The future of (online) retail?
December 7, 2011 Leave a comment
The digital and traditional commerce worlds have been colliding. Look no further than Amazon’s recent offer to award retail shoppers with small discounts for walking into and out of retail stores. There has been an inherent tension between traditional retail players and eCommerce players, as eCommerce disrupted retail and traditional retailers largely took to eCommerce as a defensive measure. Moreover the DNA of the two industries has been vastly different.
There is tremendous innovation possible at the intersection of online and offline commerce if it were driven by an innovator in alliance with B&M retailers. However, since traditional retailers perceivedly have more to lose from this in the short term and have large stores to run, this innovation is currently driven outside-in by eCommerce companies and startups.
What if we were to design commerce from the grounds up, ignoring the above market pressures, and design instead for optimal economics and consumer experience? Today’s technologies could enable a very different and much more efficient system than the one we have today. Consider this scenario: Large traditional stores in expensive locations get replaced by smaller ‘showrooms’ that display sample merchandise or their holograms using the latest technology. You browse through lots of merchandise without having to hike through a maze of aisles. You scan merchandise you like with your smartphone, compare product features and read online reviews. Perhaps you even ask a few friends on social networks and chat with them. You decide on a product you like. Finally after selecting everything you need, you ‘checkout’ at the spot by just tapping your phone at a counter and head back home. Just after you reach home, the products you ordered are delivered at your doorstep from a nearby warehouse.
For many consumers, this solution is a better experience than traditional retail (don’t have to hunt through aisles or carry back large bags; better product information) or eCommerce (can see/touch/try products, shorter lag to product delivery). It is also economically more efficient than traditional retail since it requires lesser use of expensive commerce space. The cost base for such an offering should be more comparable to that of eCommerce. This would imply lower prices for consumers than traditional retail.
The exciting part is that all the technologies for this setup are available today, and we are seeking some early steps in this direction. Walmart and Amazon are clearly fighting towards a piece of this opportunity. So when do we actually see the world move towards a showroom and warehouse model?