Uber to Airbnb, with consumers as prime focus, how digital brands come up with quick solutions

The advent of digital age has spawned huge choices for consumers, with many brands such as Uber, Airbnb earning trust of consumers in short time against the grind brick and mortar brands have to put. The question here: what makes these digital brands so successful? The answer is in the way they treat the consumers.

A recent joint study by the SAP, Seigel+Gale, and Shift Thinking says that online brands “don’t just do things differently; they also think differently.” For them, the ultimate aim is not to just sell the products, but position the brands in lives of the consumers, making their lives easier.“Digital stores are fearless today,” believes Pops KV Sridhar, founder and chief creative officer Hyper Collective and ASCI board member.

Echoing the view, Harish Bijoor, owner of the Harish Bijoor Consults Inc and management consulting consultant said that the online brands are able to place the products virtually causing “psycho-tagging”. “Online brands aim to get under the skin of the consumers,” Bijoor said adding that these brands want to create a craving for consumers.

While online stores are working on understanding people, brick-and-mortar is like ‘elephants that can’t turn’ with heavy investment and slow in understanding consumers, Sridhar added.

A study, published by the Harvard Business Review, has split the brands into two main categories — purchase and usage.

The purchase category focuses on creating demand to ‘buy’ the products. On the other hand, a usage brand aims to create demand for the use of the products. By the above characteristics, traditional brands will fall under the purchase category, while the digital brand will be a part of the usage bucket.

The study interestingly points out that users show more loyalty towards usage brands. In fact, the consumers are willing to pay an average premium of 7% for the digital brands and are 8% less likely to switch.

Sridhar warns that while consumer loyalty is rising, the online stores need to build emotional connect and strong brands with and for the people.

Working on the lines, “e-commerce is able to place products virtually for consumers through various methods like geo-tagging and psyche tagging,” added Bijoor.

This shift also means a shift in the marketing of the brands. The companies are now tilting towards the enhancement of user experience. Both, physical and digital stores have to spend on marketing to build a brand for themselves, which is the main priority, Sridhar said.

Taking the example of mangoes, he said that retail stores are still getting the boxes whereas online stores have already started delivering them by now.

While the debate between the two categories continues, digital is unlikely to lead to the death of brick-and-mortar model. “No one medium is going to dominate,” Bijoor said, adding that digital could lead to the sale for the traditional stores as well.

Countries like India, China and Turkey, which have different consumer segments, will continue to have space for both product and usage brands, added Bijoor.

On the contrary, Sridhar believes that while physical stores will be there, they will be limited and expensive with an exception of few sectors, say dining. “The future will be of online places where physical stores will only be experience centres.”

However, this does not mean the end for physical stores. A lot of stores are diversifying into online stores.

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In a blog post, Hari Shetty, head—retail vertical, Wipro, explains that the brick-and-mortar is becoming important for omnichannel retail.

Another study by the HBR states that the physical retailers are depending upon omnichannel retailing for providing a smooth shopping experience at physical stores and connecting with customers via various channels.

The study showed that omnichannel customers tend to spend more time in stores and are more loyal. These customers engage in ‘webrooming’ behaviour, which means that they tend to look for products online, but go to shops to purchase it.

It’s not only the physical stores that are going digital, but the opposite is also true. Many of the digital brands are also opting for physical stores as well.

“It is about having a place everywhere,” Sridhar added.

By Rishma Kapur, DNA Money