Off the Shelf: The Retail & CPG Blog

Marketplace is the buzz word these days. Sears recently announced the launch of the Sears marketplace which was preceded by Walmart a couple of months back. Play.com, the Jersey based online retailer of music and electronic products also has its own third party marketplace where one can sell DVDs, CDs, Games, Books etc. And ofcourse we have Amazon and eBay which has been around for so many years now. No doubt this gives ample opportunity for everyone to sell and most importantly a wide and competitive choice for the consumers thus giving the right thrust to the Long Tail economics that Chris Anderson proposed a couple of years back. Talking about Long Tail, this is one thought that has been going around in my mind for sometime now. Marketplace has evolved in Retail as well as in the Entertainment space. What about Banking? Is a third party marketplace possible for the Banking industry as well? Can there be a one stop shop for consumers that would address all their banking needs? A marketplace where, not only banks, but individuals can come and sell customised banking products and other individuals come and buy them? Looks improbable ...

... but definitely not impossible. The Long Tail Theory talks about unlimited shelf space, primarily made possible by the internet because of which there has been a shift in the demand curve across products allowing Niches(the tail) to score rather than Hits.The Banking industry has also come a long way from brick and mortar setups to providing the convenience of the internet in a secured way to the customer. Though when it comes to money matters over the net, people arguably are skeptical and apprehensive, but when the trust builds up and the customer gets the assurance of secured transactions, a banking marketplace can definitely become a reality. A little research on google led to a couple of interesting sites in the UK and the US where banking marketplaces from lesser known brands are already up and doing business. Be it taking a loan for medical school, buying a bike, paying past bills or funding for wedding expenses, Zopa and Prosper have set up third party marketplaces where lenders out there are ready to provide you, the borrower, with the requisite money.

And just like an eBay or an Amazon, you can choose from a host of options that suit your needs in terms of the loan amount and the time of repayment. Anybody after fulfilling the basic criteria can become a lender and can list their products, set their own rates and successfully make their idle money work. Prosper even claims to have close to a million members and a business of $188 Mn so far.

This concept, if implemented by established banks, can be particularly interesting as because banks with their own established brand name can go a long way in building that trust amongst their customers (both borrowers & lenders) and provide an extended portfolio for the consumer to choose from. In the process, the bank can also generate revenue with other's products. This is true democratisation of production as well as utilising the benefit of unlimited shelf space as mentioned in the Long Tail theory. And when distribution of these products are facilitated through a marketplace, they will definitely sell.

Going forward, I will not be surprised if in the future a consumer says , 'Enough of fixed deposits, enough of riding the unpredictability of the stock markets, let me see how much disposable income I got which I can lend'. This can become one more channel for an individual to make their money work hard and give back handsome dividends. And it surely will not be long before you start thinking what to do with your extra cash. Well, you got 3 choices : Lock it, Invest it or Lend it!!!

Posted by Rrituraj Sharma at 5:26 PM | Permalink | Comments (9) | TrackBacks (0)

A few months back I purchased a GPS from the online channel of a brick and mortar store. The web site was friendly, the deal wonderful, it even offered me a free rush shipping. I got regular updates on the status of my order every few hours, and within 2 days, the GPS was on my door steps. An awesome shopping experience.

However, I had a completely different experience when I decided to return the GPS. First of all I could not return the item online. There was also no provision for me to return the item to their store as it was bought online. I had to call their care center who advised me to ship it to their warehouse. I followed their instructions but had no clue where my returned item was and when I would get my credit back. Finally, after several days and many calls to the care centers and an equal number of unpleasant conversations I got my money back.

 Retailers have consumer friendly sales channels, stores, online and catalogs but cumbersome returns processes. A robust returns and reverse logistics process can be of enormous benefit to the retailers. It will provide higher customer satisfaction and loyalty, improved in-transit tracking, reduced shrinkage and damage leading to higher sales and lower costs.

Building a robust returns and reverse logistics process is easier said than done. It is extremely complex, time consuming and expensive to modify existing processes. It involves creating a single item master database across the company, having common pool of inventory across various channels like stores, online and catalog, streamlining the reverse logistics process and integrating the returns applications with the back end order management and merchandising systems.

I look at it as primarily consisting of 2 components. The first one is focused on improving the customer touch points. This includes improving the customer experience at stores and online where the customer initiates the return, enabling cross channel returns, improving the process of giving credit back to the customer and enabling the customer to get the status of their credit/return. The second component is focused on improving the back end processes. This includes streamlining reverse logistics, ensuring that the inventory is returned to the appropriate channel, improving returns analytics to help in better assortment planning.       

While the entire benefit to a retailer will come from implementing both the components, I believe that the first component of improving the customer touch points has a bigger impact on the customer perception and loyalty. As illustrated by my experience, it impacts the customers willingness to return to a retailer in the future. This is also relatively easier and quicker to implement for a retailer. So instead of addressing both the component at the same time, I strongly feel that retailers should improve the customer touch points for return as a first step. This will ensure customer loyalty and consequently improved sales immediately. The more complex and time consuming second part of back end integration can be taken up in a subsequent phase.

Recently, Oxford University announced ‘unfriend’ as the word of the year.  This word means ‘to remove someone (who is most likely perceived as an unwanted acquaintance) as a friend on a social networking sites like Facebook'. Retailers can also ‘unreturn’ the unwanted and perceived annoying part of their business and can reap benefits out of it. This can be a key differentiator for the retailer, resulting in greater customer loyalty and higher sales in the long run.

Posted by Somnath Sinha at 4:52 AM | Permalink | Comments (3) | TrackBacks (0)

It's SuperBowl time and while corporate America is getting geared up for SuperBowl Sunday and the advertising extravaganza, Pepsi has taken a bold move. Instead of spending marketing dollars on SuperBowl ads, Pepsi has decided to launch a new initiative around social media marketing . The new initiative, called "Refresh Everything" is being promoted through Facebook and YouTube to connect with the fans and help the community. "Refresh Everything" is an innovative combination of (blogs)ideas and (polls)votes to fund great ideas through millions in grants. This is a monthly campaign where ideas can be submitted and voted for, all by the end consumers and fans.
 
It's interesting to see CPG firms using social media to engage with their customer base to increase brand loyalty. Marketing dollars moving from traditional media to social media... Is this the beginning of a trend?

Social media is a great 2 way communication medium and helps companies listen to the consumers. Companies can align their products and services based on this feedback and in turn increase customer engagement and brand loyalty.
 
Social media marketing certainly has some advantages. It helps
1. Target the right consumer base for maximum conversion through segmentation and engagement.
2. Increase brand loyalty among fans turning them into free advocates of the brand.
3. Achieve topline growth through quality leads given the advocacy viral marketing provides.

I think we are seeing the beginning of traditional marketing (based on product, price and promotion) being replaced by customer-centric marketing. What better horse to ride on than social media and start a whole new trend.
 
What do you think?

Posted by Vishnu Veerubhotla at 3:11 PM | Permalink | Comments (2) | TrackBacks (0)

But nobody goes beyond that. If I were facing them, I will ask the following questions in return to the first question.
-       The trucks will not stop, but do you want to lose an opportunity to efficiently use them and maximize ROI?
-        In these difficult times, do you want to intelligently source and reduce your cost?
-        Do you want to improve your operational efficiency thereby reducing the cost of goods sold?
-       How well you know your customers?
-       Do you know a better way to do the above?
 I will be surprised if I hear a Yes to any of the above questions.  

During tough times like this, every organization is struggling to keep its neck out of water and is confronted to decide what to do to stay in the business. Stopping ongoing projects appears to be a tactical move, unless it is done intelligently. One has to scrutinize the impact of the ongoing projects and even if it means spending more money in the short term, but if there is a case for a good ROI and competitive advantage in the medium to long term, thought has to be given before chopping the line item of the budget. 

Unfortunately, business people who rally for BI do not have the ability to demonstrate the need for continuous investment in BI. While championing for BI, one has to analyze the data and substantiate the claim that BI will have a positive impact on the business. If the so-called champions of BI themselves don’t understand the power of data or don’t know how to use the data to make a case, how will it succeed in fighting the cause for more investments in BI?
Now that the problem statement has been made, how do you overcome this? 

Posted by Prasanna Ramaswamy at 7:34 PM | Permalink | Comments (1) | TrackBacks (0)

I even saw a “Turkish Durum” outlet having a 1+1 offer. Brands like C&A, Esprit, Mango, Celio, Zara, Foot Locker, Media Markt have their shops absolutely full of shoppers jostling their way around the store. Checkout lines have never been longer before and I tweeted my frustration during one of these long waits !

But here is the question that I keep asking. Are these so called “Winter” & “Summer” sales really worth it – to both the shopper & the retailer?

For the retailer, the focus during this period is primarily to give the shoppers a great bargain and clear old stock at the same time. But I get the feeling that the quality and choices at offer seem to suffer. My colleague posted a blog on a topic which I have only come across too often.  Are retailers risking losing their brand image by offering low quality products at a cheaper price just for the sake of joining the sale season and with limited choices to boot? Is this a phenomenon that is exclusive only in Belgium or is it the case elsewhere?

My question is not based on what I have seen this year but in what I have experienced during these sales periods during the last few years. I also love a bargain and there is nothing more thrilling that buying something which saves you 50%. But more often than not, my experience has been that the product I bought either conked out after a couple of months or came apart at the seams after 6 months. (And these are branded products that I’m talking about)

For the shopper, don’t you want something which will at least last you a year or at the minimum - until the next major sale period?

Almost every retailer is building systems for competitor price comparison and analysis. So, why cannot this price comparison and the competitive pricing be done more regularly? A study to understand shopper behaviour during the “sale period” and “no-sale-but-competitive-price” period would be interesting.

Your thoughts?

Posted by Anand Ramakrishnan at 6:31 AM | Permalink | Comments (1) | TrackBacks (0)

Are you part of a CPG company trying to comply with mandates from retailers to start tagging pallets and cases with RFID (radio frequency identification), and seeking to formulate strategies to derive value out of the investment? Or are you a big-box retailer who has mandated suppliers on RFID but are still looking forward to devising means of obtaining end-to-end traceability? Or do you belong to a container-pooling organization worried about the visibility of your assets across the supply-chain?

Very often, it has been seen that not all the supply chain players that deployed RFID in their business processes have garnered its promised benefits. Some of them faced challenges where there was not enough ROI (Return On Investment), no end-to-end traceability, and no value-addition. In order to realize the true potential of RFID, it is indispensable for organizations to enable business processes across the value chain and provide end-to-end traceability by capturing information throughout the life-cycle of the RFID-tagged assets or products.

A lot of questions pop up in the mind as to which is the right way to go forward with a complete RFID deployment, especially when it comes to maintaining the EPC (Electronic Product Code) data. Traditional WMS (Warehouse Management System) or ERP (Enterprise Resource Planning) applications are not designed to hold EPC data, especially at case or sales-unit levels. Should we go ahead with a third party vendor-hosted repository which is completely disconnected from our ERP systems but holds our information, or should we modify all our existing WMS/ ERP systems to process and maintain the highly granular RFID data? Is there a better approach that can streamline the processes in our WMS systems by enabling them with RFID as just a new technology similar to barcode?

I will add more details about this in my subsequent posts as to whether there is an EPCIS-compliant and standard way of solving this problem around Track & trace. Meanwhile, if you have any experiences or thoughts to share on this topic, please feel free to comment and let me know.

Posted by Mayank Shridhar at 6:16 AM | Permalink | Comments (17) | TrackBacks (0)

Right about last week, I was reminded ones again by my wife that our one month marriage anniversary was fast approaching and I needed to do something “special”.  I went to 1-800-Flowers.com app and ordered Tulips for same day delivery with lighting speed without ever leaving the app (of course this requires existing 1-800-Flowers.com account).  You might think there is noting “special” about purchasing flowers, and having it delivered on the same day.  You are right; there isn’t and my wife will agree with you. However, 1-800-Flowers' mobile site has made it so simple for forgetful husbands like me (if you are in the same boat, I suggest you give 1-800-Flowers.com app a chance available on iPhone, Blackberry and Android) that it seems “special”.  The experience, app which is sleek and easy-to-use, begins with a practical list with colorful icons: Birthday, Get Well, Anniversary, Same day Delivery and more and ends with checkout in few touches. This magic happens on Didby's Mobile Commerce Suite.  1-800-Flowers.com understands that Mobile shoppers typically want to make a decision fast hence providing relevant no non-sense information is a key.

According to Internet retailer magazine, Mobile site had 295,000 (monthly average) unique visitors in 2008 with site response time of 6.10 seconds and site was scored “Excellent” in Consistency.  1-800-Flowers mobile site was also selected as one of the best m-commerce site from 156 m-commerce sites and apps.  

This is all exciting and great however; my position with my wife hasn’t improved and am still looking for something “special”.

Posted by Hirak Patel at 7:37 PM | Permalink | Comments (0) | TrackBacks (0)

Happy New Year to everyone and let’s hope we are moving towards a more positive economy and upswing in consumer sentiment. On that note, continuing from previous posts (Part 1 & Part 2)wherein we talked about ideas driven around the value theme, online retailers will have to additionally provide customers a richer shopping experience and engage them deeply, particularly around community interaction.

Also, the previous post is now part of a white paper. You can download the paper here to get more details.

In this post, Jayanth and I put together notes on offering a “Richer shopping experience – through innovative adoption of technology and capabilities”.

I) Offer Advanced and Intuitive Search Capabilities
Given the wide variety of flavors, colors, fragrances, pack sizes and product forms available in grocery providing a customer the ability to quickly hone into the product she is looking for is a sure fire way to expand cart size and this paradoxically also leads to longer browse times as a customer getting positive results through search will continue to look up products she would otherwise not have cared to locate online.

Leveraging enhanced search capabilities that are in use by leading online apparel and footwear retailers, online grocers can use search as a unique differentiator to position themselves in customer’s minds as the site that is easiest to shop from.

II) Offer Faceted Navigation – “Placing products in the customer’s preferred aisle”

As a merchandiser, the right question to ask is “Would online customers want to reach this product by looking for it differently?”

Since there are multiple parameters a customer will look for in a product before finalizing the buy decision, it makes sense for online stores to enable navigation in that natural way using faceted classification

Faceted classification and navigation involves managing the product catalogue by enabling multiple product perspectives that can be assigned to a category. Such a classification supports navigation to the product in several ways, rather than a single pre set order

Browsing the website in this manner will enhance customer experience and be a unique differentiator by
   • Enabling customers to use the site in a way they feel most intuitive and comfortable
   • Allowing customers to browse and learn within topic areas by providing access to references,related links and other associated information
   • Creating a more meaningful interaction and shopping experience for the customer

III) Provide recommendations, Personalization / Customization

Using previous shopping cart data to offer a customer, relevant options in terms of package size, additional flavors and paired products will often make her appreciate the convenience of shopping with the particular website and thus drive additional visits and sales.

Analyzing and segmenting loyalty card data is imperative to offering the right recommendations. To explain, today most grocery retailers may not know the number of members in a customer’s household and while based on previous shopping history, they can recommend the right product; they miss the opportunity to recommend the right product in the right package size and thereby delight the customer.

That’s it for now and in the next post we’ll look at how online grocers can engage customers and build a community to harness the power of many.

Posted by Kunal Puri at 11:09 AM | Permalink | Comments (0) | TrackBacks (0)

We all witnessed the price war during the holiday season between Walmart, Target and Amazon over the ecommerce space.  Now an interesting move by the 2nd largest US discount retailer Target called "The Great Save".  Starting Jan 3rd Target has setup a "warehouse club like experience" in its 1,740 stores.  The idea is to provide the customers a variety of bulk size packages of everyday necessities like toilet paper.  The most important part is that Target is claiming to provide the warehouse club like experience and the savings without charging any warehouse membership fees.  What is the trend?

Target's profit took a hit during the recession as the customers started buying basic necessities than the trendy and optional cool stuffs.  Target's move to "The Great Save" is a step towards winning back the customers who are value conscious.  What if this concept of buying bulk in a retail store without paying the membership fees becomes a huge success?

Small scale buying for home customers: The small scale buying for home customers who want to become members or extend their memberships at Costco, Samsclub and BJs would be thinking before extending.  Target can probably tap them easily.  However, Target has said that they don't plan to extend "The Great Save" beyond Feb 21.  I think they are testing waters.  If it is a huge success, why wouldn't Target keep this year around.

Medium scale buying for small business customers: The medium scale buying for small business customers are going to continue to be loyal to their Costco, Samsclub and BJs respectively.  They are not going to shift their buying to the new "The Great Save" warehouse club like experience as it may not cater to their needs.

How would true membership based warehouse clubs react to this?  Create even bigger bulk size packages, become more efficient in supply chain, increase customer basket size and put more price pressures on the CPG companies.  You may recall what happened between Coke and Costco during the last three months.  In November, Costco put a sign in its store saying they are not carrying Coke products as the negotiations between Coke and Costco failed.  In December, Coke is back at Costco.

How would other retailers react? It is going to be interesting.  What if they follow suit and sell bulk packages in retail floor?  Will Walmart cannibalize Samsclub by introducing bulk packages?  Will Grocers like Safeway, Publics, etc focus on small packages? It will be an interesting situation.

What are your thoughts?

Posted by Ezhil Mani at 9:49 PM | Permalink | Comments (0) | TrackBacks (0)