Phygital - The Now and Future of Commerce
What is Phygital (Physical + Digital) Commerce?
In today's world, you can divide a B2C business practice into three categories: brick-and-mortar (aka Physical), eCommerce (aka Digital), and “Phygital.”
A “Phygital” experience embraces both brick-and-mortar and eCommerce shopping into one unified journey that takes the best of physical stores and online shops to create a superior and flexible shopping experience. Phygital experiences allow customers to shop how they want and take advantage of the attributes a hybrid shopping experience offers.
But do people want a hybrid (phygital) shopping experience? A recent IBM study outlines the public's split desire towards their shopping experience:
45% of respondents prefer purchasing in-store.
28% of respondents prefer getting products online.
27% of customers choose phygital Commerce stores (36% of Gen Z).
The impact of a phygital shopping experience also shifts by industry. For products like groceries and personal care, the physical shopping experience still leads over online sales. But when looking at home goods, digital and phygital lead.
5 Elements of A “Phygital" Store
Let’s dive deeper into what this hybrid shopping experience looks like using Digital Strategist Paul Prior’s five elements of a “Phygital" store.
Phygital is omnichannel.
STOP viewing your business as online and in-person - customers see businesses as one brand. Being a Phygital business goes deeper than just viewing yourself differently; you must build omnichannel objectives that lead to cross-channel strategies and responsibilities. Yes, you should have goals for your eCommerce store, but you should not build competition between your commerce channels but encourage growth for the company as a whole.
Phygital is psychology.
To run a successful Phygital business, you must understand how and why your consumer chooses to shop. From this, you implement new experiences from your omnichannel toolbelt. You must draw on the strengths of your digital store to support your physical store and the strengths of your physical store to support your digital store.
Phygital is combined revenue recognition.
True Phygital stores look past channel-by-channel profits to see the success of the business as a whole. Yes, we need to keep KPIs in mind for our commerce channels, but we must also realize our customers may use one or both of your commerce channels to make a purchase.
Phygital is a compromise.
The best shopping experience is “one that is optimal across your physical and digital channels.” Make sure your business decision is not biased towards one of your commerce channels. Meaning, we need to be willing to break from the “way we have always done business” mentality and innovate our processes.
Phygital is a journey, not a destination.
Being Phygital requires businesses to constantly evaluate and evolve to shift toward customer demands and take advantage of new opportunities from emerging technologies.
Phygital Business Examples
Living in the great state of Texas, I am fortunate to dine under the orange tent of Whataburger. In the last few years, I have seen Whataburger and other fast-food restaurants take full advantage of the Phygital strategy. Using the Whataburger app, I can read nutritional facts, order food online, build frequent visitor rewards, and choose from the drive-through, curbside, pickup, and delivery. Whataburger and other fast-food restaurants have integrated digital into their physical stores to develop a new and better dining experience.
Back when I was engaged, I avoided the scanner gun and built my wedding registry online. This saved me hours and is an example of identifying how technology can support and perhaps eventually replace an old-fashioned, less efficient method.
Home Depot is one of the most impressive Phygital examples, where now you can research all their products, read up on DIY how-tos, calculate project prices, order online, reserve tool/equipment/truck rentals, navigate the store, and much more!!!
Customers have the choice to research, plan, and shop in-store, online, or both!
3 Omni Strategies For Phygital Commerce
Did you know banks secretly want to connect you with as many of their products as possible? Banks ideally want your checking account, savings account, credit card, and mortgage, with some banks shooting for families to have seven products - all working as touchpoints. Why? Improved customer loyalty.
Like banks, we need to build up how many touchpoints we have with our customers. Phygital commerce offers more options to interact with customers.
Customer Rewards Program
Many businesses start their phygital journey through online rewards programs. Visit us 10 times and earn a free side. With how many choices customers have available to them, we need to see how we can build loyalty through discounts, gifts, and memberships that reward customers who use the phygital shopping experience.
Cross-commerce experience is the idea of promoting a hybrid shopping experience where customers take advantage of physical and digital services to best meet their specific needs.
Digital To Physical Cross-Commerce Experience:
Amazon has implemented physical Amazon Hub Lockers across cities to provide secure pickup locations for customers who fear porch pirates.
Physical To Digital Cross-Commerce Experience:
Curbside Grocery Pickup allows customers to shop online and pick up their groceries without entering the store - helping parents with little children, commuters, and the elderly have the best shopping experience.
When businesses offer both physical and digital services, they remove barriers to their shopping experience.
Conclusion: Why we need to embrace Phygital Commerce
We no longer divide commerce businesses into two black-and-white categories - online and brick-and-mortar. Yes, the final sales are made either online or in-store, but the world’s commerce experience has evolved.
Phygital Commerce is the best experience for customers. Whether customers want to physically see and touch the product or order it from their couch, they have a choice and now expect it across most business categories.
Phygital Commerce also benefits businesses by pushing them to find innovations that solve problems and find more sales opportunities to drive more revenue.
If you want to start or advance your Phygital Commerce, contact us today!
Paul Prior, Phygital — What Is It And Why Should I Care?