Three Luxury Retailers Shinning on Instagram

They say a picture is worth a thousand words. Add a cool filter in Instagram and it may be worth more. So luxury retailers have taken up on the chance of showcasing offline products in the most popular photo-sharing app in the world.

It’s definitely worth it. With more than 300 million Instagrammers, the social network is a colorful powerhouse, just waiting for fashion retailers to tap into it. And it’s not just the numbers. From Taylor Swift to Robert Downey Jr everyone who’s anyone is walking the red carpet of Instagram.

Along these stars came the most popular and desired luxury brands in the world. With social incentives, aspiring fans can become customers and customers will become brand lovers. So photo sharing on Instagram is a go for brands looking to connect online and offline sales and marketing.

Let’s have a look at these three most effective brands on Instagram:

3. Hermes

Hermes on Instagram

Hermes on Instagram

Hermes is unconventional and creative, focusing on outlining the brand identity without being too pushy. It’s rather “modest” fan base of just over 670k followers shouldn’t be bigger either. After all, Hermes addresses a special kind of audience – the kind that doesn’t come busting doors in look for discounts. They discreetly shop online for $11.300 leisure bicycles and $7.600 bags.

2. Tiffany’s

You’ve spotted that special kind of turquoise and the must-have diamond ring that’s globally recognized. 1.8 million Instagrammers are constantly connected to the stylish social media outlet Tiffany’s employs.

The Instagram page is a mix of colorful illustrations, products showcased in glamorous yet simple and stylish photos and fashion advice from models and designers. The whole philosophy is outlined by Francesca Amfitheatrof, Tiffany & Co. design director: “I believe there is great power in simplicity.” 

Just like its brick and mortar stores, as well as the online store, the Instagram page is a stylish, simple and elegant work of art.

1. Burberry

Burberry is almost unbeatable in terms of using technology to connect to its esteemed audience. Digital retail is so important to Burberry that they’ve designed a flagship store that resembled their website, in 2012. Talk about omnichannel.

Digitally connecting to their customer has been the main ingredient to Burberry’s recent growth and Instagram was not bound to be left behind. The 2.4 million followers can get a glimpse in the lives of the rich and beautiful through Burberry’s Instagram channel.

Models, carefully crafted products and celebrities all mix to give followers, customers and aspiring Burberry product owners, that warm “I’ve got to have this” feeling.

And once that feeling kicks in, the monogramed scarf is just a step away in the online store, ready to be picked up in the closest store. Or sent home. Worry not, there’s free shipping and returns.

The Top 5 Solution Vendors in Omnichannel Retail

Achieving clarity in Omnichannel Retail is no easy task. Retailers, especially large ones, need to get all departments, all sales channels, suppliers and fulfillment operations on the same page.

And that’s just the first step. Then comes the IT integration where legacy systems are connected to a central management tool that handles at least inventory transparency, CRM and order management across channels.

Omnichannel Retail is not mainstream right now. It is still in its infancy. Sure, some are more advanced than others and some companies are building the future faster than others. But the truth is omnichannel is a need to be fulfilled for most retailers.

And here come the knights in shiny digital armor to rescue the day. The following 5 vendors have built omnichannel retail capabilities ready to be plugged into existing retail ecosystems. They are now the go-to elite for large retailers in need of upgrading their IT infrastructure.

5. Shopatron

Shopatron was founded in September 2000 by Ed Stevens and Sean Collier. Since then, it has evolved into an integrated SaaS platform that connects offline and online orders management, making it easier for customers to purchase from retailers.

shopatron

The company offers specific omnichannel solutions, most important being:

  1. in-store pick-up
  2. ship from store
  3. inventory lookup
  4. vendor dropship

Shopatron targets midsize retailers and its main benefit is the advanced order routing. The platform combines online and offline sales and claims inventory visibility across channels.

Pros:

  • great fit for midsize companies
  • regular updates without setup costs (the platform runs as SaaS)
  • good fit for larger retailers that look for a quick roll-out for the solutions listed above
  • can connect multiple sales channels and direct orders to the right fulfillment point
  • works with both retailers and brand manufacturers
  • reduced costs and quick roll out

Cons:

  • the company is not known for its transparency in terms of product road map
  • smallest entry on this list, making it a target for future acquisitions
  • no clear option of on-premise setup

4. NetSuite

NetSuite was already rocking a great SaaS ERP product and a fully flavored ecommerce solution when it acquired OrderMotion in 2013. Now the company can provide inventory management across channels, a single customer view, business intelligence data and omnichannel order management.

netsuite

The company, among the first to bet on SaaS platforms, is now one of the fastest growing companies in the field, closing 2013 with $414 million in revenue. The revenue is up 34%, which is a big win for the company initially backed by Larry Ellison.

NetSuite started as NetLedger, envisioned as an online accounting tool, that later turned to an wider array of company management tools.

The past two years have been very active for NetSuite in terms of omnichannel related acquisitions. In 2013 it acquired Retail Anywhere, a POS solutions company. In 2014 it acquired both Venda, an ecommerce SaaS company, and eBizNet Solutions, a company focused on WMS (warehouse management system) solutions.

Netsuite has decided omnichannel is a perfect mix when it connects companies focused o separate blocks in the retail chain.

Pros:

  • extensive know how of retail operations management
  • integrated SaaS solutions
  • great record of acquisitions
  • single view of customer
  • cross channel inventory view and order management
  • extensive list of customers
  • great uptime

Cons:

  • NetSuite is “broadly focused”: its solutions work with healthcare, finance, manufacturing and many, many others. That leaves little room for actual retail innovation
  • the recent acquisition will probably work together but many steps have to be taken until full integration is achieved
  • implementations aren’t always all that seamless
  • complex pricing and licensing structure

3. eBay Enterprise

PayPal is not the only jewel in eBay’s pocket as it seems. eBay Enterprise (formerly known as GSI Commerce) is one of the fastest growing and biggest companies providing technology and consultancy for omnichannel retail.

ebay-enterprise

eBay Enterprise interfaces and tools

eBay Enterprise interfaces and tools

The company delivers four big solutions to its customer base:

  • commerce technologies
  • retail order management
  • operations
  • marketing solutions

Unlike the other companies on the list, eBay Enterprise goes beyond software integration and into marketing and operations. In terms of retail solutions, eBay Enterprise provides support for commerce integration across channels. The company integrates the main sales touch points, with the help of its omnichannel tools:

  1. web
  2. smartphones and tablets
  3. store associates
  4. interactive kiosks
  5. customer service

The omnichannel operations tools cover a lot of ground and can be used in fulfillment operations, customer care and store based fulfillment.

Pros:

  • provides great tools for online retail, offline retail, fulfillment as well as cross-channel operations
  • best-of-breed order management solutions
  • strong fulfillment and customer care solutions
  • multiple sales interfaces to channels
  • wide array of large retailers and vast experience
  • flexible pricing structure, based on sales commission

Cons:

  • eBay Enterprise is pretty picky when it comes to customers. So unless you’re not a large retailer, chances are you won’t be working with their tools

2. IBM

ibm-commerce

IBM stands for a lot of things and among them it had to be omnichannel retail also. The tech giant offers technology to retailers in need of:

  • content management,
  • supply chain management,
  • order management,
  • inventory management,
  • business intelligence,
  • CRM and
  • interactive kiosks.

Its Websphere Commerce solution connects both online and offline sales through its different versions. It handles cross-channels inventory visibility, distributed order management and scales as you would expect from IBM.

At the core of IBM’s order management and inventory tools you’ll find components IBM acquired in 2010, when it purchased Sterling commerce. The transaction cost IBM $1.4 billion but brought in 18.000 global customers.

The Websphere commerce is a great fit for large companies and powers some very well known brands, but it is somewhat a not so great fit or  midsize retailers.

Pros

  • scalable solution
  • works across channels
  • integrates all retail chain components
  • great omnichannel inventory and order management
  • large user base

Cons

  • expensive setup
  • complex setup process
  • outdated interface controls and architecture
  • hard to implement by midsize retailers

1. Hybris

Hybris, now a part of SAP, is probably the best fit for omnichannel retailing. Hybris is a dynamic company focused on growth and delivers constantly on market needs.

hybris

The omnichannel solution is scalable and built on a modern and flexible architecture, that allows interaction with all interfaces. Its order management solution, inventory and commerce application are built to work together seamless and easily connect with other systems.

Hybris’ solutions work both B2B and B2C and can handle inputs from multiple inventory sources and outputs on multiple sales channels. Moreover, the solution features a central content management system that enables retailers to push content across a multitude of interfaces.

As of 2013, Hybris is a part of SAP, making it a global powerhouse connected to the world’s most popular (well, at least used) ERP.

Pros

  • scalable solution
  • feature packed
  • fully integrated solutions
  • works B2B and B2C
  • modern architecture
  • supports multiple interfaces
  • works online, offline and on multiple other channels
  • flexible enough to work with open source technologies

Cons

  • training may be expensive
  • professionals able to implement and train are hard to find, due to an increase of platform demand
  • customization and setup can be time and resource consuming

So that’s it – these are the best of breed. Of course, there are more out there that deliver great products and I could name Intershop, Demandware or even Oracle. They, however are less inclined to omnichannel or have a really new found love for omnichannel retail. The vendors mentioned above are leading the pack in omnichannel retail implementation, especially for large customers.

Staples Opens Marketplace, takes aim at Amazon

The second largest online retailer, Staples, announced the launch of its inhouse developed marketplace, Staples Exchange.

staples-store

Previously, the company used Commercehub’s marketplace technology to connect its vendors to its Ecommerce sales channels. With this new development there are two big things happening:

The number of products available on Staples has increased dramatically

The number of products available on Staples has increased dramatically

The first and most important, Staples moves technology development in house. This is a clear sign the company is shifting from a brick-and-mortar centric strategy to a technology centric strategy.

Staples has also reduced store space in the previous year on one hand and has invested in technology services its offering to its partners.

With its legacy store network already in place, growing online sales and the new marketplace, Staples can compete with Amazon on an omnichannel level. Its vendors can now access its online sales channels but with future improvements, their products will be probably ordered offline as well.

The second biggest change is in Staples’ logistics strategy. So far the company relied heavily on its own fulfillment centers. Now orders are increasingly shipped by vendors through drop shipping. This is the most efficient way for Staples to increase its product count and it seems to be working: Staples increased its product count from 30 000 in 2012 to 200 000 in 2013 to a whooping 1.5 million SKUs in 2014, according to Internet Retailer.

As Internet Retailer reports, Staples is still curating the vendors’ offers but it will soon switch to a fully integrated platform in 2015. Even now the new tool allows vendors to receive orders, see real-time alerts, access analytics data and manage inventory, without the cost Commercehub’s technology implied.

Can Belly be an Omnichannel Loyalty Program?

Belly is a startup focused on loyalty. It launched in 2011 and has since grown to be active in 18 markets and more than 6500 locations. It aims to reach 10 000 locations by the end of this year and as things look, it might just do so.

The product works by allowing customers (aka “Belly Members”) to “Belly” every time they visit a “Belly Business”. That basically means scanning their unique QR codes every time they visit a partner location. In exchange, customers receive loyalty points that can be used to claim rewards.

The system is part old-school loyalty program and part gamification. Belly Businesses can encourage customers to keep coming back by adding increasingly valuable rewards, redeemable with an increased number of points.

Belly rewards at Doyle's Cafe in Boston

Belly rewards at Doyle’s Cafe in Boston

The product is free to use for customers. Locations that feel the product is right for their marketing efforts pay a subscription fee and get fitted with the nice iPad used to interact with visitors, belly cards and access to digital features in the app.

Belly cards

Belly cards

Features include data on visitors, social media marketing options, access to reputation management on Yelp and the ability to attract new visitors with the help of Belly Bites. These are special rewards offered by locations targeting new customers. By gathering data on users, Belly can recommend the right customers with special rewards based on previous behavior.

The company has been among the first to be featured in Apple’s Passbook and is also integrated with Google Wallet and Samsung Wallet. With these integration up its sleeve as well as its game-like approach, Belly can become one of the leading solutions in loyalty programs.

But to do that, it will have to connect both offline and online experiences, providing a truly omnichannel loyalty approach, ready for the next of innovation. That is not going to be easy as what may today means payments , tomorrow can include loyalty. Apple, Google and PayPal are hitting each other hard in this market. They can surely tackle smaller companies.

But the other way around is also an option. Loyalty can turn to payments so maybe there’s more than meets the eye for Belly.

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.

 

 

 

 

Why is Apple Pay such a Big Deal?

Apple Pay is Apple’s take on mobile payments. It works by storing credit card data and then charging consumers with a simple tap to NFC payment devices. Most important: it’s a huge game changer in payments.

apple-pay-cook

Tim Cook presents Apple Pay

With this product, Apple unveiled its grand vision of a simple, secure payment process. It can store multiple credit cards, it’s linked to the biggest card processors AND big banks such as JP Morgan & Chase or Citigroup. For now, not all Apple devices support Apple Pay but just give Apple a little time. The iPhone 6 and the iPhone 6 Plus come equipped with NFC technology. So will future products.

The big news: Apple is betting big on this product and you know what this means…

The retail industry hates it.

That’s right, even though Apple Pay registered 1 million credit cards in the first week and users love it, some retailers decided they know better.

Retail chains such as Walmart, Rite Aid, Target and many more chose to bet on a different technology, called MCX. The acronym stands for Merchant Customer Exchange and it is a network of retailers offering mobile checkout options through a product called CurrentC.

Seems a bit complicated? Well the short story is that even before Apple Pay was nothing but a rumor, some retailers thought – “hey, why let Apple have so much influence on our sales? Let’s build our very own mobile payment system!” (not an actual quote)

Pictured here: Not Apple Pay

Pictured here: Not Apple Pay

So the MCX people built CurrentC. And by built I mean they have been struggling for years to come up with something that says Mobile Payments. When Apple Pay was announced, they went on and announced their own product.

The product is sliiightlty different from Apple Pay: it works only in the MCX network and works with QR codes. Plus it stores consumer personal info and connects DIRECTLY to the consumer’s bank account. No way that storing consumer data in the cloud and accessing consumer bank accounts could ever go wrong. Just ask Target (among those in the MCX) and Home Depot.

As the public decided they are not going to wait for CurrentC to show up, retailers such as Walmart and Rite Aid went on and blocked the technology that made using Apple Pay possible.

Now why would they do that? Why is Apple Pay such a big thing and why are these retailers so afraid of it?

1. Apple Pay links online and offline shopping

Amazon vs Walmart - 17 years revenue comparison

Amazon vs Walmart – 17 years revenue comparison

Ever thought of buying online and picking up in store? Or searching for an item in a physical store and asking store associates if it is available at another store? If you have you’ve probably noticed that service is lousy when it comes to connecting channels. Omnichannel retail is still in its infancy. To make things work companies have to rewire their IT infrastructure and get ready for a future where it doesn’t matter if orders are placed online, offline, in the mobile app or on the phone.

And that’s hard.

Big retailers have a problem adapting to this new landscape where the consumer is at the center of every transaction and operation. Everything is moving faster and the giants are not really that agile. For example have a look at how much faster Amazon is growing when compared to Walmart.

A large part of this change has to do with payments. Consumers now have to pay one way in the Brick-and-Mortar store. Another way in the online shop. Mobile shopping has yet another payment process. It’s frustrating and the challenge to connect all payment systems is a really rewarding area.

The mobile payments market is estimated at $90 billion and expected to grow. That’s why Google, Apple, Amazon, PayPal and even AliBaba want a piece of it.

So far Apple has managed to connect online and offline channels best. Apple Pay’s ease of use, integrated payment in Safari through the Keychain and many others make it a reasonable bet for the future.

2. Mobile Payments are happening, whether you like it or not

29% of Millennials would be willing to bank with Apple.

29% of Millennials would be willing to bank with Apple. Source

Mobile Payments may seem like a no-go right now. After all PayPal is available for quite some time on the mobile and Google has already launched and failed once with its Google Wallet. What change the future holds as to make Mobile Payments such a big thing?

The answer is Millennials.

The up and coming generation is now just beginning to earn and spend their cash but soon they will be a driving force in the economy. Unlike elder consumers, they have no problem bridging the gap between sales channels and they definitely don’t have a problem paying with their smartphones. IF it’s easy and secure.

In a recent Accenture study millennials were found to be ready to accept mobile payments. They were, in fact, driving the adoption in mobile payments. Among those surveyed, 60% did NOT use their mobile phones to pay. Their main worries: privacy (45%) and security issues (57%). Apple Pay solves both.

3. Everyone expects a revolution

The player that revolutionized the music industry.

The player that revolutionized the music industry.

Remember the iPod, the iPhone and iTunes? They are just three of the most disrupting technologies from the past decade. And they were all introduced by Apple.

The scenario is always the same: a large market in need of change. Market leaders were stuck in exploiting existing technologies. Everyone from label records to Nokia and RIM learned a hard lesson. When Apple goes after a large market, it will revolutionize it.

Apple Pay is a revolution and the MCX retailers know it. Right now they are negotiating their place in the future of retail.

4. It’s not just about the payments, it’s about the consumer

APPLE-PAY-COMIC

Apple, Pay!

Omnichannel payments is all about the consumer. Everything happens around his or her habits. The retailer doesn’t get to dictate what the consumer wants, when it wants it and how the product should be bought.

If you look at Amazon you’ll find that it’s just a very very large store. But is it? In fact, Amazon is a marketplace. An instrument for the consumer to choose from lots and lots of products (240 million in Amazon US), sold by lots of merchants.

At the core you’ll find the consumer account. The preferences, the brand loyalty to Amazon, the saved shipping addresses and others. For each Amazon user, Amazon is a PERSONAL deal.

But for now, those products can only by accessed through Amazon’s infrastructure. The big thing that Apple Pay does is putting your personal account for millions of products and hundreds of merchants where it should be: in your pocket.

By doing this Apple will take out Amazon’s and the likes most precious asset and liberalize it: The personal account. Walmart and the likes have misinterpreted Apple’s message. Their product is not an enemy: it’s the best tool they have right now against Amazon.

5. It actually works

Consumers love the fact that Apple Pay feels easy to use and most important – secure. It works online, offline, on the iPhone and on the Apple Watch.

Unlike Apple Pay, previous products were introduced as standalone products, not as part of an ecosystem and seemingly without any clear strategy and vision for the future.

Google failed and now it’s trying again with a new Google Wallet.

PayPal has maybe missed its opportunity to become what Apple Pay will probably be. Internal company battles and unclear strategy made the company lose sight of how the market is shifting.

Amazon too launched Amazon Payments but its focus on online payments makes it a NOW product. It really isn’t future proof.

Apple Pay works great and it works great for a large audience. Apple has a huge user base and this user base trusts Apple. They use the company products and are willing to allow the company to store their credit cards. In turn, Apple has not let them down: Apple Pay just works.

Tesco profits drop 92% yet online sales increase

Tesco-LogoIn what is probably the biggest financial error in commerce this year, Tesco announced that it overstated its profits. By a lot. The problem was caused by the company booking payments from suppliers as income. In fact, payments were used by the company to run promotions on the suppliers’ behalf.

Tesco is now under fire as forensic accounting investigators from Deloitte reported the company overstated profits expectations by £263m in the first half of 2014.

Not only that but profits overall are 92% down after a previous write down of £527m caused by the above mentioned error in registering income in previous years.

Nevertheless, Tesco is still the largest supermarket in the UK, leading the pack with a large market share:

tesco

Although its market shares have taken a hit, it seems that online sales are growing at 11% and I believe this is just the beginning. Following the unfortunate news eight executives were forced to leave the company, including chairman Sir Richard Broadbent.

Now the company is ready for a fresh start. Ok, scratch that “fresh”. It’s more like it’s forced to improve its omnichannel approach as customers demand better service and improved shopping experience. The company had previously employed several experienced directors to help it become a competitor to Amazon in global retailing. How well this would fare is hard to tell but they should get some award for trying. After all Tesco was the first to ship an online order.