Over the past 10-15 years we have heard the term “online vs offline.” The term refers to if someone is connected or not to the internet. For example, currently I am online. When I was doing Yoga, I was offline.
With the emergence of smart phones, the terms online/offline are starting to refer to if you have your phone with you or not.
Online vs offline shopping used to be very clear cut. If I was shopping at the mall, I would be shopping offline. If I was shopping on Amazon, I would be shopping online.
As we move forward the online/offline boundaries are blurring and “offline” retail stores are having to adapt.
*This is because if I am shopping offline I can be shopping online. However, if I am shopping online it does not mean I have the option to shop offline.
As long as I have my smart phone with me, I can shop at the mall while comparing prices online. The “offline” store becomes a space for me to physically see the product, and try it out in order to understand if it is a good fit for me.
Unless the “offline” store is owned and operated by the product manufacturer, I am going to be able to find the product for 10-30% less online. From there it is up to me to decide if I want the product now or am willing to wait 2-5 days.
This is called showrooming and has caused “offline” retailers to maintain inventory, pay salaries and rent while marketing and promoting goods that consumers are not purchasing through them. This business model is clearly broken.
What is being done today?
Big box Exclusivity: Big box stores are demanding product exclusivity from manufacturers. If they don’t get exclusivity, they dont sell it.
Encourage connectivity: Rather than fighting showrooming, retailers are providing free wifi to ensure their shoppers are connected. This way they can track browsing, and match online prices. Savvy consumers can get what they want instantly and retailers can maintain loyalty while generating a smaller profit which is better than no profit.
Merging databases: Stores are now creating their own online shopping experience that is connected to their offline stores. Browse for product online and pick them up at physical locations. Returning products is easy, you can browse offline, maintain loyalty points, and compare prices.
What will be done tomorrow?
Boutique stores are dead: If you don’t manufacturer goods. If you are not big enough to demand product exclusivity or price discounts. Your business is dead. (Sorry to be blunt. I just feel businesses need to remove the emotional connection to their business, understand they got it wrong, and move on.)
Connected 24/7: As physical retailers stop fighting the online and start integrating it into the experience and as the “internet of things” grows around us. There will be no more online vs offline. We won’t disconnect or reconnect, we will just live. Everyone will have access to as much or little information as they want. Supply and demand will dicate the price of all goods. Offline retailers will be used for two things trying things and distribution.
How this changes business?
Showrooms will be a business model: Because consumers will be connected 24/7, meaning they will be tracked 24/7, showrooms will know if a consumer interacted with a product at their location and if he or she chooses to purchase that product anywhere else. With this information the showroom will be paid for generating the sale. Showrooms will hold massive amounts of product, but will be able to dynamically change micro-stores to suit the personal needs of the consumer. For example, if I am shopping for a TV, the showroom will create a micro-store specifically for me that understands size requirements, price point, and key features that are important to me. I can choose to purchase at the showroom and have it delivered or I can purchase later. The showroom will generate revenue when I purchase a product that I interacted with at the showroom.
Distribution: Because pricing will be universal, products will be unable to compete on price because pricing information will be accessible to all and distribution will be same day, inventory databases will be linked across all warehouses/showrooms. This means wether I purchase from Best Buy, Amazon, or Sony my product will ship from whichever warehouse/showroom has the product closest to me.
Be warned, adapt or don’t. Just don’t expect things to stay the same.