Priming the iPad for for Frictionless Retailing

Priming the iPad for for Frictionless Retailing

Back in the late nineties Jeff Bezos of Amazon.com coined the term 'frictionless retailing' - throwing down the gauntlet to online retailers to improve product search, personalization, customer loyalty, recommendations and simplified carts and payments - yet today the consumer experience is far from frictionless. The arrival of the iPad could enable online retailers bring their shopping experiences up to date.

In December 1998 Business Week's cover story described Amazon's book retailing model where "with a single mouse click, an order can be placed on its Web site, making shopping a friendly, frictionless, even fun experience".

Since that time, Amazon's range has grown to 10 million SKU's, incorporating Marketplace, personalization, recommendations and reviews and serving the United States, Canada, China, France, Germany, Japan and the United Kingdom. The constant innovation has also spawned a host of other related services such as Mechanical Turk, Amazon Web Services and the EC2 Cloud, the Kindle Book Reader and now an iPad Application.

According to Internet Retailer's top 500 sites, Amazon's eStore leads with a web sales volume of $24.5 Billion, followed by Staples ($9.8 B), Dell ($4.5B), Apple ($4.2B), Office Depot ($4.1B), Walmart.com ($3.5B), OfficeMax ($2.8B), Sears ($2.7B), CDW ($2.4B) and BestBuy ($2.4B).

Looking at the top 10 list above, we see 3 general merchandise, 3 office supplies and 4 consumer electronics retailers and visiting their sites, we also see the formats are tried, tested and identical. Their collective sales may exceed an impressive $60B, but perhaps it's time to re-fit the store.

So what's the Problem with Online Retailing?

Over the previous decade everything has moved on. Mobile phones do email, play videos, take photos and run applications. Television is digital and interactive and programming spills into the web. Cars have satellite navigation, play movies and report accidents. Anything that can be is Facebooked, Twittered, FlickredSecondLifed, Foursquared, Dopplred, App'ed and then finally Squared-Up. It's all experiential, contextual, location aware, socially networked and multi-channel and it's always on.

With the sophistication of technology available, why do online retailers insist that we shop their stores by navigating a department store product hierarchy? Why am I forced to browse webpages as if they are a print catalog? Why does searching for products feel like Google's early keyword search? Why is the basis for recommending products to me what people in my zip-code also bought?

Online retailing is still fundamentally a two dimensional experience that is largely constrained by the underlying e-commerce engines and then polluted by search engine optimization, conversion, abandonment, price comparison and product rating technologies. A decade of frenzied feature implementation has produced a top ten list of virtually identical online retail formats. Surely time for a change.

Four pillars on which to build a new Online Retailing

The top online retailers have mastered SEO, conversion, abandonment, aggregators and ratings, yet to differentiate and innovate demands a paradigm shift. Four pillars around which the new online retailing format can be designed are: Experience; Convergence; Convenience; and Confidence

Experience

Provide a rich and intuitive shopping experience that complements the physical world. Watch how your customers shop in bricks and mortar stores, then use the online medium to enhance that. Online communities and content rich sites provide contextual opportunity to merchandise, where the customer is able to fulfill the information seeking parts of their buying process and seamless be taken into a product consideration and selection environment.

Online health portals such as MayoClinic and RightHealth provide excellent examples of sites where people find information, but today they are not really merchandized, rather advertised on. UK retailer, Boots the Chemist has collaborated with WebMD to provide a heavily sponsored health portal where products are promoted in a content rich environment. Walmart's Healthy Living area is an information rich shopping site that holds the promise of the content rich shopping experience.

Many retailers are also experimenting with Online Communities, Facebook pages and Twitter identities. As these are progressively woven into the shopping experience, consumers will interact and inform themselves, with purchasing a natural consequence.

Re-frame the shopping experience:


  1. What are the information needs around your product categories?

  2. Is the information from experts or simply people who have previously used the product?

  3. How can the product and the information be presented in a coherent manner?

Convergence

In the physical world, grocery stores are now not just aisles of products on shelves, they have cross-merchandized menu displays, sampling and cooking demonstrations. From this thinking has emerged a new generation of shopping malls like San Jose, CA's Santana Row where dining, entertainment and shopping all form part of a leisure destination - buy a pair of shoes while on your way to dinner and after the movie go buy the book or BlueRay.

Online media are converging into an almighty mashup - and the same is true for online retailed products and services. Take the movie How to Train Your Dragon as an example: buy movie tickets on Fandango, see it again on Netflix, download the soundtrack from iTunes, play the game on Xbox and buy the toys at Amazon.

Mashup your sales medium:


  1. What are the natural product associations within each Category?

  2. What other online sites provide products, services or informational content that augment and enrich your own products?

  3. How can pre- and post-purchase activities be woven into the product presentation?

    Convenience

    Over the last 70 years, self-service grocery stores and the shopping mall have allowed retailers to create a model optimized for their own efficiency. Webvan's unfulfilled promise of total convenience at competitive price challenged that model such that today's online retailers can be profitable.

    The challenge to re-invent and re-optimize today's model profitably will require the new online experience to draw from the best parts and improve upon the worst parts of the existing. Zappos decided to provide an assortment that no physical store could match, but with the ease and convenience of physical store returns.

    Location awareness equals convenience and startups such as CityRedBird and Siri are exploring how to convert this into cash. Crowdsourcing is now a driving force online and is spawning startups such as Groupon and Woot and an interesting 'power of the crowds' phenomenon called CarrotMob.

    Give your customers the ultimate convenience:


    1. Imagine your customer experience being that of 'instant gratification' - how would that look?

    2. What are the obstacles that can be removed or eased to approach instant gratification?

    3. Are there innovative service partners that could be engaged to deliver such an experience?

    Confidence

    Personalization, Customer Loyalty and Recommendations are all voracious consumers of personal data. Much of that data is concentrated into segment profiles based on transactional data and solicited information, however, Social Networking has created a vast mine of personal data that is in the public domain. Individuals are unwittingly publishing a detailed picture of themselves on the web - and there are a large number of organizations mining that data to find marketing hooks.

    Facebook is one of the largest mines of personal information and data can be accessed via any Facebook Application. Facebook Privacy Settings can be used to prevent marketers, stalkers or malicious sites from accessing your personal data, but they have been engineered to outwit most consumers. Most online merchants who are building their own closed Customer Profile databases of inferred information about consumers preferences would be happy to get their hands Facebook data for their customers. There are benefits to consumers making this information available, however, data breaches and privacy violations may fuel a kickback amongst consumers.

    Movements such as DataPortability and Vendor Relationship Management are working to provide an alternative infrastructure where an individual's profile is back within their control and online merchants and marketers can engage with consumers in a permission-based environment.

    Understand your customers without violating their privacy:


    1. If your customers were to volunteer information about themselves, how would this benefit them?

    2. Why would a customer trust you enough to provide personal profiles and their future product needs?

    3. What mechanism can you provide to help customers protect and manage their personal data?

    Preparing the iPad for Frictionless Retailing?

    2010: Enter the iPad. Bigger than an iPhone but smaller than a netbook. Great graphics quality. Intuitive user experience. No physical keyboard. Built to encourage application developers. It's neither a smartphone nor a notebook computer. It's a book, a magazine, a gaming device, a movie viewer and a web surfing device.

    It could also be the platform that will power a new form of online retailing incorporating Experience, Convergence, Convenience, and Confidence.

    Experience

    Now imagine… there's an On Demand movie on Cable, before you subscribe, you pick up your iPad and say you'll stay tuned into the movie's iPad App while you're watching - which gives you a discount code for the movie. While watching the movie, you can check information on the cast and crew.

    Convergence

    As you watch you see a dress that you really like and you access the movie site's wardrobe section and look for the item you want. The iPad has no keyboard and you're watching the movie, so you just click on an icon to add the dress into your universal shopping cart.

    While watching the movie, you think that one day you might like to go to Ireland and visit Dublin, so you add the destination into your travel wish-list. At the end of the movie, you want to buy the soundtrack, but instead of waiting for the credits to roll, you just click on the purchase soundtrack button and the MP3 is downloaded to iTunes on the iPad.

    Convenience and Confidence

    I've now got a number of generic items in my cart and I'm sitting with a device that is wireless and has no keyboard and I am sitting at home on the sofa rather than in a store with my credit card at hand.

    However, I am already a registered customer of the online retailer sponsoring the iPad App and along with my registration details, I have provided my clothing sizes and maybe even a photo of myself. The iPad App is firstly able to check availability of the dress in my size and render the dress onto my photo.

    I'm ready to buy, but I don't want to be entering credit card info or a password into the iPad and I don't want to wait until later when I can go to a proper computer. The iPad in Gamsworld also has a fingerprint scanner that I can swipe to authenticate my payment. The online store of course knows my delivery address and credit card details and none of these will cross the network during these transactions.

    So the iPad mostly provides the platform for Frictionless Retailing as defined, it's now up to merchants and content providers to create the compelling events. If there is enough push by the content developers and merchants, that fingerprint scanner may yet appear on the iPad.

    Bibliography


    Gam Dias remembers tape, punched cards and that he liked Pascal. Since then he's worked on technology projects with major retailers such as American Stores, SuperValu, Thorntons, Somerfield and Hudson Bay Corporation. He's also been a CRM consultant, a Product Manager and run a number of Research and Innovation Projects for big companies that really didn't want to change. Currently he's a Principal at FirstRetail Inc. - a tiny company working diligently on something rather interesting.