It’s self-explanatory to state that retail is changing. It’s more interesting to dive deeper into the why’s and how’s. At the moment, especially two global trends – Social and Quick Commerce – have caught my attention because they are shaping tomorrow’s consumer behavior.
Social Commerce is fueled by social-first platforms launching commerce features (e.g. social media creating in-app product catalogues or live selling features) and commerce-driven sites launching social shopping elements (e.g. marketplaces launching live selling or group buying). In 2022, roughly 4.6 billion people (58% of the population) were active social media users, spending an average of 2:27 hours per day on these channels. The social media platforms are now looking for ways in which they can profit from people’s time and attention as paid media income declines. In parts of Asia, social media is already seamlessly integrated with commerce. In Indonesia, for example, social commerce is expected to make up at least 25% of e-commerce.
Quick Commerce is a big city phenomenon. At least for now. What started out as takeaway delivery is now expanding into all sorts of consumer goods – groceries, drinks, personal care, pharmaceuticals, and other products that can be bagged and delivered by car, bike, scooter within minutes (as in Uber Eats, Wolt etc.). Quick Commerce has been on the radar in Asia for the last 10 years, but it seems as if the corona pandemic has made the rest of the world realize how convenient it is to find an immediate response to shopping impulses at home or on the go.
For marketeers Social and Quick Commerce provide new ways of engaging with consumers and drive purchases that retailers and consumer brands should explore.
Consumer habits are in flux
However, when I look at the incumbents (big brands and retailers), I sense a certain hesitation towards these new commerce players. I get the feeling that yes, they are aware of these new trends, but no, they are not worried, because the ripples on the water are too small to make an impact. When it comes to Quick Commerce, it is true, that it’s difficult to make money on rapid delivery models, and it is also challenging to meet ESG targets and make sure that everybody in the ecosystem is treated well and paid a fair wage.
My point is, that even though it is hard to build a profitable business model on for example a Quick Commerce offering, it’s the movement, not the outcome that is important right now. Consumer habits are in flux; they are not a measure of continuity. They change with global incidents like The Great Recession or the COVID-19 pandemic. Market niche players test new ideas, global concepts get adjusted to local populations, and it all happens very fast.
Consumers will always navigate towards a feeling of tomorrows shopping experience being a little bit better than yesterdays. Right now, Social and Quick Commerce are providing exactly that feeling through inspiration, interaction, discovery, and ease of purchase.
In a very recent example from my own city, Copenhagen, 7-Eleven and Wolt have partnered to make around the clock deliveries to Copenhageners – initially, from nine 7-Eleven stores across Greater Copenhagen. The initiative is the first of its kind in Denmark and is based on, among other things, Wolt’s positive experiences from Finland. In Wolt’s own words, they imagine a future where not only soft drinks and croissants are delivered by carrier 24/7, but where consumers do all their shopping online and receive their goods at the doorstep.
A great example on how to combine Social and Quick Commerce was Häagen-Dazs’ partnership with Amazon Prime Now. Häagen-Dazs nearly doubled its U.K. Amazon orders with Instagram and TikTok influencers by sponsoring a home-entertainment eight-week series that was promoted with an influencer campaign. Häagen-Dazs sold more ice cream, and the TV series received 80,000 new subscribers by engaging the target group directly.
Pioneering or monitoring
The traditional shopping experience online or in a physical store will not disappear. But it will be supplemented – and for some challenged – by new ways of engaging with consumers. Think of the B2B sales process today. Brands and retailers get together to build annual business plans months in advance, agreeing on assortments for the store front and hoping consumers will be interested at that time. It’s a very static way of doing business, and everything is happening far away from the hearts and wallets of the customers.
On the other hand, Social and Quick Commerce are two dynamic approaches that evolve around a direct, instant connection with consumers. Many of the new commerce players are tech companies by heart. They work agile and are always testing and adapting to new business models. They use data, search, and algorithms to find out how you as a brand/retailer can get your products recommended. These are not the classic competences of a B2B Key Account Manager. To work effectively with these platforms, you need the mindset of a modern retail business which requires not only deep and data-driven retail shopper activation but also fundamental changes to the way you organize and integrate your digital technology architecture into an ecosystem.
To sum up: Brands must decide whether they want to be a pioneer in this new commerce space or whether they want to monitor and potentially follow later. Habits of consumers are changing, so both approaches come with great risk and opportunity.