Hybrid Commerce: The fusion of e-commerce and retail

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Over the past two years, consumers have flocked online and e-commerce is continuing to gain momentum. However, about 80% of today’s consumers now consider the retail landscape to be ‘phygital’: technology bridges the gap between the digital and physical retail worlds.

Since the start of e-commerce, the retail industry has been clearly divided into two channels: brick-and-mortar and online shopping. However, today, the lines between these two sales channels are blurring and their separation will before-long be over. Today’s retailers need to live in both worlds to compete.

So, what is Hybrid Commerce? We break down everything brands and retailers need to know about this new business model.

Today’s consumers are demanding and want to be served in the best way possible. To meet their requirements, brands unite the use of brick-and-mortar stores, their brand website or app, delivery and shipping services. This practice is known as hybrid commerce, and calls for brands and retailers to become more tech-oriented than in a typical brick-and-mortar retail setting. The idea behind this hybrid model is to unify online and in-store to better serve customers as they seamlessly hop between the two channels and to optimise supply chains.

A well-known example of this is ‘buy online, pickup in-store’ (BOPIS), or ‘Click & Collect’. We have seen this shift happening gradually over the past few years, and while this model is now commonplace, the world of e-commerce is continually introducing new concepts: buy online and have your order delivered to the boot of your car, parcel locker systems or a vending machine. Big names such as Walmart and Amazon have been investing in last-mile technology ranging from drones to self-driving cars to respond to these needs.

This is a type of omnichannel shopping experience. While omnichannel and hybrid commerce were already gaining a strong foothold before COVID-19, the model greatly accelerated thanks to the pandemic.

The measures that were put in place are now expected by shoppers in brick-and-mortar stores, and brands and retailers that want to survive must get up to speed with the digital age in order to remain competitive.

While every brand’s approach is unique, hybrid commerce necessitates precise coordination of both inventory, shipping and human resources across multiple areas.

Physical stores become ‘smart’

The ‘smart stores’ have digital applications to improve efficiency and the shopping experience.

Another, more novel example is ‘Grab & Go’ shops, such as Amazon Go and UK grocery giant Tesco’s GetGo, which take Hybrid Commerce a step further and showcase some of the most advanced shopping technology. No lines, no checkout – just grab your items and go. 

These digital-first shops require shoppers to download and use the Tesco or Amazon apps in order to check in to the branch, select their items, and leave–no need to use the checkout till. Instead, after leaving the store the shopper’s purchase will be charged to the card associated with their account on the app.

These highly connected stores have sensors that recognise consumers, monitor their every movement, and track the movement of every product. These ‘smart’ stores are made up of smart shelves, scales with weight sensors, cameras, IoT systems and AI technologies all to enable data analysis. For a completely automated checkout experience to be possible, all of these elements must be present.

Another Chinese phenomenon heading for the West

While, globally, all consumers share the same desire for convenience, according to a Forrester analysis on omnichannel commerce, this convergence of e-commerce and brick-and-mortar is most prominent in China. In this market, one channel simply does not exist without the other. 76% of the Chinese population surveyed by Forrester in 2021 regularly use the ‘buy online, pickup in-store’ service. This is a stark contrast between 45% of surveyed UK consumers and 43% of French consumers.

This is also highlighted by the fact that half (49%) of metropolitan Chinese consumers are less likely to visit a store if its in-store inventory isn’t available online, versus 29% and 25% in the UK and France. 71% of those surveyed in China feel more confident about their purchases when they use their smartphones to do research while they browse in the physical boutique, more than double the 30% of surveyed European consumers.

Where data is important, building trust is paramount

All of this implies that across digital and physical touchpoints, businesses must continue to offer more tools and information to customers and shop employees. Retailers must do this by gathering and analysing a wide range of customer data from various touchpoints and putting technological solutions in place to respond to it instantly.

Gaining customer confidence is crucial when it comes to gathering the necessary data for brick-and-mortar stores to operate in a ‘smart’ way. Across markets, consumers concur that the way brands and retailers utilise their personal data affects their purchasing decisions. It is, therefore, necessary to demonstrate a value exchange and make it clear to consumers how you will manage their data.

Brands and retailers should not overlook the importance of how they cater to their customers in their physical stores. Consumer shopping behaviour is increasingly hybrid, and shoppers are seeking additional services and experiences that will take place on either of these channels. However, Hybrid Commerce requires logistical and digital know-how and can be a costly transformation.

The longer retailers wait to go digital, the more they risk to fall behind. Would you like to talk with an expert about your e-commerce strategy?

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Adrian Gmelch

Adrian Gmelch is a tech and e-commerce enthusiast. He initially worked for an international PR agency in Paris for large tech companies before joining Lengow's international field marketing & content team.

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