This novel approach merges facets of e-commerce with the perks of an in-person shopping experience using machine learning, video chat, and more.
In 2017, there were well over 100,000 shopping malls in the US, per Statista data. In recent years, shopping malls have been on the decline as customers shift to online retailers. As a result, so-called "dead malls" spot cities around the US, and research forecasts more of the same in the near future. It's been estimated that one-in-four US malls could shutter in the next five years, according to Coresight Research, and the coronavirus pandemic may have only hastened the inevitable for struggling brands like JCPenney which filed for bankruptcy in 2020. However, a modern tech-savvy twist on the classic shopping experience, virtual stores, could lure customers back to the brick-and-mortars of the previous century. This shopping format intertwines elements of e-commerce with the perks of in-person shopping. So what is a virtual store exactly?
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"Virtual store itself is one of these rather abstract words, it can mean many things to different people. I think my interpretation of a virtual store, in today's context of the growth in e-commerce, is really trying to bring the IRL, the in real life experience to an online shopper," said Adam Levene, founder of virtual shopping app Hero.
Virtual stores exist as a tech-enabled variant of the classic brick and mortar storefront, offering the perks of a physical, in-person retail with the convenience of online shopping.
"We think about Hero as really fusing the best of e-commerce, but also bringing it to best physical store, in real life experience, to create this virtual shopping experience for the consumer," Levene said.
Today, there are a number of companies operating in this virtual retail space and virtual stores incorporate a vast spectrum of technologies ranging from virtual reality (VR) shopping experiences to video calls and chat. Instead of tapping the burgeoning VR market, Hero uses more readily available technologies to connect customers and brands.
"Rather than using technologies like virtual reality, we make use of technologies that are very familiar to people today. Tools like video calling, like messaging, like chats, like text," Levene said.
These capabilities allow online shoppers to engage with retail associates at the physical stores.
In less than 10 seconds, Hero can connect customers with a sales associate across all of its partnered brands, and, oftentimes, the online shopper is paired with an associate at the nearest physical storefront in their area, Levene explained.
If a customer is perusing items online, they can use the virtual store capabilities to interact with an in-person employee, ask them questions, have them send photos of the product, he added.
"We can [also] elevate that to a two-way video call. A little like having a FaceTime conversation that's live and direct from the brand's own website," Levene said.
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The company is also tapping artificial intelligence (AI) to further enhance the shopping experience in this hybrid virtual brick-and-mortar experience. During communication, Hero uses machine learning to match customers with a particular sales representative, Levene explained.
Instead of a screen of open product tabs and closing the deal with the click of an "add to cart" button, this bridging of physical and digital space affixes another dimension to traditional online shopping.
"There's that magic moment for the shopper when they realize, one, they're speaking to a real life human and not a bot, and secondly, when they realize they're speaking to someone who's often nearby. So if they do want to enter the store after, they can and often they meet the associate that served them online," Levene said.
Overall, the virtual storefront blueprint is based around a tech-savvy consumer base as well as physical commercial storefront space, an area that has seen decline in recent years as malls struggle to retain tenants.
That said, Levene detailed a number of ways in which virtual shopping is changing the traditional brick-and-more retail model.
To illustrate inefficiencies in the physical retail space, Levene discussed what he called the "Tuesday at 10 a.m. problem," where sales associates are on-site inside of an empty mall without customer foot traffic. The virtual storefront enables brands to bring virtual customers into the fold and connect with sales associates already inside the physical stores.
"You can apply this digital layer over the physical store, conceptually, and it suddenly means the store is busy, even if there's no customers in person there. Suddenly the staff are utilizing their skills to connect with new customers, to showcase the merchandise in the store," Levene said.
Brands also need to account for both physical store hours as well as peak online shopping times, and some partnering brands are incorporating flex hours at physical locations, according to Levene.
"Typically a website is very busy at 7 or 8 p.m. in the evening, but often the store is traditionally closed, so there's no associate there to help the online shopper," Levene said. "We're seeing many of our partners experimenting with opening their stores later. Even if they're closed to [the] public in person, they're still, essentially, virtually open, so they can assist the online shopper."
This movement has given rise to "dark stores," according to Levene; a shift he likened to the ghost kitchen trend in the restaurant industry, where a brand operates a kitchen without a pricey storefront and delivers food from this location through delivery apps like Uber Eats and Grub Hub.
"[Dark stores] are not open to the public, but you have store associates working in an environment that looks and feels like a normal store. But really what they're doing is assisting online shoppers, they're showing them the products and the merchandise, and then potentially shipping the products directly from the store," Levene said.
During the coronavirus pandemic, e-commerce juggernauts have thrived as lockdown measures have closed storefronts, and consumers opt for delivery amid a modern plague. In the competitive online shopping space, Levene believes the ability to offer a human connection to the shopping experience is one way retailers can set themselves apart and compete.
"Every brand in the world, that isn't Amazon, the one thing they have that Amazon doesn't is their human edge, their ability to connect with shoppers and to empathize, and to provide great customer experience," Levene said.
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