Preparing for the Post-COVID Shopping Experience: It’s All About Mobile

Even before the COVID-19 pandemic, e-commerce was on the rise. In 2019, it accounted for about 10 percent of all retail sales, and at the height of retail shutdowns, in Q2 of 2020, it had climbed to more than 16 percent.

As vaccinations are distributed and restrictions are lifted, more customers will return to brick-and-mortar retail experiences. Yet it would be naive to assume that there won’t be any long-term ramifications from the past year of altered customer behavior. We may be returning to “normal,” but it is a new normal.

The simple truth is that habits die hard. More customers are accustomed to an online shopping experience now, and the ubiquity of smartphones allows them to take the online shopping experience anywhere. This means that even as customers return to physical stores, they will continue to use online shopping methods in-store via mobile.

This hybrid shopping experience poses unique challenges, but also some unique opportunities that businesses will need to learn how to navigate in order to best adapt to and thrive in the post-COVID shopping environment.

The Challenges of an Increasingly Mobile Shopping Experience: Intense Price Competition

Roughly twenty years ago, brick-and-mortar stores began to give way to electronic commerce. For good or bad, the shift fundamentally changed consumers’ perception of the shopping experience. Beyond increasing the number of choices available to customers, it brought one major challenge for sellers: increased price transparency.

In the past, if customers wanted to compare prices, they had to drive from store to store or rifle through stacks of advertisements. Today, customers can now search for the best price with a few keystrokes. There are even technological tools that will automatically compare prices and search for coupons and price drops.

For sellers, this means a greater likelihood of losing out on sales because a competitor offers an essentially identical item for a little bit cheaper. The rise of mobile shopping will only intensify this problem.

E-commerce began in internet browsers, but it is slowly being taken over by mobile shopping. According to a report from Criteo, smartphones’ share of US online retail sales, excluding apps, climbed to 31.8 percent in Q3 2018. Tablets accounted for another 7.8 percent. In some countries, mobile commerce has already outpaced e-commerce.

The rise of e-commerce meant that consumers could compare prices and shop from the comfort of their own homes. The rise of mobile shopping means that consumers can now compare prices and shop online not only in their homes but just about anywhere, including in-store.

In essence, even after customers return to physical store locations, sellers will still have to compete on price on an online, global scale.

The Opportunities Mobile Shopping Presents: An Improved, Individualized Customer Experience

The increased price transparency—and corresponding rise in price competition—brought about by mobile shopping is certainly a challenge, but mobile shopping also offers the opportunity to create an improved, highly individualized customer experience.

A key differentiation between website-based e-commerce and mobile commerce is that the mobile-commerce channel ends at a specific customer. While multiple people may use a single computer or IP address, typically only one person uses a specific smartphone. This allows for very fine-tuned personalization of the customer experience.

This individualization can be used to combat the increasing price competition brought about by greater price transparency. When you’re competing on a global stage, it’s nearly impossible for you to guarantee the lowest price, not without severely slashing your profit margins. Instead of trying to compete on price, what you should do is try to maximize customer loyalty, which is where individualization comes in.

The mobile shopping experience allows you to offer personalized rewards to individual customers, which you can use to build loyalty. The Starbucks app, one of the most widely used mobile commerce apps in the United States, is a great example of what this can look like. When customers use the Starbucks app to make purchases, they collect reward points (in the form of “stars”) and get deals. The more coffee a customer buys from Starbucks (or the more loyalty they show), the more they’re rewarded.

This is largely a continuation of the loyalty punch cards stores have offered for decades. What differentiates the mobile shopping experience is that the rewards can be highly personalized. For instance, rather than a “buy ten, get one free” type system, a store could offer personalized loyalty pricing. Say a cup of coffee is normally $1.00. One customer, who gets a cup once every week, might be given loyalty pricing of $0.95 instead. Another customer, who gets a cup of coffee every single day, could have a different price: $0.85.

Because mobile shopping is linked to each customer, stores no longer need to restrict themselves to one-size-fits-all pricing.

Radical Changes Require Radical Solutions: The Case for Individualized Pricing

The mobile marketplace is already here, and as e-commerce did twenty years ago, it is radically changing the consumer experience. COVID-19 has only intensified these changes. To survive, businesses must be prepared and ready to adapt to this evolving marketplace.

Personalized pricing is a controversial idea to some, but radical changes require radical solutions. It simply isn’t possible for stores to compete on price when they’re up against sellers from all across the world. Customer loyalty is no longer a benefit, but a requirement.

While mobile commerce is responsible for driving increased price competition, it also offers a solution to this problem: the capability to provide individualized pricing that rewards customer loyalty.

The following is adapted from Price: Maximizing Customer Loyalty through Personalized Pricing (Lioncrest Publishing; February 15, 2021). Commentary by Cactus Raazi. Here’s what you’ve missed?
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