Despite the increasing professionalization of online commerce in Europe, e-commerce companies still have a lot to learn in some areas. Large online shops tend to find it more difficult to deal with more innovative topics in particular. This is mostly due to lengthy investment decisions and equally long amortization periods (the period until refinancing of the investment).
On the contrary, the game industry is considered to be particularly agile, mobile and innovative. There are large, international corporations too, but despite their size, they manage to tackle new topics quickly and flexibly. The main reasons for this are the application of modern development methods (e.g. Scrum or Extreme Programming) and the use of new technical possibilities (e.g. Virtual/Augmented Reality) as well as the many young, highly specialized employees, who ensure rapid innovations in the game industry. Because the competition never sleeps and is always happy to accept dissatisfied players from other providers!
As a technology service provider, we have therefore asked ourselves:
What can e-commerce learn from the gaming industry?
Technological view of products
The general conditions of the games market have changed notably in the last 5-10 years. The development of some console and PC games could take up to 15 years in individual cases. Because this kind of games had to be perfect and work flawlessly when they went on sale. Digitalization has shortened the development time prior to publication, especially for mobile games, which are constantly being further developed through updates.
Nowadays a game consists essentially of software or interconnected software systems. Console and PC games, which are a combination of software and compatible hardware, are still an exception. At Europe's largest games trade fair in Cologne, Gamescom, you can witness the ever-faster pace of innovation. Every year in August, the latest technological trends, hypes and games are presented to all your senses.
A technological view of products and platforms with constant updates and further developments is an important point that e-commerce can learn from the game industry.
You can literally feel the technological focus of the game industry there. Technology is seen primarily as an enabler and not as an investment object or possible risk. Because the use of state-of-the-art technology is an enabler for sales, more revenue and competitive advantage.
Many large e-commerce companies, on the other hand, have a history as mail-order catalog companies or in stationary retail. Despite good progress in the digital transformation of their business models, many large e-commerce companies are still far from being technology companies. Seeing technology as an enabler rather than a potential risk should be much more firmly anchored in the boards of directors of European e-commerce and retail groups.
KPI driven products
Modern games are extremely driven by different KPIs. The retention rates per day, source of registration (e.g. advertising, recommendation etc.), game character, cohort or level are analyzed. Even adjustments to the game are made, if a level is too difficult or too easy. This means that user feedback flows directly into the continuous development of the product. This is reminiscent of elements of the product development process according to the lean start-up approach, for those of you familiar with it.
This feedback-loop is especially important for so-called Free-To-Play games. These games are free of charge and are monetized through advertising or in-game purchases (IAP). IAP refers to the purchase of items within a game. Naturally players only buy additional items in games that they particularly like or love. It is therefore important to involve the users in product development in order to increase gaming fun, activity and thus sales per user.
Only those who regularly review their KPIs and monitor the correct ones can measure and increase their success based on data.
From these processes the e-commerce in Europe can learn a lesson. Although large platforms are already collecting user feedback and analyzing metrics, they are still far from the level of the gaming industry. Such a feedback could for example be done simply by a 5-star rating system for new functions ("How helpful is this function?"), yes/no buttons ("Is this function helpful?") or smilies like :) / :( .
Especially large American platforms test new features of their shops: Only when changes are positively perceived by smaller user groups (focus groups), the platform operators roll out the new functions. In this way they collect live feedback from their users and can quickly eliminate any functional problems or errors. They can also reduce the development of unused functions to a minimum.
This collected feedback can also be used profitably. With the help of product and user data in combination with the corresponding CRM data, each user can be provided with an individual shop. In this way, e-commerce companies can respond perfectly to the needs of their customers in any situation. This is called situationalization.
More shopping fun with Gamification
Gamification is the transfer of typical game elements and processes into external contexts. The goals of gamification are, for example, behavioral changes that ultimately lead to increased use or to an improved repurchase rates and increased motivation. All good games use Gamification to keep users loyal to the game (levels, unique items, interaction between players, inspiring design, etc.).
Integrating typical game elements into the online shopping experience is a great challenge and an opportunity at the same time for e-commerce companies.
But there are other non-gaming apps that use Gamification skillfully. A good example of this is the language learning app Duolingo. The app is free and is primarily monetized by advertising, although there is also an ad-free premium version of the app. The user is motivated and rewarded by badges for reaching special milestones and experience points for raising levels in language learning. This motivates the learner to continue using the app, allowing Duolingo to generate more advertising revenue. The result is impressive: over 300 million users do more than 7 billion exercises a month!
An extremely successful example of gamification in e-commerce is the ebay bidding process. Do you remember the pinnacle of the 3,2,1, mine era? Although the biggest ebay hype is now over, there is still a large community of ebay fans, especially in Germany. At the end of 2017, around 17 million buyers from Germany were active. Assuming a constant use of these users in 2018, with about 175 million users, about 10% of ebay users would currently come from Germany. They use the platform to buy or sell with fun and excitement. You don't just buy something, you "win" an auction. But see for yourself how the gamified ebay bidding process is explained by the company itself:
Using technological interfaces
In the gaming sector, technological interfaces as enablers have already been used for a long time. Most games communicate via an API (Advanced Programming Interface) with other services (e.g. game stores, analytics or testing tools, advertising networks etc.). This technological openness makes strategic partnerships possible and is a prerequisite for operational speed in product development, marketing and personalization in real time.
API interfaces make companies more open to third-party integrations and open up opportunities to generate new added value.
In European e-commerce in particular, the thinking in interfaces and networked systems is less widespread, even though some companies are already offer services using API concepts (e.g. Real.de marketplace, the About You Cloud or Commercetools API). Frontastic also provides a solution for API-based commerce systems that allows frontend modules to be reused without code knowledge. All these are good signals for a stronger focus on technological interfaces in German/European e-commerce. Because only technologically stable and open systems can serve as enablers and accelerate growth.
Focus on mobile-first
There is an ever-increasing percentage of web traffic coming from mobile devices. This trend will increase in the coming years, since it is estimated that Internet traffic via mobile devices will be 2.8 times higher worldwide than it is today in the next 3 years alone.
Major game developers such as InnoGames (e.g. Elvenar, Forge Of Empires), Zynga (e.g. FarmVille) or GoodGame (e.g. BigFarm) therefore rely primarily on mobile-first concepts and especially on apps. To increase their reach, games such as Elvenar or BigFarm can now also be played in the browser. But the gaming experience is always reminiscent of a mobile game. Zynga even goes so far that some games can only be played as apps over social networks, primarily Facebook. These game studios thus consistently respond to the needs of their target groups. So why should e-commerce companies still make responsive compromises when it comes to design? Thomas from frontastic also critizes this in our expert interview.
Game developers are already extremely focused on their predominantly mobile target group. E-commerce can learn from this and promote a mobile-first thinking internally. In this way, customers of all ages can be inspired.
A nice example of an uncompromising mobile-first e-commerce website is Flaschenpost. The German company delivers beverage cases straight to your door and offers for the delivery area are loaded by simply entering the postal code. Their very visual website can be used on mobile devices as well as on a laptop or a Smartwatch. Other international examples of a mobile-first approach are Airbnb and Etsy.
Because what works on small screens will also be appealing on the desktop. Therefore you should dare to start with the conception from the small screen and then roll out the desktop version. The future of e-commerce is definitely mobile!
Use of push and in-app notifications
The game industry relies on push notifications to reactivate and inform its players: be it in the case of a player’s inactivity, new levels/features in the game, an attack on his city, settlement or spaceship, etc. Since many current games are primarily played mobile on smartphones or tablets, this is the right communication channel.
E-commerce can definitely learn something from this. Although some online retailers are increasingly using their own apps to serve the mobile users, the potential of push messages is often not yet fully exploited or "the old advertising logic" is applied to new communication channels.
With push notifications you get a place straight on your users' smartphones. This enables you to communicate quickly and directly with them.
New/back in stock products and special (personalized) offers can be sent in real time to relevant existing customers or app users. Even products that have already been viewed could be advertised to a user again in order to increase the conversion rate. The tone of the notifications should however, be target-group oriented and personal. Today, users want to communicate at eye level and not to be bombarded with commercial messages.
And it works! According to a study by push news service provider Accengage, push notifications have an average response rate of 7.8% (4.9% for iOS and even 10.7% for Android). In-App messages even have an average response rate of 21.9%! These response rates can be optimized with a few tips. Emojis are expected to increase the response rate by 20% and innovative formats such as images, GIFs or videos by as much as 25%. Personalization even quadruples the response rate.
With A/B or multivariate tests, you can also find out when which user should receive which type of notification to trigger a response. According to Accengage, this improved timing can also increase the reaction rate by about 40%. From our point of view, this offers enormous potential for e-commerce.
Use of bonus and reward systems
Games are designed to communicate directly with the mental reward system. In each game you can collect or buy points, coins, crystals or other "currencies". Even reaching certain levels in a game or training an avatar directly addresses our internal reward system. Such reward systems can also be useful and boost sales in e-commerce, depending on the target group.
The advantage in the case of the player is obvious: He can invest the collected points in bonus items, accessories or the improvement of his avatar. In e-commerce, for example, customers could receive exclusive discounts/products/free samples as well as cash payments (e.g. Payback) or shopping vouchers. This promotes customer satisfaction and increases customer loyalty.
You can increase customer loyalty and satisfaction with a sophisticated bonus system. Take a look at the successful mobile games and get to know how they use these mechanisms for customer loyalty.
Although such systems also exist in e-commerce, mostly in the form of cashback or discount campaigns, the entire potential here is far from being completely tapped. In the meantime, bonus systems such as Payback Online can also be used at e.g. Delivery Hero brands, expedia or Rewe Online (a German supermarket chain), but many merchants also make themselves dependent on these third-party providers. Online shops could also set up their own bonus systems to make shopping at their store more comfortable for their customers.
A further positive effect of a bonus system is, of course, that merchants collect anonymous or GDPR-compliant data about users, their usage and purchasing behavior as well as their preferences. These can thereafter be used again for a more targeted and individually relevant communication.
Conclusion: Focus on the customer
If you don't constantly develop your game/e-commerce platform or your communication further, you will bore your players/customers. You will lose millions of players/customers just as quickly as you won them before.
For example, the recently celebrated multiplayer game PUBG has lost 50% of its players within half a year. That's about 1.7 million players in total! The reasons for this are a lack of focus on the players (customers), unfixed bugs in the game and poor public communication with the players.
The same can also happen in commerce. Even large corporations have been crushed by competitors in recent years. Some of you will surely remember the high-profile insolvencies of Radioshack, American Apparel (both 2 times bankrupt & rescued) or Toys R Us. In these fast-moving, digital times, you should therefore always focus on the customer!