The Grand Retail Unified Theory

How, when and where this first happened we might never know but at some point retailers divided customers into 2 groups. One group bought online, one group didn’t, plain and simple. We know this philosophy has been unanimously adopted by the retail world because if you look at organizational charts of the top 5,000 multichannel retailers you will see eCommerce is managed by either:

– Head of Technology
– Head of Marketing
– Head of eCommerce

I have not seen one instance where eCommerce is overseen by the Head of Store Operations (on a full time basis).  One exception- Cabela’s had recently elevated their Head of eCommerce to CEO role.

Doesn’t this seem a little strange? Sure there are subtle differences between online and offline shoppers but aren’t these variations influenced more by architecture and less by intent? If your online shoppers are using search it is only because it is at their disposal. Offline shoppers love search too, ask Blockbuster or Borders.

What the retail world needs is a grand unified theory that merges these distinct customer views into one persona, one strategy and one view. Here are a few ideas:

Search Engine Marketing

Search engine marketing is the online equivalent of a customer walking to a salesperson and asking “I am looking for office chairs”. Instinctively the salesperson will walk the customer to the furniture section of your store and point to the stack of chairs on display. The salesperson will not respond with “Oh, we have a 27% discount on paper products, are you interested?”. So why does your SEM program promote discounted paper products to people Googling for office chairs?

Product recommendations

If I walk into a Macy’s store and ask the salesperson for a Lacoste Messenger bag he/she will never cross-sell board shorts or crewneck sweaters. But this does happen on macys.com (below):

Nordstrom

At the end of the day both customer sets are getting two completely different experiences. No wonder you have two operational heads, you are running to different operations!!

I believe the synthesis of these channels will dramatically improve experiences and significantly lift revenue. Product reviews is a truly original online invention and (I believe) one of the biggest reason why eCommerce sites have been able to convert first time shoppers. So why not bring this offline? I would love to walk into a Blockbuster and read movie reviews by other members. Doing this is easy. Blockbuster needs to use reviews and ratings from their web site and place them on review labels below DVD titles at their stores. Why stop here, why not use the data sitting in your ERP system and actually mention on your website how many items of a certain SKU have been sold (or even mention how many items have sold for a specific event: like chirstmas).  Mentioning number of units sold can actually be a great counterbalance for products that have horrible reviews but sell well.

Threadless.com is already doing this, the problem is threadless is an exception here.

Notice there are 13 Large Hoody’s left

The good news is that things are changing and companies like Cabela’s are taking bold steps to integrate disparate operations, details covered here. But beyond retailers realizing the need to consolidate the bigger challenge is changing consumer behavior.

At the present time disparity between the Average Order Size (AOS) of an active shopper compared to other shoppers is so great that retailers need to rethink definitions. For example, only registering online visits leading to sales exacerbates disparities. Not every SKU can be sold online, if retailers trace an online visit to a store visit that itself should be recorded as a success. Wilsons Leather is a $400 million retail business that also sells through wilsonsleather.com. Now, if their internal business team compared online sales with store sales it is very obvious (purely based on revenue dollars) that the online store is not working. One solution would be to double/triple SEM investments. This will bring temporary sales lift relief. But because Wilson’s Leather has multiple SKU’s online we can perform comparative analysis. Shoes sell well on their site because this is a category people are conformable buying online but this should not lead one to expect the same velocity for leather jackets. Because of the sheer size of the non-shopping community Wilsons Leather needs to rethink its leather jacket web section. Getting people to convert online could be hard since leather jackets need to fit well plus this is a high consideration category. By moving focus away from buying online and redirecting it to a store visit Wilson might do a better job converting this lead. Note: simply saying ‘visit our store’ is a poor execution. To make this worthwhile (for the customer and business) 2 things need to happen:

– Value added incentive (for customer): simply telling a customer to visit a store reinforces the tendency to bypass the web store and directly walk into a retail location. Wilson needs to create a value added incentive to make this work. The online leather section should allow customers to select from a range of designs and then setup a store appointment. This is value added for the customer because it allows them to try out favorable options even if they were not originally available at that location.

– Trackability (for business): if any sort of measurement has to be made this visit needs to be tracked. Fortunately just the act of building a list does the trick. Once the browser has built a list and booked a store visit a request is submitted to the store and after the visit the event is recorded. The online session is now trackable. As a bonus now the sales contact can prepare for the visit.

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