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More than milk

‘RT’ if you find it impossible to go out for milk and only come back with milk. – @sainsburys. How important is the role of serendipity in retail sales?

When UK supermarket chain, Sainsbury’s, asked Twitter followers this simple statement, it summed up one of the key assets of retail stores – serendipity.

The happy, ‘accidental’ purchase. It is a truism to say that stores want you to buy more than what you just came in for, as anyone who’s faced a battle of wills over toys or confectionery at the checkout can testify.

Online retailers have aimed to replicate this phenomenon with the ‘other customers also liked’ feature and by personalising our browsing experience, relying on excellent data mining to impress the casual shopper.

So, you’d be forgiven for thinking that it’s all about collecting huge quantities of data. Well, no. “It’s not about big data, it’s about small data” says the president of eBay Marketplaces, Devin Wenig in an interview with McKinsey Publishing. “You don’t want to be part of a big data set; you’re just looking to buy a shirt.”

Data, of course, feeds the e-commerce world like no other. Clicks, page views, orders and returns can all be accurately monitored in a way that is perhaps harder in the offline world. The eBay managers themselves admit to employing ‘brilliant mathematicians’ but they also turn to real life storekeepers to help set the right tone.

I needed a shirt, I got a shirt and a matching pair of pants that I didn’t know I wanted…

Despite the rhetoric about data, Wenig also believes that digital shopping can be both utilitarian: ‘I needed a shirt, I got a shirt’ and also inspiring: ‘I needed a shirt, I got a shirt and a matching pair of pants that I didn’t know I wanted.’

Books, electronics and fashion seem particularly suited to our impulses. Little wonder then that over 50 percent of the market consistently falls into one of these three categories and electronics in particular is singled out as top dog in figures for 2011-2013, accounting for over BUSD140 annually.

There’s clearly something inherent in the nature of these goods that makes them easy to purchase online. Perhaps the sheer volume of categories, brands and designs of electronic goods – whether they be DVD players, cameras, cellphones, gaming accessories, GPS devices, headphones, iPads, kindles, laptops, speaker docks, surge protectors, wireless routers – and so on and so on, makes the internet ideal for sorting through the massive modern day ephemera that fills the virtual warehouse.

Of course, it also means that somewhere a real life warehouse is also storing them, and the change in buying patterns has established a well known pattern.

As Swisslog’s e-commerce White Paper points out, the vast majority of the world’s consumer products have hereto been distributed to retail stores in bulk, and the most efficient method for handling this merchandise has predominantly been pallet movement. The move towards personalisation and segmentation has led to retailers having to factor in split case picking and multiple line items to fulfill fluctuating volumes of online orders (which often require delivering within 24 hours).

According to the research, this is only set to continue. In 2010, Europe accounted for 37.4 percent of total global online retail sales, BUSD 162.6 in revenue. We have seen a lot of growth in Europe as businesses focus on getting the maximum productivity out of their existing infrastructure, as well as re-evaluating all their future developments.

Datamonitor predicts European online retail sales will exceed BUSD315 next year, still representing almost 40 percent of the global market despite huge increases in e-commerce in China and the Far East.

China’s e-commerce market itself is now the world’s largest, having surpassed the US in 2013. Chinese online shoppers are said to purchase huge amounts of electronics on sites akin to Amazon and eBay, and are forecast to spend BUSD540 in 2015 according to Bain & Co.

Perhaps the next question is, will these rapidly expanding Asian markets maintain our love affair for technology, gadgets, books and fashion? To which an appropriate response might be, “Are you joking?! They’re not just buying milk.”