Multi-Channel Commerce & Retailing

Green with Intimacy

2008-08-04T01:04:21Z

For this post, I’d like to get a little more concrete on the potential of using the new channel framework to analyze & optimize a marketer/seller-customer relationship.

One company I like that deals with a potential retail “channel” in many different ways is Recellular.com. Recellular is in the perhaps unglamorous but important business of "electronics sustainability"--they work to keep the millions of cellphones, PDAs, and related accessories that get replaced annually out of landfills. How might they adopt our framework?

]]> The first answer that comes to mind for me is: gather and analyze customer intimacy data concerning how long the customer has had his/her phone, how many new features he/she might be missing, what he/she uses his/her phone for…and then to target them with SMS, MMS, voice, or web solicitations intended to appeal to their propensity for technology change vs. the age/functionality of their phone.

But here are some other ideas that come to mind:

- Could Recellular partner with a battery company to incorporate technology that detected when a battery is nearing the end of its life (who among us hasn’t had to figure that out the old-fashioned way?), and somehow (calendar message, SMS) triggered a message to the user?

- Could Recellular partner with service providers or cell phone companies to send SMS, MMS, or internet-based reminders to customers whose phones are close to reaching the end of their lifespans, perhaps based on the customer’s known usage patterns, travel patterns, or other behavioral data (if the service provider is willing to provide it…)?

- Could Recellular combine customer behavior intimacy with location awareness (perhaps through a custom, co-branded hardware component) to suggest to green-minded customers green-related things to do? Or drop off points when it was time to recycle a cell phone or battery? Or for that matter, any other recyclable thing?

- Could Recellular partner with a philanthropic organization to leverage any of the above technologies to allow cell phone users to benefit causes significant to them through simply recycling electronics?

- Could Recellular partner with both a philanthropic organization and a cell carrier to provide benefit to both parties PLUS to the customer in the form of some sort of incentive?

All of these ideas have their pros, cons, and practical/technical limitations. Again, I’d love to hear your feedback on any of these or anything else that comes to mind.

Can you direct me to E Commerce Street?

2008-07-19T02:49:49Z

I was recently going through some old digital photos and came across the following I thought readers of this forum might get a kick out of:

]]> I’m somewhat embarrassed to admit, even looking at the data embedded in the jpeg, I can’t figure out where I took this thing. I think it was somewhere in central TX where I live.

Which I’d like to say got me thinking about Multi-Channel Commerce, but instead it made me remember a recent article I read on Eye-Fi, which brings interesting value-add technologies to plain ol’ SD cards. They now offer the Eye-Fi Explore card that, by triangulating wi-fi signals which the company has meticulously mapped (read some of the articles at http://www.eye.fi/news/reviews-awards/ to get a better idea of how this works than I can present here), imprints every photo with the approximate location at which it was taken. THAT would allow me to figure out where I found E Commerce street!

And THAT got me thinking about multi-channel commerce in a whole new way. Perhaps our traditional channel paradigm needs to change from the old medium-based framework of bricks & mortar, online, direct, etc. to a different frame of reference.

The Eye-Fi card, of course, got me thinking that location would be one component of this new framework…but as we all know, a one-dimensional framework is somewhat unappealing. So I had to find other components. If this new paradigm can be summarized as a graph (as all good paradigms can), what are its axes?

I have a notion that at least one of them is somehow related to proximity, or perhaps intimacy, yielding two axes:

Location: as technology improves, marketers gain better and better information about where you are, which they can then use to target you by the most appropriate channel based on this knowledge.
Intimacy: this could be a big axis, or several. I’m using “Intimacy” to indicate a category that contains some superset of:

What is the time: the timing of the interaction is relevant on every conceivable level: the year, the season, the month, week, day, hour, minute.
What you are doing: are you on a lunch break from work? Driving to the country for a weekend with the family? In an unfamiliar location?
Who you are: what are your demographics? Health concerns? Hobbies? Profession? Interests? Tastes? Pulse/blood pressure/other easy-to-measure-and-transmit vital stats at this particular moment?
How well do we know you: how much data on the above points (or any others related to intimacy) do we have? How about location data? How reliable is all of this?

As technology improves, it’s inevitable that marketers and sellers will get better and better information about their prospects’ and customers’ intimacy axis as well. As the accuracy of this information improves, and the technology delivering it becomes more ubiquitous, maybe we’ll finally see the long-predicted debut of the location-dependent lunchtime fast-food SMS coupon.

But I’d like to ask you to help me think outside the box about how the combination of location and intimacy—together with their lower-level facilitating technologies, like wi-fi, wi-max, GPS, SMS/MMS, digital imaging, character recognition, customer data management, artificial intelligence, and increasingly robust mobile web access devices—will impact our thinking about channels going forward. Beside the $.50 off hamburger coupons that might pop up as you stroll past a MacDonald’s at noon, what else should we look forward to? Some thought starters:

- Product, price, placement, and promotion—besides the hamburger coupon, how can location and intimacy knowledge be leveraged to improve the classic 4Ps? If I as a marketer know where you are and something about what your tastes are, how does that influence the products I promote to you and how I position them?

- Data input—Remember, in addition to facilitating voice and text communication, most cellphones now contain cameras and MMS capability. How can this feature be used to drive interactivity between marketer and buyer? Think about technologies like OCR, barcode recognition, and automated language translation.

- Social networking—how might marketers use location awareness, imaging/sms, mobile data input/send capabilities, and ubiquitous internet connectivity to encourage social networks in a way that both improves the customer experience and increases the bottom line?

- Ethics—on a recent trip to the UK, my mobile provider figured out that I was there and SMS’d me a message about my roaming rates. I don’t remember opting in for this kind of message, but I was happy to receive it. What kinds of communications, under what kinds of circumstances, is it ethical for a marketer to push (unsolicited) to a shopper by leveraging the technologies we’re discussing?

- Feasibility—From a technology standpoint, how feasible are these Big Ideas? How long will we have to wait for the software and hardware necessary to realize them?

I’d love to hear your feedback—especially if you have axes to add to (or grind into:^) the framework!

One page check-out and perpetual shopping cart: an opportunity not to be missed!

2008-07-03T20:56:54Z

Imagine a world where more than a third of the visitors of a store would start their shopping and fill their trolley and then, all of a sudden, leave the store with all these baskets lying on the floor. It looks more like science-fiction that anything else, but unfortunately for online retailers this is still the daily routine: according to a recent report from Jupiter Research only 64% of shopping carts filled on a site will result in a purchase!

]]> This could be explained by a variety of reasons: people use their shopping baskets to compare prices, are afraid to give their credit card information online or hidden delivery charges. But one sure thing is that online retailers are still struggling to design check-out processes which are truly engaging and intuitive. The typical check-out process will consist of 3 to 4 different pages (with a progress bar in the best case scenario) where I am likely to loose sight of my shopping basket and forced to register to order. These sorts of processes have not been designed with the customer in mind and are clearly creating a negative experience which will result in a poor brand perception.

Online retailers should stop reinventing the wheel and simply look at what customers do in the brick and mortar world. In the real world I see my basket all the way from the start of my shopping experience to check-out and I can add or remove products until payment – the till being a really good place for selling other goods like chewing gums or TV magazines (cross-selling) and I do not have to register for a loyalty card prior checking out. So why is the vast majority of the websites not just designed like this? Two main reasons:

Rich Internet Applications (RIA) are still considered as gadgets or nice to have by online retailers
Lack of customer centricity with usability testing and personas definition skipped and IT or Marketing defining the requirements.

A few online retailers have already understood that, done their homework and as a result they are setting new standards across the web with painless one page check-out processes and perpetual shopping baskets. Reebok, Nike, Gap (see picture below) or Anthropologie (again see picture below) can be identified as pioneers in this area and the good news is that customers are rewarding them for that! Anthropologie claimed for example an increase of 24% of their shopping basket conversion after implementing their new check-out process.

It is clear that online retailers not following this trend will not address key consumers needs (perpetual shopping baskets and one page check-out are generally rated as more important than toll free number or live help) and will continue to leave money on the table in the process. Can they really afford it?

Assortment & ranging in a multichannel context

2008-06-23T15:28:41Z

Multichannel retailers are confronted with the challenge of assortment and ranging across their online and offline channels. What's the overlap between the merchandise mix offered online vs in the stores? There are signficant implications to the merchandising decisions because it affects the customer experience, synergy between what the consumer sees online and finds in the stores, the cross-channel capabilities that allow customers to buy merchandise online from store inventory etc. These are not easy decisions and affect issues that transcend people roles, responsibilities, metrics, business processes and technology integration.

Flying Blind

2008-06-18T20:38:21Z

I am often called upon to review a design. The first things that I ask for are the performance goals and the scaling assumptions, often called the Load Model. More than half the time, they don’t exist, or they are pure fantasy. (I have heard business types specify sub-second response and infinite scalability.) The Load Model tells us how many transactions, page hits, orders, etc. a system will be experiencing per unit of time for a certain number of years in the future, often the next 5 years. This table or graph will determine the type of design that you have to create. Without it you are “Flying Blind”. For example, if you are told that you will have 45 orders per hour at peak then you have any number of ways that a system could be built. In fact, almost any design can handle such a light load. On the other hand, if you are told that you will have 45,000 order per hour you will have to examine every aspect of the design to detect bottlenecks as quickly as possible. Many times, no one really knows what the load numbers will be. Often, the business people will try to pawn the estimation off on the technical people. Resist this! You must make the business people take the bottom line for this. If you don’t, you will be accepting the risk that the business people are paid to accept. If you create the Load Model yourself, you will be ultimately responsible for its correctness. This is especially important when the load is unknowable. In that case, the business must pick a number out of the air. Once picked, you should ensure that everyone agrees to design to it. Later, if your approach is correct for the assumed load, but incorrect for the actual load, you will be able to defend the design.

3D Commerce: A Toy or a Trend

2008-05-22T12:46:15Z

Virtual worlds, like Second Life, have carved a niche in the hobbyist world. In these worlds participants earn “Linden Dollars” by creating and selling clothes, furniture, cars, land, etc. to each other. All of this is very nice for those who share this hobby, but of little use to the rest of the world. However, there are some features of that world that make it interesting to those of us who specialize in more traditional eCommerce models. First, there is a floating, but fairly stable exchange rate between the Linden Dollar and the US Dollar. Second, there is no restriction on what type of commerce takes place in the virtual world. You could, for instance, sell music downloads there, collect money for the transaction in Linden dollars and exchange them for US Dollars. The question that arises is why would someone sell in that world when the tradition eCommerce sites already do a good job of selling many products. Several reasons come to mind. First: Browsing. Traditional eCommerce is essentially like going to the hardware store. You sign in, search for an item, pay for it and leave. In the brick and mortar world, you can do that too, or you can “hang out” in a store to see what’s new. Many stores like American Eagle and Target are laid out and merchandised to appeal to this type of shopping. (Their sales numbers speak for the appeal of this strategy.) Second: Not all products are easy to sell in a traditional eCommerce site. Furniture, clothing and office furnishings sell better when the user can “experience” the products, not just look at a picture of them. Perhaps the ability to configure a room, an office, or a mannequin in a 3D world would be superior because it allows a customer to “walk around” the choices and modify them until they get it right. Third: Youngsters. The rising generation of shoppers is not like us. They are a wired group who prefer texting to talking on the phone, and playing Internet video games against their friends to having them over to the house. Will 3D Commerce have more appeal to them than the current user experience once they become young adults?

eCommerce Strategy is Hard (Too)...

2008-05-05T05:12:04Z

Regarding Steve’s posting, “eCommerce Engineering is Hard”, I have to put in a couple cents about the up-front strategy portion of an eCommerce project, which in my experience is just as hard—and often not sufficiently addressed by many companies.

]]> Let me be clear that I agree 100% with all of Steve’s points, and having worked with him on a very aggressive strategy-through-implementation ecommerce project, I’m (fairly:^) sure he’d agree with mine. In fact, my central theme is that in order to optimally execute an eCommerce project—even one of relatively limited or “tactical” scope—one must take a view that is holistic across the entire software development lifecycle—from strategy to engineering to coding, QA, and ongoing maintenance.

In this post, however, as you may have guessed, I’ll focus on the strategy phase.

My pat definition of “the strategy phase” revolves around rationalizing the investment—ultimately including all the applicable technology components Steve mentioned. To do this, one must figure out:

The Value: How to provide value to both customers and investors, and what are the associated customer and investor (e.g. business) metrics you will use to measure this value?
The Capabilities: What are the online capabilities that will best deliver these values and positively impact these metrics?
The Realization: How to best optimize process, people, and technology investments to realize these capabilities? All three of these take time and resour
ces; in other words, they are hard.
Figuring out the Value first requires an analysis of customer needs and business goals. Ideally, this includes:
An analysis of competitive sites and the customer satisfaction they produce—this can be done by looking at industry research reports and performing a structured analysis of competitive sites that evaluates the broad categories of user experience, features and functionality, performance metrics, and content.
An analysis of customer needs, which really requires talking to real customers—customers from all the segments and channels (including offline channels, if these customers are targeted for migration to online) served by the company. Ideally, the output from this exercise provides customer profiles, usage scenarios, and value propositions by segment and across channels if appropriate.
An analysis of what the business hopes to accomplish using the online channel—e.g. what levers does the business hope to move? There are a number of ways eCommerce can be used to increase revenues (think lifetime customer value, cross-sell/up-sell), but depending on your business, cost-to-serve reductions may make for a compelling business case as well. The next step is determining what capabilities best serve the above goals. Again, you’ll want to look at user experience, features and functionality, performance metrics, and content. Do your customers visit the site to buy a specific product (focus on navigation and search capabilities), or do they want to interact with the company or other users (focus on community capabilities)? Are your customers technologically sophisticated or not so much? How do they organize information—e.g. do they think about specific products (hp.com) or about activities (rei.com)?
Almost done! The final step is to look at these capabilities in the context of:
Business processes: how will implementing these capabilities require changes to your processes? E.g. if buy online/pick up in store provides value, what are the processes necessary to support it?
People: how will the capabilities and their attendant process changes affect your people? What changes in organization, roles/responsibilities, and incentives will be required? What will the governance implications be (e.g. if you are providing community capabilities, who will monitor/manage forums, and how will you manage customer dissent in them?)?
Technology: this is where the rubber hits the road, as Steve discussed in his post. What technologies should you invest in to realize the capabilities and process changes you’ve defined? Will you build or buy? What will the overall technology architecture look like? And most important, does the business case make sense based on incremental revenues/costs reductions you expect owing to the targeted capabilities vs. the cost of these investments?
eCommerce strategy isn’t quick or easy, but based on my experience across a number of clients in this space, companies that skip this crucial upfront activity run a substantial risk of implementing sites that fail to justify the substantial outlays they make in technology infrastructure.

eCommerce Engineering is Hard

2008-04-18T16:34:25Z

What makes it hard? First, you have to write or acquire an eCommerce engine, integrated it with an order management system, a content management system, and a payment service. Then you have to interface these products with 20-40 legacy applications so it fits into your corporate structure. You have to design a user experience that is better (or at least no worse) than you have on your old site. Finally, after you have managed to get all of the projects, and subprojects done, it must perform well today and scale well over time. If it won't perform, then you have to go to your boss and get $X million more for additional licenses and CPUs. This is clearly in the hard category!]]>

Are B2B websites facing an identity crisis?

2007-08-13T21:12:50Z

Increasingly, companies that have a B2B business model are realizing that their current websites are not designed to provide a rich, interactive and user friendly shopping experience. There are several retailers in the industry that have a B2B and B2C customer segment base. While there have been several innovative implementations in the industry to provide a rich online shopping experience for B2C business models, there is little if any being done to revamp the B2B sites. These sites are very functional in nature offering basic capabilities to reorder merchandise, place new orders, manage account details etc. However, they significantly fall short in providing the ability to present alternatve views of products, zoom in and change colors, provide guided selling tools that help the B2B customer visualize what the end product may be etc...

I think the time is ripe for relooking at how we manage the online customer experience of the B2B segment, what can be done to make it rich, yet simple and interactive. There is tremendous opportunity to make this investment worthwhile to a retailer thro' cross-sells and up-sell opportunities that can be offered to the customer dynamically as they make different choices online...

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Social Commerce

2007-06-11T17:17:25Z

Retailers are increasingly considering the use of social commerce technologies to enhance and personalize the customer shopping experience online. In a recent discussion I had with the CIO of a 100 year old retailer, he brought up a point of exploring social networking ideas to attract the 20-30 year old customers. Likewise, retailers like Nordstrom have experimented with a designer collections site to attract the younger fashion concious customer earlier on in their lifestage cycle.

This seems quite an interesting trend cutting across retail segments and the usage of customer reviews and feedback forums are influencing shopping cart conversion and buying decisions. Retailers have experiened benefits with social commerce technology providers such as Bazaarvoice.

Consumer generated content can be effectively leveraged by companies in testimonials, product feedback and reviews, new product ideas, target marketing new concepts and understanding the positive and negative dispositions of customers to products, brands and the shopping experience.

I like Patty Seybold's perspective on this subject http://outsideinnovation.blogs.com/pseybold/2006/12/are_you_leverag.html . Our advice to clients is that they must ensure that the "voice of the customer" is central to the way we design the shopping experience.

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Ecommerce Implementation Pitfalls

2007-06-04T18:45:12Z

Ecommerce implementations programs are complex and challenging. Not all retailers have the internal capabilities or scale to execute on them successfully. Interestingly, a leading research analyst confronted me with the question - "So what are the challenges that we need to be aware of before embarking on ecommerce implementation programs?"

]]> In our perspective there are several challenges that retailers need to consider when they embark on their ecommerce programs:

Most clients attach inadequate focus to the organization change impact and what it means to people roles and responsibilities. For example, how does the IT organization for the online business coordinate and engage with the Corporate IT organization? What is the change readiness and training impact to people as they implement the new technology?

In several cases, the effort impact to legacy and backend systems has been underestimated. This is usually a case because of insufficient knowledge and documentation of the incumbent systems. Likewise the effort associated with the customization and integration of the ecommerce platform with existing systems (which in a specific client example included integration with over 30 existing systems)

The other issue is the elaborate definition of the content management and workflow processes and the retraining of merchant teams so that they can effectively use the new content management systems.

Performance tuning is another area that gets pushed to the backburner and sufficient importance needs to be attached to the architectural implications of scalability, availability and performance.

Other aspects that retailers need to consider include social networking and the usage of Web2.0 http://www.infosys.com/industries/retail-distribution/multi-channel-commerce.asp technologies to improve the overall quality of the user experience.

Role of ecommerce in Multi-channel retailing

2007-06-04T18:29:07Z

A leading research analyst who covers ecommerce and multi-channel retailing asked us about our point of view on the role of ecommerce in the overall multi-channel retailing strategy and which of the two is a driving/determining force. ]]> According to Patrick Ogawa (AVP-Infosys Technologies), the ecommerce strategy decision is becoming a Board level decision especially given that the online business is reaching scale of revenues of several billion$.

In some cases, clients are approaching their ecommerce strategy as part of their overall Multi-Channel vision and hence are trying to integrate their item & customer management, merchandising, inventory and order management organizations, processes and technologies.

Other retailers are realizing that their aging commerce platform is not scalable to support future business growth, and hence feel the urgency to replace this technology. While they make those technology investments, they should ensure that they don't lose sight of the longer term vision of multi-channel retailing.