Online shopping, or eCommerce, is a growing trend and although still relatively small in terms of business share, it has retailers and brand owners talking about all around the world – whether in domestic or global travel retail (GTR) markets.
The ability of the consumer to access technology is a key enabler for online shopping. A recent Euromonitor white paper (‘Consumers in 2016’) highlights the existing position and the difference in penetration across households based on the type of technology device used between developed countries and emerging countries (see below).
Thus the access to technology is proportionally significant everywhere, with smartphones acting as an enabling technology with a disproportionate impact in emerging countries.
Now if the technology platform is established and already in place, will consumers turn into online shoppers? According to Criteo’s analysis of shopping data in Q.4 2015 the following applies:
This growing trend towards eCommerce is here already, enabled by an increased penetration of technology across households and facilitated by the multiple devices available. So will this eCommerce growth be taking place via the retailers or directly from the brand owner to the consumer (B2C)? Or will it be a combination of both depending on the category or proposition offered?
This week’s The Grocer magazine touches on this topic and calls out the current position across retailers and brand owners. It also highlights the term to ‘disintermediate’, i.e. to cut out the retail middleman and sell straight to shoppers. Why? Because being able to sell directly allows as the article states “for end-to-end brand experiences and relationship building; and the chance to reclaim margin and assert greater control over pricing and promotions. Perhaps above all, it gives brand owners access to hugely valuable consumer data and shopper insight.”
The Grocer, ‘Goodbye middleman?’ article for full subscribers only
Amongst the brand owners, Procter & Gamble (P&G) seems to be at the forefront of direct to consumer selling. It has taken a stake in UK’s Ocado in 2008, in the US site ofwww.pgshop.com it sells to consumers, it has a close relationship with Amazon via the Amazon Dash buttons mechanic and it launched an online subscription service, the Gillette Shave Club. Other brand owners have followed suit in order to exploit, trial and learn more about their potential shoppers – examples in the Spirits industry include Diageo’s Alexander & James online shop but also the Glenfiddich Gallery from William Grant & Sons. Each of them offer something unique to consumers in order to convert them into online shoppers.
But in today’s world, our life is continuous whilst the consumer shopping experience is anything but – thus the desire and talk about a multi-channel or omni-channel approach by retailers and brand owners. It is about continuity of the consumer’s own experience, potentially even beyond a single brand’s universe. All experiences offline or online should converge and offer a seamless total experience. Easy? Certainly not and perhaps a point to consider further.
The higher risk to established retailers of disintermediation probably comes from online retailers – whether start ups or the mighty global juggernaut that is Amazon.
In the Global Travel Retail channel, Amazon is already being talked about and being more visible than in the past, as these articles in the trade press have highlighted recently:
Amazon steps up presence at Cannes
Amazon’s eCommerce dominance highlights GTR challenge
Dufry’s Díaz warns of online threat to business
The truth is that those retailers that connect best with the consumers whilst leveraging the power of brands, will be the winners in this omni-channel retail arena. The lesson for retailers in the GTR channel is to start engaging now with brand owners in order to work jointly on the overall proposition to turn consumers into shoppers: sharing more data, developing joint insights and working more closely in creating new platforms and programmes to reach the consumer whilst increasing penetration and overall sales – which will benefit all involved. Otherwise the ever growing risk is here already and coming our way fast…
Note: All views on this post are my own and may not necessarily reflect the views of my employer. Others quoted on this post were used for context only.
This blog was originally published in February 2016 on LinkedIn