New tactics, old principles
How do you grow something that is already humongous? That’s the challenge I took on when I joined Allegro as its Head of Growth for the C2C Segment in October 2020. We are already an icon in Poland: 80% of people here visit Allegro each month.
The country has seen a boom in online shopping during the pandemic and we can better observe the untapped opportunity in Poland. According to Statista, most categories countrywide saw double digit growth in the first quarter; and some went stratospheric: grocery sales rose by 239%, and health and beauty by 138%. While these statistics refer to Poland as a whole rather than Allegro, they are indicative of a trend that is of interest to us. Importantly for our business, that shift to online is likely to stick.
Checkout.com’s new report suggests 2020 was the year when one in five Polish citizens considered themselves “ecommerce converts”, and 12% have rejected the High Street forever.
Building trust with new customers
It’s important that ecommerce merchants are sensitive to this new cohort. They have come to online shopping more in desperation than by design, and so we all have to keep testing our assumptions about what’s important to them. But I predict these new converts will place huge value on trust. And actually, that might help merchants realize that the trust factor is just as important to veteran shoppers too.
Amongst the benefits of convenience and speed, the notion of trust can sometimes get lost in ecommerce conversations. And more so with online marketplaces, where trust can sometimes feel detached from the shopping experience because you’re not transacting directly with the retailer. But the sector should never underestimate how valuable trust is; or how damaging a lack of it can be.
At Allegro we try to combine the convenience and financial incentives of an online marketplace, while retaining that connection between shopper and seller. Customers can connect with small businesses rather than buying from a huge faceless corporation. And while you are not always necessarily buying from your neighbour, you are buying from people that you can have some kind of connection with: A book seller selling online as a lifeline during the pandemic or a small skateboard shop where the owner lives and breathes skateboarding. This trust factor in the retailer is one of the reasons people choose to shop with Allegro.
Carefully selecting the right partners
There are other trust indicators in an ecommerce experience, which are just as important; for example, data privacy, the integrity of the supply chain, cost transparency, taking payments efficiently and securely, and fast delivery. To them, it’s all one shopping experience. That means selecting our partners really carefully, so we can be confident in consistent levels of trust throughout the process. As ecommerce becomes more crowded, merchants and marketplaces will increasingly need to partner with third party specialists that can unlock competitive advantages for them.
The future of online shopping
A big part of any growth plan is to look to the future, to get clues about where you should be innovating. One of the most interesting developments is the blurring between online and offline retail. We are already seeing traditional online retailers opening showrooms to answer customers’ ‘touch and see’ sensibilities. I wasn’t surprised by Checkout.com’s insight that 68% of online consumers say they’d like to visit experiential showrooms to meet brand representatives and trial products before buying online.
Trust in what you’re purchasing isn’t the only driver of this; there’s undoubtedly a social aspect of physical shopping that will always be important. But having the ability to straddle the physical and digital worlds also allays the suspicion some may have of transacting behind a digital curtain.
Seamless online to offline transitions
This hybrid experience can conjure up some exciting business models. In Poland, the largest shoe retailer has pivoted online, but retains a physical presence so its customers can get their feet measured accurately. So that when their shoes arrive, they can trust they will fit perfectly. If you think of other sectors where this tangibility could be important—cars, fashion, furniture—it could be a big game-changer.
You can extend this principle to the adoption of virtual and augmented reality by online retailers. If you also think of trust as an internal dialogue (i.e How will that bookshelf look in my room? Will that hairstyle really suit me?) then confirming (or contradicting) your instincts derisks the purchase.
In some ways, the subscription model is the most profound expression of a customer’s trust. “Not only do I trust you enough to shop with you; I know I’m going to trust you for a long time, so let's make this an ongoing thing.” But clearly there needs to be a subscription model in place for a shopper to act on this sentiment. This is easier said than done. Retailers will need to work out the right packages at the right prices, and have the tools to easily execute these. Just as crucially, they will need to be able to meet their customers’ higher expectations of what a subscription should bring. Hard earned trust can be easily lost.
The ecommerce boom we are seeing right now will tempt some merchants and marketplaces to rush innovations in order to defend and capture market share. Certainly at Allegro we always feel the pressure to go faster than the competition. But in this race, we remain anchored to the principle that customers will always be drawn to a shopping experience they can trust.