The Art of Checkout: Digital and Physical Shopping Experiences

Every business inevitably engages in a checkout journey. In B2B contexts with low-volume but high-value transactions, this can be a lengthy, manual process. Nevertheless, the same three key steps can always be identified:

• Finding and Selecting a Product or Service

• Collecting and Delivering the Product or Service

• Paying for the Product or Service

These 3 steps can always be identified, but they may vary in sequence depending on the specific use case.
Optimizing each step to be as frictionless as possible for the customer is a crucial aspect of conducting business.

Let’s delve into these three steps in more detail.

Step 1: Finding and Selecting a Product or Service

This step focuses on creating awareness for your business and guiding customers to the right choice from your catalog. It corresponds with the 'SEE' (creating visibility for initial contact) and 'THINK' (where the customer considers a purchase and identifies their needs) stages of the Google model.

In physical stores, this includes store advertising, clear road directions, attractive window displays, strategic product placement, and knowledgeable staff assistance. In online shops, it encompasses effective SEO, user-friendly web design, efficient search and filter tools, and smart product recommendations based on trends like 'People Like You Bought' or 'People Buying This Product Also Bought', as well as reminders for abandoned shopping carts.

Step 2: Collecting and Delivering the Product or Service

The collection and delivery methods vary significantly between physical and online worlds. In physical stores, customers usually collect products themselves, ensuring instant delivery. Online, collection involves adding digital representations of products to a shopping cart, followed by a webshop employee preparing the product for shipment (post-payment). Delivery options include in-store pickup, home delivery, or collection at designated points.

Step 3: Paying for the Product or Service

The payment process first requires determining the total amount due. Products are scanned at a cashier, or customers scan the products themselves (during shopping or at a self-service cash register). The payment can then be made using cash, card (online or via a POS-terminal), or mobile payment methods like Apple Pay, Google Pay, or QR-based systems. Additionally, options like traditional consumer credit or Buy Now, Pay Later (BNPL) schemes may be available.

Minimizing friction in these steps is crucial for revenue generation. Online retailers like Amazon have significantly streamlined these processes. They utilize sophisticated AI models to anticipate customer needs, offer easy user registration, maintain long-lasting login sessions, record customer delivery and payment preferences (e.g. preferred delivery dates, methods, and contingency plans for absence at home), and facilitate one-click payments with security measures like risk-based authentication and behavioral analysis (refer to my blog "Multi-Factor Authentication and Identity Fraud Detection in the Financial Services Industry" - https://bankloch.blogspot.com/2020/02/multi-factor-authentication-and.html).

Physical stores are also evolving. Hybrid multi-channel experiences combine the immediacy and personal touch of in-store shopping with the convenience of digital tools, thus eliminating unnecessary friction (e.g. waiting lines at cashiers, out-of-stock items, carrying shopping bags). Examples include online reservation of in-store goods, personalized assistance based on customer profiles (such as shoe stores that measure your feet and store characteristics to personalize advice on your next visit), self-scan and cashierless checkout technologies (like Amazon’s Just Walk Out technology), and apps to manage payments and loyalty points. These apps can be directly integrated with the shop’s cash register system, allowing to receive directly the payment amount and ticket information. The app then automatically applies coupons and discounts, manages loyalty points, and handles payments (allocating gift cards and vouchers correctly, if desired by the customer). They can also store invoices for business customers and manage guarantees, warranties, and optional insurances for certain products. A universal super-app covering all chains would be even more convenient, but there’s still a long road ahead, although BNPL players like Klarna and large tech giants are well-positioned to deliver this experience.

These innovations hinge on 3 crucial building blocks:

• Frictionless and secure customer identification: Rapidly identifying customers when they visit a webshop or physical store.

• Personalization: Adapting the shopping experience to each customer’s needs and preferences. This encompasses personalization of product guidance, delivery and payment methods, advertisement strategies, and dynamic pricing based on an estimation of the customer’s willingness to pay.

• Hybrid Experience: Merging the best of digital and physical worlds. This includes strategies like composing a shopping bag online but picking it up in-store with the option to add additional products, or selecting items in-store and having them delivered to your home. Items out of stock in physical stores can be automatically added to a webshop bag by a store employee, with delivery details known due to the linking of webshop accounts and physical store loyalty cards.

Optimizing each step of the checkout experience is key to significantly enhancing customer value.