brands or offline brands which are undergoing a transformation, I wanted to look at some of the use cases from the Unified Commerce experience in developed markets such as the US and China that might be applicable to India and SEA and some challenges that remain.
Personalising customer experience
I order the same Bubble Tea at Chi Cha San Chen every week and even after two full years, I have to repeat the same four lines each time: Oolong tea, with bubbles, less ice, no sugar. This is a small inconvenience for me, but one that is easy to turn into a delightful experience by using a customer identifier at the start of the ordering journey: my phone number or better still, a tap of my credit card. It isn’t entirely inconceivable that the same experience carries over to an online ordering platform, which knows exactly what I order offline to help me checkout faster.
Even better would be a more personalised loyalty program. Today, all customers at Chi Cha get a free tea after 12 orders. What if my tea has a better margin profile and the store can afford to give me a free one after every 10? Could the store add up my offline and online orders from a loyalty standpoint? Could the store upsell a product that most customers-like-me, also like?
Inspired by US-based Square, Singapore-based Waffle POS is trying to solve some of these challenges for Food & Beverage (F&B) outlets in SEA. Their goal is to enable F&B outlets to “hyper-segment” customers to enable chains to attract and retain customers more effectively — whether they order offline or online. Within a year of launch, Waffles co-founder, Auston Quek is seeing a 16% increase in transactions in outlets that use the Waffles product versus those that don’t.
Despite the promise, a few challenges that remain are: (i) the ability and willingness of a small business to pay for software in emerging markets; and (ii) the integration of online and offline orders, data and behaviour.
Enabling multi-channel sales
Some products — especially premium products and subscription products — need a multi-channel sales approach to convert customers. Take the case of Peloton, the American exercise equipment company. Peloton regards integration and coordination across all sales channels to be critical to its customer journey because over 37% of their customers purchased a product or service in a different channel than where they originally engaged with Peloton.
The Peloton showrooms allow customers to experience and try the products and to maximise immediate conversion, Peloton uses the Stripe terminal at showroom checkout to instantly activate subscriptions offline and set up recurring payments. Peloton’s ability to activate subscriptions in-store has resulted in increased in-store conversions.
In this context, it might be worthwhile to analyse the various customer journeys a brand enables and think through how the experience can be made more uniform whether in terms of branding, assortment, browsing, trials or checkout to improve conversions.
The biggest challenge here is, of course that all channels might not be owned fully by the brand thereby limiting the ability to customise customer journeys and interaction in the same way.
Seamless returns and refunds
In the context of standardising customer journeys, another pain-point is seamless returns and refunds. Can you buy a product offline and return it online, or vice-versa?
Below is the returns policy for DTC brand Allbirds. The channel of purchase does not make a difference.
On the other hand, a company like Sugar Cosmetics in India only allows returns of products purchased online to be done online: From their website: “To return the unused goods, please email us at hello@sugarcosmetics.com and we will walk you through the process till completion.”
What makes it possible for Allbirds to create this seamless experience is by owing all of their customer channels (own stores, own brand.com) and using the same checkout technology stack online and in-store. An order is the same entity in the system regardless of whether it was created online or offline. This is made possible by using say a website builder (e.g., Shopify) along with a payments partner (e.g. Stripe) online as well as offline with Stripe’s terminal product for offline checkouts.
For brands wanting to standardise experience, an important consideration would be the cost of owning all channels and thereby limiting distribution/reach, versus aiming for mass distribution versus experience. Looked at from this lens, it makes sense that customer experience for a shoe-brand like Allbirds is more standardised than say a brand like Sugar Cosmetics.
These are some of the many promises and challenges of Unified Commerce. At its very core, it is a promise to the customer to be treated as a hyper-personalised segment of one regardless of how the customer chooses to interact with a brand — online or offline. Where a brand lands in terms of creating a unified strategy depends on a few factors:
- Value of the product (usually high-value products need more personalised touch-points)
- Cost of owing / standardising all the consumer touch-points
- Prioritisation between distribution and standardisation of experience
The author is a partner at Saison Capital. This article has been republished from Medium.com.
