Retail, in the eyes of the everyday customer

Linda over at GetElastic linked to an article by DJ Waldow which I am now reproducing for my blog.

DJ Waldow shares an excellent email strategy by SideStep.  Click here to see it.

Imagine if your web-store had a yearly “Thank-You” sale for your top 200 customers. The Thank-You sale is a sale where you only charge the cost of production (sourcing) plus shipping, in short, you don’t make a dime.  Do you think this is a bad idea? if so, why?

What a great idea

It’s been a hard few months for anyone in the retailing world but Inc.com has an excellent slideshow on how 17 companies survived previous recessions (link here).  I liked the Wrigley and Toys “R” Us stories best, produced below:

With just $32 to his name, a 29-year-old Chicago entrepreneur named William Wrigley Jr. starts a business to manufacture soap. When it sells poorly, he tries baking powder. As a gimmick, he includes free chewing gum in every package. Customers seem more taken with the gum than with the goods it is meant to promote, so Wrigley drops the other products and starts developing new brands, including Juicy Fruit and Wrigley’s Spearmint.

During a time of high inflation, a 25-year-old named Charles Lazarus gambles that rising birth rates will sustain the baby-furniture store he opens in Washington, D.C. He soon adds toys, which prove popular. Sensing that consumers’ buying habits are changing, he decides that his second store will sell only toys and uses the supermarket as a model. The stores that Lazarus subsequently opens feature shopping carts and long aisles of merchandise and are an early example of big-box retail.

Why can’t I go to my grocery store’s web site and:

- create a shopping list
- set a future shopping date
- mark a discount alert

And have the store send an email when my list has the best possible collective discount?

Do any of your grocery stores already provide this service?

Google ‘hot sauces’ and hotsauceworld.com is the first result that pops up.  For every hot sauce seeker hotsauceworld.com is a mandatory stop and every month over 15,000 fellow seekers land here.  Being that hotsauceworld.com gets all this organic traffic as a passionate hot sauce enthusiast I have a few suggestions.

Idea 1

Build a list of five recognizable hot sauces (Maybe: Tabasco, FRANK’S RedHot hot, Sriracha, Cholula Hot Sauce and El Yucateco Green Mexican Hot Sauce).  I would then hire a professional hot sauce taster (they exist for wine and coffee so probably also for the hot sauce world) and ask him/her to classify each sauce against this palette of five.  So, hot sauces under Tabasco are similar in taste to Tabasco.

Whenever someone makes a purchase I’d add samples of the five base sauces to the order.  This way shoppers can familiarize themselves with base flavors.  Any sauce that has a flavor outside of the five sauces will have it’s own category called “unique”.  The five flavors I’ve chosen are random, I’m sure the store owner could do a better job picking representative base flavors.

Idea 2

Hotsauceworld.com currently ranks sauces on four levels: Hottest, Hot, Medium and Mild.  This means nothing to me.  What I describe as hot might be medium for you.  The most popular hot sauce in the US is Tabasco it’s taste and hotness is universally recognized.  I would use Tabasco as my average hotness point and categorize each sauce on a gradient scale above and below Tabasco.  Now I would use our hot sauce expert from Idea 1 and have him/her rank every sauce on this new scale.

Brendan Regan’s post on how etailers should manage gift card redemption is so good I’m re-producing it verbatim (even the procrastination bit, which might seem out of place in this reproduction).  The steps below illustrate the experience from a customer’s perspective:

1. Receive the card, note how much is on it.
2. Sometime between and 12/26 and 1/31, decide to redeem it (Made a New Year’s Resolution about procrastinating less).
3. Look on the back of the card for redemption instructions.
4. Following the instructions, type in the URL and land on a unique landing page or a microsite, 100% dedicated to gift card redemption. No distractions.
5. I can select the value of the gift card and be shown ONLY relevant price range items, or receive a few friendly suggestions of ways to spend the $, or find out how other shoppers have been spending their gift cards.
6. The checkout flow is customized to my unique task of checking out with a gift card.

In a definite sign that ecommerce platform space is getting too crowded Omniture has gone ahead with the purchase of Mercado’s Site Search and Online Merchandising platforms.

Mercado’s customers include: Macy’s, OfficeMax, REI, Overstock.com, B&H Photo Video and Williams Sonoma.

As recently as February ‘08 Mercado was undergoing a re-brand when, in my opinion, they should have been focused on saving their sinking ship.

In the ecommerce world Omniture is one of the few companies that has developed a voracious appetite for acquisitions and in recent years they’ve purchased: Offermatica, Visual Sciences and UK based TouchClarity.

The Mercado business is well known to Omniture and the companies have collaborated on areas like site search and analytics in the past.

Mercado had raised nearly $65 million in VC monies and was bought for a mere $6.5 million.  That’s as good as a bargain deal can get.

For a retailer, it would seem, the brick and online store are like oil and water.  Both are needed individually but must never be mixed.  But mixing has its benefits.

In previous posts we’ve discussed bringing store functionality online through features like browsing stores by area code, but the reverse is equally powerful.

Retail space is expensive and brands like Naturalizer Shoes that have only recently started building independent stores this cost can be crushing.  My local Naturalizer store carries no more than 60 shoes on display racks.  This seems ridiculous because naturalizer.com has over 450.  If we stocked all 450 items at the back of the store and brought in a few computers then walk-in customers could enjoy browsing Naturalizer’s entire inventory while experiencing a store shopping environment.

Ecommerce functionality is only slightly modified, now when in-store shoppers add to cart store reps bring their selections to them.  This way everyone befits: customers enjoy a blended experience, salesmen increase commission potential 650% (390/60) and the retailer converts a customer who found the web and store inadequate individually.

In a move to further consolidate control of online payment environments eBay has gone and bought the second largest player Bill Me Later for an all cash transaction of $820 Million.  This is significant because eBay already owns PayPal.  Obviously the company is doing this to realign their business by focussing on strengths because the news also comes with the announcement that eBay will layoff 10% of their global work force.

I find it funny that Bill Me Later which gives shoppers the option to defer payments has chosen to sell itself for an immediate all cash transaction.  How ironic.

A big advantage for ecommerce sites is the ability to track minutest details of customer activity.  For the average store, however, swing door operators is the extent of their analytics.  Now it’s time to bring analytics deeper into store isles.

One idea consists placing infra-red sensors at the ends of isles.  These would trip each time customers walk in or out.  Unfortunately this would only show that people walked into isles but fail to give insight about what they did there.

Another approach is being explored by Rayid Ghani at Accenture Technology Labs.  Their approach is to use video cameras to track in-store motion but the technology is still in development.

The approach I like best utilizes RFID.

RFID technology is getting cheaper by the day and is estimated to cost around 5 cents a tag in the near future.  With prices that low I would slap tags all over the store.  Let’s consider using RFID technology at the grocery store.

Placing RFID tags on carts with receiver tags at strategic locations all over the store is a salivary idea for any analytics junky.  The implications are fantastic and such a network of sensors would allow us to perform all kinds of rich analytics.  What really excites me is the idea that if we placed receiver tags at checkout lanes then when I give the cashier my preferred card the system would immediately match my cart id with my store history.  This opens up a whole new layer of analytics- now we can track both averages and specifics.  Averages apply to the average customer but specifics apply to me as an individual, and both are useful measures.

Listed below is a partial list of what RFID data could potentially reveal:

• We can now track how many people walked in an isle

• If position of product SKU’s is known (as it should be) then it’s possible to see what shelves caused people to pause.

• We can trace the average walk-paths of customers.  In the old days store managers would literally look at the floor to see wear and tear for rough estimates on walk-paths.

• As a reverse metric we can measure what items got little customer attention.  If those items typically sell well in other stores we can insert them along popular walk-paths.

• We can now calculate conversion rates.  Say an item on the popular walk-path gets 50 pauses a day but is bought only 2 times this would give us a conversion rate of 4%.  Another item outside the popular walk-path gets 12 pauses but is bought 3 times.  The conversion for this SKU is 25%.  As store manager I would switch these two items.

• I hate frozen isles, they are far too cold and cause me to walk real quick.  Up until now grocery stores didn’t have any idea how many dollars were being lost because of the sub-arctic temperature.  Knowing my average speed and tracking my speed in frozen isles they would realize I find the temperature uncomfortable (caution: this could also mean I didn’t need anything from the frozen isle).

• Habitual by-pass isles:  Let’s say I never walk through isle 8.  If my shopping list indicates I might like items on isle 8 then the store could send me a special promo for an item on isle 8 tempting me to break my habitual walk-path.

• Moving price analysis:  Let’s say SKU #1332 gets really high pauses but fails to convert, this may indicate that customers are interested but find the item too expensive.  The store should consider dropping price a little if they want to move this item.

• Price sensitivity analysis: Let’s say customer A and customer B have the exact shopping receipt.  Normally the retailer would look at the shopping receipts and give both customers the same preference ranking.  Now let’s dig deeper and look at RFID data.  We find customer A pauses only at discounted SKU’s while customer B pauses equally at discounted and non sale items.  Clearly customer B is not motivated only sales alone, thus for the retailer is more valuable.

• Browsers Vs. agenda specific shoppers: Browsers tend to walk through every isle while agenda shoppers only visit isles with items on their list.  I’m not sure how a retailer would use this metric but it’s there for them.