Seems that the trend nowadays is to channel most retail marketing online. Conventional brick-and- mortar shops have incorporated online shopping to compete with online-only sellers like Amazon. However, some big retail stores are closing shops together with their hopes of complementing their physical stores with an online presence.
Retail store owners originally thought that an omnichannel (a type of selling that uses different means such as website, phone, actual store, etc.) strategy will encourage online shoppers to shop in-store and vice versa. Sales and coupons have been used but these are not really effective in increasing profits.
Temple University Marketing Professor Xueming Luo led a research team to find out how shoppers decide which channel to purchase. They randomly selected 56,000 members of a certain store’s loyalty program. 8,692 of them shop exclusively online and 24,804 of them only shop in physical stores. Some were given coupons redeemable online, others have coupons redeemable only in stores and others have a coupon that can be redeemed in either channel.
There was also a control group that has no coupons. Here are their findings:
- Online customers can be encouraged to visit a physical store and can increase profits,
- However, incentivizing in-store shoppers to purchase online decreases profits due to their preference of a more tactile and “experiential” connection with goods. In-store shoppers are also more inclined to do impulse shopping which they cannot so online.
Perhaps it is time to think of the omnichannel strategy in a different mindset: establish an online store to encourage shoppers to buy in-store. Luo points out companies that began as online-only have started to put up physical stores. Case in point: Amazon. This once online-only store has established physical stores and is actually expanding its branches. “Traditional retailers’ strength is the in-store shopping experience, and they need to play that up,” says Lou.
Reference: How to Make the Most of Omnichannel Retailing
