Off the Shelf provides a platform for Retailers and Consumer Packaged Goods companies to discuss and gain insights on the pressing problems, trends and solutions.

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December 18, 2014

The case for Online Grocery

 

 

Online retail is a very important channel today, on which every retailer is trying to gain a foothold. Giants like Amazon, Ocado, and Flipkart etc have established their online business and are trying to tap into a larger market share across the globe. Be it the retail or consumer products for new or used products, everyone wants to be on the web and doing business.

 The next big thing in the online business is Online Grocery. Online business has its own advantage on cost, but is it cost efficient? Grocery retailers today are striving hard to become unique in form of the service they provide, the range they carry or the omni-channel presence allowing easy access to the customer. But there is a definite amount of cost involved in being unique, which is a major concern for any grocery retailer. The margins are very thin and tight control on operating costs is required to meet the top and bottom line. However the buzz around going online in grocery segment remains a major thrust area in 2015.

Customer's wants are never ending and companies too are trying to satisfy them with innovative methods like click and collect, drive through, home delivery and centralized lockers, to service the customers and retain them, apart from the online offering.  There are retailers who have a physical store and also provide home delivery, drive through - these services win customers but they also mean additional cost for the retailer to manage these services. That's why online retailers have  a minimum cap of purchase for customers to avail these services.

Going online sets the retailer free from the real estate cost which occupies a major chunk of the P/L statement of any brick and mortar retailer. And added to it are other costs like power, human resources, shrinkage etc.

The advantage in the online grocery business is the use of limited manpower who could be trained to handle sensitive categories and make sure the product stays intact till it reaches the customer. Also, when a customer sitting anywhere, places the order, gets to pick it from a location near to his/her work place or home or gets it delivered, it gives enormous customer satisfaction, which is most important today. The only thing online retailers need to do is to market their services, try to reach all types of customers and make their supply chain efficient. Once the supply chain for home delivery, drive through and click-n- collect is in place, the online retailer can enjoy the cost advantage and scale up.

In conclusion, in having only a physical presence, there is always a limitation in targeting only the customers available in the catchment area. In an online business, the retailer has a better reach and the retailer can provide other services too, which improves customer centricity, apart from  benefitting both parties monetarily.

 

 

 

December 15, 2014

Consumers can 'bank' upon Wearables

Wearable devices are surely going to make doing business and making consumption choices easy and the retail industry is one of the biggest beneficiaries of this. In fact, the impact would go beyond retailers and the online business and extend to even consumer banking. In fact one can visualize the boundaries between the retail business and banking business blurring in the new digital age.

As consumers seek easier and more convenient ways to shop and then pay, the retail and payments worlds are likely to collide in the internet expressway to create a smooth seamless transaction for the customer.

For example, a customer walking into a store with a Google glass will use the Google glass to do various things such as - find his way to the nearest store, seek the aisle he wants, receive any promotional updates about products, browse product information and the same Google Glass will also allow users to connect to internet and access all bank account related information and conduct transactions using voice commands. The user could look at his account details, pay bills by taking pictures of them and commanding the app to "Pay Bill".  Another use case here could be, that next time round the customer is walking down the retail aisle/or passing by a restaurant/store, he can get targeted and customized offers of products and services on his Glass, which fit his 'client profile' and there is history of a payment made through his account for the particular category.

To extend the use of the Google glass further, the app will also help him find the nearest ATM/Branch. The user could simply deposit a check by looking at it (the image of the cheque is taken and processed for clearing).

Now let's look at a use case which might be applicable to the Relationship Manager of a bank, such a person would also find the device extremely useful. Once he gets a call from a potential lead, he will be able to reach the client on time, using its easy navigation interface. The conversation with a customer in a different language will be far easier, due to speech to text and language translation apps, on the Glass. Incase, the client needs more detailed product information, the same question can be transferred 'live' to a product expert, who can instantly see and hear the query. Once the questions have been answered and the customer decides to sign up, all he has to do is speak required information and a customized app on the phone automatically converts it into text and feeds it into an application form. Signatures can be collected digitally. Finally, customers photograph and copies of on-boarding documents can be instantly uploaded by saying "take picture". Funds for the account could be transferred instantly using a wallet application on the Glass. That's all! This really makes life much easier for a customer, by having a constructive discussion and completing all the mundane paper work very fast. 

May 12, 2014

Power of Crowdsourcing

Crowd sourcing is a fairly new phenomenon that has shaken the basics of various industries, business models and enterprise decisions. Right from getting inputs to product designs to utilizing pictures from Instagram for running marketing campaigns this practice of leveraging collective intelligence is now becoming  main-stream.

With the success of this practice manifesting in many walks of life, we can take a look at some of the examples to see how well this model has been adapted.

a) Quirky - Adopted Crowd sourcing into their Product Development process and called it Quirky Social Product Development. Individuals submit product ideas which is then curated by the community, reviewed by a product evaluation team before its designed, engineered and mass produced. A percentage of resulting sales from the product is then shared with the person who proposed the product idea. With projected revenue of 54 Million USD by 2014, Quirky is quietly becoming the Mass Market consumer product manufacturer.

b) Wal-Mart: In 2011-12, Wal-Mart started with the Get on the shelf initiative, where it invited public to submit great product ideas and then through a review process and thrown open for voting. Finalists were chosen based on the votes and rating and their products were available online and in stores. Human Kind in 2012 and Elvis Presley Home Bedding Collection in 2013 were chosen as winners (see https://getontheshelf.walmart.com)

c) InstaCart:  Grocery service provider that leverages the power of crowd sourcing to delivery grocery to homes within an hour of order getting placed. Company began operations in San Francisco but has rapidly scaled up to cover cities like Boston, Chicago, NYC and has also expanded partnership with retailers like Whole Foods, Shaw's, Market Basket, Harvest Coop and more. With revenues rising more than 2X times in the last few months, there is a great growth story for the company.

There are numerous other examples of L'oreal, Coach and other fashion retailers seizing this opportunity to put together marketing campaigns and/or product images that borrow on photos and amateur images from social media sites like Instagram and Pinterest.

Real benefits in Crowd Sourcing? Clearly the benefits are not very hard to see

  • For brands that weave in crowd sourced images for product display or marketing the benefit is plain and simple - imaginative, original and authentic
  • Crowd sourcing helps disrupt the existing business model and creates new opportunities for startups.  A classic example is that of Instacart that has successfully launched same hour Delivery for Grocery orders where larger players were struggling with same day deliveries.
  • For companies like Quirky, it is about accelerating innovation and cutting overheads and operating costs associated with typical New product Introductions.
  • For Walmart it's about finding the next Billion dollar of sales by identifying those high potential new products and getting it on the shelf
  • For players like Utest it is unlimited access to an expanded set of skills and sometimes hard to find skillsets.

Problem Areas: While we certainly want to focus on the benefits and the key drivers of this model, there are few problem areas that needs to be addressed as well

  • The first and foremost would be that of Intellectual Property. Who owns the IP in case the idea is transferred from the founder to companies like Quirky or Kickstarter. Can there be non-exclusive license transfer instead of completely transferring the IP rights?
  • How to sufficiently compensate the founders? Is it a onetime lump sum or gain sharing or a commission on sale?
  • How do we ensure quality of product or service? Take the case of Instacart - for some orders if items are not found in a store then those items might not be fulfilled leading to lower customer experience.
  • Lack of Confidentiality
  • Lack of Proper Communication

Key Considerations: Finally for retailers, service providers and manufacturers trying to leverage the power of Crowd Sourcing the following key points needs to be considered to ensure a very effective process and resultant output

  1. A rating mechanism for the participants in Crowd Sourcing to identify their significance of past and present contributions, social influence, originality of design or ideas. Ex: In case of Instacart rating parameters could include order fill rate and on time delivery by personal shopper. Higher the rating, the better the compensation or assignment for future orders.
  2. Search Mechanism (using an extensive algorithm) for systematically sifting through enormous amount of data, photos, videos, ideas and products and also considering the rating to identify those opportunities that aid future growth, address under served  customers or geographies. 
  3. A workflow driven technology platform that will help the collaborative nature of work right from submission of ideas to reviewing, evaluating, allowing public to register vote and eventually identifying the top picks.
  4. A palatable profit sharing mechanism to reward the Founders (of idea) based on the outcome - sales of the product or service.
  5. Re-defining the various roles in the Internal Organization - Product Incubation, Marketing or service teams to adapt to the new model and to deliver creative outputs (campaign, service, product) both from within and outside the organization. 
Clearly these are interesting times for the various participants in this model - be it the contributors/founders of ideas, new age companies that aid to translate these ideas to sellable products or the retailers that borrow upon the end products for final sale. With more funding and with proven case studies on sustainability and success this model will become a huge source of disruption to as-is business models in the coming years. As they say, the collective intelligence of community (local or global) can very easy surpass the intelligence of corporate giants.

September 30, 2012

"Mobile Apps For Faster Shopping Sprees"

 "Google Indoor Maps" has opened a whole new opportunity to retailers whereby they can enable their customers in getting easy and quick access to the products that they're looking for. In brief, "Google Indoor Maps" allows a person walking inside a store to navigate his travel within this indoor location just like what she(/he) would have done while driving a car using a GPS

Integrating these maps with Retailer's own mobile application (app) and tagging a store's aisles by "Product Categories" on these Google Indoor Maps for a large format store, going down to category of products available by Brands may be just the beginning of the thought as to how Retailers allow their patrons to directly reach out for the product that they are looking for rather than wandering through store departments or searching for a store associate which for some shoppers may be time consuming or even frustrating.

One of the best supporting feature on Google floor maps, is the ability to guide the user by individual floor's plans, whereby a large multi-level retail stores can also be covered easily and therefore we feel that some of the immediate exploits can be in the large scale Store or say Super Store

Let us try to understand how one such Retailer app may make the life a Retailer's clientele much simpler and the shopping experience much better. Assume the scenario that our loyal Customer "Louise" is entering such a Large Super Store for her weekly purchases which runs across several departments of the store like fresh produce, dry grocery, apparel, cleaning supplies, bath-ware, electronics, sports goods and the list goes on. Soon after she has parked at the store, Louise logs-in to the Retailer's own native Mobile app on her smart phone. The Retailer's app upon invocation on her smart phone, detects her geographical location and the store that she is visiting today via Location Based Services (LBS) wherein this specific store's latest tagged maps can be pulled and displayed on Louise's phone's screen

To make the whole shopping trip faster, Louise has keyed in the shopping-list beforehand in the app and a route map is prepared for her upon her check-in into the store via this app. This route map is based on the latest movement of shelves/racks in the store.  Such a guided walk cuts down the Louise's walk through the aisles a short, easy and a confortable one

Louise was looking for a shirt for her son, but the size small does not appear on the shelf today... does the store have it? No problem... the check would be a quick one by Louise quickly getting to know this via her mobile app. Moreover, if it is not available in store right now, the app prompts her with an easy and quick site to store order which she can pick up during her trip next week 

Another use for this app+google maps eco-system can be to integrate with the floor maps and publish current vacancies/next available time slots/expected wait times in Large Store's sub stores like ophthalmologist shops, saloons etc.

 

This Large Super Store's sub stores are very frequently publishing a status of a vacant customer spots/seat available or unavailability of the same on the floor map which when viewed by Louise, will give her an idea whether she needs to do the shopping first or go to the sub store for a quick visit to the hair salon

While these are just some of the initial thoughts, when pursued actively this specific technology can be utilized in umpteen ways to boost the store sales and to guarantee customer satisfaction. Overall, sky is the limit when one starts documenting the concept of such a solution/product. Customer purchase/return history and loyalty points can be utilized to highlight offers/deals when customer is approaching a specific aisle or when she has been looking for a specific product for some time

This article has been contributed by Ashutosh Kaushal - Senior Consultant (Sterling Commerce - Infosys Ltd). You can reach Ashutosh at Ashutosh_Kaushal@infosys.com.

 

Leveraging Social / Consumer Genome for Merchandising

Most retailers traditionally leverage sales data from POS terminals to analyze buying behavior. In some cases, loyalty card data is also used to determine appropriate assortment decisions. These data sources and their corresponding analysis have proven reasonably helpful, though they don't convey the whole picture. With the recent explosion in social and consumer related data on the web, there is a wealth of information that Retailers should be exploiting and incorporating into their merchandising decisions, primarily around assortment and space.

Social/Consumer genome related data provides rich insights into needs, wants and buying behavior of individuals. This data when combined with demographic and geographic data can provide a good map of consumer wants and needs for a given market for a set of product categories.

A major input into merchandising decisions / assortment plans is to determine consumer buying behavior to identify what products sell and what potential products could sell to increase sales. Based on this analysis, assortment decisions of inclusion/exclusion or allotment of space are provided. The means to identify this buying behavior was typically the use of POS data or data from Nielsen/IRI that provided good basis for WHAT was being purchased. When married with Demographic data, there was a good proxy for WHY the products were being purchased. Even when rigorous correlation and clustering analysis is carried out, the determination of buying behavior and the reasons for the same were proxies at best.

Now with the availability of consumer genome or social genome information, the analysis of WHY purchases are being made and what is being purchased with identification of latent and express needs becomes even more accurate as there is clear expression of wants and needs. This will significantly enhance the quality of assortment and merchandising decisions as the degree of error/approximation is reduced.

There are however some pitfalls to the use of this data. We cannot solely rely on this data as web usage and consumer/social genome information may not fully represent buying needs and wants for the entire market population. This data usage has to be married to traditional sales analysis to augment the decision making process.

There are no tools / application products in the market place that provide truly integrated capabilities. The holy grail for optimized merchandising would be to integrate social/consumer genome data effectively into the traditional clustering analysis and thereby into the assortment planning process. This might be a challenge for some of the retailers who struggle with traditional approaches. Asking them to adopt more advanced analytical approaches to incorporate social/consumer genome data would be a challenge.

The key would be to devise suitable technology/process platform augmented with robust analytics shared services that can leverage necessary data to enable optimized merchandising decisions.

This article has been contributed by Amitabh Mudaliar (Group Engagement Manager - RCL Infosys). You can reach Amitabh at Amitabh_M@infosys.com.