Convenience Is The New Battleground For Consumer Electronics Retailers
The COVID-19 pandemic, and its far-reaching impact on the consumer electronics industry, has created an unprecedented disruption that is hindering analysts’ ability to accurately predict what is next for that industry. One of the key areas where customers are showing is convenience-led purchasing patterns.
Some might argue that a couple of years ago consumers were only looking to find a good bargain in the shape of a generous rebate or an attractive spot discount, where lower price points were deemed to be a key driving factor. This is no longer the case. According to Deloitte’s Bobby Stephens, convenience has become a priority for consumers. In fact, more than 50% of consumers have reported spending more on convenience to get what they needed.
Consumer convenience can be presented in different shapes and forms. It can be in the form of a contactless shopping experience, or frequent inventory availability, or even on-demand fulfillment. The ease of acquiring a product is of high influence on the need to buy the product itself. This is forcing retailers to pour huge investments into improving their logistics experience to provide consumers with unmatched convenience in different options, such as order online and pick-up from a nearby store, same-day delivery for many goods, and even instant provisioning for different types of software solutions and subscriptions.
Dilute large upfront pricing barriers
According to Statista’s Simon O’Dea, a smartphone’s replacement cycle in the US was estimated to be between 2-3 years, where the average cost of a smartphone was around $600-650. Such high prices are one of the reasons that are urging large retailers, such as BestBuy and Target in the US, to start new lines of business and offer credit and financing services to take down high price point blockers. This is helping create additional space in the consumer’s wallet and enabling these retailers to cross-sell value-added services such as insurance, repair services, and even SaaS solutions to increase their average order value as well as margins.
Some of the retailers are also taking initiative to start complementing lines of business, such as aggregated telecommunications and connectivity services. This is helping several large retailers, like Cdiscount in France, to improve their consumer convenience. Their customers can easily buy a financed device that comes prepackaged with data, connectivity, repair, and insurance services at a small two-digit monthly subscription fee.
Expand beyond standalone product selling
Following their footsteps in creating an ecosystem of complementary services around their anchor products, consumer electronics retailers are now switching their focus towards innovating to succeed. They are finding new ways to increase their customer retention as well as average lifetime value. The answer to this puzzled equation is to offer bundled recurring services options to their consumers, such as repair and insurance services, installation services, and even software solutions and services.
One of the most recent innovations is AO World’s washing machine as a service model. They are offering washing machines as a service in the UK at £2 a week. The £2 price point included the machine’s rental, insurance, and repair fees. And if in case a machine malfunctions, they will replace it at no cost. This is helping AO World significantly increase their customer convenience as well as margins, where the average retail price of a regular washing machine in the UK is around £250. This model helped them net an average of £550 per machine over a 5-year span, almost double the original retail price. The as a service model has shown retailers the way to drive growth and demand led by convenience and flexibility.
Become an open marketplace and offer diversified services
As retailers realized that being product-centric is not getting them anywhere, the race was more geared towards the fastest pace a retailer can have to expand their portfolio and become a one-stop-shop for all of their consumer needs. This included adding both, their own services along with external value-added partner offerings that complemented their portfolio. A good example is the opportunity Target has when partnering with AllState Insurance, where all of their consumers receive recommendations for device-based warranty services upon checking out. With this level of convenience, Target consumers were able to get financed devices bundled with warranty and support services in a monthly subscription-based manner, from one single entity.
With convenience being top of mind, model helped their consumers better define their need and understand what are the most suitable appliances that would fit in their space. Most importantly, Darty listed their own as well as other partner-delivered services on their marketplace to ensure that they maximize convenience for their customers and offer them the best of both worlds, from one unified marketplace experience.
Maximize your customer convenience
Metrics of success for consumer electronics retailers are changing post-COVID-19, where the path to success is not paved by having more physical stores or products. The path to success is changing based on a retailer’s ability to change and keep up with the increased market demand while considering consumer convenience. A consumer’s urge to buy a certain product is fueled by flexibility as well as convenience, and both proved to be key driving elements behind buying decisions in the B2C electronics retail market. The necessity for retailers to change and become more agile to provide consumers with the highest means of convenience is becoming imperative and unavoidable.
Get in touch with CloudBlue to learn how we are helping consumer electronics retailers offer a wider array of offerings through bundled solutions, device as a service offerings, and open marketplaces. For additional information, read how consumer electronics retailers can achieve even greater growth by catalog expansion and transforming into a subscription-based business.