• Are free returns right for your customers?


    It’s one of the big questions that every online retailer faces – should we be offering free returns?

    Whether or not free returns are even viable for your business is, of course, specific to your business model, but I can guarantee that they’re something you should investigate.

    Why? Because customers care.

    According to the 2015 UPS Pulse of the Online Shopper survey, 57% of shoppers consider paying for return shipping an issue, making it easily the number one issue encountered. 62% of shoppers consider return policy an important aspect of selecting whether and where to buy products at all.

    In an earlier ShopRunner/Harris Interactive survey, 81 percent of survey respondents stated that they were less likely to make more purchases from sites that charge for return shipping. This tallies with the findings of a study published in the Journal of Marketing (emphasis mine):

    “customers who paid for their own return decreased their postreturn spending at that retailer 75%–100% by the end of two years. In contrast, returns that were free to the consumer resulted in postreturn customer spending that was 158%–457% of prereturn spending.”

    This insight arms us with a conclusion that is not inherently obvious: a free return policy is so appealing to consumers that the process of going through it actually encourages repeat business.

    This makes sense – a consumer friendly return policy (especially once successfully used) creates a bond of trust between a retailer and customer. The customer now believes that the risk associated with making purchases from the retailer is inherently lower. So they have the emotional leeway to order more, feeling secure in their ability to easily return products they’re unhappy with.

    Why not offer free returns, then?

    Despite all the data pointing towards the benefits of free returns, only 22% of the online retailer’s assessed by the UPS study offer free returns.  There are a number of reasons for this.  First, certain retailers simply aren’t capable of offering these benefit, including low margin sellers who are competing on price alone or companies selling especially heavy or difficult-to-ship items.

    Another reason is that many online retailers continue to internally stigmatize consumers making returns as attempting to game the system.  Making returns too easy could open the door to borrowing activity.  Imagine buying clothes or a videogame for a one-time-use and attempting to return them once you’re done. While this may be the case for a minority of your customers, the insight from the above study suggests that offering free returns actually increases the amount of spending that takes place, making up for losses incurred from serial returners.

    The case for free returns in your business is ultimately predicated on the product you sell. Apparel, for instance, can see significant gains via a free return policy as consumers feel free to try out new styles or fits. Asos, for instance, goes so far as to ship their clothing in re-sealable packaging, encouraging returns, while Zappos was perhaps the original pioneer of the free online returns trend, offering shoppers an entire calendar year to change their minds.

    When it comes down to it, deciding whether or not to offer free returns is an investment in your customers. You shouldn’t do it simply to “keep up with the Jones’s.”  You should do it because it makes sense for your business and your customers.  Dive into your own data and keep an open mind.  My guess is that you’ll find some kind of friction-reducing tactic around orders and/or returns to be worthwhile.

  • When should you take your retail business global?


    You’ve got an awesome website.  A phenomenal product.  Loyal customers.  A growing domestic business.

    The next major question you are likely to ask yourself is: when should I start selling globally?

    The allure of a global market is simple – for businesses successfully cornering a domestic market, expanding beyond their borders opens up a nearly unlimited supply of new customers, capital and talent. In addition to increasing revenue, global markets can extend the lifespan of existing products and reduce dependence on a single market.  This reduction in dependence is particularly important when it comes to insulating from the risk of localized adverse economic conditions.

    So, given how easy it easy to articulate the benefits of going global, why doesn’t (or shouldn’t) everyone do it? The short answer – it’s complicated. From different cultural norms to foreign regulations, going global can get complex fast.  That’s not to mention the costs associated with an increase in supply chain complexity and new employees.  Expanding globally takes a sense of focus and purpose that not every company is interested in or capable of.  

    Perhaps the first and most important question to ask yourself as a store owner is this:  am I really ready to take the plunge into a running a global business? Here are some factors to consider:

    • How much organic traffic do you get globally? If your organic global traffic numbers have you feeling like you’re leaving potential customers on the table, you may well be operating in a segmented well-suited to go global. Not getting foreign visitors? It’s not the end of the world, but you’ll need to do your research and make sure global markets want what you’re selling.  Further, you will want to validate that you can do it better than the companies operating there now.

     

    • How many orders do you get? There’s no magic number here, but are you still growing in your domestic market? If you’re part of a small team with upwards sales growth at home, adding the employees necessary to make international expansion a success might be more complicated than meaningful.  You can always consider going global later.

     

    • How much control do you have over the supply chain? This relates to a number of other logistics factors that you’ll need to consider before deciding to expand internationally: Do you produce your own product?  How heavy is your product? How challenging will your product be to ship in customs? What is the holding cost of your product? Make sure you have a strong grasp of your domestic shipping capabilities. Whether through a third-party logistics provider or in-house, shipping globally adds complexity every step of the way.

     

    Once you’ve determined that you have potential international customers, a business capable of supporting global business complexity, and a shipping/logistics model capable of handling overseas orders, you’re ready to start putting together your strategy for going global. Be prepared for a rocky road – it’s not easy to take a business you know well into new waters.  That said, with enough research and a solid plan, it’s the best way to ensure diversified growth into the future.

    Check out part II in this series for advice on forming your global strategy and tips for making your international rollout a smooth one!

  • Gilt Groupe Acquisition and What it Means for Flash Sales


    Hudson’s Bay recently confirmed its acquisition of Gilt Groupe for $250 million earlier this month.

    As a company that has raised $300 million in venture funding, this is clearly a disappointing outcome for Gilt.  I remember meeting executives at Gilt back in 2009, when the company was riding high and approaching it’s $1 billion valuation1.

    It seems that a lot has changed for Gilt over the years.  It’s important to explore the story of the company, and take away what we can in terms of lessons learned for eCommerce more broadly.

    The Path to Success

    Companies like Gilt were part of the ‘back-to-the-future’ crop of new-age permission marketing companies.  While their business model was largely new, the overarching concept really wasn’t.   People have been giving businesses permission to send them messages on deals and company updates for many years.  (Think retailer-specific credit cards as just one example of this.)

    The difference with a flash-sale retailer like Gilt is that the site had a members-only appeal to it.  The idea was that you got access to private sales in exchange for creating an account and letting them email you sales updates each day.  As a consumer, you’d want to do this because you’d have access to deeply discounted products as part of these sales.

    Further driving conversion was the scarcity of these sales.  The sales would be one-day only, and most of the good products would sell out in mere hours…

    My sense of the contributing factors to some of the stagnating valuation are as follows.

    Communication Channel Fatigue 

    The problem with Gilt and the broader flash-sale category was the negative network effects.  The more flash-sale retailers there were, the less interesting it became to be a flash-sale retailer.  Why?  Because the more sites that a consumer gives permission to, the less likely that consumer is to actually see the marketing messaging.

    Plus, Gilt gets more than a third of its revenue through Gmail email campaigns, but Google filters marketing messages out of main inbox, making them much harder to get attention2.

    Also competing with that communication channel are specialty retailers and department stores in the U.S who are commonly offering 30-50% percent markdowns on new inventory and even better deals on older merchandise3.

    Gilt grew rapidly in its early days by selling heavily discounted excess inventory at a time when the economy was strained and big brand fashion manufacturers had plenty of excess inventory to unload. Now that the economy has strengthened and lux fashion brands have scaled back production, there’s less inventory to deal with. When they do have excess inventory, more outlets are available for distribution, including giant off-price retailers like T.J. Maxx.

    Too Big, Too Fast

    It’s called breakneck pace for a reason.  One of the dangers of growing in valuation and size as quickly as Gilt Groupe did is that it’s hard to operate efficiently when you are in hypergrowth.  With large infusions of cash (like the $138 million it raised in 2011), it can be very tempting to spend quickly and attempt to chase growth.

    If there is any lesson that venture-backed startups are doomed to repeat learning time and time again, it’s this one: An inorganic shape of growth is often a dangerous one.  Once companies hit an initial ramp of growth, venture investors expect that growth to remain constant or accelerate into perpetuity without any bumps in the road. The problem with this way of thinking, of course, is that company leaders feel like they have to chase growth at all costs for fear of being categorized as a ‘slowing-growth startup.’

    The reality of growing a business is often very different than perfectly up-and-to-the-right graphs of accelerating growth.  It takes material investment in product, operations, and talent to really keep a business growing healthy.  That’s usually a lumpy process.  And success is often a lagging indicator to these kinds of major investments.

    The reality of the flash-sale category is that from 2005 to 2010, industry revenue growth grew at an average annual rate of 76.2%, according to IBISWorld. Since 2010 to 2015, that has declined to 16.7% annual growth.4.

    Flash Sale Industry Revenue Trends

    Commerce Without Vertical Integration Is Dying

    Yep, I said it.  And I’ll say it again (more thoroughly) in another post.  eCommerce has changed retail forever.  Back before the proliferation of internet buying, having a cool and curated set of products was a differentiator and enough to grow a successful business.

    You could have the coolest little shop on the block, and it could have cooler products than other stores.  People would quickly find that they could come to your store because you ‘got them’ and their lifestyle.  Even if there was a store one town away that got them better, or had a bigger selection of product, they still might not shop there because of the additional time and effort associated with going there.

    This idea of winning on curation translated online, but only in a limited way.  That’s because the switching costs of shopping online are approaching zero.  It’s as simple as Command-T to open a new browser tab and check another site for the same product.  So it matters a lot less if a retail site ‘gets you.’  It matters a lot more if they have the best price.

    It seems only inevitable, in this new digital commerce world, that folks who sell the same product as everyone else are engaging in a race to the bottom in terms of pricing.

    The way out?  Produce something.  Make a product that’s the best in the world at what it does, and people will find their way to it.  If you control the methods of distributions, then they’ll only be able to buy it from you or a channel you control.

    Lessons We Can Learn

    I’ll admit that I thought Gilt was going to be worth upwards of $2 billion when I first met members of the team and watched their meteoric early growth.  Hindsight is 20/20.

    Gilt Group Revenues

    First and foremost, it’s important to think about competitive advantage that is sustainable and hard to erode.  I think for companies like Gilt, and most in the flash-sale category, this is difficult (if not impossible) to achieve.

    Vertical integration and having a product advantage is just one example of how a company can build a moat and defend itself from the competition. Vertical integration can offer many advantages5, including:

    • Lower transaction costs.
    • Supply assurance.
    • Improved coordination of production and inventory scheduling.
    • Better coordination of marketing and technical functions.
    • Higher barriers of entry for the competition.

    Ultimately, the issue related to chasing growth won’t go away until Silicon Valley gets better at understanding what slow and deliberate growth looks like.  The lemming culture around chasing hot deals (that just happen to have the right shape of growth for venture) is dangerous and will continue to lead to the destruction of shareholder value.


    References

    1. Gilt Groupe CEO Seeks to Prove Flash Sales Are No Fad
    2. Why Gilt Groupe Is Forced to Sell, Either to Saks’ Parent Company or Someone Else
    3. The Trouble with Flash Sales
    4. Why The Flash Sale Boom May Be Over—and What’s Next
    5. Is Vertical Integration Profitable?
  • Competing in Retail in an Amazon World


    Phew.  This is a big topic.  This post will be the first of a series on the topic.  In case you haven’t been shopping on the internet lately (or paying attention), Amazon is CRUSHING it.

    The company has done a phenomenal job of increasing its footprint in Global Commerce, going from $619 million in revenue in 1998, the first full year after it went public, to a projected $100.59 billion projected revenue for 2015.1

    Explore more AMZN Data at Wikinvest

    Perhaps the most noteworthy trend is that more and more US consumers are using Amazon as a starting point to search for products (as opposed to Google or another search engine). In a recent survey of 2,000 US consumers, 44% go to Amazon, 34% use a search engine like Google or Bing and 21% start on a retailer’s site.2

    Anyone selling in retail these days should be rightfully concerned about Amazon.  They offer virtually every product in the world, in just about every size, color and option you might imagine. Their sheer size allows them to win major concessions from vendors, making competing on price next to impossible. During just one week of the 2015 holiday shopping, Amazon Prime added 3 million new members.3 According to a report from the Cowen Group, Amazon’s growth in the apparel purchase market could see it replacing Macy’s as the number one apparel retailer in the US. (Just 4 years ago, Macy’s apparel sales were five times greater than Amazon’s). 4 As of January, 2016, Amazon’s distribution network totaled 138 active facilities with over 66.2 million square feet in the US and 237 worldwide, occupying 107.8 million square feet of space.5

    amazon1

    Most of the advanced thinkers that I know in retail are starting to form ‘Amazon strategies’ that encompass their strategic thoughts about how to compete, going forward.

    There is no one right answer to this question.  Here is a quick sketch of the the primary ways that I can think of to compete, going forward:

    • Vertical-integration: Have a product that people want.  Make it yourself.  Control the channels where people can get it. Control how the product is presented and at what price it’s sold. Eliminate multiple markups. Optimize resource utilization and avoid wasted costs.
    • Ship products faster: Find a way to optimize your fulfillment strategy.  Can you use 3PL?  Can you work with someone like ShopRunner or Shyp? Develop a fulfillment operation that delivers exactly what customers want. Honor delivery commitments without exception and don’t make delivery commitments you can’t keep. Ship orders in the smallest carton possible to reduce carrier charges by volume and weight, but use environmentally responsible packing materials and make it easy to open products. Locate fulfillment centers near shipping hubs. Implement a return process that flows seamlessly. Offer value-added services, like gift wrapping.
    • Have top-notch customer care: This is the price of admission these days.  Ensure your service is topnotch, not only during the transaction process but long after the sale. Regularly ask your customers what they want. Treat your customers like royalty to gain their loyalty. Have a specific protocol in place for handling customer complaints. Make sure all your employees buy into your company’s philosophy of excellence in customer service.
    • Be personal:  Depending on your brand and demographic, a personal touch can be as simple as associates that know your name or as complex as a fully VIP experience. Make your customers feel important and valued as individuals. Know your customer’s history with your business. Use their name when they call and remember them whenever possible.

    Retail is changing.  Commoditized products are going the way of Amazon and other marketplaces.  To win, you have to have a clear strategy of what will set you apart.  That, or you better have plans to start selling on Amazon.

    References

    1. WikiInvest – Revenue for Amazon (AMZN)
    2. Marketing Land: Amazon Is the Starting Point For 44 Percent Of Consumers Searching For Products. Is Google Losing, Then?
    3. GeekWire: Amazon Prime adds more than 3M new members in 1 week at peak of holiday shopping season
    4. Alibaba: Amazon Could Replace Macy’s as Leading Apparel Retailer by 2017
    5. MWPVL International: Amazon Global Fulfillment Network
  • What to Look for in Third-Party Logistics (3PL) Providers


    As your retail business continues to grow, you will probably find yourself considering using a third-party logistics provider as opposed to fulfilling your orders in-house.

    Third-party logistics is a big industry. In 2014, the Global 3PL Market expanded to $750.7 billion and the U.S. 3PL Market grew 7.4% to $157.2 billion. Two U.S. 3PL Market Segments experienced double digit growth.1.  Global companies all around the world, from REI to Campbell Soup Company, use 3PLs to enhance their fulfillment operations.  At the enterprise level, these logistics providers provide entire supply chain solutions.

    choosing-a-supply-chain-solution-ups-201303250745-750

    Up-and-coming retailers have very different needs than the much more established enterprises.  Most of us start out by looking to fulfill orders received through our web channel.  And most of us don’t have the size of business necessary to require a full supply-chain solution.  What we need is a logistics provider that solves our problems here and now and can also scale with us into the future.

    Specifics to look for in a 3PL

    Costs

    Are the costs detailed enough to permit you to make valid cost comparisons between providers? Depending on your specific needs, typical costs might include2:

    1. Setup fees—the most common of which are web store integration and EDI set up.
    2. Receiving costs—when products are accepted, counted, inspected for damage, labeled (if necessary), placed in their proper location in the warehouse and added to the provider’s inventory system.
    3. Storage costs—usually factored on a monthly basis and most often based on average inventory for the month. Rates may be set on a per-pallet basis, square footage basis or cubic footage basis.
    4. Fulfillment fees—which can vary substantially in part due to who provides boxes and packaging materials. Some 3PLs have been known to underprice fulfillment fees and make up for them elsewhere.
    5. Shipping—usually shown as a markup over their cost or a discount off of published rates.

    When comparing costs, be sure to consider:

    • What do the costs look like today?
    • What is the preview like of how the costs scale with you over time?
    • Are sample invoices in a detailed and easy to read format and does the 3PL have an invoice auditing process in place?

    Technology

    Cutting-edge technology can provide 3PLs with efficiencies that can improve performance. Enhanced management software analyzes and monitors the 3PL’s practices to help identify and eliminate inefficiencies. Cloud-based platforms and Internet of Things (IoT) devices have come into prominence within the 3PL industry, as well as the rest of the supply chain. A leading 3PL will have the latest systems that provide real-time data and feedback on supply chain operations and freight.3 How does the 3PL measure up when it comes to transportation optimization software to allow it to access and use the fastest, most efficient and cost effective routing methods?

    When comparing technology capability, be sure to consider:

    • How will the 3PL integrate with your existing ecommerce platform?
    • How do they keep inventory in sync?
    • What data security measures are in place?
    • Can you access the information you need when and where you need it, from any device?
    • How fast can the 3PL respond to IT requests?

    Speed

    Today’s consumer wants it now. The only way your retail operation is going to thrive is to give it to them. That means your supply chain has to be nimble and responsive to get the right item to the right place in good condition in the least amount of time. In part, the 3PL’s geographic proximity to your customers will play a role in your decision, but there are other considerations to keep in mind (especially considering the growing number of etailers offering same-day shipping). The speed of the entire process from transaction to delivery will have a bearing on how fast orders arrive at their destination.

    When comparing speed capabilities, be sure to consider:

    • How quickly can they ship product to customers?
    • How do they manage peak times such as the holidays?
    • How do they optimize routing to ensure that customers get packages quickly?

    Broader Capabilities

    Remember that the relationship with your chosen 3PL provider is a partnership and for the partnership to work effectively, you’ll need to work together toward mutual success. Consider whether the 3PL will share the same values, ethics and sense of responsibility. Cultural values may become especially important if you ship globally. Is the 3PL you’re considering willing to establish agreed-upon benchmarks for success, and willing to share measurement data so that both you and your chosen provider can work together to understand what’s working and what isn’t so adjustments can be made accordingly. Essentially, your metrics need to align with your 3PL’s metrics4.

    When comparing broader capabilities, be sure to consider:

    • Can they ship from multiple distribution centers?
    • How do they handle international distribution?
    • How do the handle emergencies and exceptions?
    • Will they customize services to meet your specific needs?
    • Can both sides understand and agree on what the specific nature of the partnership will entail?

    You should dig deeply into these questions when you talk with the sales team at the 3PL.  And, as always, the best way to get the real scoop is to talk to customers that are already using these folks.  Any good 3PL should provide you with references.  If you want to get exceptionally good data, try to source your own reference that wasn’t provided to you by the provider themselves. You’ll also want to consider the financial strength of the provider. When you think you’ve found a good one that meets your needs, you’re going to want them to be around for a long time to grow with you as your needs grow.

    References:

    1. Big Deal – 2014 3PL Results and 2015 Estimates
    2. What is the Cost of 3PL Services?
    3. 6 Factors to Consider When Selecting the Right Global 3PL Partner for Making Your Supply Chain Go Global
    4. Six Essential Strategies for Selecting a Global 3PL
  • How to build a retail brand that engages millenials


    Engaging millennials is one of the most compelling and complex topics of modern retail.  I’m often in conversations where people talk about how hard it is to appeal to millennials, and how it’s even harder to keep millennials as customers over the long-term.  

    Unlocking the millennial mystery has clear ROI, and can help brands better engage their existing customers and, perhaps, acquire new ones.  It’s a particularly interesting topic to me, as a millennial myself and someone who thinks a lot about building great commerce brands.

    Based on my experience in the world of commerce, I’ve seen a couple interesting characteristics emerge as it pertains to us millennials.

    Millennials are very discerning customers.

    Millennials grew up in the information age and are digital natives.  We’re engaged across forms of social media and are very used to consuming many streams of information simultaneously.  As such, we’re no strangers to noise.  Millennials see advertisements all over the web and are often pushed product imagery wherever we are.  We’re used to ignoring it.  In order to stand out, products need to be fundamentally compelling or unique.  Millennials are hard to please as customers because we buy online all the time.  We’ve seen and experienced wonderful customer service, and we know what mediocre looks like.

    Millennials have excellent bullshit detectors.

    Precisely because Millennials are exposed to so much information, we’re used to seeing a lot of bullshit on the internet.  Because we’re so at-home on the internet and on mobile, we have a little bit of sixth-sense when it comes to scammy content and sites.  We know when sites are not worth our time.  If the bullshit is repackaged, then millennials have likely already seen it before.

    Millennials have short attention spans.

    Again, because we’re used to consuming multiple streams of information at once, we get bored easily.  Very easily.  We don’t often read articles to the end.  We have a hard time watching video clips that are longer than a few minutes.  We have little patience for filler.  So, when you hit us with content, make sure it’s good.  And keep it short and to the point.

    Keeping the above characteristics in mind empowers retailers to rethink how they approach millennials.  There are a couple areas that retailers need to pay particularly close attention to in order to be successful in building lasting relationships with millennials.

    Merchandising evolves into storytelling.

    Your brand is not just about curation anymore.  That’s the price of admission.  You need to tell a story that resonates with the millennial customer.  What’s truly special about your brand?  What passion was brought to the inception and development of your product, and why is it the best in the world at its particular function?  Your humanity matters here.  What’s your story as a founder or leader of the company?  How did you get here?  What were the trials and tribulations you faced in building your brand?  What went wrong along the way?

    Customer service evolves into relationship-building.

    The millennial customer is so often exposed to empty superficial interactions that you have an opportunity to differentiate on relationships.  Will someone pick up the phone when they call?  Will that person actually know their name?  When they get live chat or email customer service, will the representative actually be useful and capable?  Or just someone keeping a seat warm?  When you reach out with updates and messaging, is it going to be the same old email spam, or will the content and information be valuable and useful?

    Online retail evolves into omnichannel selling.

    Millennials know how easy it is to setup a website.  And how easy it is to make it reasonably good-looking.  Just because you have a website doesn’t give you instant credibility with us.  So, you need to do more.  Do you have a pop-up shop in my area where I can actually meet members of your team?  Do you have events for customers and prospective customers?  Do you sell on other digital channels and marketplaces in addition to your website?  If so, then millennials have a clearer sense of your legitimacy as a retailer or brand.

  • eCommerce Buy Buttons and True Social Commerce


    For many years, we’ve talked about the rise of ‘social commerce.’  People have predicted that our social networks would curate products for us and that the lines between content, community, and commerce would blur and eventually become unrecognizable.

    While on one hand that progression has marched along, on the other, it has not progressed in the ways that many of us (especially me) expected.  eCommerce sites have remained primarily commerce-focused.  And social networks have continued to focus on eye-catching content that people mostly read/watch/listen to.

    We’re finally turning a corner on this trend, and it’s because the social networks themselves are starting to push users in this direction.  This may end up being the natural form of social commerce that the market has been waiting for.

    The change is happening in the form of ‘Buy buttons’ that enable users to purchase products without ever leaving the network.  These buy buttons are proliferating throughout the social web, and fast.  Each of the major players has either launched or is testing them actively.

    Let’s take a quick look at what’s out there:

    Twitter – Already out in the wild. 

    TwitterBuyButton

    With the help of Stripe’s Relay, Twitter has launched Buy Now buttons that can be embedded directly within tweets.  This functionality uses Stripe’s payment technology to process the transaction and send orders to the retailer.  Twitter has not yet released any major numbers associated with the success or traction of these buttons.

    Pinterest – Buyable pins live and seemingly growing quickly.

    Buy_it_on_pinterest

    Pinterest first previewed that Buy Buttons were coming back in June of 2015.  They went live with the concept soon after, and announced that 60 million Buyable Pins were available by August of 2015.  Pinterest also stood up a page that outlines the buyable pin functionality.

    Instagram – Promising, but not yet live. 

    instagram_buy_button

    Instagram, being the go-to destination that it is for trending fashion and beauty, is well-positioned to launch a buy button.  Their blog post on the topic was a little more broadly-focused than the others, talking about ad-units that enabled direct action of multiple types (including signing up on a website or downloading an app.)

    Google – Announced, but not yet broadly available.

    Purchase on Google

    Given it’s position as the much of the world’s primary search destination, Google is perhaps the most interestingly positioned player in the whole bunch.  It recently announced Purchases on Google in a blog post that talked about other retailer-focused enhancements.  What’s interesting here is that Google is alluding to integration with Google wallet, where users may already be storing payment methods.

    Facebook – Announced and in testing.  

    Facebook_Buy_Button

    Facebook announced that it was testing buy buttons for the first time back in 2014.  Things were relatively quiet until an October 2015 blog post drove more clarity about its intent to power shopping on Facebook.  It appears as though the intent is enable shoppers to checkout without leaving Facebook.  Even more interesting is the addition of the shop section on Facebook Pages for businesses.


    These buy buttons can have a lot of implications on commerce, especially mobile commerce, in the next 2 years.  The biggest hurdle is going to be overcoming the differences in mental-modes that people have when browsing the web.

    Many of us are in a content consumption mode when browsing social media and looking for content.  Separately, we are in shopping mode when we are searching for specific products to buy.  Breaking down this mental barrier, and getting content consumers more used to the idea of ‘switching lanes’ from consuming content to buying is going to be a challenge.  With that said, it seems like only a matter of time before behavior is changed and users adapt.

    Stay tuned for more analysis on this topic in the weeks to come!

  • Mobile eCommerce: Old, but still intriguing, news [Part Two]


    Before I begin, I want to give a quick shout out to Clay Allsop at Propeller for pointing out that there are companies out there helping retailers and shop owners differentiate their mobile and web platforms. I’m excited to see the cool implementations that may result.

    Quick Recap

    I left you on Wednesday with some thoughts about what I think this year’s Black Friday and Cyber Monday numbers mean for the future of mobile commerce. In particular, I touched on the importance of not looking at phones and tablets as smaller versions of the web as well as what the growth of showrooming and webrooming means for the relationship between Brick and Mortar and eCommerce (for more general insight into the future of B&M vs. eCommerce as I see it, check out this post).

    Today, I want to move away from the businesses themselves and look to the consumer. How does consumer behavior change when using phones vs. tablets vs. computers?

    Measuring Mobile Behaviors

    Ok, I’ll get to the consumer, but first, I want to talk about how we measure behaviors. My first question in thinking about all this is “Where’s the proof?” Everyone talks about how important it is to have a good mobile site, and the numbers certainly show an increase in mobile sales as well as traffic, but WHO is downloading your app? Is anyone actually acquiring NEW customers via the mobile channel, or are web customers simply adding a new channel/migrating over? So far, I don’t know that we have any way to measure this consistently, but it would be a useful statistic to have. Particularly since it would provide interesting commentary on the significance of mobile commerce as a tool to strengthen either CLV or CPA. (I have some strong opinions and probing questions on where these two are going to end up in the equation of success, stay-tuned for a post on this one).

    Consumer Mobile Behaviors

    So not surprisingly, people have already thought about this. They’ve considered who their customers are and how they shop. Case in point:

    Courtesy of visioncritical.com

    Courtesy of visioncritical.com

    But this infographic doesn’t answer nearly all the questions I have about how consumers interact with the mobile platforms available to them. And, to the best of my knowledge, no one has yet (if you’ve seen/heard/read otherwise let me know @adilwali). So here’s what I want to know:

    Are mobile shoppers browsing or searching for specific products? I want to know if consumers are passing time on their phones exploring what’s out there or just buying things they already need. Moreover, if consumers are browsing, are they then going back to their computers to actually buy? (This goes back to my question of CLV vs. CPA). According to an article by socialmarketingforum.net, one of the key barriers to mCommerce success is security concerns. Consumers aren’t convinced that transactions on their phones are as secure as on their computers. I expect this will change as digital wallets become more prevalent and a stronger resource for internet retailers.

    How much more interrupted is the shopping experience? I want to know if orders placed on mobile devices are generally larger or smaller than orders placed on computers. IBM average sales numbers put tablets about equal with computers and smartphones just below in terms of amounts spent. How does this break down for product quantities? Which brings me to my next question: if viewing real-estate matters, how do you know that the size of the screen isn’t a key contributing factor to lower AOVs (average order values)? The numbers this year show that while sales have gone up, AOVs have gone down – how much does this have to do with the rise in mobile shopping for the holiday season? The same socialmarketingforum article cited above also mentions that even though consumers like the convenience of mobile shopping, they prefer the resolution and size advantages of viewing products on a desktop. It’s harder to judge an object the smaller it is. The real question here may be about merchandising versus experience. Do different numbers reflect the different experiences of mobile vs. desktop shopping? Or should retailers be merchandising their products differently across different platforms?

    Finally, while visioncritical.com has broken down four shopping archetypes, who are they missing? How do the different archetypes interact with mCommerce. If the mom is usually looking for coupons, what’s the college-aged female looking for? How can retailers adapt their mobile platforms to best meet each archetypes needs?

    To sum this all up, I’ll leave you with some more numbers. mCommerce is going to keep growing and companies need to start gathering the data that will allow them to maximize their mobile potential.

    Courtesy of culturelabel.com by way of mashable.com.

    Courtesy of culturelabel.com by way of mashable.com.

  • Mobile eCommerce: Old, but still intriguing, news [Part One]


    In the wake of this year’s Black Friday/Cyber Monday stats, I want to talk about mobile commerce: the truths, the questions, and the abundant opportunities. I’ll be honest, the importance of mobile commerce isn’t escaping anyone playing the eCommerce game. In fact, it may be the most agreed upon movement out there — consumers spend a lot of time on their phones so eCommerce apps need to be available to them. And there are tons of stats to support the growth of mobile, particularly after the past four days.

    Courtesy of teach.ceoblognation.com

    Courtesy of teach.ceoblognation.com

    Some background stats

    According to IBM, Black Friday mobile traffic increased 34%  over 2012 to make up 39.7% of all online traffic and mobile sales constituted 21.8% of online sales. Cyber Monday was also strong in mobile, showing 31.7% of all online traffic and 17% of sales. The breakdown of smartphones to tablets was interesting too:

    “Smartphones drove 24.9 percent of all online traffic on Black Friday compared to tablets at 14.2 percent, making it the browsing device of choice. Tablets drove 14.4 percent of all online sales, double that of smartphones, which accounted for 7.2 percent of all online sales. Tablet users also averaged 15 percent more per order than smartphone users, spending on average $132.75 versus $115.63 for smartphone users.”

    Compared to Cyber Monday:

    “Smartphones drove 19.7 percent of all online traffic compared to tablets at 11.5 percent, making it the browsing device of choice. When it comes to making the sale, tablets drove 11.7 percent of all online sales, more than double that of smartphones, which accounted for 5.5 percent. On average, tablet users spent $126.30 per order compared to smartphone users who spent $106.49.” (Read the full Black Friday and Cyber Monday reports).

    The Big Question

    So what does this all mean? We know phones and tablets are important in the future of eCommerce, but what should companies actually be doing about it?

    Differentiating Web from Mobile

    Tinder screenshot

    Despite universal acknowledgement that mobile apps are increasingly important for eCommerce companies, those apps continue to be viewed as just paired-down versions of web apps. They’re not. Thinking about tablets and smartphones as smaller versions of desktops is a dangerous game: Best Buy and Sony Style both failed to adapt their sites to tablet users and lost out on Cyber Monday (Mobile Commerce Daily has a good article about this). On the other hand, dating site Tinder is crushing it in the mobile sphere by creating an app that is NATIVELY mobile. Users swipe though potential matches instead of clicking or scrolling.

    But what about eCommerce sites? Some retailers are certainly catching on. Both REI and Nine West have created mobile apps that are meant for use in store. They recognize that shoppers want to be able to compare products in real time. The REI app has a product scan option where shoppers can scan the bar code of any product in store to see details and customer reviews. Nine West now provides in-store ipads with an app from which shoppers can browse, see details and reviews, and then order online, all while still being able to try on the item in-store.

    Mobile apps offer incredible opportunities for marketing and personalization. Cache is doing this right. They’ve adapted their push notification system to respond to shoppers habits. If a shopper generally browses certain parts of the site, they get notifications about specific items that they may have viewed. And, like REI, the Cache app also offers in-store bar code scanning.

    There is so much opportunity inherent to mobile shopping; retailers need to remember that having a mobile app does not mean having a responsive web page.

    Showrooming vs. Webrooming

    Brick and Mortar isn’t disappearing anytime soon. But the growth of mobile shopping means that eCommerce and B&M don’t need to be in constant competition. If showrooming and webrooming are growing trends, mobile apps and in-store tablet implementations could help companies create harmony between the two. eCommerce companies should be looking to build better cross-channel experiences as Nine West is doing. Moreover, companies should think about offering incentives to customers browsing online — if the customer webrooms on his phone, why not offer him a promo when he walks into the store? Promotions could work across channels, providing incentives for shoppers to be interacting with retailers on multiple channels, thereby increasing exposure.

    Coming up in Mobile eCommerce, Part Two:

    Mobile Behaviors and a few questions to turn things on their head.

  • The New World of eCommerce: An Increasingly Competitive Landscape


    To begin, I’d like to say, “I’m back!”  I’m committed to being a better, more frequent, blogger.  Instead of simply stating publicly that I’m going to try harder (which I’ve done before…and failed), I intend to simply prove it.  Stay tuned and see if I’m telling the truth.

    My newest company is focused on scaling global technology teams for high-growth companies.  Many of our earliest customers are eCommerce companies.  (This is not purely coincidence: I was a Founder at ModCloth, an investor in Touch of Modern, and an advisor to Blank Label.)  So I’ve done a lot of thinking lately about the future of eCommerce.  My goal is to share the fruits of my research and analysis with you.  With that thought in mind, this post is intended to get you up-to-speed. This is the stuff I already know, and much of it may not be new to you. Moving forward, I intend to dive deeper into the nitty gritty.

    Before I jump into things, if you are totally new to eCommerce (or just want to have a little more background) I suggest that you check out this report from the National Retail Federation. It provides a brief history of eCommerce as well as an overview of the eCommerce landscape in 2012 and 2013.

    Groupn Collage

     eCommerce is getting very competitive.  Fast.

    This post is about the big picture. eCommerce has evolved a lot over the past seven years. Online retailers are reaching more people around the world (see the recent Wall Street Journal article on Russia’s emerging eCommerce market) through more channels. With more points of access to retailers, more retailers, and more product choice, consumers are gaining power at an unprecedented rate. And with more consumers with more personal choice, retailers have to compete more than ever to win that consumer’s custom. In order to compete, retailers have to up their game, and they’ve been doing so in a myriad of ways.

    Trend #1: Flash Sales and Deep Discounts It’s not the newest trick in the book, but sites offering flash sales and deep discounts are still making headway in the eCommerce world. One point of success for these companies is that they require the consumer to sign up before he or she can see any of the offers. This allows sites like GrouponTouchofModern, and Zulily to better track and identify their users. Whether you’ve visited once, twice, or fifteen times, they can customize their marketing to your apparent interest level.

    Screen Shot 2013-11-26 at 12.31.55 PM

    Other sites like One Kings Lane and Wayfair (see here an interesting article on Wayfair’s approach to indecisive consumers) may not require you to sign in, but they publish their discounts on the page (see image) and on sites like One Kings Lane, sales only last for a certain amount of time, encouraging consumers to buy quickly or lose out on the deal.

    Threadflip Comments

    Trend #2: ReCommerce Deals don’t only come in the form of sales. Companies like thredUP and Threadflip are bringing second-hand retail to the internet. Nor does it only apply to clothing. Gazelle is a site where consumers can selltheir used electronics.  Offering verification services for used items brings the whole second-hand marketplace online. It also allows shoppers and sellers to directly communicate with each other about things like size and availability.

    Trend #3: Social Shopping Although the social shopping trend hasn’t seen too much implementation amongst individual retailers, it may not be far off in the future. If friends share what they buy with each other through channels like Pinterest, Facebook, and Wanelo how long will it take before major online retailers implement their own social shopping platforms? A slightly different form of social shopping, Yardsale incorporates both secondhand and social elements. A mobile-only app, it makes your local garage sale  available right on your phone.

    Trend #4: Subscription Commerce In contrast, a trend that has taken off amongst online retailers and consumers is the subscription model. Companies like Birchbox, ShoeDazzle, BlueApron, and Fancy are all using it, to lesser and greater success. The appeal of the model for the retailer is that it solves the problem of CLV (customer lifetime value). For the consumer, boxes provide a sense of personalization, and for boxes like those from Fancy (who predetermines the content of each box along some basic themes), they also provide a solution to the paradox of choice. For a lot more insight andsome interesting reviews of the many subscription box options out there, check out My Subscription Addiction. You can get an even better of idea of who’s doing it well and who’s just making it work.

    Box Collage

    Trend #5: Digital to Brick In a world of pure-play vs. multi-channel, many eCommerce companies have opted for the online (and mobile) route in order to keep down the costs behind traditional brick and mortar retail. But one company has found a way to do both – and to both the company and the customer’s benefit. Bonobos, originally an internet-only retailer has begun opening “guideshops.” Recognizing a desire in their customers to try before they buy, customers can nowgoto designated guideshops to try out clothes and then place an order online and in-store. The orderis delivered to their home. Glasses brand Warby Parker has also begun opening stores that offer in-store optometrist appointments and a carefully curated selection of books with which to test your newfound eyeware. Fashion jewelry site BaubleBar offers in-store visits by appointment only with perks including styling sessions, a free tote bag and other small delights.

    Screen Shot 2013-11-26 at 12.35.35 PM

    Trend #6: The convergence of content and commerce An interesting partnership is emerging between Flipboard and online retailers. Flipboard now offers clickable catalogs for retailers like eBay, Banana Republic, Modcloth and more. And they’re creating a platform not only for retailers, but for users too. For more information, check out this article.

    Trend #7: Vertical Integration Finally, one of the most interesting trends emerging-and it’s significant to note that this is the only non-user-facing trend I’ll discuss here-is the movement towards vertical integration. This is a trend focused on creating a sustainable competitive advantage, not simply generating sales. For this reason, although I’ve mentioned it here, I want to come back to this trend in more depth. So keep your eyes open for a post on vertical integration and how it fits into the future of eCommerce.

    So how do you compete? I don’t know yet.

    Alright, so now you’ve got an idea of some of the developments and innovations I’ve taken note of in the world of eCommerce. It’s a tough world out there, but the little guys are finding some pretty good ways to fight back. (For other interesting trends, check out this article) But what does all this mean for the future of eCommerce? First, and perhaps most significantly, consumers are winning. They get more choice overall: products, costs, brands. But having this as our number one takeaway raises questions about loyalty, marketing technique, and sustainability. In particular, the following questions come to mind:

    1. If the consumer has so much power of choice, what does the future of CLV and loyalty look like?

    2. If loyalty is becoming ever more unattainable, how important is CPA? Is it possible to attract consumers and drive purchase behavior without some kind of gimmick?

    3. This gives rise to my next question: should retailers really try to differentiate based on existing customer loyalty vs. new customer acquisition?

    4. And if gimmicks are the best way to attract consumers, what’s the half-life of user-facing innovations on the web? How long is the window for gimmicks open and what are the benefits of being a fast follower?

    To be honest, I don’t have the answers for these questions just yet. But I promise I’ll get back to you soon with some more insight.