Retail mix need to account for e-tailing

With nearly half the world’s population expected to become web users by 2016 the internet economy is set to provide companies with an important source of growth.

This trend is being further fuelled by the rise of the emerging markets, the popularity of mobile devices, especially smart phones, and the growth of social media. SMEs are also increasingly championing the Internet, using it for marketing, sales and interactions with customers and suppliers.

In the Middle East, the web effect is no less dramatic. For example, according to The Boston Consulting Group, the Saudi Internet economy will rise to 107 billion Saudi riyals by 2016, up from 37 billion riyals in 2010. In addition, 42 per cent of UAE shoppers accessed the internet for online shopping in 2012, up from 33 per cent in 2010 according to a survey by MasterCard.

Within this landscape, retail in particular is gearing up to embrace ‘digital’ in a big way. In the US, the National Retail Federation predicts that online retail is one of the big opportunities of 2013. They observe the mobile is transforming retail. In just a few short years, QR codes, cutting-edge apps, and the ability to search for product information, reviews, or even just store locations — all from a mobile phone — have had an enormous impact.

Social media is fast becoming an important facet of retail. Starbucks, with over 12 million fans on Facebook, Macy’s, using its digital hub to engage customers across all channels, and JC Penney, embarking on a digital transformation, are just some of the superheroes of the social world.

The e-commerce trends here are no different. While Aramex is considered by many to be one of the pioneers of e-commerce in the region, new players like Namshi, Sukar, Souq.com, Markavip and OnePiece are setting ablaze the trail for e-tailing.

Paypal is coming on big in the GCC and brands like Mobily and Toyota are doing great on Twitter. In fact, according to Arab Advisors Group, the value of e-commerce related transactions is about $11 billion a year in the Middle East. With the growth of broadband in the region and improvements in logistics, security of transactions, payment execution and technology speed, we expect the online space to continue to flourish.

Evolving customer base

Building and distributing a successful brand in the Internet era is about addressing the new behaviours of an evolving customer base. Looking to the future, the discussion has to shift from e-commerce vs. offline commerce to an integrated model.

For the consumer, some things remain the same irrespective of whether the talk is about online or offline retail. Customers still want to buy trendy products at great prices, they still value good service, and they continue to desire brands that understand their life interests.

Increasingly, consumers are making the final purchase through a series of online and offline experiences. Online, they share information, validate their friend’s choice, research, learn and develop a point of view. Offline they often look at and feel the product, comparing it with some brands and associating it with others.

It is a mixture of these experiences that drives the consumer to his or her final purchase decision and brands of the future must take both into consideration. Finding the right strategy for this online versus offline dynamic will be key to the success of future brands and e-tailers.

The writer is the CEO of Emax.