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Digital Commerce: Infinite Commerce
By: Katherine Voyten, Lauren Edelman, Nichole DiNunzio, Alexandra Hardyment, Lauren Hirschbach, Carlos Omana and Allison Robl
Posted: June 10, 2013
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The evolved online experience will be powered by Google Now’s natural language user interface which can answer questions, make recommendations and perform actions by delegating requests to a set of web services. Content is selected based on the consumer’s preferences or online behaviors. Consumers’ online and offline shopping experience becomes seamless as the use of predictive analytic technology and artificial intelligence creates a customized in store shopping experience and fuels a curated environment that lives both in physical retailers and online.
This is an example of how it will work. The consumer has booked a weekend getaway and Google Now utilizes information about the destination to recommend sunscreen and travel sizes of her favorite products. These products are aggregated into a single basket and delivered directly to the consumer’s home. They will arrive in the same day because immediate delivery is an emerging consumer expectation and Walmart, Amazon and Ebay are now piloting same-day shipping services (Wohlsen, 2013, 118–123).
To fully engage the consumer with a high touch online experience, the service elements will be improved as beauty advisors will be available 24/7 to answer product questions or provide advice. Today, online retail growth is driven by women, many of whom are resorting to this channel because they do not have time to visit physical stores. “The 24/7 access provided by the internet certainly is appealing for busy parents, especially since they may not also have time to shop at brick and mortar stores in the constraints of normal business hours,” (“Beauty Online,” 2012, 34). Bringing the high touch experience to consumers online will enable greater conversion. It frees the consumer to browse brands beyond the regular hours of a physical store and lessens concerns about a desired product being out of stock.
Using technology to blend the high touch experiences of the offline with high tech elements of the online is crucial to evolve beauty commerce to be truly seamless for the consumer. The two main commerce channels of brick and mortar and online retail must evolve to keep up with consumers’ increased expectations and demands.
Beauty on Demand
Beauty on Demand is the commercial opportunity that will be the future of the beauty industry. The consumer is empowered to purchase anywhere utilizing mobile devices, and brands are enabled to sell everywhere.
The new digital world and mobile devices are already having a significant impact on commerce. By 2015, 50% of retail sales will be influenced by digital (Liebmann, 2013). Consumers are beginning to adopt mobile for commerce; 35% of smartphone users have purchased a product or service on their smartphone (“Our Mobile Planet,” 2012, 30). Therefore, the next step is to enable consumers to purchase what they capture in pictures and audio clips, allowing brands to take advantage of infinite opportunities for commerce. Consumers are already armed with the tools to make this possible. Smartphone penetration is on the rise in the United States: increasing from 31% of device users in 2011 to 44% in 2012 (“Our Mobile Planet,” 2012, 6). 80% of smartphone users do not leave their home without their device (“Our Mobile Planet,” 2012, 6).
By the end of 2013, there will be more mobile devices on Earth than people (Murphy, 2013). There are 6.8 billion people on the planet and 5.1 billion (75%) own a cell phone (Edmund, 2012). This number is sharply on the rise too as by 2020 it is projected that there will be 20 billion internet-connected mobile devices globally (“Beauty Online,” 2012, 7). Increased consumer connectivity is part of the foundation on which Beauty on Demand is built. Between 1980 and 2012, the number of photos taken annually increased from 25 billion to 380 billion, fueled by the omnipresence of smartphones (Schwarz, 2012). Connected consumers are also addicted to sharing, with 90% of online users accessing social sites (“Emergence of S Commerce,” 2013, 14). There is an opportunity for brands and retailers to commercialize this consumer behavior while satisfying an unmet desire to be able to purchase anything in the consumer’s environment.
Beauty on Demand exposes brands to billions of new points of sale (POS). Technology exists to enable transactions between consumers and brands and connected mobile devices are already in the hands of billions of consumers. Google is a leader in visual image recognition and color-matching technology, but it is currently being utilized only to improve search capabilities. Shazam is a leader in audio recognition, yet the app is only commercialized for music. YouTube is leading the way in shoppable video content, although very few consumers or brands are using this platform. Technology already exists to identify objects through images, sounds and videos, but no one has commercialized this opportunity. The beauty industry should be the first to capitalize on this technology.
The next step will be to create the connection between the image or sound and a product, and to provide consumers with the opportunity to truly purchase anything. All brand assets, such as the physical products or TV and print advertising, will need to be coded so that visual and audio recognition tools can identify the item and allow consumers to purchase directly. Today, QR codes have been utilized to provide consumers with more product information, but they generally are not designed to close a purchase. They re-direct consumers to a brand website, where the consumer typically needs to click through multiple screens on her path to purchase. This inefficiency leads to dropped baskets and lost sales. According to Baymard Institute, 67% of e- commerce carts are abandoned (“19 Cart Abandonment Rate Statistics,” 2013).
The final step for brands, retailers or both will be to figure out how to ship product quickly and directly to the consumer. Today, the distribution model confines the ability to sell a product to traditional retailers who can hold and manage inventory. In the future, brands will remain in control of their inventory but will need to be able to ship orders to consumers who purchase off of anything. After a consumer clicks to make a purchase, the order is transmitted directly to the brand. To ship these orders efficiently brands should partner with a fulfillment expert. Beauty on Demand recognizes that fast and free shipping will be a point of parity.
The future of beauty commerce will be a new consumer network of brand ambassadors, who serve as affiliates through whom brands fulfill directly to consumers. In essence, the street becomes the future shopping mall. When this happens, consumers become retailers as friends or strangers identify and purchase what they are wearing on the street with a snap of their smartphone. Bloggers become retailers when consumers purchase products straight from their blogs. Publishers become retailers by linking items that editors review. With a touch of a button, consumers can truly have Beauty on Demand by purchasing anything they see in their daily environment. This is the future of Infinite Commerce.
Conclusion & Recommendations
Infinite Commerce is a world where consumers are in charge, empowered by digital technology to transact wherever they choose and where they are both brand ambassadors and new points of sale. The best aspects of the online and in store environments cross over creating a seamless shopping experience. Implementing the Infinite Commerce model requires operational and organizational changes from brands and retailers. To do this, we recommend brands invest in technology to deliver convenience, curation and customization. If these operational and technical capabilities are not part of the brand’s core competencies, leverage experts in these fields.
- For convenience, invest in infrastructure and technology to provide excellent customer service and rapid delivery directly to the consumer, or partner with capability experts such as Amazon or Ebay for order fulfillment.
- For customization, in the short-term, enable consumers to shop where they want to shop and long-term enter into partnerships with technology experts such as Google, Shazam and YouTube.
- For curation, become a content generator, giving the consumer richer content accessible through mobile.
The real breakthrough of the future and what drives Infinite Commerce is the ability of consumers to buy anywhere, and for brands to sell everywhere. The future does not depend on improving just the in store experience or just the online retailer. The future of beauty commerce is integrating both so that the high tech capabilities of the online environment are maximized offline, while the high touch elements so important to the brick and mortar retailer are now incorporated online. The Infinite Commerce model, which creates the ability to buy and sell online, offline and anywhere in-between, will bring these worlds together. This new world of Beauty on Demand creates a powerful commercial opportunity for the future of the beauty industry.
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Industry Experts Interviewed
- Anzo, Alexis, Google
- Armendinger, Erin SVP Customer Engagement, Nomi
- Barson, Donna, Kline & Company
- Benhamou, Marc, Owner, 360 Creative
- Bloch, Doreen, Poshly.com
- Carbon, Yahel, Blue State Digital
- Chang, Hana, Google
- Chase, Mariah, Co-Founder, Send-the-Trend
- Collin, Guthrie, Amazon.com
- Flatley, Kaitlyn, Senior Digital Analyst - Chanel
- Ghossaini, Zahia, Digital Analyst - Chanel
- Gutierrez, Andres, Teen Vogue, Executive Development Director, Beauty
- Homlish, Caroline, Digital E-commerce - Chanel
- Jureidini, Serge, AKI Inc.
- Karmon, Yahel, Blue State Digital
- Kangas, Deanna, SGC President at Strategic Growth Consulting
- Kasper, Jennifer, GVP, Digital/New Media & Multicultural Marketing at Macy's
- Kells, Kevin, Google
- Kristo, Nathalie, SVP Marketing, L'Oreal Paris, L'Oreal USA
- Liebmann, Wendy, CEO & Chief Shopper, WSL Strategic Retail
- Madan, Nikhil, Google
- Marie, Heather 72Lux, Founder
- Martin, Tad, Collectivei
- McEniry, Dennis, President, ELC Online, Estée Lauder Companies
- McDonald, Camille, BBW, President, Brand Development
- Megasko, Molli and Gregory Baratte – Chanel
- Pirie, Neil A., American Express
- Preis, Elizabeth, Estee Lauder
- Prouvé, Cedric, Group President, International, Estée Lauder Companies
- Ray, Allison Slater, Consultant
- Ricci, Robert, Marina Maher Communications
- Roman, Jon, Vice President, ELC Online, Estée Lauder Companies
- Ruddy, Lauren, Teen Vogue, Senior Marketing Manager
- Shah, Khushbu, Google
- Speichert, Marc, CMO, L'Oreal USA
- Vitali, Cheryl, Kiehls
- Wagner, Meredith, Relationship Manager, Home & Personal Care, Google