When one brings up digitalisation, many retailers have the impression that it is merely about offline businesses going online, because that is just how things are currently.
Tap on a link, add to cart, check out, and wait for purchases to arrive at your doorstep — easy. E-commerce simply seems like the way to go, especially when even schools are actively promoting e-commerce skills to upskill students.
However, having a one-dimensional definition of retail digitalisation might not be as effective as everyone imagines it to be. For one, many have the misconception that e-commerce is meant to be a replacement of the brick-and-mortar retail channel, rather than as an additional channel for the business to generate sales and engagement.
Some businesses also have the impression that the process of digitalisation ends once they set up their e-commerce sites.
Many businesses who have set up their e-commerce presence have, however, learnt that getting web traffic and visitors is challenging, especially at the start. Brands have to invest heavily to drive traffic, and competition is often at the global level.
Even when building on a third-party platform or marketplace with established consumer traffic, competition against other brands on the same platform remains intense.
For SMEs and startups without a strong customer base, investing adequately to drive online impression and traffic is often an overlooked necessity and some default to accepting that their newly set up e-commerce site is just not working out.
According to Singstats, while e-commerce has grown to 15.4 per cent of Singapore’s total retail sales during the COVID-19 pandemic, it became clear that offline retail retains the lion share at 85 per cent.
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Evidently, both channels — online and offline— have a role to play, and retailers big and small can benefit from integrating both of these channels to create a frictionless sales experience.
If anything, one of the clearest lessons from the COVID-19 pandemic is to avoid being overly dependent on a single sales channel amidst regulatory uncertainty. Globally, we already see major e-commerce players acknowledge the importance of going omnichannel to capture the full breadth of retail opportunities.
As COVID-19 restrictions begin to relax, consumers are starting to head back out for retail. We have since observed many businesses re-prioritising towards offline in-store sales or omnichannel sales. After all, statistics from Rakuten Insight revealed that 72 per cent of respondents preferred shopping in-store, so they can inspect products before purchase.
A recent forecast of 2025 Singapore retail sales even predicted that e-commerce will only account for 6.7 per cent despite the growth in online retail. This underscores how offline retail still forms the majority of the retail sector in Singapore, especially given our high population density and good transport infrastructure.
What really works for local retail businesses now
The short answer: going omnichannel instead of focusing on just the online channel. In recent years, many global and local pure-play e-commerce players have begun to take their business offline as they embrace the importance of an omnichannel world.
Some local SMEs that come to mind include local women’s fashion brands Fayth, Love, Bonito, and HerVelvetVase, who all began online but have now added physical stores to complete the omnichannel loop.
The Business Times had also previously reported that omnichannel presence would be the most crucial for businesses in the future. Still, challenges are ahead for many SMEs as they face the need to reconfigure retail operations and service delivery for personalized and curated omnichannel experiences.
From my perspective, one other key challenge might be a lack of understanding about what omnichannel really entails. Going multichannel and omnichannel is different. A key difference is the depth of integration and how unified the channels are. For example, is customer data unified?
Is there a consistent experience for all customers across the board? If the answers are yes, then chances are there is a successful omnichannel structure in place. Some examples of true omnichannel experiences we might be familiar with are: try in-store and buy online, buy online and pick-up in-store, buy in-store and deliver to home and geo-fenced promotions of personalized offers.
In essence, an omnichannel retail approach is far more immersive and cohesive, whereas multichannel retail often involves little or no integration between the online and offline experience. Sephora for example has made use of digital tools to create a personalized customer experience that encourages both online and offline sales.
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Each time a sale occurs offline, loyalty program participation allows for identifying purchases at the individual level and profiling of users for online promotion and advertising. At the same time, operational targets are focused on overall sales as opposed to siloed views on sales for individual channels.
Tackling the challenges of going omnichannel
Through my journey with GrowthDesk and Skale, I had the opportunity to speak with many SME brick-and-mortar retailers who were reliant on a single sales channel. When COVID-19 broke out, many did not have an e-commerce game plan to fall back on, and many didn’t have a customer database of who their existing offline shoppers were.
Those who had also found it difficult to translate offline data into something tangible. Today, few retailers have an established game plan for effectively driving integrated sales across channels.
With Skale, we want to help solve this recurring challenge for the many brick-and-mortar SMEs in Singapore. We are focused on offering a seamless, and easy-to-use all-in-one marketing tool that integrates online and offline sales.
This includes geofencing digital ads to reach and acquire shoppers nearby, since they are the most likely and actionable customers, capturing every prospective shopper’s details through gamified digital vouchers and being able to let our SME partners form a single view of their customers and use the data to effectively drive shoppers to return, be it online or offline channel.
With such data, retailers have a deeper understanding of their customers and are further equipped with a myriad of ways to re-engage them. Some of these strategies might include Whatsapp conversations with salespersons, in-store sales, and e-commerce sales.
Ultimately, this facilitates better resource allocation and promotional efforts for brand building or driving sales uplift.
Going omnichannel might sound complex, but it is the way forward for many retailers, not just in Singapore. The past 1.5 years have been challenging for many retailers, and for that, Skale is currently collaborating with hundreds of Singaporean SMEs ranging from restaurants, to local fashion brands to drive omnichannel sales in its ongoing nationwide Digital Voucher festival, named Voucher Fest 2021.
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Since 2019, the tools we have offered via Skale have worked for many retail brands. Within 1.5 years, we’re also very happy to share that our user base has also grown to 6,500 SMEs not just in Singapore, but across Asia, including Malaysia, Australia, Indonesia, Philippines, and more – a testament that retailers across the board are also beginning to recognise the importance of omnichannel sales.
E-commerce adoption has grown over the past 30 years and is fast approaching maturity. The next wave of offline digitalisation and omnichannel is similarly not just a fairy tale, but a reality that many businesses will begin to face, and we aim to facilitate that journey.
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