Andreessen Horowitz is Betting on Digital Commerce

You might know Andreessen Horowitz as … oh, just one of the most successful investors in the history of tech. They have invested in 231 companies,  and managed to exit their investments through 36 acquisitions and 4 IPOs according to Crunchbase. The venture capital company has no less than $2.7 billion under management.

Founders Marc Andreessen and Ben Horowitz

Founders Marc Andreessen and Ben Horowitz

Basically when a16z goes after something – you know the market will soon follow. And guess what’s the latest news?

Why … if it isn’t ecommerce.

Their latest monthly newsletter is dedicated to ecommerce. The venture capital company has mashed together a list of brilliant posts and podcasts on what it considers to be the the future of commerce.

The topics range from holiday shopping to logistics to competing with Amazon. My personal favorite, however, is “The End of Ownership“, an eye opening piece on what happens when people stop wanting to own stuff:

The sudden interest is actually not that sudden. In the past two years investors have increased investments in digital retail and connected areas. For example investments in logistics tech have increased by 1370% in 2014 compared to 2012. Andreessen Horowitz’s investments in ecommerce startups have also picked up. Some may still be working on reaching success (ex. Fab.com) and some may never find it (ex. Groupon). But others are growing by the day. Belly, Julep and Fanatics are doing just great.

4 Companies That are Disrupting Logistics

There is no shortage of logistics needs in the world. As the world gets smaller, more products have to be moved. Recent changes in consumer behavior helped increase the volume of moved goods. Almost $19 trillion worth of goods were imported and exported in 2013, 5 times as much as in 1990.

This 19 trillion market is stuck for the moment with two very big problems leading to ineffectiveness. The first one is technology infrastructure. As goods move to and from very different countries and cultures, there is no unified backbone for making shipments happen. As such, logistics are somewhat slow, compared to other areas in the commerce landscape.

The second big problem is the last-mile delivery. The likes of FedEx and UPS are great at moving goods from New York to Shanghai and the other way around. They’re not really that great at building local delivery networks, able to ship goods fast and cheap. As you might notice, this is a bit of a problem for ambitious retail companies such as Amazon, Walmart or Alibaba, aiming for global dominance.

But worry not.

Investors have picked up on the opportunity to disrupt the $19 trillion market and have turned their investments to logistics companies. According to Crunchbase, investments in logistics startups went from 0.1% of total investments in 2012, to 1.37% in 2014. The total amount invested in 2014 in logistics startups ($1.8 billions) means an increase of 1370%. That is a sure sign that something big is really just around the corner.

As the market is ripe for disruption and investors are generously tapping into logistics, a lot of companies will be showing up on the logistics radar.

Among all these, here are 5 companies that might be the model these investors are looking for:

No.4: Amazon is trying to ship goods with drones

Amazon Fresh, one of the companies logistics challenges.

Amazon Fresh, one of the companies logistics challenges.

After Jeff Bezos announced Amazon is building a drone-delivery service, a lot of people (me included) were questioning whether this could be real or just a PR stunt. It seems that not only is Amazon serious about the drones, but it is also very focused on building the model for the next generation of logistics operations. It has invested more than $14 billions since 2010 in its warehouses.

It has invested in robotic fulfillment operations, purchasing and integrating Kiva Systems. Becoming one of the most automated fulfillment and shipping company, it leads the way in large scale ecommerce logistics. As a result, the company is improved its operations vastly. In 2012 it managed to ship 10 million products per day, leading to 1.05 billion products shipped in the last quarter of 2012.

No. 3: Freightos takes a shot at a trillion dollar market: the cargo industry

The Freightos network

The Freightos network

It may come a shock to those reading this but the cargo industry is really in need of some technology updating. A lot of work in the freight (cargo) industry is done with the help of emails, spreadsheets and … fax machines.

Freightos aims to change all that with a SaaS product that connects those in need and those offering freight services. Unlike the previous way of managing shipping costs, Freightos provides a cloud application that can allow for real-time responses.

No.2: GoGoVan connects vans, delivers the last mile

gogovan

Remember the thing about the last mile the likes of FedEx just can’t handle? It turns out they really don’t want to handle that last mile. Large logistics companies in Hong Kong outsource 70% of their local operations, estimates Gabriel Fong, CEO of Hong Kong GoGoVan.

The company employs Uber’s taxi-hailing model to connect van drivers and those in need of moving goods. They basically replace the old and ineffective call center with a mobile app.

GoGoVan estimated that 35 000 of Hong Kong’s vans are owned by freelancers. These freelancers usually subscribe to a call center which can forward requests and lease radio communication equipment. It’s usually ineffective for both the van-driver and the customer so GoGoVan decided there is a market there.

Right now GoGoVan has 18 000 vans registered with their service so things are going great.

No.1: Uber has transformed the cab industry, it can go further

uber

Uber started as a car-sharing service but soon turned into a multi-billion company, available in 45 countries and 200 cities. It has done that by allowing those with an acceptable vehicle play cab-driver for anyone willing to pay.

The company so far successfully dodged cab regulations and managed to change the way people move in the urban environment.

Lately they have figured out that if they can move people from point A to point B they can also do that with merchandise. After experimenting with a fast delivery service called UberRUSH, trying on a Corner Store service and shipping Christmas Trees, Uber got it: It can do logistics.

Specifically – urban logistics. After all – it really is not that hard to adapt the model to minivans (see GoGoVan above).

I can’t wait to get my online orders delivered in a black luxury sedan. Hear that, Uber?

 

 

 

I, Robot, Will Take Your Job

robot

Isaac Asimov was among the first to ponder the implications of robotics. In his “I, Robot” collection of science fiction stories, he debates the theme of humans, robots and morality. Asimov wonders how humans would interact with robots, how robots would be treated and why using robots merely as tools could or could not be moral.

The term “robot” was first coined by czech author Karel Čapek, in one of his plays. His “robots” were merely simplified human beings, capable of work but not capable of thoughts or able to express emotions. They did not care for self-preservation and were used for only the most menial of jobs. The absolutely brilliant but rarely quoted play that coined the term “robots” is called “R.U.R.” (Rossum’s Universal Robots) and it’s a must read.

In this play, the robots eventually rebel against human beings, kill them all and eventually restart the cycle of evolution as replacements for humans.

As interesting as both works are, they miss an important part in the trans-humanist evolution – the point where machines and humans have to coexist in symbiosis. While you’re picturing these machines we will once have to coexist with, you should drop the anthropomorphic image. The robots don’t necessarily have to have two legs, two hands and do our simple jobs in the way we would do it.

Picture them as a combination of hardware and software that creates abstract versions of us. Picture screens and buttons. Picture programs and applications.

Picture the mechanical hands that wield automobiles together and the software that controls it.

Picture planes with all their mechanics and the software that manages most of the jobs the pilot doesn’t have to.

Picture automated trading systems that move trillions in capital across the globe each day.

Picture systems that handle most companies’ management.

The fact is that although we have (probably) not yet built Artificial Intelligence, we have built the machine to host it. Still, our lives are not those envisioned by Asimov or Capek. Not completely. Yes, we do manufacture more. Yes, we do work less to produce it. Our lives, however, are not easier. The robots don’t serve humanity. The robots serve a tiny fraction of us humans and technology has not made life far better.

Wealth disparity has increased and it will continue to do so. Technology is unaffordable for most.

Time seems to move faster but this is only because we are now competing against faster and faster machines. Each job is getting transformed. The jobs that were here yesterday are now programmed and sent to automated workers, software or hardware machines that request little pay and offer increased returns.

If you believe your job is safe, you are wrong. The great change the industrial revolution has brought to the world is the assembly line. This assembly line works just as good when building cars or selling banking services. Each uncreative job is but a small piece in a very large mechanism. Ultimately, everything gets abstracted, simplified and robotized.

Industry after industry has fallen victim to the automata. The media, construction, automotive, telecommunications, manufacturing and of course commerce. All have something in common. They need to get better, more productive, yield more results but humans, we are not scalable.

This will continue to go on. We have first built the steam engine, then the assembly line, then electrical and pneumatic robots, then computers, software and eventually the Internet to tie it all together. Each time a new technology comes – it is widely accepted. We live better for a few years and then we need something else as it is never enough.

Now it is time for the robots to take our jobs and mark my words – they will take them.

But…

Do we really need jobs? Is mankind’s purpose to place all its individuals in small cubicles or large factories? After all, these robots that are taking our jobs, they are here to solve problems. The are here for a life of drudgery and they do not care about that. The word “robot” comes from the czech term “robota” – hard work. And hard work they do.

Taking away our hard labor we are left with nothing but the choice to be what we were meant to be – creators, discoverers and artists.

But to do this, humanity has to change its ways. It has to lay away the habit of humans enslaving other humans. The disparity in wealth and increased tension in the world stands as proof that some change is about to happen. This change can mean awful things and in our history it always has.

But it can also mean that we could now make free men of all of us, discover the skies and let our spirit roam throughout the stars. Meanwhile – let the robots have our jobs.

$9.3 billion in Sales in Just One Day – Alibaba’s Singles’ Day

Each year on Nov. 11th, China celebrates an event called Singles’ Day. The date (11/11) is a symbol for those unwed and stands as an anti-Valentine’s Day celebration. Chinese retailers have turned it into a sales mega event and this year it has turned global, with a lot of help from Alibaba’s marketplaces.

A live counter showing sales going through the roof.

A live counter showing sales going through the roof.

Inspired by US sales shopping events Black Friday and Cyber Monday, Alibaba decided to take the event global. The campaign was a huge success and overcame any expectations. It was so big that it accounted for more sales than Black Friday and Cyber Monday in the US. Combined.

But let’s have a look at the hard facts post-sales bonanza:

  • Alibaba registered a total of $9.3 billion in sales in just one day;
  • The company registered a peak sales of $2 billion in just one hour;
  • Consumers from 217 countries bought merchandise from AliExpress, Tmall and Taobao;
  • 1.2 million household appliances and 50.000 cars were purchased;
  • The campaign was aimed at attracting China’s 360 million online shoppers (yup, that’s more than the entire US population), as well as shoppers all over the world.

Pretty good for a singles’ holiday.

 

 

 

 

Macy’s Strategy for Omnichannel Success

Think about this – is there actually such a thing as an online customer? Or an offline customer? Or even a mobile customer? Definitely not. Consumers like to skip sales channels and fulfill their goals in the best way possible. Your customer can research for products online, ask friends for references on social media, test them in the brick and mortar shop and finally purchase in the web store. So it makes no sense treating customers as stuck in a sales channel. The Omnichannel experience, where every consumer can use given sales outlets as she sees fit, is now pretty close to utopia for many retailers.

macysBut others are dedicated to making omnichannel a reality for their customers.

Meet Macy’s.

“Our goal remains to help our customers shop whenever, wherever and however they prefer, and to use the entire inventory of the company to satisfy demand,” Terry Lundgren, Macy’s CEO

As other retailers are facing declining sales and decrease in customer loyalty, Macy’s seems to be thriving. The company has seen recent increase in sales overall and a sharp increase in online sales (48% in 2013).

How did they do it?

Improve customer experience with technology

Macy’s has lots of experience in customer service but the digital revolution took most retailers by surprise. Macy’s has dedicated a large portion of its yearly budget to improving customer experience through technology.

Macy's Flagship store in New York

Macy’s Flagship store in New York

The company’s cost of sales rose to $139 million in 2014 second quarter. This increase was caused by “omnichannel business and the resultant impact of free shipping” which means Macy’s is betting big on its customers’ experience.

The results are great. Just short after Apple Pay was announced, Macy’s announced it will implement the technology in all stores. The company already allowed customers to store their coupons on the Mobile Wallet, that could be accessed anywhere – online, on mobile devices or in store.

Macy's mobile wallet

Macy’s mobile wallet

Using shopBeacon in-store

Using shopBeacon in-store

Macy’s also partnered with Shopkick to increase brick and mortar traffic in its New York and San Francisco stores and now the company is rolling out the shopBeacon technology. The beacons give retailers the ability to push information directly to the consumer’s mobile device. It can welcome shoppers as they walk inside Macy’s stores, send out specific deals and recommendations and can be used as a way to redeem loyalty rewards.

Macy's Beauty Spot kiosk

Macy’s Beauty Spot kiosk

Interactive kiosks were used to improve customer experience throughout brick and mortar stores. The kiosks vary in size and complexity, ranging from simple browse and order applications to more complex features. The “Beauty spot” kiosk, for example, improves Macy’s cosmetics section with an electronic make-up consultant. The system advises potential buyers on makeup and skin products that are best fitted for their needs.

Even store associates are empowered when answering customer needs. The company is now testing mobile and tablet POS that can connect to real-time inventory and offer quick responses to customer needs.

And if we’re talking about real-time inventory, you should know that Macy’s has been working hard at improving cross-channel operations:

Improve fulfillment and inventory management

In 2010 Macy’s piloted a store-fulfillment program in 10 stores. The idea was that if the company can connect inventory from individual stores, it can manage inventory better. As merchandise was sold sold online, stores would be able to ship orders directly, depending on their inventory levels or allow for in-store pick-up.

The program was a success and the company increased the number of stores that could ship orders. 13 more stores were added to the program in 2011. In 2012, 292 stores were shipping orders. In 2013 – roughly 500. The process will be finally completed in 2014 when all 800 stores will be able to fulfill customer orders.

In-store fulfillment increased rapidly since 2012.

In-store fulfillment increased rapidly since 2012.

As these stores began fulfilling orders two things happened. First – orders could be shipped faster, with the ultimate goal of same day delivery, thus improving customer experience. The second big change in Macy’s fulfillment was that using stores meant inventory turnover greatly improved.

With store associates empowered with real-time inventory data, orders began to increase. The store associates could locate items in other stores, and ship that item from that point, directly to the consumer’s requested address.

Macy’s discovered that the nearest store may not always be the best choice to ship the product. Sometimes a product sold in point A could have a really slow turnover so it should be shipped whenever possible. On the other hand, the same product could be in high demand at point B, closer to the customer.

The company didn’t stop here. With stores able to fulfill orders, the Order Online / Pick Up in Store program began in 2013. It was first tested in 10 stores during fall 2013 and began rolling out to all stores in 2014.

It’s not just the stores that improved their fulfillment functions. Macy’s is now expanding its direct-to-consumer fulfillment center in Goodyear to a mega-facility of 960 000 square feet which will be soon followed by an even bigger fulfillment center in Tulsa, in 2015.

So Macy’s is quick to implement omnichannel policies but is it worth it?

Macy’s is winning the retail game

It’s worth it, all right. As you can see in the chart below, Macy’s revenue has been steadily rising, as opposed to some of its main competitors. It seems that 2010 was a real turning point for the company. And what year is that? Right, the year the company began to implementing omnichannel retail.

Macy's growth versus JC Penney and Sears. Source.

Macy’s growth versus JC Penney and Sears. Source.

 

 

 

 

Using Customer Journey Maps in Omnichannel Retail

A customer journey map can be a real useful instrument for retailers. It helps better understand how customers interact with the company’s touch points. It makes complex numbers easy to understand in the form of a diagram.

The customer journey can be simple and easy or complicated and frustrating. Usually it’s somewhere in the middle for most companies. Few, such as Apple or Amazon, stand out when it comes to A-class customer experience .

The omnichannel journey to relevance

Nordstrom uses omnichannel to better serve customers

Nordstrom uses omnichannel to better serve customers

What most companies don’t really have yet figured out is how customers use the omnichannel retail touch points. What exactly do they want and how they use the multiple channels the company has set-up. Are customers buying online? Probably. But what do they do afterwards? Or before that? How is the offline shop integrated in the customer journey? Is the customer satisfied with the current sales process?

All these questions and more can be answered with a few carefully crafted studies and journey maps.

To do so, omnichannel retailers need to build customer journey maps for separate customer types. These maps have to take into account the customer profile, different purchase scenarios and possible bottlenecks.

When customer journey maps are developed, several key issues need to be taken into account:

  1. View the company from the customer perspective
  2. Research customer satisfaction
  3. Build separate customer profiles for different market segments
  4. Look for bottlenecks
  5. Try to understand customer feelings

Once you’ve done the research, integrate the customer feedback on separate customer journey maps, focusing on different paths customer take.

Here are some examples:

Omnichannel customer journey examples

Bellow you’ll find two of the most popular examples of customer journeys in the omnichannel world. Such maps outline the integration of four channels: the offline store, online operations, mobile apps and devices, the call center and social media. Of course, brands can choose to expand their omnichannel operations to include other channels such as interactive kiosks, smart home appliances or technologies not yet discovered. But the five mentioned above will do just fine right now.

Customer journey no.1

Example no.1: The customer travels across four channels to finish the order and at the end shares his experience with his peers on social media.

Customer journey no.2

Example no.2: The customer discovers the product in the offline store, researches the product on the smartphone (showrooming), pays the product on the web store and the product is shipped home. After the purchase, the customer contacts the call center to activate the purchased product.

Of course, such customer journey differ from retailer to retailer. If you need to outline your company’s specific customer journey map, you can use the example below and ad specific customer journeys to it. Click the photo below to open the diagram in a new window and download the full resolution image.

Click to download the customer journey map template. Opens in new window.

Click to download the customer journey map template. Opens in new window.

3 Content Strategies that Work Great for Ecommerce

You’ve chosen the best products for your customers, you’re spending top dollar for advertising and your customer service works great. Yet something seems to be missing. Your online store does not yet stand out. If so, you may be in need of some content marketing.

Now content – this is a rather big word and it may mean lots of things for lots of people. For me, content is about more than keywords stuffed on product descriptions or carefully changing your product title to match whatever Google is into these days.

It’s about your shop’s personality. It’s about standing out and standing up for something. It’s your story to the world.

So let’s have a look at five ways to build great content for your online store:

1. Tell your story. No one cares “About us”.

What do you do when you meet someone? You try to look as interesting, smart and great looking as possible. You wouldn’t just go ahead and show them your ID card and recite a bunch of boring facts about you.

You tell a story.

Ecommerce sites all have a story. At some point someone thought - hey, I can do better than my competitors. They decided to stand for something. Yet most of the times they miss the opportunity to show this. They get lost in boring and useless “About us” statements that fail to transmit anything else than the fact that someone bothered to fill in some words on that page.

Others, however, they make it personal. They tell everyone what they stand for and why should you choose them. Meet Warby Parker:

Warby Parker decided they would have none of that boring “About us” corporate double talk. No sir. They went on and shared everything the company stands for. The history, their social responsibility program, even why they’re named Warby Parker (Turns out they’ve named the company from two characters in a Jack Kerouac book).

The point: tell a story, not just a few facts about the company. After all, your customers are people, not robots.

2. Show them “How To” do it

So you’re selling lots and lots of products. That means you should be some kind of expert on how they could be used. As shocking as you might find this, your customers are probably not.

So tell people how to use your products.

Take Sephora for example: As their online sales grew intensively, they’ve built a special How To’s page. It features videos, inspiration photos and user posted tips on how to best use make up.

Even the products have their own how to’s and user submitted gallery:

How to look good at everything on Sephora. Being a complex product, it gets easier to use with videos and photos.

How to look good at everything on Sephora. Being a complex product, it gets easier to use with videos and photos.

The point: make your customers understand how to use the product. You probably know a bit more about the products than they do.

3. Earn your media. Own your media. Have a voice.

You know who’s the best at saying great things about you? That’s right. You.

Don’t rely on others to say great things about your products. You know they’re great. Otherwise – why would you sell them?

Build a magazine for your niche and stick to it. Explain what your customer should do to look better, feel better, spend better. After all, you have already picked those “whats”. The times where media was owned by large corporations and they alone could make or break your business – those times are gone.

Just go ahead and build a blog and fill it with great advice, just like the good folks at Gilt.com did. The Gilt MANual is a great resource for men interested in fashion. It’s ran by Gilt and very popular.

giltmanual

And Gilt is not the only case where ecommerce sites built their own media outlets. Bonobos publishes great fashion advice on Equateur. Alex and Ani, one of the fastest growing online retailers in the US runs a great blog that showcases events, company news and things customers would take interest in.

The point: start writing and earn media instead of paying for it. It’s a great way to share insights with your customers and build relationships.