The Phygital Approach: Reinventing the customer experience in the eCommerce Industry

The Phygital Approach: Reinventing the customer experience in the eCommerce Industry

  • June 14, 2023

The pandemic has brought about a lot of changes and adaptations which have efficaciously changed the way people shop and experience brands. Adjusting to this mad rush of brands emerging online and everyone chasing ‘phygital’ and ‘omnichannel’ has unlocked a new horizon of opportunities for D2C brands; as customers take charge to demand and dictate the pathways of the brands. This ‘new-normal’ has been grueling for brands to adjust to and has tested the D2C readiness so much so that even legacy brands in India are taking the D2C path and trying to provide an effective phygital experience. So, the question arises, what exactly is phygital and how can you use this approach to reinvent the customer experience?

Phygital is an amalgamation of two words – physical and digital. It is redefining the eCommerce industry landscape by marrying the online convenience and penetration of the D2C industry with the human interaction, look and feel of the physical store. Basically, Phygital blends online and offline purchasing to create a seamless customer experience (CX). Brands have been very proactive in setting up experience centers and specialty stores that solely exist to give the consumers the missing element of the brand-human interaction. FabIndia, Wagh Bakri Chai, OnePlus, Kent, Urban Ladder etc. are a few of the leading brands that are operating their experience centers in a wide variety of locations. Phygital gives a double edge to your brand as discovery is accelerated through the internet but the way your customer accesses your product becomes multi-fold.

Phygital is revamping the future of the eCommerce industry to deliver enhanced customer experiences. To enable this, a multitude of forces are driving the increased adoption of the Phygital approach in the industry.

Dimensions of a Phygital approach

Instead of the funnel model, phygital compliments the flywheel marketing method and puts the customer at the center of it all. From attraction to engagement and delighting the customer, marketers use this new approach to deliver their products and offerings while communicating to the customer their story – why they exist and what they are solving.

Let’s explore the multiple functions of a brand and how different technologies are used to make them phygital. For Sales – chatbots, machine learning; for Product – virtual try-ons, biometric fittings; for Customer Experience – virtual stores, AI-assisted shopping; for Catalogue – omnichannel catalog, demand sensing; for Marketing – omnichannel lead capture, Targeted digital campaigns; and for Stores – proximity marketing, Digital payments.

Advocating increased Personalisation 

Phygital is not just integrating online and offline shopping channels, it is about providing a seamless purchasing experience to customers. Personalization is the key to boosting conversions through retargeting in which you can get your customer to become a repeat customer in a more organic way. Since you’ve mapped their journey online and offline, the content for your customer can be highly personalized.

Unification of promotions and seamlessness of loyalty redemption, across online and offline, envelops the customer for an absolute phygital experience. For post-order personalization, brands must ensure that the support desk can tell a customer’s order history, regardless of the channel they used to make the purchase. Ultimately, this can only happen from your point of sale and not the marketplace as you don’t get that much data. If you can harness the data and the AI Insights you can boost your customer lifetime value (CLV).

A big word in phygital is convenience, many people don’t realize it’s not a tech change or a norm. Ultimately, the shopper or the user will shift towards convenience. As per the reports, around 55% of shoppers research online first and then go buy the shortlisted products offline, contributing to USD 70 Bn of offline sales influenced by online consumer research.

Changing consumer behavior and demands

A major paradigm shift in the buying behavior of consumers was seen during the pandemic where even people from tier-2 and 3 cities came online to start shopping for essentials. Our studies at GreenHonchos point towards the experimentative nature and the greater order volumes of tier-2 and 3 markets. In the personal care and beauty segment, the AOVs are higher in tier-2 cities compared to tier-1 cities, similarly, this segment has shown 143% growth in the order value and 137% growth in the GMV in 2021. Tier-2 and 3 cities have had a massive 85% and 75% growth in emerging segments online, respectively.

Local to global access

Many established local players are expanding their geographical footprint from tier-2 and 3 cities to the international markets. During the pandemic, the concepts of dark stores and cloud kitchens have allowed brands to look beyond the local confines and extend their reach to a larger consumer base. This way, the brand can also perform localized studies to discover new potential offline markets in a post-pandemic world and capitalize on growth based on real-life evidence. Thus making it easier for D2C brands to adopt hyperlocal delivery channels and penetrate rural and remote areas. The benefits of extended access are enticing many retailers to go Phygital.

Leveraging the omnichannel approach

By going omnichannel, brands can make sure they are providing the same experience on all their channels, be it on their D2C website, on marketplaces, or offline. The omnichannel approach is redefining the customer experience since the customer can order online, pick it up offline, get grievances done on a call or text, and all of this is done online and offline, across channels in tandem. By leveraging the omnichannel approach brands can progress towards quick commerce since they’d be able to communicate inventory intelligence and logistics across different stores and warehouses.

Cost-effective retailing model

One of the most compelling arguments in favor of adopting a Phygital model is its cost-effectiveness. The Phygital retail model enables existing store owners to increase their customer reach by offering a digital store without incurring huge expansion costs. Similarly, D2C players can set up a small store or partner with local businesses without investing a substantial amount in a full-fledged store. This enables them to boost their last-mile reach to the customers economically.

Enhanced customer experience

As the pandemic transforms customer behaviors and aspirations, companies are looking at innovative and unconventional means of catering to their unique needs. A phygital offering increases customer convenience as they can shop whenever and wherever they like. User-friendly and easy-to-navigate online channels along with the in-store experience and interaction enhance customer experience.

Making Business Impact

During the monthly reviews with leading footwear listed brand with one of the largest presences pan-India (Liberty), the GreenHonchos team saw an emergence from a region in South India (Telangana) that kept rising the ranks, more organically than paid push, amongst the usual regions of high sale. That’s where the metrics like repeat customer purchases, AOVs, and non-discounted sales showed the strength of the location in terms of brand recall and the brand did not have enough offline presence. After consulting with GreenHonchos, the brand took a conscious and data-backed approach through its D2C analytics and the store turned profitable within the third month itself. Which is a record in terms of net profit that doesn’t happen often.

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What is more testament to the emergence of phygital than the huge growth in Quick Commerce which keeps the actual Kirana or the dark store at the center of its supply chain for fulfillment, whereas the CX is managed online between the customer and the business app.

Final thoughts

As businesses across the globe navigate through the unique challenges posed by the aftermath of the Covid-19 pandemic, embracing innovation can help them traverse uncertainties. The phygital transition can potentially help retailers in not only diversifying their offerings but also in expanding their customer reach and network.

Phygital is emerging as one of the key concepts in the eCommerce space, paving the way for improved Customer Experience and adding the parameter of ‘look and feel’ to the eCommerce Space. For brands to deploy such techniques, they need a growth partner that can recognize the potential of these emerging technologies and implement them, unlocking new areas of growth and opportunities for the brand. GreenHonchos can prove to be such a growth partner for brands. Helping kickstart, execute and manage the growth of over 200 leading D2C brands, GreenHonchos is a leading full-stack enabler. GreenHonchos – a Full-Stack D2C enabler offers services like growth marketing, eCommerce digital marketing, marketplace management, social media marketing, and much more! For more valuable insights on eCommerce marketing and D2C growth strategies, follow us on LinkedIn, Facebook, Instagram and Twitter or visit our website to know more about our services.

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Where to bid your money? Digital Marketing v/s Traditional Marketing

Where to bid your money? Digital Marketing v/s Traditional Marketing

  • April 18, 2022

Marketers since generations have banked heavily on the traditional means of marketing for the share of voice and getting people to buy their products & services. However, over the period of the last 20 years, there has been a significant and constant increase in ad spend on Digital Marketing in comparison to Traditional means of marketing. 

This pivot has largely been attributed to the exponential increase in the number of internet users across the world, adoption of technology within the marketing circles and the predictability of returns that new-age digital media has to offer. As of today, over 560 Mn Indians are on the Internet and  the growth of this domain remains unprecedented. To know more about the differences of Digital Marketing vs Traditional Marketing here is an elaborative guide:

Traditional Marketing vs Digital Marketing: What’s the difference?

The main difference between traditional and digital marketing is the medium used to reach a wide set of audiences for an organisation’s marketing efforts. Traditional marketing uses magazines, newspapers, OOH etc. while digital marketing uses social media, websites, search engines etc. Since the advent of the Internet, businesses have started putting a lot of emphasis on digital marketing efforts since it provides a great ROI & ROAS but that doesn’t mean traditional marketing is lagging.

Traditional marketing provides an impactful & immersive experience and puts your brand physically in front of your audience whereas digital marketing uses every digital touchpoint of your audience’s to increase the exposure of your brand, as using the Internet for hours has become the normal part of everyone’s lives.

Mediums of Traditional Marketing: 

  • Out-of-home or OOH – Billboards, Bus/Cab wraps, Hoardings, Banners etc
  • TV, Radio Broadcasting
  • Print Media – Magazines, Newspapers, Posters etc.
  • Mail – Catalogues, leaflets etc.
  • Telemarketing – Phone, SMS etc.

What makes Traditional Marketing the OG marketing channel?

Traditional marketing methods include all the offline marketing methods including ATL and BTL marketing. Traditional marketing is great to make your business stand out or popularise it in a local market and compounding your marketing efforts with digital marketing will lead to a holistic campaign made of all relevant channels. Here are a few advantages of traditional marketing:

Credibility: Since the collaterals in traditional marketing are tangible (OOH, print media etc.) and rolled out in a bulk manner, from a psychological standpoint, it gives users more confidence in a brand than other forms of marketing. The additional point of a larger budget involved also portrays Traditional marketing as a more credible channel.

Diversity: The collaterals in traditional marketing are rolled out in bulk, which means that the brand will be able to reach a wider and a more diverse audience than digital marketing. The whole play of digital marketing is segmentation and personalisation, thus, traditional marketing stands out as a winner in this field too.

Scope Of Human Touch: Traditional marketing methods can arguably be more engaging and involve a human factor more than its digital counterpart. Offline activation like contests, events, concerts etc. make people interact with the brand and portray the human side of it too.

What makes Digital Marketing stand out?

Here are a couple of examples of how digital marketing fares in comparison to the traditional marketing:

Performance Predictability: Unlike traditional marketing, digital marketing can be run for days with a small, managed budget as well. TVCs take crores of rupees, the same is the case with OOHs and even pamphlets can cost you thousands, without giving you a proper track of the KPIs. With digital marketing, small businesses can run digital ads under their D2C growth strategies and ensure that a set budget is used to omnipresent ads with trackable KPIs.

Huge ROI: Digital marketing offers a great return on investment (ROI) over a small ad spent as well. You can start campaigns that last for a day to over months. As a thumb rule, digital marketers should aim for 5X ROI, that is, gaining INR 5 for every INR 1 spent. Great digital marketing campaigns can offer up to 10X ROI as well. eCommerce marketing requires a holistic use of social media promotions, digital marketing (PPC, Google Ads etc.), email marketing etc.

Trackable Conversions: Digital marketing enables ads that are specialised in making the audience convert. You can set conversions as a goal, run the campaign, gather data from the campaign, make changes and run them again. These campaigns can be tracked and come with an additional perk: digital marketing’s conversion rate is higher than the conversion rate of other forms of marketing.

Campaign Flexibility: One part where traditional marketing truly suffers is campaign flexibility. Since a large budget is involved and physical, tangible collaterals are involved, once rolled out, it becomes increasingly difficult to make changes or adjustments to your ongoing campaigns. A TVC once aired, cannot be reshot or a printed ad once circulated cannot be taken back, whereas digital marketing allows marketers with tools to make adjustments and optimise or pause ads depending on their learnings and insights.

Growth-focused Strategies: Successful growth strategies give way to more conversions and more conversions translate to increased revenue. Email Marketing alone offers an approx. 4400% ROI and an average open rate of 15-20% (source: MailChimp). Thus, a combination of content marketing and digital growth marketing strategies is bound to bring you a high response and revenue.

Targeting The Right Audience: As mentioned before, digital marketing is highly personalised through not only demographics but also psychographics. So, for example, if you want to target a college professor or an under-18 athlete, you can easily do it through the tools provided. This gives way to personalisation like never before, making digital marketing win over traditional marketing.

The interactions done with the target audience are result-oriented. They help to achieve predetermined goals. With e-mail marketing, one can directly target a specific person. Therefore, digital marketing is considered the highest personalised form of marketing.

Influencer Marketing: An integral part of digital eCommerce marketing is influencer marketing. Social media has given birth to content creators who use their skills and talents to attract people. Influencers have a large follower count and cult fan-following, through which, they influence the decision of the general public and make them aware of a particular brand. Influencers have a great engagement and conversion rate as well, thus, apart from brand awareness, they can help businesses convert and turn their audience into repeat customers as well.

Measurable Results: Every ad platform provides specific tools, through which a marketer can easily measure results for every digital marketing platform. You can also organise, reorganise and collate historical data to make comparable and analytical reports. 

Traditional methods are quite slow and limit your reach to the local level only. With digital marketing, potential customers can be identified, targeted and converted online very easily. Thus, digital marketing is taking a big portion of any business’s marketing efforts.

Both Traditional and Digital Marketing are important and necessary, basis your marketing needs and more often than not, their interplay makes a huge impact on the overall campaign. A digital marketing campaign backed by traditional marketing channels always leads to higher ROI in comparison to a stand alone digital marketing campaign. 

With the digital proliferation, Digital Marketing is turning out to be essential for growing brands and established goliaths alike. To truly reap the benefits, you need to explore a multichannel approach but if you are looking for more performance predictability and quick gains then Digital Marketing is a more sensible investment.

If you are looking for a Brand Marketing agency that understands the needs of your D2C eCommerce, check out GreenHonchos – a Full-Stack D2C enabler offering services like growth marketing, eCommerce digital marketing, marketplace management, social media marketing agency and much more! For more tips & tricks on eCommerce marketing and D2C growth strategies, follow us on LinkedIn, Facebook, Instagram and Twitter or visit our website for more information.

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