The Purpose of Physical Stores Has Forever Changed
“A new medium is never an addition to an old one, nor does it leave the old one in peace. It never ceases to oppress the older media until if finds new shapes and positions for them.”
by Marshall McLuhan, 1964
Retail has forever and dramatically changed. This isn’t news – e-Commerce has been with us for over 20 years. But only in the last few years has momentum built, with shoppers increasingly becoming accustomed to looking to e-Commerce first, for many product buys as recent data shows. And e-Commerce and Amazon are virtually synonymous, with 50% of U.S. households now subscribing to Amazon prime with its free shipping.
Fundamentally, though, what has changed? What is the essence of the change?
In this blog, we’re going to look a little closer. We all know that our first thought in a shopper journey is to look on our devices to search for a product and read reviews. We’ll take a look at ‘top picks for you’ (on Amazon) and other suggestions that algorithms suggest from our purchasing history data. We’ll do a few Google searches.
What I want to show here, is that one of the most critical changes in retail, post-internet, is that the two aspects of discovery and fulfillment in retail, that pre-internet were inseparable, are now forever split. Discovery and fulfillment (I’ll explain these terms more, below) used to be so closely linked in retail shopping, that we didn’t even think about them differently. They were inseparable. Now they are distinct.
And this is good news. Understanding the difference allows different types of consumer businesses to get closer to their customers and thrive. Using the best of both worlds; e-Commerce and physical retail. The concept of omni-channel – a perhaps clumsy term, but still a useful framework, describes how this works.
In this article, first I’ll explain the difference between the two functions of discovery and fulfillment. Then I’ll go over how, in our current e-Commerce era, they’ve been split and why it matters.
Finally, I’ll explain how product brands, retailers, both e-commerce and brick and mortar, and associated businesses, like operators of retail real estate, can, by understanding how discovery and fulfillment work together, concentrate and refine their business models.
Discovery and Fulfillment are Two Different Aspects of Retail
Retail shopping has always offered two basic functions: discovery and fulfillment. Pre-internet, the function of the ‘store’ was to provide both; A store, as its name suggested, was an actual ‘store-house’ of products. You could research what was available (discovery) and buy it –carry out the transaction – (fulfillment) in the same place. The store was an arrangement of products presented to capture shopper’s attention and help them easily browse. Catalogs filled this function too, of course, you could always browse a general catalog like Sears, or more niche catalog like L.L. Bean (outdoor sportswear). Both to achieve discovery and by ordering, fulfillment.
Enter the internet, the most powerful information delivery tool ever devised. The internet has taken up many of the discovery functions that stores (and catalogs) used to provide. There is simply no beating the astonishingly efficient process of typing a product description or just a question about a need, into a search engine and receiving accurate, although obviously biased solutions. By having access to what experts and other consumers have to say about a product, within seconds, one can obtain a range of facts, descriptions and informed opinions of probable solutions to your need.
So, for products for which you don’t feel much need to see in person, or handle, or talk to a salesperson about, the internet is really the ultimate discovery method.
Fulfillment is a different story. Obviously, for digital products (software, reading material, music, video) fulfillment also happens digitally for the most part. But physical products have to get to us. Fulfillment can just as easily happen through ordering online and home delivery. Or through store pick-up. Speed and shipping cost will influence which.
How Does this Work in Practice?
If I go to a Best Buy store to research different brands and models of laptops (discovery), and see something I like, why not just buy it there too (fulfillment)? If I decide to research quinoa by visiting a Whole Foods Market (discovery) I could buy it there too.
Or I could do my discovery online. I could read up on what experts and consumer say about a product (discovery). And then just order online too (fulfillment).
Some discovery aspects are better handled online, and some, especially for the kinds of products like clothing or fresh food that are better evaluated in-person, sometimes known as ‘experience products’ are better researched in stores. (To explore these ideas in more detail, read my book The Future of Omni-Channel Retail: Predictions in the Age of Amazon, which explores many more nuances about which types of products we want to shop in person, and why.)
Some fulfillment is better handled ordering for home delivery, some through store pick-up – if you need it now, or if shipping costs are high.
My point though is that these aspects of discovery – finding out what we want, what’s available, what’s the right solution to our need, and fulfillment – getting it in the most efficient, cost-effective and pleasing method, are now two different functions of retail. And the internet caused this split. This divide is new, and it’s never going away. It’s a permanent change in the retail landscape. Consumer businesses and retailers that succeed from now on will be those that understand, and can leverage, the difference.
How Can Consumer Businesses Leverage these Two Aspects of Discovery and Fulfillment?
Physical stores cannot compete with the ease and effectiveness of online discovery. Nor should they try. They should view themselves as simply an enhancement to what can be discovered online, an extension of digital media into physical media of the store.
To reference the Marshall McLuhan quote at the top of the article, retailers with physical stores must decide how to position their value offering within and around what e-Commerce can offer. They must decide how they can best help consumers fulfill these aspects of Discovery and Fulfillment in ways that complement and improve upon the online experiences that are being offered.
Retailers have to understand what ‘job’ consumers are ‘hiring’ them for (‘Jobs to be Done’ theory, Anthony Ulwick, popularized by Clay Christensen, Harvard Business School). What aspects of discovery and fulfillment they are best suited to deliver. Based on the assets they have in place and their competition.
- Are they there to offer discovery and experience for product options that consumers can later buy online? Recent research published by Retail Dive, shows that consumers are using stores as showrooms to evaluate products which they may buy later online.
- Are they there to provide fast, one-day, same-day or even two-hour shipping by having many local stores close to consumers?
- Are they there for consumers to shop and buy online and then pick up in the store? This option, known as BOPIS (short for “buy online, pick-up in store”), also known as “click-and-collect,” is becoming increasingly popular.
Imaginative consumer brands and retailers, both e-Commerce, brick & mortar, and increasingly omni-channel retailers which blend both, will learn to position themselves in the consumer’s mind, around these two aspects of the buying process – discovery and fulfillment. It’s that simple – and complicated. To explore these ideas further, read my book “The Future of Omni-Channel Retail: Predictions in the Age of Amazon”
And read the full Retail Dive survey about shopper behavior and how consumers are interacting with online and offline retail.