Transitioning From Brick and Mortar to E-commerce: 5 Key Steps

With the growing prospect of e-commerce in Nigeria, more businesses are recognising the need to go beyond the limitations of physical locations in their quest for expansion, customer satisfaction or service delivery. The growth of the e-commerce space in Nigeria can be measured by the growth of courier services in the country. According to the Nigerian Postal Service, the agency in charge of regulation of courier services in Nigeria, there are currently 237 financially stable, cross-country courier services in Nigeria. This excludes in-house logistics run by several firms, unregistered companies mainly operating intra-city and of course international giants like DHL and UPS.

With more businesses expected to go online in the next few years, there is a need for retailers to understand that having an online channel is not an end in itself but a means to an end - improved customer satisfaction. Deciding to adopt e-commerce may seem daunting, especially with the structural issues and cultural contexts in Nigeria. However, there are companies that have been able to leverage this channel. In this piece, I will highlight how physical stores in Nigeria can transition to online retailing in a systematic way.

1. Understand your customer’s journey

One of the main reasons for transformation is to make the customer’s life easier. So the first step for any traditional brick and mortar outlet considering e-commerce is a deep understanding of who your customers are and their shopping journey. You should map out how your customers currently experience every stage of interaction with you, from when they decide they need a certain product to when and how they purchase it from your store and finally begin to use it. This way you can tell if going online will indeed help you improve on how you serve customers.

Typically, the journey for a customer visiting a physical store can be summarised in the following four steps:

Adapted from McKinsey & Company

Essentially, when drawing up the customer journey map, it is very important to first identify the different customer groups you have. Understand their goals, shopping behaviour and frustrations. By segmenting customers according to demographic factors  e.g occupation, marital status or location and even behavioural factors, you would soon begin to discover both common and interesting characteristics. For example, let’s consider a thriving food court in a quiet neighbourhood in Lagos. The owner may discover that one customer group is made up of very busy workers who prefer to eat out and cook less, so visit daily. Conversely, he may discover a group that comes in occasionally. Another group may work or live within a-200, 500 or 1000-metre radius from his food court. It is also possible for him to discover a group that prefers takeaway as opposed to eating in.

Undoubtedly, each of these customer groups will have unique reasons for patronising his food court, including proximity, availability of local dishes and so on. But they may also have slightly different journeys and peculiar pain points in their interaction with the food court. For example, the busy workers group might have problems with the wait time, while those who live remotely afar off might be worried about travel time.

Armed with information about your customer’s journey and pain points, you will be in a position to determine how going online will reduce any friction along their journey. For instance, will online shopping shorten the time your busiest customer group takes out of their already tight schedule? Will it provide more information that could ease the discovery and evaluation process for a particular customer? Are you saving time for a customer who may just want to check product availability or view product details before venturing in-store? Finally, will it provide an opportunity to gather useful data that could help your perspective or evaluation of your product mix?

By paying attention to these details, the food court owner can make informed decisions about how to improve his/her services by going online. Nevertheless, one important point to highlight here is how data collection is central to effectiveness in this step.

2. Start with existing customers

Going back to the food court example. Imagine that the quality of food there is one of the best-kept secrets in town. Assume that the owner decides to go online to boost discovery and expand his customer base. He would initially struggle because most consumers who have not visited his food court could be hindered by the evaluation process. However, your existing customers have tried and tested your offering and it would be easier to get them to buy online.

Let us assume the food court owner took stock and found out one common pain point for his customers that are busy workers was the delay back to their office after coming to his food court for lunch, as a result of heavy traffic. This hurdle might have affected how often they come in. He may also find that some customers came occasionally either because of the long waiting time or because his eatery is often crowded. You will agree that he is in a better position to explore the prospect of delivering lunch to customers that already trust him and need less convincing. He also has existing information on this group.

There are two main advantages of starting the transformation process with already existing clients. Firstly, the journey map of an online customer who is already an existing customer (refer to A) is a precise approximation of that of a new online customer (refer to B).

Close examination shows that in the latter, the customer has to evaluate prior to purchase and inspect the product when it arrives, whereas the main source of doubt in the former could just be the delivery process. The second reason why it is important to start with already existing customers is that you need references. And most times, when a customer is recommended to you by either their friends, colleagues or family, it eases the pressure of the evaluation process. Online reviews have also become a big part of the decision making online and you want to make sure you have true brand advocates putting out reviews. 

3. Make the most of conversational buying

Most consumers in Nigeria are not willing to take the risk of buying online and would rather buy from tested and trusted retail outlets or seek repeated reassurances before committing. Depending on the product line, price, availability of alternatives, durability and mode of payment, decision-making can be a genuine source of concern for new customers seeking to make an online purchase. I have heard many small business owners make a lot of fuss about the number of questions some prospective customers often ask before they make a purchase. For many of them, the ideal customer is one who asks the fewest questions before making a purchase. While I accept that irate customers exist, I will like to say that if you are hoping to transform, you have to recognise that online shopping is completely different from shopping in physical stores. The questioning is a very crucial step in the evaluation process, especially for first-time customers shopping online. Moreover, because of the gaps in our consumer protection laws, quality standards and service delivery, many prospective customers are not prepared to gamble with online purchases.

In many cashless societies, the evaluation process for online shopping is often aided by reading product reviews. In a cash-based society like ours with trust problems, the evaluation process can be overwhelming. So, many e-commerce customers still prefer to interact with the retailer before deciding to buy.

There are a variety of ways customers can get in touch with retailers but some customers might be worried about the cost and convenience of using conventional communication platforms like telephone. This is where social media platforms like Whatsapp, Facebook and Instagram come in handy. For this reason, any retailer hoping to transform should be willing to use social media as a tool to encourage interaction with prospective and existing customers. This is because communication through these platforms is usually spontaneous and less formal than email. And the cost of communication is less prohibitive compared to phone conversations. So customers are encouraged to express themselves and raise more concerns than they would have done when using a telephone or email. In addition, social media platforms are very sticky and can be a valid source of data acquisition for the retailer.

4. Customer service is important but standardisation goes a long way

Following on from the previous point, It is crucial to render excellent customer service by embracing the doubt and reassuring your prospective customers. However, when transitioning to e-commerce, you must be prepared to look beyond customer service to standardisation. If you are known to deliver quality products to customers consistently, the doubt is often assuaged and the customer becomes more willing to take risks.

Lack of standards can manifest in so many ways. For perishable groceries, it could be inconsistent scales of measurement. For more non-perishable groceries, it could manifest as a lack of transparency either in pricing, product offering or mode of payment. Most times, excessive bargaining could be an indication that you are not transparent. It is also the main reason why prospective customers ask a lot of questions. Inconsistency goes beyond groceries nonetheless. It could also manifest in the way you package or deliver your products. For example, your system is not consistent if customers are uncertain about when an ordered product will arrive or when they are not sure the quoted size of shoes or clothes would match their true size. There are countless reviews on some Nigerian e-commerce platforms suggesting apparel fit issues or a mismatch between what was displayed and what was received.

So anyone hoping to transform in a cultural context where there are genuine reasons for doubt and distrust, must pay attention to standardisation and ensure that the goods are delivered in a consistent manner. This is important to convert and retain new customers.

5. Be willing to take risks

We have discussed lack of trust as a major impediment for customers looking to buy online and this is because majority of the risk of online shopping is borne by the customer. Without adequate standards in place to punish offenders or to guarantee returns, they are not really protected. One way around this is for retailers to show customers that they are willing to take risks.

A typical risk to consider is ‘pay on delivery’. This means sending the item to the customer and receiving payment once (s)he gets delivery of the goods. It thus reduces the risk on the customers part and could help the retailer ensure that only quality goods are sent out since the retailer bears the cost of returns if the customer rejects the product. Customers also have the ability to evaluate the items physically before paying, an aspect that online buying usually takes away from them. Most importantly, it can guarantee returns in a win-win fashion. So the customer does not have to pay for the delivered product if (s)he is not happy with what was delivered and giving that product is in good condition, the retailer can easily resell the returned item. Finally, adopting this method may force the retailer to make a commitment to quality control.

The ‘pay on delivery’ option was made popular by local e-commerce platforms like Jumia and Konga. However, in spite of the growing number of courier services in the country, only retail outlets with in-house courier services are adopting this option. This is mainly because most small retailers are sensitive to cost. Usually, the customer pays for the cost of the delivery in the ‘pay on delivery’ option. However, in the event the customer rejects the product, it becomes more complicated. The retailer incurs costs associated with a sale that was not actually made. There are ways to mitigate this risk. For example, retailers with a chain of stores in different locations can use store interconnectivity to their advantage. Delivery can be made from the nearest store to the customer to reduce the last mile delivery costs. But for smaller retailers, it is important to gather data from your customer journey. If the pain points indicate delivery might be crucial, then get big on quality control and ensure you can consistently meet customer expectations (refer to point 3) before considering this option.

Retailers not willing to take on the full risk can consider sharing the risk with the customer. It is possible for retailers to offer prospective customers part payment online and then complete the payment upon delivery. In this case, the risk is shared equally by the retailer and the customer, the customer shows a level of commitment and the retailer puts his best foot forward to secure the rest of the money e.g an apparel retailer might send over two sizes to ensure the client can get the best fit. Alternatively, a retailer can offer prospective customers the ‘pay on delivery’ option for the first few purchases to showcase excellence in service delivery and a willingness to take risks and then demand full online payment for follow-on purchases.

Another risk sharing option that mirrors what most customers are used to in this market is online reservations. Usually, many physical stores can reserve an item for a customer (take it off the shelf) that has made part payment. However, this is most beneficial to retailers with a network of stores across locations or a pick-up location remote to the customer, because you do not want a case where customers still need to travel a long distance to access the product.

To summarise, I would like to reiterate the following points. Firstly, the transformation from a physical to a digital store is a systematic process that should ideally begin with the observation of your customers to understand their journey and analyse the role e-commerce can play in easing or eliminating pain points. The importance of data acquisition to the success of this step cannot be overemphasised. Secondly, it is preferable to start with existing customers because it is much easier to identify and respond to their pain points than that of prospective or unknown customers. Thirdly, because lack of trust is still a major issue with e-commerce in Nigeria, retailers should take advantage of conversational marketing tools like WhatsApp and Instagram to reassure customers. This is particularly key for small retailers. Bigger retailers can afford to take on more risks to ease customer’s concerns, via initiatives like pay on delivery. Finally and most importantly, retailers cannot afford to gamble on standardisation and consistency. In the long run, this is what will keep customers coming back.

If you would like to learn more or would like help with your Retail Strategy and E-commerce, please get in touch with us at info@thethreadgroup.com

Uchenna E. Uche is the Business Strategy Lead at The Thread Group.