Sales networks: the Internet alternative

The e-commerce revolution has caused problems for many established Italian retailers and garden centers whereas the cross channel revolution carries many advantages also for dealers. If the customer deserts the store it is possible to make him or her return. This is not a matter of changing strategy but adopting a policy which takes into account that we are living in a digital world

In a previous article (Mondo Macchina/Machinery World May-June 2016) we illustrated the great growth and influence of new digital technologies on purchaching habits. This trend has also been confirmed by data produced by the Multichannel Observatory, sponsored by Nielsen, Connexia and the Milan Polytechnic School of Management. The data made public last June 23 indicated that 65% of the Italian users of the Internet made online purchases over the past 12 months, the equivalent of 20.5 million individuals and an increase of 20% over 2012. The frequency of acquisitions, initially sporadic, was monthly or weekly; moreover, analyses of the data on single categories, clusters, of consumers showed a migratory flow. The most traditional clusters were down 30% under 2012 while the consumers likely to stream their purchasing via digital channels rose 22%, to 22.4 million.

Also the continuous increase in 2016 is the phenomenon of showrooming, that is, customers in the habit of first checking the product in a sales outlet to then make an online purchase: these are 45% of the Internet users compared to 26% in 2010. Running counter is the declining number of those who gather information online to then make the purchase in a retail outlet, down from 84% in 2010 to 58% in 2016.

The increase in showrooming is certainly attributed to the greater use of smartphones allowing access to the web: in 2012 only 17% of Internet users had this option for connecting to retail sales whereas by 2016, these users rose to 40%.

 

Customers returning to the center

Since the arrival of the digital era the advantages for consumers have been evident: they can compare prices online, personally check out the product in established retail outlets possibly assisted by a technician and then acquire it at the best price. If the purchase is made online the buyer can write a positive review of his or her experience for potential buyers without having passed through an established outlet. 

From a certain point of view there could also be a good opportunity for the producer. Today it is possible for anyone to sell their own products directly to the consumer, removing intermediaries from the supply chain to thereby recover enormous financial resources parts of which go to the advantage of the consumers. It is obviously not a good idea to generalize but there are undoubtedly some less technical markets where prices account for a lot and these levers have come up for analyses in many industries in these years. An example is Cortilia.it at work in Bologna, Milan and Turin to put agricultural producers in contact with consumers for weekly home zero km deliveries of fruit and vegetables of the season.

Other sneaky approaches for established retailers are the new businesses on the market, the dotcoms which operate only online. In some cases they offer only services, such as the UK MySuperMarket.co.uk which offers price comparisons of 13 supermarket chains. The user keys in his or her own spending and in a few seconds receives suggestions on where to buy and spend less. Obviously there are also categories on gardening, flowers and pets. In some cases sales are wrapped up, though with controversial features. An example is Platejoy an app which recommends a personalized diet and has home delivery of the food products needed. But a good example is Dash Buttons launched by Amazon, personalized according to brand: the buttons are installed in the consumer’s home and when a supply is finished the customer has only to press the button to order a new supply, not only skipping the store but the computer as well.

 

What are the strategies for gardening retailers?

Though the role of retailers seems to be on the losing side in the scenario illustrated above, established retailers are still central to the purchasing process of Italians and even have great opportunities offered with the use of new technologies for taking a leap of quality.

Especially in the gardening and groundskeeping machinery market specialized outlets provide consultations and authorized retailers play an important role not only for pre-sales assistance but mainly for ongoing post-sales relations involving assistance. 

There is no need to force strategies and go digital at all costs but only to adopt a policy which takes into account the fact that we are living in a new digital world.

 

E-commerce for the real store

A dominant issue is the approach to e-commerce taken by physical retail outlets, especially as regards the policy on prices which are normally not discounted from those applied at the point of sale. In real conditions, this applies only in part because e-commerce makes it possible to exploit the long queue, that is, the option to amplify the offers on the lines present in the store and also refer to what is available online. An example is Home Depot in the United States with an outlet in Atlanta, Giorgia, marketing 28 rideon mowers with only 9 of them actually present at the point of sale. Especially in dealing with expensive, bulky technical products such as a rideon mower, the assistance of a sales clerk is fundamental. If the clerk is trusted by the customer whether or not the product is present in the store becomes secondary, especially if home delivery is offered.

It is important for the sales clerk to be given all the necessary instruments such as forms for the presentation of the long queue products, a QR code for online purchase and advising a customer to deal with the backshop technical expert. Broadening the offer can also be done through triangulation with suppliers to optimize the cost of the logistics. The long queue can also mean going online beyond the boundaries of the sales outlet. An example is a garden center which might sell garments for hunting and fishing where a customer might find samples on display but then make a purchase for delivery online. These products could carry aggressive pricing in line with those offered online in major marketplaces.

The final fundamental issue for an approach to e-commerce by the physical retail outlet is analyses of the use of the marketplace, that is, online commercial centers which, for a modest leasing price of a few dozens euros per month and a supply of products for sale, ensures a frontpage location on Google. The most famout in Italy are e-Bay (operating in Italy since 2004) and Amazon (since 2011) and also the emerging vertical marketplaces such as ManoMano.it specializing in home improvement and gardening with operations in Spain, the UK and France (created in Italy in 2015).

Opening a shop on the marketplace does not mean only showcasing e-commerce products on a national scale but offering an extended range abroad, especially in the UK, Germany and France, where e-commerce is much greater than in Italy.

Many European retailers can personalize these virtual shops by using them for first testing the market response to new products or as outlets. This means quickly getting rid of stock without checking supplies left in the warehouse or mistaken purchases.

Interest in e-commerce in Italy has been testified to in a survey conduced by the Milan Polytechnic which found that 57% of the enterprises questioned intend to invest in the coming years in setting up their own e-commerce ventures, another 42% will invest in personal apps and 29% will develop their own websites as shops on the marketplace run by intermediaries.

The leap in quality: the cross channel

A point of sale connected to the web is equipped for e-commerce and other than providing a broading of products offered can strongly improve the buying experience and service for the customer. Examples are touchpoint, QR codes on the screen for the products and a dedicated site, an app or an m-site, designed to assist the customer during the purchase.

It must be reported that in Italy retailers as well as manufactures are still behind the times comparted to what is happening in the other big European countries. This tendancy applies to the market in general, also the gardening sector which is not brilliant, the use of the Internet as well as the integration of communications on the web inside the point of sale. According to a Retail Survey by Accenture Interactive, 34% of customers say the shop must improve the multichannel experience and only 9% think the mobile interface must be improved.

The truth is that the customer is willing to approach a multichannel purchase but the businesses are finding it difficult to bring in new processes. This is due to shortcoming in mentality and an important organizational factor. The Shop of the Future sponsored by Coop Italia at the Milan Universal Exposition showed that the point of sale can be transformed into an interesting touchpoint allowing the consumer access much more product information compared to what is now contained on the packaging. For the sale of a rideon tractor, a few QR codes can open a video of the manufacturer which produced the machine, the designers responsible, the post-sales assistance network available, the accessories for separate purchase options to improve the tractor’s performance and the origins of the raw materials behind the brand name as regards sustainability and quality.

 

Shop of the future:

less space more services

Other then providing assistance for the customer, this much greater supply of information is useful for tracking the customer’s behaviour in making a selection. From a certain point of view, new technologies give the retailer the opportunity to take advantage of info-commerce to help and stimulate purchase at the point of sale and ultimately allow the customer to complete the purchase online.

The talking shop is not a mirage in the future but a possibility for today. Now available are the farsighted use of QR codes, NFC, Near Field Communication, a wireless connectivity technology and showcasing such as the Smart Shelving System by the Italian firm Cefla, the winner of the Popai Award 2016 in the Proximity Marketing category. This system consists of what appears to be a normal shelf but can interact with customers at the point of sale with personalized messages such as discount coupons, instructions and suggestions of similar products based on the customer’s habits, profile and the amount of time the customer spends in a certain department.