This article is for the Professionals
Sign up to Inside Retail Professional now for only $5+GST for your first three months.
That's an 85% discount plus you’ll get FREE access to all Masterclasses during Retail Week. 5 retail industry leaders like you’ve never seen them before.Already a professional? Log in
It’s a lot like online shopping.
The messy middle
Even the most straightforward task like buying laundry detergent online can turn into a thesis on household cleaning products. Should I buy the big or small? Which site is the cheapest? Does it get good reviews? Will it get here in time? Is it eco friendly? Would baking soda really work as an alternative? Hello rabbit hole.
Google calls this the “messy middle” – “a complex space between triggers and purchase, where customers are won and lost.”
Unlike physical grocery shopping, the options can feel limitless online. Google also found that we can rely on up to 80 different touchpoints to buy laundry detergent online. That’s more research touchpoints than annual underwear cycles for some developers I know.
As a retailer, this can be an expensive and complicated way to acquire a customer.
But what if you could avoid the messy middle?
It’s certainly what the big social media and tech companies are looking to do. They are engineering their platforms so for you to buy on the high.
Earlier this year, Facebook and Instagram made the most significant and noticeable move with the announcement of Shop. Customers can browse products from a brand profile, purchase directly from an influencer post and even buy from a live video while watching. So far, it has attracted the likes of Sephora, Nike and H&M as selling partners.
Last month, another Facebook company, What’s App, announced that they would take this product feed and integrate it into their chat functionality so that customers can purchase from within a conversation without leaving the app.
Pinterest now allows retailers to connect product details and inventory to their profiles. While you can’t checkout on Pinterest, retailers, including Big W and Crate & Barrel, are already using Pinterest’s style guides or shoppable catalogues to condense their pre-purchase touchpoints.
Likewise, TikTok is predominantly an advertising revenue-driven model and doesn’t have a native checkout. But they are experimenting and most interestingly, focusing on experimenting direct commerce with their influencers. It begs the question of whether this is even bigger. Could brands, not just their channels, get cut out of the messy middle altogether?
Snapchat is the most interesting of the lot. They are using a mixture of augmented reality and exclusive content to drive engagement for brands like Adidas, Gucci and Covergirl. No inbuilt checkout yet but it won’t be far off.
While not technically a social channel, Google has made listings on Google Shopping completely free. YouTube is currently testing checkout from within videos. This week they announced that the ability to checkout within Gmail is coming.
You get the picture. E-commerce is pretty attractive right now, and the social media giants are coming for a piece of the pie. Advertising revenue is not enough.
And for now, direct shopping via social is relatively small. In the US, social commerce sales represent $23.2 billion – up 20 per cent year on year but a fraction of the $680 billion annual online sales.
But the trend is clear. You only have to look as far as Shopify to see what writing is on the wall. Despite a stellar 2020 where they have cemented their place as the home for direct commerce and their value has tripled, they aren’t competing with the social giants. They’ve jumped in and partnered with Facebook, Instagram and TikTok to empower their merchants to sell directly in the social channels. There’s seemingly no fighting it.
Social channels and the tech giants are out to consume the messy middle. Build an audience. Inject the dopamine. Seamless checkout. No need to go to the other 79 touchpoints to research your laundry detergent.
For customers, it will be a great convenience and shorten the shopping loop. Add a checkout into the apps that I use multiple times per day with all my details stored and fingerprint checkout. They’ll be transacting quicker than you can say “Afterpay merchant fees”.
For brands, it is a significant strategic shift.
Do you continue the same investment in your owned channels, including websites and apps? Which social channels do you partner with? Do you shift content for more visual, video and influencer led communications? Is your technology stack set up for product, inventory and payments to easily cross channels? How do you protect your competitive advantage?
You most likely won’t be able to do it all. The next 12 months will be fascinating, but now is the time to get the foundations right and start experimenting.
Again… hand me the wine. The laundry pile is overflowing.