Exclusive Q&A: Retailers must prepare for permanent COVID-19 changes
A discount online auction marketplace sees new customers and increased returns as some of the components of the “new normal” retailers must adjust to.
Chain Store Age recently interviewed Sree Menon, COO of e-commerce platform Tophatter Inc., about the shifts COVID-19 is causing in the omnichannel retail environment. Menon advises retailers to build an infrastructure that can withstand and adapt to rapidly changing consumer sentiments and preferences.
How have consumer online shopping habits changed since the pandemic began?
Undoubtedly, the COVID-19 pandemic has sent shock waves through the retail industry. As of April, U.S. e-commerce orders went up by 110%, and 63% of U.S. shoppers bought categories of goods online they hadn’t previously. At the same time, manufacturing in China took time to recover and global freight capacity declined by 35%, so the cracks in the ‘anything, anytime’ retail model started to show.
People who once only shopped online discretionary purchases are starting to use e-commerce for necessities like consumable goods and paper products. And millions of people are just now entering the world of e-commerce. It's our job as retailers to support this new class of shoppers: providing them deals, especially during these hard economic times, bringing the joy of shopping to their mobile devices, and meeting their specific needs—which are different from consumers who are already e-commerce devotees.
Another big change is to returns. It just makes sense that the more someone buys online, the more they will need to return or exchange, since they couldn’t experience it in person first. But of course, this creates additional challenges for retailers.
What trends are likely to last beyond COVID-19?
Even when we’re ‘back to normal,’ normal will look very different, but most of the shifts won’t be a surprise. For example, think about consumer spending. With the economy looking shaky, consumers will likely trim discretionary spending and look for deep discounts and promotions. Think about your own online shopping habits when you’re in consumer mode—a good bargain is always welcome, especially when your budget is tight.
Which businesses thrive and which fail probably also won’t come as a shock. The COVID-19 pandemic also accelerated changes we were already seeing in the retail industry. Many traditional retailers were already contending with heavy debt, tight liquidity and negative profits before foot traffic dropped off dramatically due to stay-at-home orders. Consumers have been signaling that their needs were changing for a long time, and this crisis has made the message clearer than ever.
The retail businesses that remain standing will not be left unscathed. Brick-and-mortar brands will expand their online footprints to meet customers where they are now and e-commerce brands will develop smarter and more agile logistics and fulfillment strategies to compete. Everyone will likely have to play a balancing act as they weigh tradeoffs between convenience, speed of transaction, value to customer, and cost of operations.
One area that you should really pay attention to is that of increased returns. Returns can kill a business, so retailers need to find channels to liquidate returns and move excess inventory. Many of the traditional brick-and-mortar options like T.J. Maxx and Marshalls don't have online presences, so there’s a big opportunity for fresh perspectives, and it’s one of the things we’re most excited about at Tophatter this year.
How can retailers best integrate their stores and websites in the "new normal"?
One of the strongest differentiators between strong retailers and failing ones is the strength of their omnichannel strategy. Expect to see consolidations, partnerships, and strategic acquisitions as companies build out effective omnichannel business models.
Customer information collected on your website will allow businesses to develop more robust and targeted customer engagement, and even more importantly, reengagement and loyalty, tactics and smarter real-time forecasting. Use this rich data to analyze your shoppers’ behavior and create customized incentives for every stage of the customer experience.
Retailers should be prepared to invest in their end-to-end supply chain. Look at Amazon, which has reshaped the traditional supply chain model with sophisticated information technology, an extensive network of warehouses, multi-tier inventory management, and excellent transportation. You don’t need to have Amazon-level logistics immediately, but the efficiency of your supply chain can make or break your bottom line.
Do customers want to browse online and buy in-store? What are the trade-offs between different tiers of shipping and in-store pickups? Can you handle brick-and-mortar returns and online without losing money? Optimize for real-time communication between and visibility into your supply network and to your shoppers.
This is a great opportunity to look at your business through fresh eyes. Try on the perspective of a shopper—what kinds of experiences and communication make you feel served best? Look at it from a customer service perspective—what are their blockers? At Tophatter, we have a huge network of marketplace sellers, and we’re always running tests as sellers ourselves so we can experience every side of the business ourselves. Even when we don’t like what we see, we walk away better at our jobs.
If you approach these challenges with conviction and enthusiasm, it’s really an exciting time to learn and grow. Don’t be attached to old answers about what your value is and how you get things done. With the right outlook, these challenges can be extremely energizing.
Are there different ways of collecting data or types of data retailers can collect?
Digital retail empowers access to data that goes much deeper than high-level location and demographics. We can collect data from every touchpoint on the customer journey, from their first ad impression to checkout and beyond.
Information about purchase history, timing, device, social media activity, browsing history and more make it possible to customize communication and personalize offers to optimize conversion rate and reduce costs. Use the data available to you to build rewarding, sticky user experiences that strengthen your brand, with or without in-store interactions.
Even if the product you sell is great, customers won’t come back if they don’t have a satisfying experience or if they forget about you as soon as they check out. Successful e-commerce businesses are the ones you want to tell all your friends about.
What is the single most important step e-commerce retailers can take to survive and thrive during COVID-19?
Continue to push online sales and use this period as a valuable opportunity to dig into your processes and procedures to find inefficiencies and to grow your brand. Change is a constant, and it’s happening faster than ever. The way you’ve always done things may not work anymore, but you have a remarkable opportunity to build stronger customer relationships and more agile, diversified supply chains.
Think of yourself like a surfer. The waves will rise and fall, but if you have built a strong core, good balance, and you get back up every time you fall off, you can ride what comes to impressive success.