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
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:
View the company from the customer perspective
Research customer satisfaction
Build separate customer profiles for different market segments
Look for bottlenecks
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.
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.
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.
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.
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)
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
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
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
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
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.
Word’s out that Amazon is planning on opening its first brick and mortar shop. With such news the retail world is now buzzing with questions:
Is Amazon really going head to head with mainly brick-and-mortar retailers? Should the likes of Walmart be paying attention to such tactics? Could this mean a new way of doing business for Amazon?
The answer is no.
First of all Amazon is not opening actual stores. It’s opening pop-up stores. The big difference is pop-up stores are available for just a limited amount of time. They pop-up and then they pop-off. For example the two stores Amazon is now opening will be in San Francisco and Sacramento and will be open just for the holidays.
Amazon will use these stores to showcase its proprietary mobile devices (tablets, ebook readers, the smartphone). Once the holidays are over – puff – they disappear.
There is, however, one report from the Wall Street Journal, not yet confirmed by Amazon, saying the company would actually be looking for more. This report points to a New York location in Midtown Manhattan that would serve as a permanent physical presence. Again, this won’t be your typical store but rather a location designed to respond to specific Amazon needs.
Such needs would include testing Amazon products, order pick-up, returns and local delivery. Maybe even a drone helipad. Who knows?
Seriously now – with the store working as a mini-warehouse, the company could easily offer same-day delivery to near-by customers. That’s a great way to compete with Google’s same day delivery. These type of operations (pop-up shops and drop-shops) could become mainstream in the future as retailers need to bridge the gap in omnichannel retail AND provide faster shipping.
However, Amazon’s offline presence should be scanned from a different perspective:
Amazon is not moving offline. It is already there.
There are no Amazon stores just yet. Except for a few Amazon lockers and the occasional pop-up stores, the largest online retailer remains a pretty digital presence.
Except for its logistics.
Beneath the magic of Amazon’s online retail presence lays an well-oiled logistics machine. Amazon combines advanced IT systems, human operations, robots, huge warehouses and a complex shipping operation to fulfill its daily orders. And some underpaid workers but that’s another thing.
How many products does Amazon ship? Billions.
In 2012 Amazon sold and shipped more than 10 million products each day. The total number of products shipped in the last quarter of 2012 was 1.05 billion. Yes, that is a Billion with a B and it is reportedly the first time in the company’s history when it sold more than 1 billion products in just one quarter.
The number of listed products is also huge. Its top 5 markets all list more than 100 million products, with the US totaling a whooping 253 millions, as reported by Export-X:
Amazon Fulfillment: 83 million square feet of storage and fulfillment centers
You’ve probably guessed that shipping 1 billion products per quarter to more than 200 million customers worldwide requires a bit of work. What you probably don’t know is that such a large-scale operation uses 50 million square feet of storage in the US and 33 million square feet of storage outside US (source).
There is no other ecommerce competitor with such storage and fulfillment potential. Its dominant position allowed for two interesting business models to evolve: The Amazon Marketplace and Fulfillment by Amazon.
To reach sales as those shown above, Amazon lists and sells both its own products and those from 3P (Third Party) merchants. Merchants can join its Fulfillment By Amazon program, ship the product to Amazon’s Fulfillment centers and than leverage Amazon’s Logistics.
This means the company can count on its sales AND influence to shape the future of retail. Its logistics are probably the most useful and under rated tool in expanding globally. While everyone wonders if Amazon will set foot in the offline world, the company has already laid the foundations to what will probably be the future of retail.
Of course, the numbers listed above can only show a small bit of what is required to keep Amazon moving and growing. The operational tools Amazon employs and the processes behind this amazing machine will be uncovered in an upcoming ebook. Until then – check out “Understanding Omnichannel Retail” – a comprehensive report on how online and offline sales are now connecting.
Ebay and PayPal have been together since 2002, when Ebay decided to acquire PayPal for $1.5 billion. At that moment both companies were heavy weights in their respective fields and growth was booming. Ebay struggled with a previous solution, called Billpoint, until deciding to give in and purchase PayPal.
Since then, both gained a lot from the other. Ebay benefited from PayPal’s ease of use and helped its customers send money to one another. This helped streamline and secure the purchase process, thus increasing transactions. PayPal, one the other hand, piggy backed on Ebay’s massive user base and international exposure. Its revenue increased by the year and in the second quarter of 2014, it amounted to 45% of Ebay Inc’s total revenue.
The fast growth of PayPal, as well the whole “payments revolution” potential lead Carl Icahn to propose a split between Ebay and PayPal this year. Icahn’s proposal / attack was then fended off by Ebay CEO John Donahoe and PayPal ex-leader David Marcus. Since february 2014, a lot of things happened. David Marcus left the company to join Facebook and biggest of the biggest, tech mammoth Apple launched the Apple Pay. What seemed like a closed case soon turned into a huge split between the companies.
Now – John Donahoe will still run Ebay Inc until the split is official. As of that moment he will step down as CEO and Ebay will be lead by Devin Wenig, now president of eBay Marketplaces. PayPal will split into a new company, directed by Dan Schulman, now president at American Express, Enterprise Growth Group.
PayPal benefits from Ebay Inc. spliting. The split means that PayPal will be able to roam free, grow and develop independently. On the other hand Ebay will be able to … well … do everything it was doing before. The marketplace division is not gaining much from the split. It loses a revenue stream, its shares will drop and it will have to find a new way to keep up with its growth in the future.
However PayPal needs independence to keep up with increasing competition in the omnichannel payments landscape. It needs to innovate, it has to connect online and offline and it has to do a bit better on mobile devices. The split will help the company evolve and here are three reasons why:
1. PayPal can mean more than just payments
Banking as we know is shifting from an old, rigid system to a new way of doing business. That means more than wiring money. It means deposits, it means financing, it means Peer 2 Peer Lending and more. Under Ebay, PayPal was bound to stick to payments and money transfers. Now that Ebay is no longer the umbrella that fosters PayPal innovation, we may soon see more financial goodies from PayPal.
2. PayPal should be more than an accessory to Ebay
Elon Musk explained best why Ebay should not hold PayPal back: “It doesn’t make sense that a global payment system is a subsidiary of an auction website… It’s as if Target owned Visa or something”.
The fact is PayPal outgrows Ebay. It can and should be a global financial company, a field that’s obviously larger than Ebay’s marketplaces can ever be.
3. PayPal could grow even faster as a separately traded company
It’s no secret that Ebay has already done what it could to help PayPal. Now it’s just living off PayPal’s growth. As a separately traded company PayPal can become a larger company, more attractive to investors, which in turn can help the company finance its expansion, growth and fight against Apple, Google, Amazon and even AliBaba.
Carl Icahn is known as a corporate raider and maybe there’s more to this story than meets the eye. There is a possibility that he and others are just splitting the company to later organize a take over from companies such as Visa, MasterCard or one of the larger banks. What could be a profitable short-term strategy could hurt PayPal in the long run and kill one of the most promising financial companies in the world.
Home Depot, the largest home improvement retailer, has announced that 56 million credit card numbers have been compromised. In what is now known to be the biggest security breach in corporate history, Home Depot has been the target of an attack that lasted from April to September 2014.
Home Depot managed to beat the previous record, held by Target with 40 million compromised credit cards. As a result of Target’s security breach, the company laid off its CIO. Chairman, President and CEO Gregg Steinhafel then announced his resignation as a result of the security breach and previous unfortunate events, like losing $941 millions in a failed Canadian expansion.
September 2nd: the same man that announced Target’s breach, Brian Krebs, announces a new security breach. This time on Home Depot. The same day, Home Depot starts digging through its POS systems and on the September 8th announces that indeed, a breach has happened.
Krebs reports that the same group of Russian and Ukrainian hackers that managed to steal Target’s data were responsible for the hack. The same day a new batch of credit cards shows up online. The batch’s code name: European Sanctions.
16 days later, Home Depot announced that it managed to clear all infected systems and has “has completed a major payment security project that provides enhanced encryption of payment data at point of sale”.
The company worked with security firms, banking partners and the Secret Service to find out as much as possible about the breach. Results show that hackers used custom built, never before seen malware. This was not the work of some isolated hackers group, acting on its own. A very well organized attack has been put in motion.
Home Depot has worked with banks to provide customer support to those in need. A small local bank, Dollar Bank, as well as larger banks such as JP Morgan Chase and Capital One, have started replacing credit cards.
Although Home Depot has not been hit by the market just as heavily as Target, one can still feel the tension looming over the retailer’s security actions. Consumers are more careful in how they use their credit cards and banks have jumped on board the Apple Pay system, which promises better security.
Is there a cyber war out there?
The fact that the same group of hackers seem to have been involved in attacking Target, as well as Home Depot points to a maybe. But then you have the Secret Service involved. You have an ex-Homeland Security contractor acting as CIO with Target. You have the FBI investigating whether Russia is behind the recent JP Morgan Chase cyber attack.
But most of all – you have Edward Snowden, defected to Russia with a few gigs of classified information on US cyber intelligence actions. Some of those actions may have included packing backdoors and security flaws into US digital infrastructure. Too bad.
Yes, there there probably is a cyber war going on and the US and Europe are extremely exposed. Retailers should pay a lot more attention to their security backbones and check each potential backdoor, should they not want to suffer the same unfortunate events Home Depot, Target and others have faced.
Apple announced its newest products and everybody focused on the much awaited iWatch or the iPhone 6 and 6 Plus. The real news, however, both business-wise and from a consumer point of view is the launch of Apple Pay, an NFC (Near Field Communications) ready payment system. Simply put, Apple’s payment system allows customers to store credit card data on their iPhones and when the time comes, just tap to pay.
The product launch was not unexpected. With the previous operating system launch, Apple packed several features that would allow for better mobile commerce. The iCloud Keychain was introduced to Safari in order to allow both faster logins to known websites as well as, in the future, a faster checkout.
With Apple Pay, the Cupertino company joins the omnichannel payment war as was predicted in this previous post. Google, Amazon, Ebay (through PayPal), AliBaba and even Facebook are trying to get a piece of the $15 trillion payments market. As banks and established financial institutions have failed to meet customer expectations in mobile payments, the gap between needs and available options will probably be filled by one of the tech titans.
Google tried its luck with the Google Wallet, Ebay’s PayPal is now crossing the bridge into offline teritorry and Facebook recruited Paypal’s former CEO David Marcus. Marcus is the man that helped Paypal grow from $750 million in 2010 to $27 billion in 2013, so one can only assume Facebook is also serious about payments.
To help the product take off, Apple signed 220 000 merchants onboard its Apple Pay project. Among them: Mc Donald’s, Babies R Us, Macy’s, Staples, Sephora and of course, all Apple retail stores. The 220 k merchants are just 2.4% of the total 7 to 9 million merchants in the US but it is a great start given the fact that Apple has a habit on pulling seemingly impossible feats, starting with close to nothing.
For example the iTunes Store launched with not more than 200 000 songs and only Mac Users could move the purchased songs to their iPods By September 2012, it was home to more than 37 million songs, 700,000 apps, 190,000 TV episodes and 45,000 films. By February 2013, the iTunes store had sold more than 25 billion songs worldwide.
So yes, there is a pattern here and there is probably a whole lot of room for improvement in the payments area.
Apple Pay’s security
Although recent iCloud security issues clouded the product launch, the security behind the payment technology looks great. First of all it allows customers to save credit card data on their phone without exposing sensible details to potential hackers. It also features the Touch ID identification technique where users sign payments with their biometric input (the fingerprint).
The credit card information is not beemed online but rather stored in a special chip, on the iPhone, a hardware – software combination that Apple named Secure Element. When a transaction is processed, credit card details are not sent to Apple’s servers and the retailer can’t see the data. Instead, a proxy account number is issued that the retailers charges. Each transaction is secured by an unique security code that authenticates it. Apple has laid more layers of security then we came to expect and that should work just great. But take it with a pinch of salt because everything is secure untill it is not anymore.
The company states that it does not store transaction data regarding location, products purchased or the amount the customer has spent. That certainly leaves room to question why exactly would Apple choose not to store these valuable data. The answer lies with data from Bloomberg sources. According to these anonymous sources, Apple has partnered with banks in the system to receive a percentage from each transaction.
The banks involved are JP Morgan Chase & Co, Bank of America and Citigroup Inc. They agreed to integrate their cards into the system and alongside came three of the biggest card networks – Visa Inc., Mastercard Inc. And American Express Co.
So we have a great lineup for Apply Pay and although NFC payments where slow to take off, it seems that Apple’s incredible effort to bring every important player on board will be the push mobile payments needs right now.
As the company promissed it won’t charge users, merchants or developers, one of the biggest issues (the cost issue) seems to be out of the way. With customers using their mobiles more and more, retailers will be forced to adopt some form of omnichannel payment system.
How does Apple Pay benefit retailers?
Retailers and merchants in general receive several incentives to adopt NFC payment compliant technology.
First of all, the Apple Pay system allows a greater connectivity between online and offline sales channels. Customers can order products on the web store, in the brick and mortar stores or within a mobile app. The security and speed allow for greater ease of use.
The second big advantage is payment speed. By just tapping the phone, customers can pay within a 10 second timeframe, improving sales speed. This allows merchants to move customers through almost instantly.
Third big advantage Apple brings is an improvement in mobile purchases and payments. Although customers are so far browsing for products, they rather pay on the web store or order and pick up in a physical store. The biggest bottleneck is the mobile payment experience, one that is just awful for most retailers.
Famously Amazon has solved this issue with its One-Click Payments, where registered customers can use previously stored credit card data to move as fast as possible through the checkout process. Amazon’s patent sits at the heart of Apple’s payment system within iTunes, an extraordinarely usable example of mobile payments.
Actually that’s one of Apple’s strong points when implementing Apple Pay. The company will leverage almost 800 million iTunes accounts, most of them having their cards linked to the account. The magic of paying with a tap will now probably become mainstream.
A chart based on US Census Bureau and Comscore data was published by Business Insider. It shows Mobile Commerce growing three times faster than Ecommerce overall.
The numbers behind it are very interesting:
mobile commerce is on the rise and has registered a 48% YoY growth, in the second quarter. It now accounts for $8 billion in online spending.
overall ecommerce (including mobile commerce) grew “only” 15.9% year over year in the second quarter and totals $70.1 billion in online sales.
Stop betting on (just) mobile. We’re not there yet.
Smartphones and tablets have brought forth a revolution in computing and social interaction. Unfortunately for overenthusiastic mobile-only fans, mcommerce usage is lagging behind mobile device adoption.
If you look at the chart above you’ll see there’s a linear growth in mobile commerce. Not a hockey puck growth. Not even an accelerated growth.
Even more – ecommerce accounts for only 5.9% of all retail. Mobile commerce itself is just 11.4% of ecommerce. This means mobile commerce, however ambitious is pretty much insignifiant. It accounts for just 0.67% of total US retail.
Smartphones and tablets are extremely popular. Mobile commerce – not so much.
And hey – it’s not the fact that people don’t like smartphones. Oh no. People love smartphones:
They also love tablets. Almost 42% of all US adults own at least a tablet. Remember – this is a product that went on sale only 4 years ago, when Apple introduced the iPad. In just 4 short years, the tablet has become a virtually ubiquitous computing item for US adults.
So – people are buying mobile devices like crazy. PC sales are dropping yet the mobile commerce is just 0.67% .Why?
The short answer – there is no mobile commerce.
Mobile is the bridge. It helps connect the physical world to the virtual world. The act of purchasing happens on multiple channels. Mobile is not “the future”. It is the present yet the present comes in a form we have not met before – a bridge across channels.
If we take the time to see matters from the consumer’s point of view things are not as black and white as we expect them to be. Few if any consumers think in terms of mobile OR desktop OR brick and mortar. The consumer will spend time in a B&M store, browse the web to search for the right products, do a little showrooming to find the be best pricing. In the end, the whole purchasing experience stretches across channels and some are more popular than others.
But the customer has only one perspective where channels blend in. The omnichannel perspective. To provide the ecosystem for this perspective, the new retailers will try to understand and implementomnichannel retail because mobile, however massive, is just a piece of the puzzle.
Quickly – think of one market you know is a sure bet for growth. If you guessed the groceries market, awesome! You’ve spotted the subtle hint in the title. The groceries market in the US is expected to reach $1.1 trillion in 2016. China, the largest groceries market, is expected to peak at almost $1.6 trillion in 2016. India, Brazil and Russia are growing at a fast pace and are expected to overtake Japan within the same threshold.
All in all – the US and BRIC states groceries market is expected to total $4.2 trillion within the next two years.
That’s a big market. Obviously, some of those groceries will be purchased online. For the online groceries market to take off, some disruption has to happen. Although not yet mainstream, we can see signs that consumers will be purchasing at least some of their groceries online.
Amazon is going Fresh
If there is one thing that online retailers need to get right in the groceries market – that is the logistics. From a consumer point of view, a reliable fulfillment and a guaranteed product freshness is a must. To do that, online and omnichannel retailers need to set new logistics policies to allow for a quick order delivery, without loss in product quality. Do we know a company that is really good at online retailing logistics? Of course we do:
Amazon is clearly the leader in online retailing so it was expected to move into this market. It did so 5 years ago. Its Amazon Fresh grocery service was first tested in Seattle. Now the company unleashed the grocery service in San Diego. Customers in Northern and Southern California can pick from 500.000 products, ranging from vegetables and milk to batteries and hair care products.
Jeff Bezos previously mentioned that in order to become a $200 billion company, Amazon has to learn to sell food and clothes. The obvious target was Walmart, a company with revenue north of $475 billion.
To do so, the company will continue to improve its service and increase the number of cities Amazon Fresh is available in. “We’ll continue our methodical approach – measuring and refining AmazonFresh – with the goal of bringing this incredible service to more cities over time” mentioned Bezos, addressing Amazon’s shareholders.
The methodical approach Jeff Bezos is talking about might reach New York soon enough. Re/Code mentioned the company has already prepared an warehouse in the area, instructed suppliers to ship frozen products to it and is hiring workforce for the service.
In New York, Amazon will have to face competition from online groceries retailers such as FreshDirect or popular startup Instacart.
Online Groceries in Europe are growing fast
It’s not just the US, though. Online supermarket Ocado now covers 73% of UK’s population, more than any other supermarket chain. It’s plans are outrageously ambitious: take the world by storm through a global marketplace, similar to Amazon’s. Only for groceries.
Whatever it is they’re doing – it must be right because the company jumped from being evaluated at less than £300 million to a £2.3bn valuation in less than 13 months.
Uber rides into ecommerce, brings groceries
You’ve probably heard a bit about Uber. It’s that company that’s turning the cab industry on its head, enraging french cab drivers and linking riders with drivers.
Now it’s testing a new service, called Corner Store, in Washington. Customers can order from a limited inventory right now, 100 products only, ranging from “drinks” to “feminine care” to “first aid”. Not in that particular order.
Wayfair announces what is expected to be one of the most important market moves in the US online retail landscape: its IPO. The company previously raised $157 million this year, valuating it at $2 billion.
The online home-furnishing retailer has shown consistent growth in revenue throughout 2013, as well as the first half of 2014. Total revenue for 2013 was $915.8 million (52.4% increase from 2012). This fast-paced growth was maintained in 2014, as revenues reached $574.1 million, up 49,8% from the same period last year.
The company was founded by Niraj Shah (CEO) and Steven Conine (CTO), in 2002. It was first headquartered in Conine’s home and was then named CSN Stores LLC. The company grew to operate around 240 individual ecommerce sites, such as bedroomfurniture.com or racksandstands.com (first one online).
Wayfair reached $100 million in revenue in 2006 for the first time, after adding more and more product categories to its catalogue. It now features products for home deco, institutional, furniture and many more. It has more than 7 million products listed and over 2.6 million customers in the first half of 2014 (75% increase from last year).
In 2011, most of the niche webstores were consolidated in Wayfair.com. The company changed its name to Wayfair LLC and continued its aggressive expansion. It is now the largest online-only retailer for home, and number 45 in the largest US online retailer’s list.
Although the company consolidated its brand on the Wayfair platform, it does operate other subsidiaries under different brands. Joss and Main is a flash sales store for home, Dwell Studio features upscale home furnishings and AllModern sells affordable design items.
The largest company shareholders are founders Niraj Shah and Steven Conine, who own 57.8% of the company. Next notable shareholder is private equity company Great Hill Partners (11.4%).
A very select group of companies lead the way when it comes to omnichannel retail solutions. Intershop is one of these companies. Having unveiled its first online shop in 1994, it’s also one of the most experienced and innovative. Now more than 500 mid-sized and large companies benefit from its solutions. Among these you can find Hewlett-Packard, BMW, Bosch, Otto, Deutsche Telekom, and Mexx.
We’ve reached out to mr. Jochen Wiechen, Intershop’s CTO, for a few thoughts on the future of retail. Previously a VP of ERP powerhouse SAP, mr. Wiechen holds a PhD in Physics and has a very interesting view on the future of retail.
Netonomy.NET: What are the biggest changes in retail you have noticed in the past 5 years?
Jochen Wiechen: Clearly online is the main disruptive technology that has fundamentally reshaped the entire industry, not only retail by the way. Ubiquitous bandwidth availability, multi-media developments and mobile technologies allow for completely new business models and customer experiences.
The customer journey nowadays starts in the Internet, around the clock and everywhere. Sophisticated online marketing activities trigger more and more personalized buying processes that start with extensive research and lead to process innovations such as click and reserve or collect.
Rising online stars such as Amazon, Zalando and Alibaba grow extremely fast and challenge classical retailers who simply cannot ignore these developments and start embracing those concepts by embodying online into their cross-channel concepts. The winners in this game will be the ones who understand the changing customer profiles and associated behaviors as well as the potential of integrating online into an optimized omni-channel system instead of shying away and sticking to the old offline world.
N.: Which retailers do you believe are leading the change in global retail?
J.W.: Out of the blue Amazon has developed to the leading global online pure play as well as a relevant player in the retail industry. By consequently embracing the online concept into their channel strategy Walmart is currently showing an even faster growth rate of their online channel than Amazon and is a perfect example of a winner in the overall online transformation. Other relevant players in this game are Nordstrom, John Lewis or House of Fraser, for example.
N.:Do you expect Chinese retailers to increase their market share globally? Do you believe Alibaba Group’s expected IPO in the US is a step in that direction?
J.W.: Alibaba is projected to pass by Walmart in overall sales this year, the latter being the largest retailer worldwide. In the US alone, Alibaba is expected to grow 30% this year and although its development in Europe is still in its infancy, also here surprises will have to be expected.
N.:How important is technology in addressing the consumer needs now and in the future?
J.W.:As stated above, nowadays most customers start their journeys in the Internet which is a profound change compared to classical retail. Already at this stage they are able to browse for any categories and products from anywhere at any time with any device, to compare prices, select within huge collections, take advantage of intelligent recommendations and potentially use fitting engines before they buy either online or in the store where they might collect the selected product.
In order to provide large target groups with these services a highly complex, highly scalable, and highly available IT-infrastructure is a prerequisite. Viewed from the other way around, technology is simply key in the paradigm shift that is currently taking place in the retail industry.
“[…]technology is simply key in the paradigm shift that is currently taking place in the retail industry.”
N.:Which technologies do you believe are shaping the future of retail?
J.W.:Based on the speed of the disruptiveness that the combination of high Internet bandwidth availability and the development of multi-media capabilities on a plethora of end-user devices has caused in the retail industry it is expected that the evolution of further technologies will continue to reshape the industry.
While Big Data has already gained substantial market share in order to analyze and predict consumer behavior we also see a rapidly growing demand for indoor proximity systems in order to support omni-channel transformations. In general, we agree with analysts that the Internet of Things is the next big thing in not only this industry. Devices, gadgets and sensors of all sorts interact amongst each other as well as with human beings in order to reach a new level of communications and interactions. The winners in the upcoming retail industry battle will be the ones who take advantage of this technology development that will lead to today possibly unimaginable customer journey innovations.
N.:How will mobile devices impact retailers and shape consumer behavior?
J.W.:On the one hand, mobile devices allow for ubiquitous browsing and shopping which removes any local stickiness of the consumer, who can even choose the best offer while walking through a mall. Recent search engine analytics reveal astonishing portions of regional references in search requests.
On the other hand, this is an opportunity for retailers thereby taking advantage of location-based services by sending ads or promotions to consumers walking by a store, in which a sales person might then use a mobile shop assistant app in order to lure the customer into a well-educated sales pitch that is not only consisting of more or less good guesses based on gut feelings or superficial conversations that help shying away the customer.
N.:Will 3D printing technologies be used in improving tomorrow’s supply chain?
J.W.:While the usage of the technology on the consumer side is still in its infancy, Amazon just recently already opened a shop for products coming out of 3D printers and has again proven its leading role in the industry. It is hard to say how far the technology will be able to be pushed in terms of product complexity which then will determine the extent to which it will be used in supply chains.
N.:What are the next steps in Intershop’s evolution, in terms of innovation?
J.W.:Based on a research project we have been carrying out together with local Universities we are currently rolling out a commerce simulation engine (SIMCOMMERCE) that falls into the category Predictive Analytics and that allows for outstanding optimization capabilities for commerce operators.
Apart from that, we are closely working together with our customers and partners to explore various process innovations by integrating new technologies, devices and gadgets with our platform. With our SEED initiative, with which we scan the market for commerce-relevant leading edge technologies that we can incorporate into our offering we are looking for ways to help our customers to substantially improve their traffic, conversion rates as well as sales and delivery processes. We agree with leading analysts that the Internet of Things will play a dominant role in those developments.