Local online marketplaces have long ceased to be uncommon in Germany. From Wuppertal and Mönchengladbach to Göppingen, customers in many German cities can already check out in a regional marketplace the range of goods available from local over-the-counter stores and order online the articles they want. With these offerings the initiators of these platforms, who are frequently to be found in the economic development offices of local government authorities, rely especially on the local patriotism of their fellow-citizens. But this strategy alone is not enough. What is needed are services that offer the customer added value compared with pure online players like Amazon or Zalando.
Have you ever been to Cologne? If you have, you will know that nowhere in Germany can people surely be such staunch local patriots as the denizens of the cathedral city. In their Carnival songs they mostly sing about themselves, in the world of football there is nothing to equal their FC Cologne, and in conversations with visitors – accompanied, of course, by a glass of Kölsch beer – they are quick to explain in the greatest of detail just why Cologne is Germany’s most beautiful city. With this Cologne-centric outlook on life, it must surely be child’s play to persuade Cologners from now on to do all their online shopping in a local marketplace and thereby to support long-established local over-the-counter businesses.
Some Cologners would of course respond to this kind of appeal to their local patriotism by steering clear of Amazon, eBay, Zalando, and the like in the future – especially if the appeal was backed by a local hero like FC Cologne soccer star Lukas Podolski or BAP rock band leader Wolfgang Niedecken. Yet I am fairly sure that appeals of this kind would fail to attract – even in Cologne – the critical mass of customer numbers required to support this kind of marketplace. Prof. Dr. Gerrit Heinemann, head of the Hochschule Niederrhein’s eWeb Research Center, and Michael Geffken, director of the Leipzig School of Media, were right in stating, in a May 2017 article for the Frankfurter Allgemeine Zeitung, that “Local Patriotism is not a Selling Point.”
In my opinion this statement is a given. To be explicit, few if any German online shoppers will pay perceptibly more or wait significantly longer for an order in order to support a local retailer. In shopping it is usually everyone for him- or herself. Does this mean that local commerce projects are doomed to failure from the outset? Not at all. They must, however, like all eCommerce competitors, offer in addition to a good range of products and good prices a specific added value if they are to be of relevance for customers.
When the Logistics Involves only the Last Mile
In my view the key added values that local online marketplaces offer are a result of the retailer’s physical proximity to the customer. This is especially apparent in the logistics. Because online customers’ orders can be handled directly at the retailer’s premises, which are frequently in the city center, the distance between warehouse and customer is reduced dramatically compared with classic eCommerce, opening up potential to outperform competitors on delivery times.
In some cities Amazon also offers same-day delivery for certain products provided that the order is placed in the morning. With the AllyouneedCity platform launched in Bonn, right next to Cologne, that mgm helped to develop, DHL Paket has proven that delivery times can be further reduced in a local marketplace. In selected postcode areas DHL Paket offers customers not only delivery within two hours of order receipt but also delivery at a specific time requested.
In order to cope with the logistical challenge that this undertaking poses DHL Paket relies on so-called milk runs. Within these runs couriers constantly cover certain routes, stopping only either to collect goods ordered on AllyouneedCity or to deliver them to the customer. In addition to this immediate delivery, DHL Paket offers AllyouneedCity customers its standard same day, next day and other delivery options. If the goods are not to their liking, customers can also set up a return process themselves. Once they have done so, returns trigger the same processes as an order placed on the platform or initiated by the physical store. That makes coordinating the logistics significantly easier.
Coordinating these different delivery options and the underlying processes is nonetheless one of the major challenges faced by the IT. It is made even more difficult by the retailers’ different opening hours. How, for instance, does the system deal with a customer’s same evening delivery request if the retail outlet is due to close in 30 minutes? Can a courier still handle the order as requested or must next day delivery processes be initiated, the customer of course having been notified? In view of this complexity the task for IT consists in particular of delivering the information required in the right formats and logic to the right channels via functioning interfaces. It is a task that can only be performed effectively by means of close cooperation with the responsible departments.
How Smart Multichannel Offerings Can Delight Customers
Logistics is not the only area in which local marketplaces can offer customers added value. Physical proximity of customer and retailer also opens up numerous points of reference for attractive multichannel offerings. Customers in Bonn can also make use of the logistics services provided by DHL Paket without previously visiting the AllyouneedCity platform – by ordering a delivery in-store. After an exhausting shopping tour customers thus no longer need to hump heavy shopping bags or bulky items back home themselves.
Products ordered on AllyouneedCity can also be returned directly to the store. This provides the retailer with an opportunity to demonstrate his advisory expertise directly to the customer and establish a long-term customer relationship. In this multichannel scenario the customer can also exchange directly for a pair of 43s the size 42 shoes that were a tight fit when tried on at home, thereby eliminating long waiting times.
Contrary to the wishes of local retailers and local government authorities local online marketplaces are not guaranteed to be a sure-fire success. Shopping behavior is changing too rapidly for that to be the case. Due to the digitization of retail, customers are no longer limited to what local stores have to offer. They can choose from countless offers, comfortably from their armchairs and without stepping outside of their front door. So customer loyalty has long ceased to be a matter of course that can be relied upon by appealing to local patriotism or to pity.
Instead, local marketplaces must earn this loyalty by providing unique added values. As the above examples have shown, local marketplaces still have opportunities to be better than the competition. But use has to be made of them. If the purchasing decision based on these specific added values can in addition satisfy the customer’s desire to show local patriotism, the foundation stone will have been laid for a positive shopping experience.
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