In recent years, retail businesses have come to realize just how closely linked their physical and digital shopping experiences are. Anywhere consumers shop, they’ll find the digital in the physical, and, thanks to virtual reality (VR) and augmented reality (AR) as well as other emerging technologies, something that feels like the “physical” in the digital.
Our shopping experiences aren’t siloed, and forward-thinking retailers recognize this. However, creating solutions that drive sales and profits in this complex cross-platform world can be a daunting task. In 2022 and beyond, retailers should look at three areas in particular to invest and test: the burgeoning metaverse; social commerce; and the booming buy now, pay later (BNPL).
Dive Into the Metaverse
The pandemic drove consumers to e-commerce and accelerated use of VR / AR technology in the shopping experience. Digitally sophisticated Gen Zers are getting older and their buying power is increasing. Last year, Facebook rebranded as Meta and invested $ 10 billion in metaverse development. Currently, these virtual spaces are owned by different businesses, separate from each other, and the metaverse promises to unify these spaces. If retailers don’t successfully stake their claim in the metaverse now, they may easily cede revenue to a more forward-thinking third party. That’s what happened when e-commerce platforms took off 20 years ago.
Retailers need to invest, but also think incrementally. Consumers love innovation and have embraced it in the last couple of years alone, but they also like familiarity. Every retail brand needs to consider its own strengths and its own customers’ needs to understand where to build off of existing in-store and digital experiences and where to diverge from them. (But be wary of overinvesting in any one platform, as the metaverse will be a decentralized, cross-platform experience.) Identifying those present-day experiences will dictate where a retailer should start testing metaverse experiences.
Social Commerce Goes Beyond Social
Social commerce is a natural response to consumers’ desire for convenience and efficiency – allow consumers to make a purchase whenever and wherever they prefer. Social isn’t even as siloed as some of us think: 15 percent of the time spent on social apps is actually spent on publisher sites in in-app browsers. There are reasons why social commerce was a $ 36 million market in the US in 2021, and why it’s projected to grow at three times the rate of “traditional” e-commerce over the next three years.
Part of the appeal smaller retailers see in social commerce – which they’ll also find in the metaverse – is its democratizing effect. Smaller brands have more access at more touchpoints to their customers – touchpoints that e-commerce giants can’t take ownership of. And in many cases, smaller retailers are in a better position to provide knowledgeable, prompt customer service than large businesses with massive customer bases and thinly stretched service teams.
BNPL Offers Flexibility
BNPL is the fastest-growing e-commerce payment method in the world. Part of the appeal of BNPL is that it allows consumers to purchase pricier products and services without either saving for the entire cost in advance or accruing interest on a credit balance. This is especially appealing for millennial and Gen Z consumers, who are more wary than older groups of accumulating more debt. Another upside: Paying smaller amounts in installments calls to mind any other subscription service, with which digital natives are very comfortable.
BNPL allows consumers to make purchases quickly, without the extra steps and extra pages that cause cart abandonment. It limits the time the consumer needs to spend away from the content they’re engaged with. It can also be done easily across platforms, across international borders, and with less reliance on third-party financial institutions than a typical credit card purchase. Retailers that haven’t adopted BNPL capabilities must do so now to keep pace with the evolution of consumers’ buying habits.
Start Moving Forward Now
Consumers want, and increasingly expect, to be able to make purchases at the right moment for them, on the most convenient platform for that moment. The evolution from siloed VR / AR experiences into the unified metaverse underlines the importance for retailers of adopting an omnichannel strategy. And it only follows that retailers apply these trends to the needs and advertising campaign goals of their brand partners.
The emergence of retail media networks is timely, prompting retailers like Nordstrom, Dollar Tree, Kohl’s, Best Buy, CVS, among others to launch and expand their retail media networks. These networks allow retailers to provide brands with ad inventory across the internet – not only on the retailer’s own sites and social channels. To harness the power of their networks, retailers must take control of their first-party customer and product data. In a world where the future of identity remains to be seen, retailers must take advantage of their data to reduce their reliance on giant social platforms to find the same audience at scale.
Conor Ryan is the co-founder and CIO at StitcherAds, a Facebook and Instagram marketing partner helping retailers and agencies scale full-funnel O2O marketing campaigns.