Why your e-commerce should be omni-channel

E-commerce, or sales made via smartphones and tablets, are projected to grow by 68 percent in 2016. This is no surprise to Assistant Professor of Information Systems Sang Pil Han, who studies the impact of technology on digital commerce. “As soon as the tablet was introduced, it had a huge impact,” he says.

The 2015 holiday shopping season was a jolly one for U.S. retailers. Sales were up 7.9 percent between Black Friday and Christmas Eve, according the MasterCard SpendingPulse, which tracks transactions from cards, cash and checks. News was even better for the e-commerce crowd, which saw a 20 percent increase over 2014 activity. Ahead, e-commerce, or sales made via smartphones and tablets, are projected to grow by 68 percent in 2016, a figure forecast by Bizrate based on data collected on more than 540 million online purchases made between July 1, 2013 and December 13, 2015. This comes as no surprise to Sang Pil Han, an assistant professor of information systems at the W. P. Carey School of Business. After several years of examining the impact of technology on digital commerce, he recently turned his analytical skills loose on sales data from Alibaba, the world’s largest e-commerce retailer. “As soon as the tablet was introduced, it had a huge impact,” Han says. “It restructured how the existing channels played their roles, and it has important consequences for all digital retailers.”

Shocking discovery

Han calls the 2011 introduction of popular and user-friendly tablets like the iPad an “exogenous shock” to the retail environment. “Alibaba did not introduce the iPad or Galaxy Touch. Mobile device manufacturers did, so from the e-commerce company’s perspective, it’s something exogenous, something out of their control,” he explains. But, he adds, “It had tremendous impact on their business. That’s why we say it’s an exogenous shock.” It also turned out to be a natural experiment for the research team, which included players from New York University and the University of Minnesota, as well as a scholar at Nanjing University, who was able to travel to nearby Hangzhou, China, where Alibaba is located, and convince the e-commerce giant to share the digital sales records from its online retail site, Taobao. These data likely qualify for the big data moniker, as Taobao has more than 500 million registered users and, in 2012, accounted for 5 percent of all retail sales in China.

Leveraging Taobao’s prodigious data archive, the research team was able to apply an empirical research approach designed to calculate cause and effect. So, even though the data came from a Chinese market, the team is confident the key results apply to any market, which is good news, because that exogenous tablet shock hit markets worldwide. Tablets enjoyed double-digit growth until 2014, when sales suddenly slowed. Still, Gartner estimated that tablet sales reached 233 million units in 2015, an 8 percent increase from 2014, compared to a 1 percent rise in PC sales. Consumers might be stunned to know how much those iPads really cost them. According to the study conducted by Han and his colleagues, each consumer spent an average of 6.7 percent more on Taobao after adopting an iPad as one of his or her browsing options. Browsing itself increased an average of 5.5 percent after tablet adoption, too. And, the tablet facilitated new shopping behavior.

The evening impulse buy

Han and his team saw that shopping behavior shifted when they plotted which channel consumers used and how much they spent with it, as well as what hour it was when someone clicked the “checkout” button. On tablets, the buy usually took place evenings, between 6 and 10 p.m. This granularity of data allowed the research team to envision how people used their new tablets. “We were able to tell some stories,” Han says. “Think about the actual scenario when consumers decide to use tablets. Maybe someone is relaxing on the sofa watching TV.

He doesn’t want to stand up and walk to the room where the PC is located. He’d rather pick up the tablet, which is always around, and do some browsing. He eventually finds something and may purchase it.” This scene, Han says, reflects the fact that tablets take the best from PC and smartphone worlds for e-commerce purposes. “The good thing borrowed from PCs is that a tablet has a relatively large screen size, not a tiny little screen. It can display lots of information,” he explains. From the mobile world, the tablet gets portability. “It’s accessible, so it fits perfectly for online shopping, especially in certain time periods, like off-work hours.” If people are shopping at home with a tablet after work, are they still shopping with their PCs? Not so much. Sales through the PC channel decreased 14.5 percent after Taobao shoppers began using iPads to access the retail site. This indicates that the tablet substitutes for the PC, the researchers note.

They also found the tablet acts as a complement to the smartphone channel, as sales from that technology rose more than 55 percent during the four-year sampling period used by the research team. So, is it time to put all your development’s resources into your app, and neglect the old fashioned online store — the one consumers see on that antique PC? “Our results don’t mean that PCs are no good. That’s not the key message from this research,” Han says. Although the study findings indicate that tablets are becoming more important to retailers and PCs less, he advises those in e-commerce to look at the big picture and not consider each channel independently. “They work together to make one conversion or purchase,” he notes. “Some people — for security concerns or convenience reasons — would rather make a payment through the PC channel, even if they spent a lot of time on the tablet or smartphone researching the purchase. But when it comes to contribution — which channel contributed the most to a given selection incident — I would say the roles of the smartphones or tablets deserve more credit.”

Pulling it all together

Han’s research also shows that people channel hop. “For each user, we have multi-channel information, so we can match browsing patterns to create one thread,” he notes. “We can tell if I log in from my tablet and 10 minutes later, I log in via my smartphone. Then, an hour later, I go to my PC. People usually go back and forth between channels.” In fact, a Yahoo survey found that more than 80 percent of respondents reported using PCs along with mobile devices to shop. Such findings underscore the importance of a well-coordinated, omni-channel buying experience. A recent article in UX Magazine noted that omni-channel “isn’t just about having multiple channels: it’s about making sure those channels all work together.

The idea behind omni-channels is that all the service channels are connected, integrated and consistent.” Han takes a similar view. “If I were a retailer, I’d make sure the digital experience is seamless — similar between devices,” he says. That means retailers should recognize the shopper regardless of which device they’re using, and if they had blue shoes in their cart on the phone, they should be there when they log in on the PC, as well. “That kind of multi-device user experience is key.” Aspect, a provider of customer/care software and other engagement solutions, has found through surveys that 91 percent of consumers want to pick up where they left off when switching channels. As Han points out, that’s more complicated now. “Prior to tablets, retailers only had to consider the sameness of experience between PCs and smartphones,” he says. “Now we have another device. But, sameness through multiple channels: that’s the ultimate goal."