PropTech Column by Peter Tonstad
More and more people in the retail real estate industry believe most shopping centers will be a combination of digital and physical marketplaces in the not-too-distant future. At Placewise this strategic view is at the core of our innovation projects, all fully integrated with our CRM, marketing automation and customer engagement solutions made especially for the retail real estate industry.
Our vision and definition of a fully integrated digital marketplace for shopping centers is that all products within a shopping center are available for online purchase in one unified marketplace, with local store inventory data, one cross retailer cart and payment, and the bundled purchase is available for in center pick up or delivery. This full scope was recently launched in a beta version at a shopping center in Norway, and to our knowledge is the first of its kind globally. Overall, the scope is very ambitious and not without challenges.
The following are what we regard to be the main hurdles to overcome when launching a fully integrated marketplace for a shopping center:
1. E-commerce platform: Our early assumption was that we could integrate our overall tech stack to an existing e-commerce or marketplace platform and be good to go.
After evaluating the market, we quickly discovered there was no platform available in the market that could meet the unique needs of a shopping center marketplace. When analyzing the entire customer journey, we identified that using an existing cart and storefront still required us to develop a substantial mid layer to deliver features like; bundled centralized pick-up vs in store, split order confirmation to respective retailers, partial order returns and fulfilment management between the shopping center and retailers.
2. Product and inventory data: Getting access to retailer product and inventory data has been the overall biggest challenge in any shopping center e-commerce related effort.
On a general basis the quality of the product and inventory data varies a lot from retailer to retailer. The source of data is very often an existing retailer specific e-commerce platform where the need for location-based inventory data is of less importance but is imperative when linked to a physical retail location.
As retailers in general are becoming more open to selling through third parties online, the commercial interest for a shopping center online marketplace from tenants is high. It is the technical access to the product data that adds to the timeline. And as soon as access is in place the work begins with ingesting and unifying data on thousands of products. Typically, there are as many data format variances as there are retailers involved in the project.
3. In store fulfilment: Ideally the shopping center marketplace has two-way point of sales integration with all the retailers.
For several reasons that is an unrealistic ambition, for some it is doable but for many it is not an option at all. That then means there is a need for a second screen solution for distributing orders from the marketplace to the retailers, and order confirmation from retailer to marketplace. This flow then has to be connected to the centralized shopping center fulfilment service and the shoppers. This workflow is unique to shopping centers, so it had to be built for the industry.
4. Shopper engagement: A shopping center online marketplace offers shoppers the convenience of combining online and in store shopping, cross retailer check-out and cross retailer pick-up or delivery.
It also offers attractive solutions for managing returns and exchanges. Having said that, a new shopping center marketplace has to compete with all other existing online marketplaces. So, marketing assets and budgets are required to create the wanted funnel. If your shopping center already has a consumer database from current digital offerings that would be your best starting point to also recruit online shoppers. In any case changing consumer behavior is not done overnight, so long-term strategies are needed, in combination with some realistic expectations.
The above are in short what we believe to be the four most important hurdles to overcome to create a fully integrated shopping center marketplace, and there are several others that could be added to the list. Being first at anything is never easy, but the potential of marketplaces to transform the retail real estate industry is tremendous.
For digital marketplaces to be an industry wide success high level of engagement from all involved parties is needed. The more shopping centers that embark on this venture early the more everyone will gain over time. It is not a case of being able to wait and see what others are doing, because it is the collective industry effort that will give your shopping center access to the needed retailer product data.
We are placing our bets on the future of shopping centers as digital marketplaces and we hope you will as well.