Walmart chase Amazon, catch up not guaranteed...

News that Walmart are accelerating their roll-out of warehouses, robotising logistics, randomising warehouse shelf- placement, speeding up delivery and devouring a host of e-startups all points to the fact that they have simply applied to enter a race with the advantaged innovator...

However, satisfied users of Amazon's service already take for granted infinite choice, 1-click ordering, 100% availability, 1-day (Prime-free delivery) and no-quibble returns.....

In other words, Amazon's entry requirements need to be met before Walmart can start running...

However, they will add interest to the race, and provide suppliers with a little more choice in what was beginning to seem like a 1-horse contest.

Suppliers that want to optimise online, also need to start with these Amazonian entry-standards, or move back to the sidelines...

Why dynamic pricing is a must for ecommerce retailers

According to research via econsultancy.com, Dynamic Pricing - a pricing strategy in which prices change in response to real-time supply and demand - isn’t a new pricing strategy (American Airlines first introduced it in the early 80’s*), and it is currently taking ecommerce by storm..

Dynamic pricing allows retailers to lower prices to drive sales when demand is low, and to increase profits via higher prices when demand is high. 

Apparently, Amazon, one of the largest retailers that uses dynamic pricing, changes its prices every 10 minutes on average, while Walmart changes prices up to 50,000 times/month…

Econsultancy.com also lists dynamic pricing tactics with examples for online retailers:

- Segmented pricing: tiered prices from value to premium

- Peak pricing: to take advantage of fluctuations in demand

- Time-based pricing: to adjust prices according to the time of day or product life-cycle

- Penetration pricing: to set a lower price to encourage trial

For suppliers, dynamic pricing has to be the ultimate match of demand with price and will succeed in terms of satisfaction as long as the pricing mechanism is seen to respond 'instantly' and proportionately to changes in real demand...

* NB. Dynamic pricing needs care in application: For instance, suppose airlines sold paint?  

Frictionless commerce - what other businesses can learn from Amazon

With the move to smoother, quicker, and easier transactions using a combination of f-commerce and mobile payments, to virtual wallet options and NFC, frictionless commerce is becoming widespread.

However, whilst retail may appear to be leading the way in many cases, it can be easy to underestimate the lead that Amazon has gained over all other players...

Using data collection and one-to-one correspondence that would be intrusive were it not the fact that it is so accurately focused on real need, Amazon has become an indispensable buying-tool for many...

Moreover, by perfecting their 1-click approach - and combining it with Prime status to eliminate delivery costs - their model optimises impulse purchase

In fact, in my own case, I have had to remove the Amazon UK icon from my home page in order to cause me to think a fraction longer about real need while I source the site via Google...

However, as online practitioners strive to emulate their rival's 1-click KPI, Amazon's real USP has to be their frictionless returns policy...

In fact, any aspiring online operation has to experience a heartbeat-missing moment when they realise that Amazon's returns process is easier than 1-click, the ultimate online standard... 

Everything is negotiable, when the chips are down…

Keith Ewing, owner of Number Eight Clothing in Stirling, commented that Independent retailers need to "put their heads above the parapet", as his shop was nominated as one of the UK's "top 100 inspiring shops" for 2013 by Draper's magazine. He listed rent-reviews, online, buying and display as key needs in independent retailing.

NAMs could help by sharing their negotiating expertise with appropriate retailers, as follows:

In practice, independent retailers can help themselves to survive by adapting the supplier-approach to business development:

• Cutting-costs: rent and rates are currently too high in these unprecedented times. Landlords and local government know this and are vulnerable to the ‘walk-away’ threat by retailers. In other words, retailers should calculate the level of rent and rates (seek help from commercial architects that can provide a broader view) that make the business viable, and renegotiate on this basis, ideally via a combination of lower rent and a ‘per cent of sales’ model, to force landlords to share the business risk.
• Driving sales: develop a strong online strategy by mining your customer records and collecting email addresses going forward in order to extend your reach beyond a shop visit. Optimise supplier help by negotiating better prices, terms and supply arrangement and especially instore merchandising in exchange for customer stats and enthusiastic/ innovative collaboration. Suppliers want you to succeed as a counterbalance to major multiple retailers and are willing to negotiate flexible packages for the right customers.

Being a business consultant to the retailer can optimise the trade partnership and broaden the NAM’s expertise in managing other customers.

Sharing negotiating expertise can help....

Mega-Monday - a vision of the future?

The first Monday in December comes shortly after payday for many consumers and in recent years has consistently been the busiest day for online retailers. Today Visa predicts that online shopping will be up 21 per cent on the equivalent day last year, making it the biggest online shopping day ever in the UK, a sentiment echoed by online retailers throughout the UK.

However, what if every Monday was Mega-Monday, on the way to 24/7?

In other words, why not multiply your online sales today by 365 and consider the resulting vision of the online future....? Moreover, in an essentially zero-sum game this online growth has to be at the expense of traditional retail...

Assume also that as consumers we respond positively to the Amazonian experts as they raise our 'norm-bar' for online access and service level, making non 1-click secondary players seem clunky by comparison...

Accepting the above, what can you do omnichannelwise to realise your fair share of the 24/7 dream?

Alternatively, why not ignore the signs and be surprised by the Mega-nightmare...? 

Optimising your E-xperience via the IGD’s: Trading in a Digital World. (Part 1)

With almost 250 delegates, all four major online grocers, Tesco, Asda, Sainsbury’s and Ocado, together with some key suppliers, shared online updates, plans and joint-opportunities with a multifunctional audience that buzzed throughout the session, and not only via text-questions to the speakers...

However, apart from being a great idea-source (I managed to limit my note-taking to 8 pages, more in later postings), the presentations touched on some of the key issues affecting the development of online for both suppliers and retailers that are perhaps not aired sufficiently, but have material impact on personal development within the supplier-retailer environment…

‘The poor relative syndrome’
Essentially, in common with many new business initiatives, online can be a small but patently important development for a company. In a flat-line market online provides high-growth, innovation, novelty and excitement compared with the traditional business. However, it is often seen as a relatively high risk diversion, with many risking a ‘wait and see’ mode. In other words, if successful, online will have many parents, whilst if it fails, it will morph into an orphan. As such, online tends to be insufficiently funded and hampered by inadequate resourcing, especially in uncertain times...

The need to sell from within…
For these reasons, much depends on the drive and enthusiasm of those involved in online to constantly ‘sell’ the online idea and achieve results by persuasion, taking on full responsibility, with little designated authority…(rather like the role of a traditional NAM, a resident expert in achieving change against impossible odds...)

Selling is vital to ensure that online is integrated into mainstream business strategies, taking each of the key business functions and ensuring there is an online equivalent, with dedicated personnel, all sharing the opportunities and insights, enthusiastically, in the face of traditional priorities, envy and deep down, fear of change.

How to sell the online idea
Realistically, online will need to be sold, and sold convincingly by those who hope to make it yield its full potential, fast…

In other words, think of your company as a reluctant buyer, leaving you but two ways of attracting attention of the rest of the business – curiosity and fear. By making a ‘buyer’ of ideas curious to hear more or fearful of inaction, we destabilise their status quo, leaving them susceptible to change.

Fortunately the novelty of online provides enormous scope for making colleagues curious, whilst the continuing downward spiral of categories such as CDs, DVDs, Games, Magazines and Newspapers provides ample evidence of the dangers of inadequate corporate response to emerging technologies….

Keep in mind that online supporters in retail have similar issues
A key point of the conference for me was that colleagues in online retail share the same in-house issues. In other words, you will find your equivalent within your major customer needs support and can assist in return, in helping online realise its full potential for suppliers and retailers.

For me this was demonstrated by the fact that each retailer ended their presentation with specific steps on how to optimise the online supplier-retailer relationship, encouraging supplier-colleagues to find ways of innovating within a new online retail environment, signalling a willingness to identify and implement genuine fair-share synergies with like-minded suppliers.

Missing E-opportunities?
To avoid further delay, it is now time to play catch-up by attending events like the IGD digital session, and helping your traditional colleagues come to terms with how fast the E-food train is already travelling...

We may be some years away from a ‘beam me up, Scotty’ facility, but in the meantime, there is little harm in exploring appropriate ‘what-if’s’ for your business model…

Meanwhile, why not go online and have an E-xtatic weekend, from the NamNews team!  

Facebook gets physical...via new gift service to sell real goods

According to the FT, Facebook has launched a gift-service that allows users to send novelty items to friends, via revenue-sharing agreements with its partner-retailers.

The Amazonian elephant in the room…
However, despite the advantage of background personal insight, Facebook missed a big retrospective-trick by failing to anticipate the need for physical location details and not requesting personal addresses when members’ originally registered with the social network. Furthermore, given Amazon’s 1-click innovator’s advantage, Facebook is condemned to forever playing catch-up to the online retailer’s speed, efficiency and database…

Fulfilment issues for trade-partners
Given that volume-gifting will be mainly low-priced novelty items, partner-retailers face the triple whammy of securing addresses, 'instant' shipping of low-value items and awaiting their share of revenue, in a world where fast single-step purchase is king…

For suppliers, the issue becomes one of being able to anticipate the volume and speed required should a novelty gift-item catch on big-time with the Facebook community (for openers, think hundreds of millions…fast!).

Overall assessment
Better for Facebook to revert to virtual, and find digital gifting-options that meet the same needs…(or even partnering Amazon…). This could represent a real opportunity for service-suppliers to evolve ways of digitising their offering via Facebook (i.e. ‘Have a Guinness on me for your birthday!’ NB. an example only…nothing beats the real cash-based shared-experience !)

(but meanwhile, no harm in Facebook seeking ways of harvesting physical addresses from their vast connected-community, just-in-case…)

reEpricing while you wait?

The fast-moving Internet pricing games used by airlines and hotels are now moving to online retailing via a new generation of algorithms that are re-pricing products on an hour-by-hour and sometimes minute-by-minute basis.

A goal is to maintain the lowest price-even if only by a penny-so that their products will show up at the top of the search results by shoppers doing price comparisons.  The most frequent changes are for consumer electronics, clothing, shoes, jewellery and household staples like detergent and razor blades.

Retailers find that changing prices more frequently can boost sales dramatically, but requires a lot of attention. First they set the software to beat their competitors by a certain percentage. Then they set a floor price below which they will not go.

For consumers, the result is more volatile pricing. Once the low-price vendor for a particular item sells out, rivals selling the same product can immediately lift their prices without fear of being undercut.

In effect, retailer Epricing is making the world's most modern market into the most old-fashioned, taking us all back to the laws of supply and demand, with lessons in pricing that can optimise our more traditional routes to market.....24/7.

Google, Amazon, Apple and Facebook - the new big four in retail...

We shop on phones, compare on Google and ask our Twitter-mates what they think. Even more importantly, we also have the ability to complain to 100 friends when a supplier/retailer misses our expectation…
This revolution in shopping behaviour is causing traditional retailers and suppliers to play catchup with multichannel marketing, or else…

Whilst historical purchase data reveals what we bought, social media reveals why and indicates the future. Think about it, we have been waiting 30 years for this insight…now we have it, are we doing enough?

The real opportunity
In fact, do we accept that the real  breakthrough hinges on the willingness and ability of the retailer to respond accordingly. For suppliers, the key issue is whether it is easier for traditional retailers to remodel the business based upon shopper-need, or for the new big four to fulfil the shopping transaction, profitably.

When I break from writing this KamBlog post to accept delivery of the Amazon book I ordered yesterday, at a 15% discount, while hesitating to drive to the nearest Tesco for a bottle of breakfast milk, somehow the answer suggests itself…

Just the first layer?
The multichannel e-commerce combination is obviously making it easier to buy, but I believe that as suppliers we are simply skimming off the first layer…

The real pay-off will result from re-engineering the entire brand offering to better meet consumer-shopper need, arriving at a minimal compromise between what a consumer is trying to tell us they require and our ability to provide the solution, better than the available competition.. In other words, building trust by delivering more than it says on the tin…always.

What this means for NAMs
This process includes adjusting our channel strategies to optimise their strengths, via NAMs that have the imagination to see that the accounts with real career-potential are the new retailers in emerging e-channels.
Sure, making real change in uncertain times is an uphill struggle, especially having to negotiate more with your own colleagues than with the customer.

However, given that we learn more from risk, mistakes, uncertainty and overcoming resistance (a buying signal?), numbers-based NAMs that are prepared to swim against the tide somehow move faster...

Tesco trials UK’s first virtual stores

                                                                                      pic: The Financial Times
Tesco on Monday launched a two-week trial of the UK’s first interactive virtual grocery store at London’s Gatwick airport, following positive results in Korea,  an innovation which generated 25 million online posts around the globe. See Tesco Vid

Holiday-makers in the North Terminal departure lounge can browse 80 core products, from milk and bread to toilet paper, displayed on 10 large refrigerator-sized touch screens. They can scan bar codes with a smartphone to place them in a Tesco.com online shopping basket, and arrange for delivery when they return from holiday.

On-site help
There are staff on hand to explain how it works, to talk shoppers through how to download the app and sign up to Tesco.com – if they aren’t already using it – and even a couple of iPads to let customers sign up there and then.

Roll-out options?
If the trial is successful, Tesco could position the interactive screens anywhere members of the public congregate, the only limitation being cost-effectiveness…

Korea reality vs. the UK?
However, a key difference between the two markets is that the online-distribution infrastructure in Korea is so well advanced that it is possible for commuters to place an online order en route and have the goods delivered on arrival home.

UK distribution limitations
In the UK it will be necessary for Tesco to so manage expectation that the new facility will be seen as an enhancement to normal online shopping, fitting in with the shopper’s routine ordering-delivery process.

Direct vs broadcast media?
In terms of funding, the bar-code units will probably replace traditional poster-advertising, whilst much of Tesco’s Press and TV media could possibly be converted to direct-response advertising by incorporating bar-codes wherever possible. It would also be possible to auction some premium product-space to appropriate brand-owners.

Threat to traditional media?
The future of Tesco’s remaining media usage, thus challenged by measurable response, has to be open to question, in these unprecedented times.
In response, major brand owners may explore the application of bar-codes to their own eposter advertising, directing consumers to trade-partner retailers, by negotiation…

Either way, we are on the brink of fully complementary shopping, adding another spoke to the wheel of omni-channel fulfillment…
A pointer for your omni-channel NAM? 

Facebook, Walmart chiefs 2-day meeting to "deepen" relationship…

In a unique move aimed at adding the biggest retail player to his list of friends, Mark Zuckerberg and his senior management team will spend two days at Walmart’s Bentonville home office this week, meeting with executives of the world's largest retailer and discussing ways to "deepen" their relationship.

Many investors and analysts believe the company could tap into a new source of revenue by playing a bigger role in online retail sales, perhaps taking a cut of transactions generated on its social network.
Walmart's Facebook page has more than 17 million fans and expanding its reach online is key for Walmart as shoppers increasingly shop via their computers, tablets and smartphones.

Implications

1. With each one formidable in its own right, this potential linking has to produce mega-synergies for the two giants, with knock-on repercussions for us all…
2. The move is partly a case of Walmart playing e-catchup with ‘Amazing Amazon’ whose online sales of $48bn last year were, or should have been, a surprise to most rivals, traditional and online…
3. It also strengthens the case for Saturday morning NAM trade-strategy meetings, starting like Walmart at 0730 to maximise output, away from the distractions of a NAM’s Mon-Fri 9-5 weekday-job?

However, supplier-CEOs eager to retrieve this ‘down time’ should bear in mind that since the passing of Sam, even Walmart’s Saturday morning meetings are down to one per month, and the presence of celebrity guests like Harrison Ford, Emilio Estevez and "Twilight" star Robert Pattinson; singers including Sheryl Crow and Jewel; and Steve Jobs’ biographer Walter Isaacson, has been required to add extra appeal…. 

Have a turbo-friending weekend, from the NamNews Team!