Article Published by Chain Drug Review

The many advantages of e-commerce as a sales channel can sometimes obscure the unique challenges that occasionally arise from it. One especially relevant obstacle is the lack of physical interaction with products when shopping.

While the use of many dimensions of data, enhanced images and video all go a long way toward resolving the inability of shoppers to physically test an item before purchase, some categories can still suffer in an e-commerce setting.

Fresh produce is a good example. Many shoppers still want to check out their fruits and vegetables before purchasing them. While the idea of buying produce online is slowly growing in popularity, it’s taking more time than many other e-commerce categories.

Similarly with cosmetics, a common e-commerce category for chain drug stores. The initial physical interaction with the product -— determining how it works with one’s own facial structure and skin tone — is vital to its long-term value and utility.

So making strides in this category will depend on widening the retailer’s perception of how to use the digital sales channel. Moving past e-commerce to incorporate valuable tools and concepts like beacons and kiosks can translate into more effective strategies for boosting e-commerce sales — and ultimately better results.

Take Sephora, for example. This cosmetics retailer uses a multifaceted strategy to enhance digital interactions and improve both in-store and online sales.

Beacons give customers personalized, in-store alerts through a digital platform: their mobile devices. The company also offers a money- and time-saving subscription delivery service, similarly to Amazon Prime, and an app that helps customers learn how to contour their faces successfully. Perhaps most important, the company has an innovation lab that continues to develop new avenues of digital marketing to encourage e-commerce and in-person sales.

Effective digital channel needs more than e-commerce
E-commerce is an important element in boosting sales, but it’s far from the only piece needed for an effective, connected and complete digital sales channel. The number of digital touchpoints available to retailers is regularly growing — everything from the point-of-sale terminal, kiosk and store beacons to social media, mobile apps and RFID tags offer customers many ways to engage with the store.

Market research and analysis is invaluable in this scenario, as it reveals critical information about what patrons want. Targeting these groups specifically, down to the individual level in relevant cases, is critical for success. Retailers need to know their customers well enough to be able to use digital technology to overcome any and all objections related to making purchases — especially in an underperforming category.

A deep understanding of how customers want to interact with products in-store is vital. This is especially clear in the case of chain drug stores and cosmetics. When a product requires a high level of personalized interaction or an actual test, providing the right environment for shoppers must be a priority. Increasing their comfort levels by, for example, providing the space to start a long relationship with a specific shade of lipstick or type of mascara, helps retailers substantially. It’s also an opportunity to involve digital touchpoints that encourage purchasing — such as beacons sending out personalized offers — and bridge the gap between e-commerce and in-store sales channels to get customers more involved.

Making customers comfortable should be the ultimate goal, not just a desire to increase sales. When shoppers receive the attention they want, whether in-store or online, and their issues are addressed to the best of the retailer’s ability, they feel more at ease and are in a better state of mind to make a purchase. Businesses must close the gap between what they offer and what customers want, using market research to shape their strategies and digital touchpoints to realize them. Only with that knowledge and approach can a holistic digital strategy truly succeed.

Many faces of digital touchpoints
Some of the most effective digital touchpoints may not be noticed by customers at all. This strategy has played out especially well for one high-end men’s fashion retailer, whose older clientele is not particularly interested in social media or e-commerce. The beacons used by the business don’t interact with customers in a way that’s recognizable to them, but instead provide a valuable opportunity to personalize the attention staff pay to each visitor — something the customers roundly enjoy. This is a physical interaction made possible with the support of digital ­touchpoints.

Suppose your market research reveals that your customers desire a personal interaction when shopping in-store for cosmetics. Using beacons that signal to staff that a customer is interested in making a beauty purchase is a great way to take advantage of this knowledge, even though the technology doesn’t directly interact with the shopper in a noticeable way. The moment is seized when an associate arrives to provide more information or offer access to samples or other services.

Market research also helps businesses understand commonalities between competitors and how to attract fans of a rival brand or store. For example, Coors knows many of its customers also drink Budweiser. In an attempt to capitalize on similarities and expand in Chicago’s South Side, Coors acquired market research that indicated which supermarkets, liquor stores and other retailers in the neighborhood sold the most Budweiser.

With this data acquired through a digital touchpoint — the online purchase of information — Coors targeted those high-selling stores and areas, eventually reaping the rewards. By learning more about customers through one of the many digital touchpoints available to it, Coors improved its performance by giving potential customers what they wanted — a beer similar in price and production to Budweiser, but also a new and potentially exciting option with supporting offers and marketing tactics.

This concept of no direct consumer awareness applies to tailoring and personalizing promotions as well. The vast majority of customers will never realize your business is customizing offers based on demographic information, purchasing history and other relevant factors — but they will enjoy a coupon discounting something relevant to their wants and needs.

On the other hand, some customers demand immediate visibility and transparency. An effort to target a subgroup of Millennials, for example, will likely involve social media in some form. As long as the digital touchpoints used are effective, it doesn’t matter when or how customers interact with them — as long as that interaction happens and creates positive engagement. In many cases, the source of data about customers is also acquired through a digital channel, be it internal analysis or the purchasing of research.

Bringing it all together
The true backbone of a successful digital strategy is connection. One powerful scenario to consider: When information from the e-commerce section of a retailer’s website and its ERP (enterprise resource planning) system flows into the point-of-sale system and vice versa, staff are empowered. They can recommend products customers left in their digital shopping carts for purchase in the store. The digital touchpoints need to communicate effectively with each other across channels, leading to further opportunities for engagement.

An example of the physical and digital crossover comes from Mexican drug store chain Farmacia San Pablo (FSP), which prides itself on providing a fantastic online experience that has led to a 200% increase year over year in e-commerce sales. It focuses on paying attention to customers to the point of delivering prescriptions to their doors in 45 minutes or less. FSP also integrates its ERP platform with its point-of-sale terminal, and its e-commerce site is integrated with its ERP system as well.

This strategy allows for more staff knowledge of customers, and naturally leads to increased opportunities for sales. Taking the idea a step further: If all three elements — ERP system, e-commerce site and point-of-sale terminal — are linked, staff can draw on data from past customer interactions. For example, a customer who left an item in an online shopping cart — a bottle of water or a new lipstick, let’s say — could have an employee recommend that item to them, encouraging the purchase and creating a cooperative, intuitive and knowledgeable sales channel that crosses over many different aspects of operation.

This approach disposes of divisions and silos that exist only because of tradition or lack of innovation. In the place of those barriers is a more effective strategy that draws on all available resources to do more than create additional opportunities for sales. This strategy doesn’t just create the opportunity for more revenue, it can also improve a customer’s sentiment toward a chain and make them feel more valued, engaged and relevant to the retailer.

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