The Future of Retail - March 2022

The Future of Retail – March 2022

User experience in a cookieless world

Will the new marketing paradigm compromise online shopping?

Those with a heightened awareness of data privacy may have often wondered what they are losing out on when declining all the cookies except for the most essential ones. And now that there are irrefutable signs of a turning tide on third-party cookies with tech giants’ browsers and apps gradually deprecating them, the question may have some relevance for any online shopper.

The cookieless world heralded by marketeers, however, doesn’t mean web browsers will soon be completely bereft of tracking codes. Rather, it marks the end of ad exchanges and programmatic ad buying the way we’ve known them, where online advertising and data privacy is beyond the control of individual brands.

There is no denying that the online marketing ecosystem will need to reinvent itself to find alternative ways of matching publishers and advertisers in real time – whether within the walled gardens of tech giants or on the internet at large. Online shoppers, however, will continue to have at least three other types of cookies to rely on for their quality customer experience.

First, second and zero-party cookies

Apple’s and Google’s browsers are designer to block only third-party cookies, bringing about a natural shift to first-party ones. These first-party cookies will provide brands with analytical and functional data on their own domains. They’ll also still enable them to manage users’ login and web form data, as well as the behavioural data of visitors to their websites, or even browser and device settings information.

Therefore, what seems to be a seismic change for marketers won’t prevent them offering the kind of personalised experiences their customers already take for granted, such as returning to a previously abandoned shopping cart, or interacting with the website or app in line with their preferences and propensities.

The decline of the third-party cookie is also expected to give rise to data collaboration, where cookies are merged and stored between partners in a secure ecosystem to grow the respective brands’ customer base ethically – a subdued version of the old data bonanza, in a controlled environment.

Zero-party data – information that customers provide retailers and brands with willingly and proactively through surveys, polls, sweepstakes, interactive social media stories or gamification – is also a factor, according to a recent report from Forrester Research. Zero-party data has the potential to be more accurate and relevant than either third- or first-party data, as it requires the highest level of engagement on the part of online shoppers, and therefore may be most effective when combined with rewards – discount codes, gifts or extra lives in games.

There’s more to personalised customer experience than targeting

Without playing down the setback brands may suffer thanks to the loss of data points they previously gained from third-party cookies, better ad targeting is just the start of what brands can do to improve the customer experience.

Online shopping is more convenient for many people. For it to become yet more appealing, it needs to mimic the social element of the shopping experience. But to achieve that, the interaction should be built on the understanding that what the customer shares with the retailer remains between them. After all, customers would be less willing to confide in retailers if, by showing off their ability to guess what customers were after, revealed that they had been literally been stalking their customers to get that information – a real-life equivalent of the predictive power of third-party cookies.

The end of third-party tracking can be seen by brands as an excellent opportunity to rebuild trust with customers and find alternative ways of improving the customer experience. More capital-intensive options include cognitive assistants that help customers navigate websites and make good purchasing decisions with personalised nudges and information nuggets given at the right time.

Meanwhile, cheaper methods, such as simple gestures – the equivalents of what we’re used in brick-and-mortar settings, for example a discount or a free shipping offer when the customer service has gone wrong – can also do wonders.

Although at the moment it’s not clear what the post-cookie world will look like, whether the dominance of tech giants resented previously by smaller players of online advertising will develop into a duo- or a triopoly or technological innovation will eventually square the circle, seen from a customer experience perspective, the third party cookie should rest in peace (1994-2023).

Zita Goldman

Zita Goldman covers digital transformation with a focus on demystifying digital technologies and showing how they fit into a broader sectoral, macroeconomic, legislative and societal context. She has a passion for connecting the dots of current business and financial news and explaining inconsistencies, for giving hype a reality check and looking behind buzzwords for fresh meaning.

How the future of shopping was shaped by its past

It’s a sunny, spring Saturday morning in early 2019 and I’m having coffee at the local Costa in Brentwood, an Essex town where I’ve never been before. There are plenty of people out and about and smiling. I have a couple of hours to spare so I’m planning to wander around and have a look in the shops. Then my phone pings: “Surprise!” It’s a promotion from M&S. “Here’s 20 per cent off when you shop online”.

The Brentwood branch of M&S is just a couple of doors down from where I am – I just passed it. But the notification isn’t suggesting I go there. On the contrary, this special offer will deter me from shopping in an actual shop, on an actual high street, where I know I’d now be paying 25 per cent more (if you start from the lower price) than I would if I bought online. It is, in effect, a counter-advertisement – taking me away from the shops and towards a virtual, online-only future.

Around this time, M&S had been closing stores in numerous locations. Many of these shops had been there for as long as people could remember, and were part of the towns’ identity. Like “our” NHS, and unlike most other commercial brands, M&S evokes a feeling of belonging to a shared history.

Looking back, my little counter-epiphany now seems to encapsulate something of the fraught shopping mood of three years ago. The incident felt like a painful sign of the contradictory state of British retail – and especially that part of it that is commonly known as the high street.

The choice on offer was absurd for both the customers (only one rational way to go), and the company (why push customers away from the stores that are still in use?). But it was somehow feasible then, in those innocent pre-pandemic times, to take for granted the inevitable triumph of online retail, even if it brought with it the destruction of most other modes of buying and selling.

From pedlars to supermarkets

Online shopping seemed in those days to be the next and natural step along the path that began with the introduction of self-service. I started charting these developments more than 20 years ago when I wrote Carried Away: The Invention of Modern Shopping. And a year after the sad Brentwood episode, at the start of 2020, I was coming to the end of writing my new book Back to the Shops: The High Street in History and the Future. This investigates the different stages of shopping, from its early beginnings to the present.

This history stretches back to pedlars and weekly markets and runs through small fixed shops in towns and villages to the grand “destination” city department stores of the last part of the 19th century. Then, in the later 20th century, came self-service, to be followed in recent years by the move online.

But shopping history never moves in one single direction or all at once. There have always been regional and chronological divergences from mainstream developments. There are also retailing modes that fall by the wayside and then return at a later date in new guises or with new names. They often have every appearance of being newly invented.

Take fast fashion, for instance. We think of fast fashion as inseparable from a contemporary culture of rapid turnover. But a version of it can be found as far back as the 18th century, well before garments were mass-produced in factories. Clothes at this time were all sewn by hand.

In late 18th century London, a new type of shop appeared where, for a price, a lady or gentleman could commission a customised outfit that would be made up for them overnight. It offered an instant transformation into the style and class of the best social circles. But unlike modern fast fashion, it wasn’t cheap and the clothes weren’t flimsy or soon discarded.

The same period also saw the arrival of short-term shops not unlike those that we now call pop-ups. They might appear in any village, when an itinerant salesman rented a room in the local pub as a temporary location for what he’d present as a flash sale: “now or never”. In the 1760s, for example, Thomas Turner, who kept the main shop in the small Sussex village of East Hoathly, complained in his diary about just such a character zooming into the area – and taking away attention, and trade, from his own steady service.

Today, pop-ups move into empty shop units on a short-term basis and at a lower-cost rental. It is a useful arrangement for both the owner of the premises and the shopkeeper. The landlord gets some (if not all) of their usual income for a space that would otherwise be yielding no income, while the tenant, with no long-term commitment, takes no great risk. The business itself – often selling time-limited, seasonal stock – is here today and gone soon after.

Mail order shopping also has a rich history that seems to anticipate later developments, too. Catalogue companies, like Freeman’s or Kay’s, were massively popular in the middle decades of the 20th century. But despite its popularity, “the book” (the affectionate name for the big, “full colour” catalogue) never posed a threat to the shops. Nevertheless, mail order was a form of virtual shopping at a distance, and now looks like a striking precursor to online shopping.

Perhaps the most surprising example of an early retail development whose beginnings have now disappeared from view, is the chain store. We tend to think of chain stores as having pushed independent shops out of the way in the late 20th century, with the result that every shopping mall and every high street (if it survives at all) looks like all the rest. But, in fact, chain stores were everywhere a century earlier, including some of the names that are still well known today.

Chains took off in the second half of the 19th century. Nationwide grocery companies like Lipton’s or Home & Colonial had thousands – yes, thousands – of branches by 1900.
Of these early chains (or “multiples” as they were then called) only the Co-op remains. The Co-op no longer maintains the cultural and trading pre-eminence it had from the mid-19th to the mid-20th century. But unlike the other dominant chains of that era, it has endured. It even pioneered the move to self-service in the middle of the 20th century and it remains a significant player among the biggest supermarket chains of today.

WHSmith, the newsagent and bookseller, developed from the late 1840s alongside the growing railway network. There was soon a stall to be seen inside every station of any size, providing the passenger with novels or newspapers for their journey. In 1900, there were no fewer than 800 branches nationwide. From the beginning of the 20th century, Smith’s also had outlets on town shopping streets.

Boots the chemist was another 19th-century chain that is still a standard high street presence. The first Boots shop was opened in Nottingham in 1849. By the turn of the century, there were around 250 branches – and 1,000 by the early 1930s.

Numerous small and large chains, selling many types of commodity, faded away, died their deaths, or were taken over. But the striking point is that chain store Britain is nothing new. It dates back well over a century.

The self-service revolution

If online retail was the new feature of early 21st century shopping, self-service was the shopping revolution of the 20th century.

Self-service reached Europe after the Second World war. In the US, it had been an accidental invention of the Great Depression, when abandoned factories and warehouses were turned into makeshift, cut-price outlets. Customers picked out goods as they walked around and paid for everything at the end. By the 1940s, this new type of store was well established, often in regional chains, as the “super market”. Postwar, this new American mode of retail operation was exported to the rest of the world.

Promoted as a modern, efficient way to shop, self-service entailed both a different type of store layout and new norms of customer and shopworker behaviour. Before this, every purchase made was asked for over the counter, item by item, and the assistant “served” the customer personally. Few goods were packaged, so every order was literally customised: measured or weighed and then wrapped.

But self-service did away with all this. There was no need for counter service if customers were making their own selections. All available goods were put out on display, within reach. No need to ask someone to fetch them. And there was no one else waiting behind you for their turn to be served. You could take your time, look around – or get it done at speed. It was your choice.

This was a newly impersonal shopping environment. The customer was in control of the pace and the selection, but they were on their own and there was no longer someone standing there to serve them. For shop workers, meanwhile, the abolition of counter service meant that their various skills, including their people skills, were made redundant. So too was their often detailed knowledge of the products they sold.

When the customer did encounter a person across a counter, it was not to ask for advice about what to buy; it was simply to pay and get out. Now they just handed over a basket of goods already picked out; the assistant was not involved in the choosing. Nor was the checkout for chatting. Like factory workers, cashiers had to keep up to speed.

The whole process was meant to be more efficient, a saving of time and money for the benefit of business and customers alike. The customer, notably, was seen now as someone for whom time was a finite and valuable resource. In this way the shift to self-service was perfectly matched with some large social changes of the postwar decades.

As late as the 1960s, for example, “housewife” was the default designation for women over the age of 16 (even though many had part- or full-time jobs). But the “housewife” would soon be replaced by the double-shift working woman, eternally “juggling” the demands of both home and work. By the end of the 20th century, now with the help of a fridge and a car, the daily walk to the local shops had been replaced by a weekly trip to the supermarket, where everything was available under one roof and the shopping was now a substantial task.

The first 1950s self-service stores are distant enough today to have become the subject of mild nostalgia, obscuring the original picture of smart efficiency. Black and white photos from the archives show people (particularly women) of every social type gamely learning to manage the curious “basket” containers provided for them to carry around on their arms and fill up as they walked around the shop. These shoppers are no longer standing or sitting at the counter while they wait for their turn and that, at the outset, was the visible difference introduced by self-service. What looks odd now, many decades later, is how little they’re buying – just a few jars and tins.

Save time online

With self-service firmly established to assist supposedly “time-poor” consumers, the stage was set for internet shopping to promise an even more efficient way of doing things.

An Ocado flyer from early 2019 displays the caption: “More time living, less time shopping”, as if living and shopping have become mutually exclusive. And crucially, it is not money but time – its saving or gaining – which is the quantifiable currency of the promotion.

In this way, the online upgrade appears to remove all remaining real-life interference from the task of shopping. You don’t have to take yourself anywhere to get to the store, which never closes. There are no empty shelves; everything is always there on the screen. There is still a trolley or basket, but not one that you have to push or carry, and it will hold whatever you “add” to it, irrespective of volume or quantity.

The shop assistant is wholly absent from the screen, although there are downgraded virtual versions available in the form of programmed chat-bots. With online shopping, the backstage work that “fulfils” an order occurs in a storage facility far away and is invisible to the customer. But in large self-service settings, like supermarkets and DIY mega-stores, the role of the checkout cashier had already been reduced to that single scanning function, requiring no specialist range of skills and no particular knowledge of any one of the thousands of possible things, from bananas to baby wipes, that they might be rapidly moving along.

Back to the ‘real’ shops?

Town centres had been dying a much discussed death for years, as more and more shops were being closed down – and stayed unused.

But amid the doom and gloom, some towns had been taking action to resist the trend, battling back with collective imagination and sometimes with significant financial backing. Shrewsbury Town Council revitalised a 1970s market building to make it a thriving centre for food stalls, cafés and specialist shops. The council also bought a couple of run-down indoor shopping centres in the town, which can now be redeveloped with community interests in mind.

On a smaller scale is Treorchy in South Wales, which won a national best high street prize in 2019 thanks to its flourishing independent shops and cafés. They all worked together to organise cultural events with the help of an enterprising chamber of commerce.

Still, initiatives like these were exceptional. For the places at the other extreme, where boarded-up units were everywhere, the call to keep shops open could sound like a hopeless plea, and too late to make a difference.

Lockdown’s impact

In the first weeks of lockdown, it seemed that the pandemic would hasten the move online, by closing down most of the shops that were left – and seemingly leaving online as the only option. But as that slow, strange time went on, it became clear that something quite different was going on. Two years later, we can see that the lockdowns brought about a return to slower, more local and personal modes of shopping.

The shops still open for normal business – those that officially qualified as providers of “essential” goods – were being used in new (and yet old) ways. They became places to go for some vital variation in our daily routines.

People also began to make a point of supporting and using independent, local shops. At the same time, home deliveries were being organised by these smaller shops, often working together in groups. This was the case with Heathfield, a few miles from Thomas Turner’s village in East Sussex. And it was nothing to do with the networks set up by the supermarkets and other big chains.

In the media, shop assistants, working on checkouts or filling shelves, began to be referred to as “frontline workers”. The implication of this “promotion” was that they were doing invaluable work that was comparable to the public-spirited dedication of NHS employees.

The local high street seemed to be benefitting from renewed appreciation. It was as if the pandemic had demonstrated what shops were really for, and why we should not let them go. To say that shops – real shops – are a much needed community resource used to sound worthy and well-meaning. Now it just states the obvious.

A return to home delivery

Meanwhile, another, related revival is happening: home delivery. This is often assumed to have been an online invention, promoted by big supermarkets as the latest expansion of their networks and by big stores of all kinds. Some of the big home delivery names, such as Boohoo and Asos, have no physical shops at all.

But until the middle of the 20th century, most shops offered home delivery as a matter of course. For many food products, like milk or meat, this arrangement was the default. The butcher’s boy brought round the tray of meat, and the milkman delivered the bottles direct to your doorstep every morning.

With self-service came the end of most home delivery services, too. When bigger supermarkets were built on the edges of towns, in the 1980s and 1990s, the basket became a big trolley, and people put all the bags they came out with into the back of a car. As with all the other changes associated with “self”-service, the difference was that customers were doing this work themselves. The “service” was no longer provided by others.

The new delivery services offered by smaller, independent stores that started up during lockdown represented a return to local arrangements of the kind that were standard before the arrival of self-service. Yet orders are often now made online. In this case, then, new technology has actively contributed to the revival of an older form of shopping.

In the East Sussex village of Rushlake Green, for example, the local shop began to offer home deliveries. This was so successful that they acquired a new delivery van with their name on the side. This marked something of a return to the 1930s, when local shops first started investing in a “motor van” to make deliveries (a new trend much remarked on in the trade handbooks of the time).

As it happens, this joining of the traditional with the latest tech is itself a long established phenomenon in the history of retail distribution. New modes of transport and communication have repeatedly modified the existing conditions of shopping, and the current manifestation has striking antecedents.

Virginia Woolf’s last novel, Between the Acts, offers a nice illustration of this. It is set at the end of the 1930s, when the installation of domestic telephones was beginning to make it possible for affluent customers to ring up the shop and order their meat or groceries for delivery, without having to leave the house or send a servant.

One scene in the novel has a country lady distractedly ordering fish “in time for lunch”, while she brushes her hair in front of the mirror and murmurs lines of poetry to herself. A few pages later, just as she requested, “The fish had been delivered. Mitchell’s boy, holding them in a crook of his arm, jumped off his motor bike.”

The narrator stays with this small domestic event for a moment, commenting on how the motorbike, a recent arrival on the local scene, is driving slow old habits out of use.

No feeding the pony with lumps of sugar at the kitchen door, nor time for gossip since his round had been increased.

In Woolf’s time, this mode of transport, along with the phoned-in order, was a notable innovation, allowing just-in-time gourmet food deliveries. Almost a century later, the exclusive telephone is now the semi-universal smartphone, but the method of ordering at a distance is the same. And as it turns out, the motorbike has not been superseded in the online age of Deliveroo.

Rachel Bowlby, Professor of Comparative Literature, UCL

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The seamless future of retail is closer than you think

AI is empowering retail contact centre agents, floor associates and fraud teams to help deliver seamless customer experiences

For years, retailers have been talking about providing seamless experiences across digital, phone and in-store customer engagements. Survey after survey shows that customers expect to have a consistent, unified experience with a single, united brand. But delivering those seamless experiences has proven to be extremely difficult.

At many retailers, silos remain. Contact centres, digital teams and stores all have different technology infrastructures, business processes and budgets, and integrating them can be a daunting challenge. Often, these teams operate in isolation from each other – or worse, in competition with each other.

But it doesn’t have to be this way. In future, this picture will look very different. Even now, small examples of the silos breaking down are all around us.

For instance, during the pandemic, store closures led to a massive surge in contact centre volumes. Many retailers instantly recruited experienced, knowledgeable chat agents from their in-store staff to help ease the burden.

In the future of retail, teams won’t just combine their existing powers to make customer experiences seamless and friction-free – they’ll be helped by new AI colleagues that can connect all the dots in complex customer journeys.

Augment human intelligence

One of the most exciting things about the future of AI in retail is just how much of the customer journey we’ll be able to automate. However, there’s still a balance to be struck; we can’t lose sight of the value of the human touch, especially in high-value interactions or emotional situations.

Many retailers already use intelligent virtual assistants to automate customer care interactions and shift customers to live agents for sales conversations – they want their best salespeople talking to shoppers. But even after that transfer to a human agent, AI still has a role to play.

Today’s AI applications can sit in the background of customer conversations and provide real-time prompts and recommendations for agents based on customer context and history, encyclopaedic product knowledge and best practices from the highest-performing team members.

Currently, these AI agent coaching tools learn from phone, chat and messaging conversations. In a world where experiences on those channels blend seamlessly with in-store experiences, AI models can gain an even deeper level of product and customer understanding by learning from customer interactions on the shop floor.

Imagine if even your most junior contact centre agents had access to the same level of knowledge and customer service know-how as a veteran of 20 years from a flagship store. Very quickly, the gold standard of customer care and product expertise would become the norm across all your teams. That would have a major impact on customer satisfaction scores and sales figures – and it would be a big step towards delivering the consistent, seamless experiences that customers expect.

Stop fraudsters in their tracks

In the past, providing frictionless customer experiences would have risked opening the floodgates to fraudsters. Adding security, on the other hand, would have also meant adding friction for customers with the inclusion of passwords, PINs and security questions. With AI-powered biometrics technologies, that’s no longer the case.

Already widely used in the financial services and telecommunications sectors, biometric authentication (identifying people based on who they are, rather than knowledge or devices they have) helps companies provide seamless, friction-free experiences while increasing security. It’s a classic win-win: customers don’t have to waste time being interrogated for security details, and fraudsters can’t make use of the customer information they’ve stolen, no matter which channel they try. Although digital is the latest battleground for fraud prevention teams, fraudsters will constantly vary their tactics to find the weakest link, whether that’s stores, the contact centre, a website or a branded app. With biometrics a key weapon in their fraud prevention armoury, teams can detect, prevent and investigate more fraud wherever it appears.

To watch the video, please click here.

To learn more about how you can use AI to deliver consistent, intelligent and secure experiences wherever customers engage with your brand, visit nuance.com/omni-channel-customer-engagement/industry/retail.html

By Sebastian Reeve, Director of Intelligent Engagement Market Development, Nuance

INDUSTRY VIEW BY NUANCE COMMUNICATIONS

The future of retail: keep up or risk falling behind

The need for social distancing has accelerated the dependence upon e-commerce. Total online spending in Southeast Asia has increased by 49 per cent to USD$174 billion in 2021 (from 2020), and is expected to continue growing to USD$363 billion by 2025. This has left retailers scrambling to adapt and manage the influx.

Most retail supply chains were built to deliver goods to stores. However, with omnichannel retailing fast becoming the new normal – where consumers enjoy a seamless, holistic shopping experience across multiple sales channels – the supply chain may be the first and only interaction between your brand and the customer.

Keeping up is hard. Attempting to serve more channels seamlessly puts a lot of pressure on the supply chain, especially when combined with rising customer expectations in consumer experience, personalisation and delivery speed while keeping costs under control.

Automate to improve speed, quality and efficiency

Omnichannel fulfilment involves more complex processes to efficiently handle the orders, from single-unit e-commerce orders to large in-store orders. This drives up complexity, labour and inventory costs, and many retailers with legacy supply-chain processes have found it difficult to move toward more agile and diffused operations cost-effectively while still catering to their traditional brick-and-mortar customers.

Automating warehousing and fulfilment processes negate the need for human presence, safeguard employees by supporting greater social distancing and allow increased capacity for efficiency. They also ensure orders can be picked and packed efficiently and quickly, boosting productivity.

In this age of immediacy and with a plethora of alternative options just a click away for customers, retailers risk losing sales to competitors should they fall short of delivery expectations.

A digitised and integrated supply chain

To facilitate omnichannel distribution, fulfilment technology must be integrated into other enterprise systems to give visibility and actionability to your workforce. Technology and effective data-driven strategies that incorporate the right partners are key enablers of an omnichannel supply chain; partners need to ensure they have the software and tools to capture the requisite data and offer real-time inventory updates and order statuses.

Seamless integration of systems across channels is also crucial – both to meet consumer expectations and to facilitate management and decision-making. For consumers, cross-channel system integration is essential to provide real-time information on product availability and delivery times. For retailers, effective cross-channel decision-making requires the integration of planning tools with real-time simulation capabilities, especially in situations of scarcity.

With so many moving parts, it can be time-consuming and complex for retailers to coordinate on top of all the other aspects of managing a business. Partnering with a third-party logistics firm such as blu that offers automated warehousing solutions and is experienced in omnichannel fulfilment will help support your business in the transition.

Leverage blu’s open APIs to quickly deploy warehousing and fulfilment solutions to meet your business needs. Powered by robotics and AI, blu’s scalable and integrated systems ensure real-time inventory tracking and swift, accurate fulfilment, even with a multi-node supply chain. Given its extensive trade links as well as air and seaport connectivity, Singapore is well-poised to serve as a regional fulfilment centre for retailers – shortening delivery times for customers within SEA.

Take charge of your consumer journey today or risk being left behind.

blu is a logistics provider based in Singapore. Speak to us today to learn how you can work with blu to digitalise your supply chain and meet consumer expectations for a seamless shopping experience across channels

INDUSTRY VIEW FROM BLU WORLD

How brands can take advantage of the evolving consumer journey

The evolution of the consumer journey reflects the global changes of recent years. While it looks different today, it doesn’t have to be daunting

Consumer shopping habits have shifted dramatically in the past two years. As high-street shops closed their doors and our purchases moved online, we became more digitally savvy at every point in the shopping journey. This evolving path to purchase presents a huge opportunity for brands willing to adapt, utilise new technology and meet rising consumer expectations.

The growth in e-commerce inspired consumers to research, discover and purchase products in new ways. Consumers now have the opportunity to buy from marketplaces, retailer websites, brand websites, social media sites and more. In fact, 73 per cent of consumers now describe themselves as channel agnostic, compared with 65 per cent before the global health crisis. They are no longer passive participants waiting to be told about the latest trends; they’re actively finding it themselves. Statistics have shown that 81 per cent of retail shoppers research online before making a purchase.

The big technological advancements over the past 10 years have also forced consumers’ buying habits to evolve. Research has shown consumers are using multiple channels and devices to research products, with mobile, for example, now accounting for 63 per cent of all online purchases. These developments in tech have brought a new ‘always-on’ mentality and the modern path to purchase has changed for good.

The modern consumer journey

The traditional journey consumers take is largely linear and has remained the same despite the innovation we’ve seen across the industry. Consumers start by becoming ‘aware’ of a product. They then ‘consider’ that product and finally ‘purchase’ it. This process typically remains the same, whether it takes someone 10 minutes or 10 months to buy.

The big shift in the modern consumer journey has come from technology, which has provided more digital touchpoints along the path to purchase. Consumers are now more informed, demanding and often impatient. This increase in information disrupts the traditional consumer journey and not meeting these new customer needs can impact a brand’s sales.

Awareness

Technology has had a huge impact on consumer awareness. The increase in digital touchpoints such as online stores, apps and marketplaces has increased visibility and allowed consumers to find products wherever they are.

The increase in channels has made the market much more competitive, with brands and retailers now fighting for consumer attention and trying to gain visibility. To do so, it’s essential they develop new strategies to gain exposure and reach their customers. Technological features such as shoppable media and utilising social commerce are a great way to help with this.

Consideration

According to a recent ChannelAdvisor survey, Amazon and search engines were the primary channels used for consumer research. These allow buyers to search for a specific product across multiple channels, build up their product knowledge and look for the best price or potential alternatives.

This is why keeping consumers’ attention along the path to purchase is crucial. Attention is short, and with more options than ever, it’s easy to lose a sale. Brands and retailers should prioritise their content with up-to-date product descriptions, images, blogs and case studies, all of which capture attention and keep consumers engaged.

Consistency is also important for brands and retailers. The increase in online and physical channels means consumers have a greater choice of where to buy a product. Consistent messaging across online stores and physical stores allows for a much smoother path to purchase, with consumers remaining informed and in control of their purchasing decisions.

Purchase

The final stage of the traditional consumer journey is the purchase. How a brand stands out from its competition and creates a frictionless path to purchase will prove crucial to its success.

The surge in e-commerce has made the shopping landscape even more crowded. Brands that employ tactics such as shopper discounts, how-to videos and same-day delivery options often win by providing the buyer with more information and keeping them more engaged with their offers.

A seamless checkout experience makes a huge difference. Shoppers now expect everything to be as easy as the one-click checkout service that Amazon offers and any complications on the way can quickly turn into a consumer abandoning their basket and buying from the competition.

Delivery

The modern consumer journey no longer stops at the checkout. The experience consumers have with delivery of their product is as crucial as the three previous steps and can turn consumers from advocates to critics.

Issues outside of a brand’s control will arise – the recent global supply chain crisis impacted businesses of all sizes and caused havoc for sellers. The key for brands is transparency. Keeping your customers informed of where their product is, how long delivery will be and offering them a discount on their next purchase if there are delays can help smooth this friction. Clear communication and delivering your products on time will build your brand’s reputation and keep customers coming back.

The modern consumer journey has evolved significantly in recent years. For some brands and retailers this can seem daunting, but adapting to this new e-commerce era will help with success for years to come.

ChannelAdvisor is a multi-channel commerce platform that enables retailers and manufacturers to integrate, manage and optimise their merchandise sales across hundreds of online channels, including Amazon, Google, Zalando and Facebook. To find out more, visit channeladvisor.com/uk.

By Vladi Shlesman, Managing Director, EMEA, ChannelAdvisor

INDUSTRY VIEW BY CHANNELADVISOR

A shift from physical to autonomous phygital: Store as Media

Serge Galeev, CEO of Displayforce.ai

While brick-and-mortar stores have always been the favoured place for shopping, online sales are now grabbing a large piece of the pie. After Covid-19 led to services of all kinds moving online, we can ask a reasonable question: what is the purpose of physical stores now?

People still want to be impressed, and they crave offline experience.

The problem of offline nowadays is that it’s really hard to measure the result of marketing activities in-store. The current metrics used offline stay behind the online ones. But It’s possible take performance marketing metrics from online and bring them offline, so points of sales can be monetised.

According to Doug Stevens, this is a new opportunity to communicate with customers. Physical locations give a chance to create everlasting relationships with consumers, and that’s why it’s so important to treat in-store impressions carefully.

Practically, it means that companies need to reimagine a regular store. In a new reality, you can run targeted marketing offers in store, upselling and cross-selling buyers offline as if online.

Displayforce.ai acts as a mediator to bring Store as Media to life. In general, what they provide is autonomous performance and audience-based marketing, but offline. By analysing shoppers’ interests, such as a specific product or category, and considering the person’s age, gender, mood and appearance, Displayforce.ai triggers all screens in store to display personalised content while calculating the engagement. To power screens, we use any type of media player. Being a golden partner of Intel, we recommend using Intel processors for smooth performance.

Any situation can trigger a smart algorithm to change the campaign autonomously, from new pricing or promotions to different weather. For example, an ad for a sunglasses brand will only be shown when it is sunny. If needed, the smart system can generate dynamic content in real-time involving third-party data, like an e-commerce platform.

The best part is a complete automation of brand-retailer relationships: brands can get direct access to audience-based self-service DSP to run their ads.

Elements of autonomous online marketing now accessible for brick-and-mortar stores include:

Auto-generated marketing messages
Trigger-based marketing messages
Auction-based bidding for brands in self-service DSP
CPM (cost per mile) and CPV (cost per view) paying models
Customer insights (audience portrait, behaviour, engagement and marketing campaign efficiency) due to computer vision

Activate in-store autonomous Salesforce by Displayforce.ai

Displayforce.ai — AI-Powered Autonomous Marketing solution for retailers. We boost retailers’ sales of promoted products (+3,9 per cent) and Ads revenue (+7000 $ per store).

INDUSTRY VIEW BY DISPLAYFORCE.AI

Supply chains in 2022: shortages will continue, but for some sellers the problem will be too much stock

Everything was about shortages in 2021. Covid vaccine shortages at the start of the year were replaced by fears that we would struggle to buy turkeys, toys or electronic gizmos to put under the Christmas tree. For most of the year, supermarket shelves, car showrooms and even petrol stations were emptier than usual. Some shortages were resolved quickly, others linger. So are we facing another year of shortages or will the supply chain crisis abate in 2022?

It’s worth reflecting that the shortages have happened for many reasons. During the early 2020 lockdowns, a sudden run on essentials such as toilet paper and pasta left shelves around the world bare. Singapore ran out of eggs as consumers hoarded them, for example. Retailers ordered more eggs, desperate to satisfy demand. But once the demand had been satisfied, there was suddenly an oversupply. In June of that year, distributors threw away 250,000 eggs.

This is what happens when demand temporarily changes. The effect magnifies with each tier of the supply chain as every supplier adds an extra buffer to their order to be on the safe side. Minute changes in customer demand can therefore result in huge extra demand for raw materials. This is called the bullwhip effect. As with a whip, a small flick of the wrist can lead to a big crack at the other end.

The bullwhip effect can be from demand suddenly falling as well as rising, and during the pandemic these forces have sometimes combined. For instance, a combination of the crash in demand for new cars and higher demand for devices like laptops and games consoles for lockdown entertainment contributed to the semiconductor-chip shortage.

With modern cars sometimes containing 3,000 chips, car makers are major customers for chips. But as car sales plummeted in 2020, supplies of chips were redirected to manufacturers of smaller electronic goods. When demand for cars picked up again a few months later, there were not enough chips to go around. Carmakers were forced to stop production lines and couldn’t make enough cars to satisfy demand. They also started hoarding chips, making the shortages worse.

Shipping shenanigans

Other imbalances in today’s supply chains are larger than competing companies or industries. Shipping containers move some 1.9 billion tonnes per year by sea alone, including virtually all imported fruits, gadgets and appliances. Normally containers are continually loaded, shipped, unloaded and loaded again, but severe trade disruptions resulting from lockdowns and border closures broke that cycle.

Containers were left in wrong locations as trade shifted, shipping capacity was reduced and vessels couldn’t land where and when they intended. Coupled with congested ports and problems with timely unloading and onward transportation, a typical container now spends 20 per cent longer in transit than before the pandemic.

Shipping rates have soared in this environment. Prices on major east-west trade routes have increased by 80 per cent year on year, which is bad news for economic recovery. Even a 10 per cent increase in container freight rates can reduce industrial production by around 1 per cent.

The human factor

Technological advancement may have reshaped manufacturing, but production and delivery still rely heavily on people. Waves of layoffs in production due to lockdowns resulted in labour shortages when demand picked up. To give one example, Vietnam saw a mass exodus of workers from industrial hubs to rural areas, which could not easily be reversed.

Worker shortages were particularly evident with lorry drivers in the UK and other countries. The sector already struggled to recruit and retain drivers because of pressures of rising demand, an ageing workforce and worsening working conditions. Meanwhile, Brexit has made it harder for migrant drivers to work in the UK.

There were at least early signs of the driver problems easing in the run-up to Christmas as more recruits came through the system, which will have been one reason why goods shortages were not as bad as they might have been. Equally, however, we shouldn’t expect a swift end to the supply chain crisis in 2022.

The omicron variant is leading to more staff shortages as people take time off sick and suppliers navigate new restrictions. China’s zero-Covid strategy is likely to continue to disrupt both production and transportation of goods, possibly for the entire year.

Yet we might also see problems in the opposite direction, via another crack of the bullwhip. Back-orders in many sectors will have been filled, but consumer demand may well be cooling now that furloughs have ended and interest rates are beginning to rise. So some companies might find they end up with an over-supply of goods.

To avoid this, they will have to level their production rates with demand. Yet demand may still be difficult to forecast – and not only because of omicron and China. A new variant of concern leading to a new wave of lockdowns could easily result in people once again spending money on things rather than holidays and nights out. Supply chains with good visibility of actual demand and clear communication across supply chain tiers will be at a considerable advantage. In sum, it is likely that different industries will experience both shortages and over-supply problems throughout 2022.

A longer-term issue is to what extent supply chains change. The pandemic raised new doubts about outsourcing production to far-away countries with lower labour costs. Equally, problems were aggravated by strategies to maximise supply-chain efficiency such as just-in-time manufacturing, where companies keep inventories to a bare minimum to reduce costs.

A major theme of 2021 was how to make supply chains more resilient. But building additional capacity, holding inventory and safeguarding against disruptions is not cheap. As shipping logjams ease and recruitment rises, the talk of reform could peter out. Some companies will probably continue to improve their just-in-time with a sprinkle of just-in-case. Others will bring production of some products closer to home markets while also keeping offshore production facilities to serve local markets. It also remains to be seen to what extent Covid reverses globalisation.

Ultimately, supply chains are driven by people, and 2021 showed the limitations of the system. As companies and consumers adapt, current knots will untangle somewhat. But as the pandemic wears on and the realities of keeping businesses profitable come back to the fore, you probably shouldn’t expect a resolution in 2022.

Sarah Schiffling, Senior Lecturer in Supply Chain Management, Liverpool John Moores University and Nikolaos Valantasis Kanellos, Lecturer in Logistics, Technological University Dublin

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Finding e-commerce fraud protection without the friction

Rajesh Ramanand, Co-Founder and CEO, Signifyd

Online fraud is on the rise, and it’s hurting e-commerce. But one company has developed innovative, frictionless tools to tackle the problem

The shift to online shopping was already well underway before the Covid-19 pandemic struck in early 2020. Compare figures from a decade ago to now: in 2010, online sales as a percentage of total retail sales in the UK were in the region of 6 to 7 per cent. By the beginning of 2020, they had grown to 20 per cent. But then came the pandemic. According to the Office for National Statistics, by January 2021, they had soared to nearly 37 per cent.

The infrastructure for an expanding e-commerce market was largely in place by the time Covid-19 forced physical stores to close and shoppers to go online. Brands had invested considerably in developing an online presence, and innovative fintech companies had competed with one another to make the digital payment process much easier. In effect, the stage was already set for e-commerce to really take off.

Hot Topic/BoxLunch is aSignifyd client

But not everything was coming together. As e-commerce sales began to shoot up last year, so too did the fraudulent online activity, by one-third compared to the previous year. Indeed, fraud grew at a faster rate than even e-commerce growth had, with people using the mass of online activity to hide fraudulent orders or transactions, often in territories outside of the UK where legislation around such behaviour is looser.

The right balance

Brands already reeling from the economic chaos caused by the pandemic found themselves facing deeper problems. Implicit in the issue facing online companies dealing with the risk of fraud is finding the correct balance between security and customer experience. Barriers against fraudulent activity often come in the form of greater checks on customer activity across the buying process, especially at checkout.

This creates friction for the customer and may prevent their continued use of a brand or service. While online shoppers are more used to that friction in Europe, where such checks have been established for some time, in the US market they are less so. The upshot is that applying the anti-fraud tech used in Europe to a US market would see a company lose a big portion – perhaps up to 25 per cent – of their customer base.

Au Vodka is aSignifyd client

Arguments for a one-size-fits-all anti-fraud approach are similarly weak in other territories. In Latin America, for instance, organised crime is more prevalent, and the checks in place in Europe might not be strong enough to mitigate the risk of attack. Furthermore, where shopping is done predominantly via social media platforms, rather than dedicated retail websites, different mechanisms for screening and approving orders will be needed.

The upshot is that although e-commerce may in some respects be in a far healthier place than it was even 18 months ago, new dangers lurk. Moreover, the burdensome legacy technology currently in place to prevent fraud could deter one-time loyal customers from future purchases. Technology and services such as that developed by Signifyd, which provide rigorous anti-fraud protections while avoiding friction points for customers, are the answer to a problem that is causing endless headaches for brands. It places the customer experience first, and in doing so, it plays a key role in helping brands to retain their engagement.

For more information, please click here.

INDUSTRY VIEW FROM SIGNIFYD

Account-to-account payments: the cardless payment method showing the greatest and most immediate potential

James Neville, CEO, Citizen

Account-to-account (A2A) payments are not new: certain types, such as direct debits, have been widely used for many decades. However, it has been Open Banking – the opening up of banks’ customer data – and real-time payment networks that have turned this arrangement into a fully fledged rival to debit and credit cards. Until recently, merchants had no choice but to bear the brunt of the high intermediary fees of card providers. But a tipping point occurred in November 2021, when one of the world’s major online marketplaces first considered not accepting certain credit cards, a year after the cost of card payments for retailers increased globally by 18 per cent to £1.3 billion.

Not only do A2A payments cost less for merchants than those made with cards, but they are also faster and safer. Money transfers between the sender’s and the receiver’s accounts are typically managed through the sender’s mobile banking app. This means the sender is logging into their existing bank app and using their existing banking credentials – a process protected by the intrinsic and rigorous security systems of their bank. Cyber-security is further reinforced by the fact that A2A transactions involve biometric identification via face ID or fingerprint when accessing the device used for making the payment. By removing cards from the traditional payment process, this alternative payment method can also enhance the customer experience and reduce shopping cart abandonment – which is a major pain point when card payment is combined with two-factor authentication.

Founded in 2017, Citizen was among the first companies licensed to provide payments and identity services using Open Banking. As James Neville, Citizen’s CEO and former CTO of Worldpay, explains, when a customer is making an A2A payment, they are first introduced to the transaction by being sent an email or a QR code containing a link to a bank selector screen. Having clicked on their bank’s logo, clients get redirected to their mobile banking app to approve the payment. Typically, an A2A payment such as Citizen’s would be offered as an option either at checkout or in the account management settings alongside a range of other payment methods – although Citizen does also have some clients who offer Citizen’s cardless payments as their sole transaction facility.

For those in the charity sector, every penny saved can make a real difference. In other sectors, such as gaming and trading, it’s the identity verification element of Citizen’s platform that brings the highest value by allowing payments to be linked to senders’ and receivers’ accounts – a vital tool for anti-money laundering.

Surveys suggest that the willingness to adopt A2A payment schemes is currently at about 60 per cent among users of mobile banking apps. However, uptake of the new technology will most certainly be driven by merchants, who see low costs and enhanced security against online fraud as an appealing proposition with a positive impact on their bottom line. Therefore, to incentivise users to switch over, Citizen is launching its own reward scheme which will allow consumers to benefit every time they pay with Citizen.

While other cardless payment methods such as digital wallets and buy now, pay later (BNPL) continue to gain ground in the payments space, Neville is convinced that A2A payments can get – and retain – a big share of this emerging market, thanks to their relevance to a broad demographic (all you need is online banking), as well as the inherent security features and simplicity of use cardless payments provide.

To try Citizen for yourself or to request a demo please visit www.paywithcitizen.com

INDUSTRY VIEW FROM CITIZEN

How big data is being used to boost profits in brick-and-mortar retail

Mick Moore, Group Managing Director, Scalene

Online retailers have long understood the benefits of big data and AI. Whether to improve customer experience, optimise product selection or target marketing initiatives, there are few areas in which online retailers are not enhancing their operations with well-leveraged data.

Brick and mortar retailers, however, have been slower to capitalise on the many advantages developments in the fields of data science and AI can yield.

One business helping to change this, however, is Scalene Group, which services a global clientele of leading retailers from its offices in Australia and the UK.

Scalene Group’s Managing Director Mick Moore says brick-and-mortar retailers typically have a wealth of data at their disposal, but that the challenge is not in gathering or storing the data but in applying it to day-to-day decision making.

One of the most effective ways in which brick-and-mortar retailers can translate data-led decision making into sales growth, he says, is through localising the offer at each store in a network.

He points out that traditional retail models often rely on centralised decision making scaled out across a national store network. And while this one-size-fits-all approach creates efficiencies within the business, it often fails to consider local differences in customer preferences.

Providing a localised offer at each store allows retailers to offer customers more of what they want and tailor a shopping experience geared toward the preferences of customers at a particular location, he adds.

“In our experience, stores geared to a local market see higher growth in customer numbers and these customers become more loyal and visit more frequently. In addition, when they shop, they tend to buy more and often trade up to higher-value items. The combination of all these benefits can ladder up to sales increases of 5 to 8 per cent, per store.”

As well as understanding how customer preferences and shopping patterns differ between geographical areas, store data analysis also allows retailers to understand how these preferences and patterns change over time. Moore says understanding these temporal changes can make stores more profitable and also more resilient.

“Throughout the course of the global pandemic, we’ve seen shifting customer preferences and shopping patterns impact retailers. What we’ve learned from this is that those who can most quickly and effectively respond to these changes can not only better survive, but actually drive sales and margin growth throughout periods of change,” he says.

“What has also become apparent over the past two years is that what worked before may not work in the future. But by leveraging the rich data retailers can gather from their store networks, they can continually learn and deploy better ways to engage customers and convert sales.

Moore says that throughout the pandemic Scalene has been working with a leading UK food retailer to optimise category space allocations in each of its more than 1,000 stores to maximise sales and margins and minimise the cost of food waste.

“To achieve this, we developed a tailored space optimisation model configured to the needs and strategic goals of the retailer. Throughout the pandemic, we have been refreshing this model in response to changing customer purchase patterns in the space allocation for each store. As customers have been cooking more at home, our approach has supported rapid, store-specific increases in space for areas such as produce, meat and baking, while simultaneously pulling back on space for certain convenience categories.”

While Moore is optimistic about the future of brick-and-mortar retail, he does caution retailers who might be looking to cut expenditure on their service offer to reduce operational costs.

It is a common pitfall for retailers faced with growth and cost pressures to heavily cut investment in in-store labour, which is one of the few material variable costs they can influence. The problem with this, he adds, is that store service is a compelling reason why customers continue to shop in Bricks & Mortar stores. The focus should rather be on fine-tuning service models and labour planning to provide the right service team at the right times in each store, he says.

“These retailers can also look to optimise their service models so that, rather than them being a national service model, they can be more nuanced to the needs of local customer environments or local shopping patterns. That could mean moving investment in store labour to different hours of the day or different days of the week, based on the way customers shop at a particular store location as opposed to how they shop on average across the course of a week at a national level. This can all enable a more efficient use of store labour and save money, but still provide or even enhance the service model for certain stores.”

For more on how brick-and-mortar retailers are boosting store profits with big data and AI, click here.

INDUSTRY VIEW FROM SCALENE

A new era of customer engagement for retail

Money and time have always been the biggest drivers of consumer purchasing decisions. But as buying options have evolved, consumers no longer need to trade between price, convenience and emotional experience. Innovative products, services and delivery models now cater to all three at once.

Values-based decisions drive customer choice

More than half of European consumers agree it is worth paying more for sustainable or environmentally friendly products. Most brands are responding, with dedicated sections of their websites devoted to coverage of their environmental sustainability activities, but few embed these details within the customer’s actual shopping journey. And values should extend beyond environmental issues. Retailers and brands must do more to increase the transparency of their supply chains, working practices and sustainability efforts to:

Help customers find more environmentally friendly options when shopping. Recyclable packaging and environmentally friendly shipping are among the options European consumers actively seek. Brands must start integrating sustainability into customer journeys.
Build consumer trust that brands will act on their environmental commitments. European consumers believe brands must drive sustainability but don’t trust them to do so. Our data shows that 69 per cent of them wish companies were more transparent about their business practices. Businesses must embrace transparency by design, to fortify stakeholder trust in their sustainability commitments.

Hybrid customer experiences are now the norm

Customer experiences are increasingly hybrid, with multiple digital and physical touchpoints feeding into customer journeys, often simultaneously. Smartphones mean consumers can connect to digital content anywhere. Thirty per cent of European online adults say they are more confident in their purchases when using a smartphone to do research while in-store. To serve your increasingly hybrid customers:

Use emerging technology to meld physical experiences into the digital world. Technologies such as AR and VR attempt to virtually recreate experiences that would traditionally be limited to in-person interactions. Companies such as NYX Professional Makeup and jewelry manufacturer Pandora use AR-based product visualisation tools that allow customers to virtually try on products. And consumers are embracing these experiences, with 42 per cent of UK and 41 per cent of French consumers saying they have used or are interested in using these tools.
Extend the value of store associates to digital customers. As customers are less restricted by channels, organisations must follow suit. Supporting increasingly fluid and hybrid customer experiences will require more flexibility in managing technology and human resources. From consumer electronics retailers such as Currys to beauty brands such as Kiehl’s, retailers are connecting digital customers with store associates via video-based online appointments. And consumers are embracing these new options to connect, as 33 per cent of UK and 24 per cent of French consumers have used or are interested in using a virtual shopper to shop remotely.
Make online transactions easier. Many retailers enable digital wallet payments such as PayPal or Apple Pay in an attempt to reduce the number of clicks and effort required to check out online. But more retailers and brands are also starting to offer deferred payment options, making their products financially accessible to a broader audience. Meanwhile, even luxury brands are embracing deferred payments, and the likes of Buglari and Gucci are enabling “virtual” gift-giving and group purchases in partnership with 4GIFT.

Consumers are faced with an abundance of choice and are motivated to seek out the best buying experiences. Where an experience, product or service does not meet a customer’s expectations, there is more than likely an alternative retailer or brand that will. Retailers and brands must press ahead with their efforts to retain increasingly digitally enabled consumers.

by Michelle Beeson, Analyst, Forrester

‘Virtual influencers’ are here, but should Meta really be setting the ethical ground rules?

Earlier this month, Meta announced it is working on a set of ethical guidelines for “virtual influencers” – animated, typically computer-generated, characters designed to attract attention on social media.

When Facebook renamed itself Meta late last year, it heralded a pivot towards the “metaverse” – where virtual influencers will presumably one day roam in their thousands.

Even Meta admits the metaverse doesn’t really exist yet. The building blocks of a persistent, immersive virtual reality for everything from business to play are yet to be fully assembled. But virtual influencers are already online, and are surprisingly convincing.

But given its recent history, is Meta (née Facebook) really the right company to be setting the ethical standards for virtual influencers and the metaverse more broadly?

Who (or what) are virtual influencers?

Meta’s announcement notes the “rising phenomenon” of synthetic media – an umbrella term for images, video, voice or text generated by computerised technology, typically using artificial intelligence (AI) or automation.

Many virtual influencers incorporate elements of synthetic media in their design, ranging from completely digitally rendered bodies, to human models that are digitally masked with characters’ facial features.

At both ends of the scale, this process still relies heavily on human labour and input, from art direction for photo shoots to writing captions for social media. Like Meta’s vision of the metaverse, influencers that are entirely generated and powered by AI are a largely futuristic fantasy.

But even in their current form, virtual influencers are of serious value to Meta, both as attractions for their existing platforms and as avatars of the metaverse.

Interest in virtual influencers has rapidly expanded over the past five years, attracting huge audiences on social media and partnerships with major brands, including Audi, Bose, Calvin Klein, Samsung, and Chinese e-commerce platform TMall.

A competitive industry specialising in the production, management and promotion of virtual influencers has already sprung up, although it remains largely unregulated.

So far, India is the only country to address virtual influencers in national advertising standards, requiring brands “disclose to consumers that they are not interacting with a real human being” when posting sponsored content.

Ethical guidelines

There is an urgent need for ethical guidelines, both to help producers and their brand partners navigate this new terrain, and more importantly to help users understand the content they’re engaging with.

Meta has warned that “synthetic media has the potential for both good and harm”, listing “representation and cultural appropriation” as specific issues of concern.

Indeed, despite their short lifespan, virtual influencers already have a history of overt racialisation and misrepresentation, raising ethical questions for producers who create digital characters with different demographic characteristics from their own.

But it’s far from clear whether Meta’s proposed guidelines will adequately address these questions.

Becky Owen, head of creator innovation and solutions at Meta Creative Shop, said the planned ethical framework “will help our brand partners and VI creators explore what’s possible, likely and desirable, and what’s not”.

This seeming emphasis on technological possibilities and brand partners’ desires leads to an inevitable impression that Meta is once again conflating commercial potential with ethical practice.

By its own count, Meta’s platforms already host more than 200 virtual influencers. But virtual influencers exist elsewhere too: they do viral dance challenges on TikTok, upload vlogs to YouTube, and post life updates on Sina Weibo. They appear “offline” at malls in Beijing and Singapore, on 3D billboards in Tokyo, and star in television commercials.

Gamekeeper, or poacher?

This brings us back to the question of whether Meta is the right company to set the ground rules for this emerging space.

The company’s history is tarred by unethical behaviour, from Facebook’s questionable beginnings in Mark Zuckerberg’s Harvard dorm room (as depicted in The Social Network) to large-scale privacy failings demonstrated in the Cambridge Analytica scandal.

In February 2021 Facebook showed how far it was willing to go to defend its interests, when it briefly banned all news content on Facebook in Australia to force the federal government to water down the Australian News Media Bargaining Code.

Last year also saw former Facebook executive Frances Haugen very publicly turn whistleblower, sharing a trove of internal documents with journalists and politicians.

These so-called “Facebook Papers” raised numerous concerns about the company’s conduct and ethics, including the revelation that Facebook’s own internal research showed Instagram can harm young people’s mental health, even leading to suicide.

Today, Meta is fighting US antitrust litigation that aims to restrain the company’s monopoly by potentially compelling it to sell key acquisitions including Instagram and WhatsApp.

Meanwhile, Meta is scrambling to integrate its messaging service across all three apps, effectively making them different interfaces for a shared back end that Meta will doubtless argue cannot feasibly be separated, no matter the outcomes of the current litigation.

Given this back story, Meta seems far from the ideal choice as ethical guardian of the metaverse.

The already extensive distribution of virtual influencers across platforms and markets highlights the need for ethical guidelines that go beyond the interests of one company – especially a company that stands to gain so much from the impending spectacle.

Tama Leaver, Professor of Internet Studies, Curtin University and Rachel Berryman, PhD Candidate in Internet Studies, Curtin University

This article is republished from The Conversation under a Creative Commons license. Read the original article.