'Digital first' means that a company uses its digital channels as its primary means of selling and interacting with its customer base. In some cases, there is no physical component at all: you don't go to Google stores or step into the Netflix shop down the street. In fact, companies like Netflix arguably killed off the traditional video rental store.

Not all market shifts will be as brutal as the disappearance of rental video stores, but there will be more to come. By the end of 2018, Smart Insights claims 1.66 billion people will have made at least one purchase online in that year. This co rrelates with the ever-rising number of global Internet users, but e-commerce still forms a fairly modest part of the total retail pie: between 10 and 20% for most advanced economies.

Growth engine

This doesn't mean that e-commerce is unimportant. On the contrary, its share of the total volume in retail keeps rising year-on-year and it's the biggest driver for growth in the retail sector overall, both in North America and Europe.

Does this mean the 'digital first' paradigm shift is coming for SMEs (many of which are retail stores or franchises), too? Absolutely. If you're not yet selling online, you're already losing out on competitors who are. Does it mean you ought to close your shop and copy business models such as Amazon's? Not at all.

Comfort versus experience

The reason why many people still shop in physical stores is not just habit. Some enjoy being outside of the house, or like to shop with friends or family as a social experience. That's why some companies are redefining their physical stores as experience centers where the customer is truly king, e.g. a bank where customers get food and giveaways in addition to personal finance coaching.

These banks will still be doing digital transformation and embrace the connected, mobile customer, especially for routine banking services that benefit from the comfort of being accessible anywhere and by anyone. So it's not a 'one or the other' situation.

The speed of shopping

Speaking of mobile, mobile shopping is also increasing all over the world. This means that your webshop should be accessible both on desktop and mobile. People have even less patience with their phones than with their computers, so if your shop is slow, badly designed or requires a customer to jump through too many hoops, they'll leave and you won't get their business.

Online shoppers want maximum speed and minimum bother. However, that doesn't mean they don't expect interaction with you or your co-workers – they just want it on their own terms, e.g when they have a service question. There, too, speed is of the essence. You can't be reasonably expected to constantly man your computer or phone to answer digital inquiries, but if you don't have the resources for a full-time customer service employee, a chatbot can be an attractive alternative.

Uncanny valley

But here's the rub: people don't like chatbots. When a chatbot acts too much like a real human being, users can feel tricked or weirded out. This is part of what is known as 'uncanny valley': as long as a machine gets closer to human behavior, people will rate them more positively, until this feeling falls of a cliff when the machine is very much like a human but not quite yet.

When the 'bot is too much like a machine, some customers find that too cold and mechanical. So, the trick is to make a chatbot somewhat human-like (and friendly), but not too human. Resistance to chatbots may fade with time anyway, as more and more generations mature that are used to interaction with robots and AI.

Retail v4.0.

The 'digital first' paradigm doesn't stop at creating an easily accessible webshop and replacing some aspects of your routine tasks with computerized systems. 'Digital first' also means keeping all your data together in one system (to make analysis and cross-referencing of, say, sales profiles and voucher programs easy and fast) and treating your social media activities with the care you would manage your physical storefront with.

Big companies are moving to the so-called Industry v4.0 model, but not fast (yet). Industry v4.0 encompasses trends such as AI, Big Data, predictive analytics, IaaS (infrastructure as a service) and EaaS (everything as a service), the Internet of Things, and augmented/virtual reality. Not all of these trends will be important for SMEs and retailers, but they should take note.

The advantages of being an SME

Sounds daunting? It doesn't have to be. You can make this transformation step by step and learn along the way. The advantage is that SMEs and smaller retail stores aren't burdened by huge administrative overheads or a stifling corporate culture.

Another advantage is that SMEs and retailers tend to have closer customer relationships and can quickly find out what novelty works and doesn't work. For instance, investing in AR/VR may make sense for a store that sells hand-made furniture so that the remote customer and picture the furniture in their home, whereas a pizza delivery service will find predictive analytics of customer behavior and traffic to be much more interesting.

… and since you're here…

We strongly believe in the digital future that is also lightweight. Sayl Retail lets you set-up an online pop-up store that requires no extra downloads or system configurations, and is designed for flawless shopping on both desktop and mobile. It's free unless you want to make more than three transactions per month, but even then it's very affordable. Even better, you can use Sayl Retail to complement your current webshop so they don't work at cross-purposes.

If you have more questions or thoughts about e-commerce, feel free to drop us a line at hello@saylretail.com, and we'll answer you to the best of our abilities. You can also go visit our site and take a look at Sayl Retail for yourself, no strings attached!