Why Should Companies Invest in Digital Channels?

Many are expanding their digital operations as brands try to learn more about their customers. Going online makes your advertising more successful and increases revenue. While market volatility persists and offline sales are declining, digital, direct-to-consumer channels remain a great way to reach audiences, increase sales and collect data. This suggests that brands need to accelerate their use of data and analytics. So what does this mean for communication channels?

Digital channels create engagement

According to Forrester Consulting's research for Shopify, nearly 50% of brands want to unify their online and in-store operations and data. The same study found that 46% of retailers plan to increase their investment in digital channels.

New technology will shake up your shopping routine - online and offline

Zara launched its Zara App in 2012. According to Apptopia, a market analysis company, the app is downloaded by more than 3.6 million users each month. The app features "Store Mode," which allows shoppers to check stock availability in real-time. By scanning a QR code, merchandise can be picked up immediately at automated online order pickup points. Zara currently has 61 stores with automated pickup points. The app also allows users to pre-book fitting rooms and locate clothes in the store.

Zara is not the only company using mobile devices to increase consumer engagement. Grocery companies are adding live events and other virtual content to stay connected with their customers. Walmart encourages shoppers to use its app while shopping. Wegmans has added a section to its site dedicated to family activities such as cooking and gardening.

Another way to engage consumers is to predict their future behavior through demand forecasting. 

Personalization is a critical part of an omnichannel marketing strategy. Using the data from these interactions, brands can make personalized offers and offer dynamic, flexible pricing. This is an example of a recommendation system, where companies can make their offers more relevant based on customer data. Brands are also adopting a Customer 360 model, where each team member can access customer data from every interaction. This allows users to understand better what their customers want.

Another way to reach an audience is through live chat. HubSpot writes that millennials prefer to use live chat over other modes of communication. Customers want to reach brands directly and get a quick response. Live chat allows agents to handle multiple inquiries at once and dramatically reduces response time. It's simply convenient. 

The rise of social commerce

In-store apps and chat are not the only trends indicative of the shift to online channels. Real-time shopping -- where a person demonstrates live how to use an item and promotes it in real time -- is gaining popularity. According to eMarketer, China alone is expected to generate $480 billion in sales from live streaming in 2022. The metaverse, a digital world in which virtual experiences mimic the physical world, is another example. Tommy Hilfiger and other companies such as Mango and Forever21 recently participated in the first Metaverse Fashion Week hosted by Decentraland. During the event, the brand showcased its Spring 2022 collection and invited consumers to shop for NFTs clothing for their avatars or purchase physical items from the metaverse through a digital retail platform.

Technology helps maximize sales

RFID (radio frequency identification) technology allows brands to tag items with microchips before leaving the warehouse. Using these microchips, companies can track inventory until it is sold. This provides data on inventory levels in each store, the speed at which a particular item moves from the shelf to the point of sale, and more, which helps companies adjust their sales strategies.

As McKinsey writes in its report on RFID, there are two other uses for the technology. It helps improve store operations by ensuring efficient checkout and automating replenishment. And finally, it enhances the customer experience by allowing companies to provide personalized recommendations. For example, Kendra Scott, a jewelry designer, used RFID activation to enable shoppers to collect unique jewelry and then display its appearance on a screen.

Retailers are adopting multichannel sales like never before

Fashion retailers such as Inditex Group are also using RFID microchips. The company has launched an information technology center to collect and analyze data from all 6,000+ Inditex stores worldwide. Lululemon Athletica, a sports apparel company, uses RFID tags to manage inventory and improve customer service.

Marketplace integration is another example of how omnichannel technology can be used to improve analytics and increase sales. 

These technologies also help improve store operations. The average e-commerce return rate as of this year is 23.44%. That means one in four packages are returned. To help manage this process, Doddle has created a smart digital return portal that increases seller loyalty, builds brand awareness, and offers full tracking and update information.

A virtual approach can help reduce waste and save money

Sustainability is critical for retailers. According to a recent NRF (National Retail Federation) report, companies are reviewing their supply chains as part of a waste reduction strategy. The CEO of IKEA notes that the company is working to combat climate change, which has also improved public perception of the brand. Many retailers are opting for omnichannel options, such as demand planning, which helps accurately predict demand for seasonal items and reduce waste. But that's not the only change.

As retailers move their businesses online and face pandemic-induced store closures-for example, J. C. Penney has closed 152 of its physical stores - some are considering not opening those stores as online sales grow. Fashion brands such as Nike have already begun closing some of their stores. Some consumers choose to forego personal shopping for environmental reasons to reduce their carbon footprint. 

Sustainability isn't the only reason brands choose to close stores. It's also an economic factor. Bed Bath & Beyond recently announced that it plans dozens of closures this year. These closures reflect a growing trend - as the New York Times notes, many brands, such as Kate Spade and Le Pain Quotidien, are opting to close underperforming branches.

Switching to digital channels can help companies understand their audiences and increase sales. It's a great way to learn as much as possible about the consumer while optimizing business and meeting customer expectations.

Are you looking to expand your digital operations? Contact our experts to learn how we can help empower your business with our solutions.

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