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Posted by: Zkewed Private Limited
Category: Industry trends

Amazon notification of offline world

One evening on my way home from a meeting, I visited one of my favorite clothing stores to treat myself. I had picked about two very dainty pieces of clothing and alas! There was a huge line to the cashier. Being the naturally impatient person I am, I just left my stuff to walk out empty handed. It was not the first time I walked out from that shop like that. I had done it many times than I liked. It kept me wondering how much of revenue that shop must be losing just because of the inefficiencies at the point of sale.

They recently opened an online store. I tried buying from them once. I actually ordered two dresses. But unfortunately only one of them fitted me the way I liked. The other one was just “ok”. Had I gone to the shop and tried them both, I would have only paid for the one I actually liked.

The queues at cashier are the number one frustrating thing in my weekly grocery shopping tour. Yes there are many online stores for me to order my groceries but;

Can I trust the person who packs my goodies to send me the tenderest green beans, or the tender tipped okra and packets of mushroom with the longest shelf life? (I can’t even trust my husband to do that for me!).

So it turns out, e-commerce may not be able to completely replace the physical world of shopping. Instead of complete virtualization, I would like to see a middle ground which I like to call “Amazonification”. Inspired by Amazon’s launch of “wholefoods” outlet for Amazon Prime customers, where they can just pick their stuff and pay from home.

I would like to go shopping, see, touch, and feel my product while I get to do the tedious things like payment in an easier way.

Self-Checkout Counters/ Apps

These counters allow people to scan their own products, generate a bill and pay it via a card (or even cash). I had seen so many self-checkout counters when I traveled in Europe. Why we don’t see them in Sri Lanka, I guess we all know the answer. Shoplifting. It may not be the case that % of shoplifters are significantly higher in Sri Lanka than there in Europe. But for sure suspecting shop owners are much higher.

Self-checkout is one link I can think about which can connect the online and offline worlds.

Feasibility of implementing self-checkout will vary based on the type of the shop. A clothing store can easily operationalize a self-checkout Kiosk, because people cannot take any product they did not pay for, because of the magnetic tag attached to it. Any other shop which allows their economics to attach an RFID label to their product can also sport a self-checkout kiosk without the fear of theft (unfortunately by their own customers).

Since almost everything is app driven today, why not a self-checkout app? It seems more logical because eventually the self-checkout kiosk can also build up queues.

Payment Platforms

Let’s go one notch downwards. We think that we are frustrated with shops who have a decent POS machine and accept card payments because of queues. It sounds like an extremely first world problem when there are a vast majority of little shops who completely do not facilitate any kind of virtual money payments.

And how many times have we waited until the cashier hand writes the invoice?

The second link, but in fact much more significant in impact than the first is digital invoicing and payment platforms.

Having more than 1 million small and medium business establishments in the country, there is point of sale penetration of only 50,000. Despite more than 90% of the population has a debit or a credit card (thanks to all banks who voluntarily offer a debit card at the point of opening a bank account), the total transaction volume from those cards account to < 5% by Q2 last year.

Stats kept aside, I cannot remember how many times I had to rush to an ATM to withdraw cash to pay some vendor or a taxi driver, which often made me go nuts.

Platforms like Upay and mobile payment services like ez cash are trying to get things slightly ironed out, but there are main barriers they have to break to get merchants on board

  • Time consumed to perform the transaction – Is it as twice as longer than the time consumed to make a cash transaction? If so, no thanks!

  • Impact on daily working capital – How fast the money will get deposited in my bank account? I run on a daily cycle and If I don’t get my money fast enough I will not have money to pay my suppliers

  • Digital capture of transaction data – Will it increase the exposure of my income tax liability? (Although this question looks totally taboo, it is not a secret that a lot of businessmen keep two sets of accounts).

Loyalty

I visit my favorite grocery mall once or more times every week. And I have a loyalty card under my Mobile number. But I hardly know what I can do with it. And I don’t really see that they are doing anything with my data either.

Every time I go to pay my bills, the friendly cashier lady asks my number, and it reduces about 10 – 50 rupees off my bill and that is it.

Having a very consistent pattern of buying things, I never see a personalized promotion aimed towards me, other than the standard credit card promos everyone else gets. That is not a problem unique to them, it is visible everywhere else too.

I am a huge fan of Greek Yogurt by Aeri (an amazing Sri Lankan dairy brand). I almost gasp when I see it on shelves and never think twice before buying it. But to my bad luck, I don’t get it often, because the stocks seem to be almost evaporated as they arrive. Since the grocery store knows the fact that I buy this every time there is stock, if it sends me a notification when the stocks arrive, doesn’t it make me thrilled? If I visit the grocery store, I will not just by that yogurt, I will pick something more too for sure.

What was the original objective of running a loyalty program? It is to understand your customer and cater them better. The small coffee shop at the corner who offers you your favorite coffee the moment you walk in, accompanied with a biscuit you hadn’t tried before, because the owner knows that you visit them often, and he remembers what you buy, runs a better loyalty program than any nexus or star points does. It is because, he has the data (in his mind) and he acts upon it.

Modern data science in deed allows even the big corporates to behave like the small coffee shop owner. If they have a loyalty program (with all valuable customer data and his buying patterns) but not doing it, then it means they are just sitting on a very powerful asset.

A powerful loyalty program is the third link which combines online and offline worlds to offer a unique retail experience to the customer

Such a loyalty scheme should be able to improve sales via better consumer engagement, and at the benefit of the customer. It should be a thought through process than either just a dormant bin of loyalty points or a medium to jam the consumer through generic promotions. It should allow the customer (via online mediums) to know what the shop has to offer you even before you step in there.

Future is not very far away

I think as a country we are not very far away for a digitally assisted economy and trade. The government is fore fronting economic digitization with a lot of large enterprises and technology startups assisting the move. Yes, whilst shops like Toys’R’us are closing down being victim to e-commerce, not all shops will.

People will continue to need personally check the food they are buying, and see if that dress fits them good in all the angles. More than that, at least we women will need a bit of physical shopping therapy here and there, with our girl-friends.

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Author: Zkewed Private Limited

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