Protesting online prices: Not an effective customer-winning strategy

Just in the last couple of weeks, there have been many reports that both consumer electronics brands as well as physical retailers like malls, protesting against online retailers offering discounts on products. I find this to be quite amusing and immature. If you haven't been following the news, i am referring to news articles like this one here
(http://www.business-standard.com/article/companies/malls-want-brands-to-end-deep-discounts-online-114022700032_1.html)

While price is a big factor, that drives shoppers to online channels, physical retailers should not get so hung up about cheaper prices being available online. what about assortment, range, availability, customer service and other value-added services and not to forget the all-important sensory experience of shopping in stores/malls? What are physical retailers doing in these areas to attract customers to come to their stores and not go online?

As many surveys and studies have shown, Showrooming is inevitable but retailers need to look beyond that and think of seamless shopping experiences across their physical stores and digital channels, and find ways to address the needs of the consumer. The fact that certain categories have a higher propensity to move online (like electronics, books, music etc) makes it difficult for physical retailers to compete. However, there are plenty of examples of physical retailers competing effectively with online sellers, via innovative solutions that embrace the strengths of both the physical and digital worlds. Nordstrom's clever use of social data (specifically using Pinterest boards) is one such example.

The good news is that, around the world, a vast majority of shopping still happens in the physical store and while online commerce is growing, it is relatively tiny even now. But retailers really need to stop living in denial and accept that online commerce is inevitable and digital technologies are empowering customers like never before and providing unprecedented information at their fingertips. The question is, do physical retailers want to embrace these very technologies to their advantage or not?


Complaining and protesting has not been proven to be an effective strategy to win over customers.

Can Brick and Mortar Consumer Electronics Stores survive for long?

As rapid technology advancements change consumer behavior with respect to their shopping habits, one format that is at the center of this vortex of change is the brick and mortar consumer electronics segment. In fact, the writing has been on the wall for quite some time with the untimely demise of Circuit City a few years ago. I believe the cause of Circuit City's woes and ultimate shutdown had a lot to do with their inability to adapt to the rapidly changing e-commerce market and rising consumer expectations.

In today's world, consumers have tremendous amount of information at their fingertips, esp. when it comes to technology products. From social media to blogs to opinion sites to expert product reviews to videos to price comparison sites, consumers have access to a plethora of sources to research, browse, purchase and receive a product of their choice. So where does this leave traditional brick and mortar retailers selling technology and consumer electronics?

Best Buy's strategy, one of the last surviving retailers in this space, offers some clues. They recently announced that they are tying up with Microsoft to open store-in-stores offering a variety of Microsoft's consumer products. After the success of Apple's retail stores, many brands have followed suit. These new-age stores are big on the experiential factor offering potential buyers a chance to try the devices and gadgets before they buy. They also provide true expert advisers (not sales people!) on site to help answers customer's queries. And finally they make the whole shopping experience a breeze with wireless payment options and other services. Successful brands like Samsung (Smart Cafe) and Google (Android Nation) are embracing an aggressive brick and mortar strategy too. These stores are turning into both experiential destinations such as large flagship stores(again taking cue from the Apple Manhattan store) that make a statement about the brand experience etc but also have smaller stores in partnership with existing smaller retailers that carry a localized portfolio of products, as it may always not be economically feasible to open physical stores across many geographies/cities. 

As there are a handful of brands that dominate each category such as mobile phones etc, I believe the future consumer electronics store will be an amalgamation of exclusive brand stores (like a department store) that are managed by the brand and allows the consumer to provide a real immersive experience into the brand. However, these retailers will also have to be innovative enough to not depend on the brands entirely. Technologies like 3D printing, augmented reality shopping. omnichannel shopping options etc will provide an opportunity to offer unique buying experiences that are tailored to their customers needs and preferences. Lesser known brands and not-so profitable product categories will gradually move to online sites and marketplaces as retailers can neither justify the store space allocated to such categories nor will customers find these brands exciting enough for them to want to actually experience them before they buy.

The age of the big box consumer electronics retailer is nearing an end.

The Curious Case of Offline Retailers going Online

I was recently on a panel discussion at the Etailing Expo Conference in Mumbai, India. The subject of discussion was about offline retailers going online and consequently the challenges they face etc. I wanted to elaborate on the subject as I received many basic questions about going online from the audience.

Fundamentally, for me there is no question that going online should be one of the key elements of a traditional brick and mortar retailer's strategy to expand and grow their business. There is a lot of apprehension among offline retailers in India to take this essential and critical step for various reasons. Some of these include lack of understanding of the e-commerce business model, lack of precedence in their operating segment and to some extent fear of the unknown - Unlike a physical catchment area, where will my customers come from, how will i attract them etc etc.

Let me try and allay some of these fears but also try and highlight certain "specialties" of an online channel. Certain capabilities which are possible only in the digital world.

1. In an online channel, the number of products/categories that can you sell is virtually unlimited as you are simply not constrained by the physical space available in a retail store.
2. The moment you go online, you instantly become a global in terms of being able to reach and service customers. While there may be legitimate reasons not to service customers based on acquisition costs, specific product categories etc. you now have the ability to reach a worldwide audience. 
3. Unlike offline retailing, where the catchment area around the store is your target market and you have to strive to attract as many customers as possible in that physical area, online retailing does not impose those constraints. Let's say you need to attract 50000 customers in a catchment area around the store, in online you could attract 5000 customers in 10 different cities and still get 50000 customers to your website.
4. Online offers the ability to completely personalize the experience of shopping which is quite difficult to do offline. Right from the moment, visitors come to site, elements such as content, merchandise, recommendations, promotions and offers and even prices can be personalized and made extremely contextual and relevant to that individual shopper visiting the site. all of this is possible due to the deep level of granular data that can be collected online.
5. Online offers a fantastic array of tools to collect deep information about visitors and potential customers when they search, browse, research, compare, ask/share, decide and transact online. Information about customer's behavior in a lot of these critical activities of a shopping process cannot be collected in an offline world.
6. Online also offers a tremendous amount of flexibility to adapt to changing market conditions and business models. Whether it is B2C or B2B or B2B2C or Marketplace aggregation models, online provides a relatively cost-effective avenue to pursue these models.

If one is convinced about these advantages that online offers, the most important and first step, that offline retailers need to do is to actually take a step back and map out a customer journey that includes both offline and online channels. Some critical questions to answer early on are:

• How do they see their customers interacting across these channels?
• How do they use technology and devices in the shopping process?
• What information do they expect at various stages of the shopping process?
• How can a brand provide a seamless experience to its customers as they weave in and out of channels and touch-points?
• Can customers shop Anytime Anywhere Anyhow?

Finally, the key for offline retailers is to NOT treat online as an "IT project" to be run by the IT guys. It has to be an essential component of an overall business growth plan and strategy and should not be dealt with in isolation. It should include all stakeholders from the organization such as marketing, supply chain, operations, finance, customer service and of-course technology. Once the strategy is clear, a blueprint of the design and building the foundational elements is critical. A phased road-map approach in terms of developing the basic blocks and delivering functionality from a customer perspective would help in the long run.

What is #CustomerExperience?

I recently attended a TIE-SIG event on Supply Chain challenges for E commerce in India. After a brisk discussion on the different inventory models that companies were experimenting with, the panelists veered into "customer experience" and stated this was the number 1 thing that companies need to focus on in order to keep customers happy. Well, that's a no-brainer, I thought. While mature and cash-rich startups seem quite happy doling out the goodies (COD, free shipping, no-questions-asked free returns and exchanges..the list goes on) in the hope of keeping customers coming back, the jury is out whether e-commerce companies are looked at more favorably when compared to their brick and mortar and traditional peers and competitors.  And more importantly, this definitely has not helped these fledgling startups to anywhere close to profitability.  In fact, one exec, who apparently works for one of those cash-rich startups, went on to declare that they are "not worried about costs at all" and all that mattered to them, at this juncture, was whether they gained satisfied customers or not. The statement made one of the just-out-of-college-disheveled-hair-startup-guy in the audience, just shudder in his sandblasted-jeans. 

I couldn't help going back to a recent personal experience on an apparel e commerce website, which shall remain unnamed to protect the innocent. Anyway, I was looking to buy a casual shirt for a wedding and after browsing thru a few sites, I decided to buy one from this particular site. The UI  was nice, navigating was simple, I chose the size that I normally buy (and I normally buy from a well known Indian brand), hopped over to payments, whipped out my credit card, used my Secure-3D password (I wonder why its called a 3D password?) and was even surprised by an additional 5% discount I was offered as a reward for using my CC. I was done. Cool! So far so good until the eagerly awaited package arrived at my doorstep. I tried the shirt on and found that fit was not right even though the shirt size was my normal size. No problem - I just called them to exchange the shirt for a different size. No questions asked. A courier guy came once to take the shirt back and another one showed up a couple of days later with the new shirt and while all this was happening, the wedding had taken place and the couple had taken off on their honeymoon. While I would still say that my overall customer experience was allright, the fact that I did not get the right shirt in time, was a big disappointment. And in this specific instance, the website could have completely avoided the situation by simply educating me on picking the right size according to their fit/style, which differs from the well known national brand. But companies that really understand their consumers buying behavior and requirements, handle this aspect of customer experience well. Take for example, a leading provider of maternity apparel and accessories which provides a detailed information to prospective buyers to ensure they are buying the right size and fit. They even do a follow-up call to the customer to make sure the order is "in order"! And they are one of the few sites that do not offer COD. But the results are not surprising. Highly satisfied customers, negligible returns, profitable company. 

Given that Indians are the most abusive customers in the world - hey, DKTM. just look at this survey

http://forbesindia.com/article/world-watch/indians-are-the-most-abusive-customers-in-the-world/33026/1

Customer experience is not just about having a snazzy website or offering COD or honoring exchanges. Its also about ensuring the consumer precisely get what they are looking for in the first place. Its about making the purchase decision easier for the customer. Its ultimately about providing a differentiated customer experience without breaking the bank, which is easier said than done. Who said running a business is easy?

Referrals or Intent? Or Both? What's more important in #socialmarketing? #twt

Let's take a look at 2 interesting social marketing solutions, @LocalResponse and @Extole. Both have seemingly different approaches to social marketing and interestingly, their approaches are centred around 2 of the largest social networks at the moment.

LocalResponse boasts of marquee clients such as Coca-Cola, Pizza Hut, Walgreens and McDonalds. The basic premise is that when consumers tweet about something, their DirectResponse platform analyzes the tweet to figure out the intention in the tweet. Let's say, you tweet to your friends that you are starving and want to grab a bite, you could potentially get a coupon from Pizza Hut. Brands could also encourage their customers to check-in from a particular store location which will elicit a response from the store with a promotion or offer relevant to that specific store location. LocalReponse is Twitter-centric and is not clear how their solution would work with other social networks.

Extole, on the other hand, is Facebook-centric. Their platform is designed to take advantage of the nearly billion people already on FB. They pretty much ride on FB's Open Graph and focus on social referrals, expressions and promotions, but they do track referrals thru Twitter as well. The intent is to amplify the views of brand advocates and thus drive word of mouth marketing - socially. This hopefully leads to increased awareness of the brands eventually leading to conversions. Extole sounds like a good old referral program for the social generation.

Have you come across any other interesting social marketing tools and solutions. Would love to hear from you!

A quick roundup of 4 exciting and innovative social commerce startups

@Gumroad promises to make selling "anything" easier and the "anything" includes music that you never released, book that you wrote, a comic that you created or the beta of a video game you are developing etc. Gumroad brings instant credibility in the form of its founder and CEO Sahil, who previously designed the highly acclaimed Pinterest interface and is being funded by silicon valley heavy weights. Their initial focus seems to be on selling virtual products but do provide ability to sell physical products as well, although their website is not very clear on how exactly the logistics is going to work.

@Shopcade - One look at Shopcade's homepage and you'll see that its pinterest-ified E-commerce. The way it works is that If you find something interesting on the web, you can add that product to Shopcade's website (just like you would pin something onto Pinterest). ofcourse the difference here is that your entry links back to a website where you can actually purchase the product. When someone actually purchases a product thru the link that you added, you get a share of the transaction value in the form of points. And the points you accumulate can be "redeemed" for perks on the Shopcade's website such as being able to customize the theme, provide a shopping assistant etc. Categories of products that can be added to Shopcade's site range from books and music to tickets and travel products and pretty much everything in between.

@Styleowner lets you create your own store. The store here is really nothing but a curated collection of things that you, as a fashionista or a stylist, think are going to set the trend. For example, you could be a purveyor of all things denim. You could create a store that promotes the latest and greatest in the world of denim. But what Styleowner helps you to do is to provide the necessary backend to be able to actually sell your curated collection. Instead of simply redirecting the customer to another website, it lets them buy the product on your site and the fulfillment is taken care of in the backend. Its a marketplace kind of model with social commerce on top.

@Chirpify is a twitter based commerce platform that allows you to buy/sell/donate/transact on Twitter. They provide a tight level of integration with Twitter and Paypal, which is mandatory for you to use Chirpify's services. Paypal is the default payment platform for Chirpify. Essentially Chirpify is trying to find a way to "monetize" followers of a brand, a small business or service but simply asking followers to reply to a tweet that promotes a product with pricing and other information. More than buying products etc, I am more intrigued by their fundraising application that could be applied during elections or for any other purpose. This platform seems to make it easier for anyone trying to collect funds from their followers thru this platform. Currently, paypal is the only form of payment that is accepted.

Final thoughts - An underlying theme with many of these models seems to focus on the ease of use and emphasize that you dont need to be a tech savvy person to sell online. The mantra seems to be "focus on your creativity and develop awesome content and we'll do the rest for you" One interesting fact that I noticed was that pretty much all of the sites let you use either your Twitter ID or Facebook ID, as a starting point for creating an account with these services. Google+ was conspicuously absent.

If you have come across other #socialcommerce models or other innovations in this space, would love to hear from you. Stay tuned for my next post on companies innovating on #socialcommerce centric #marketing solutions

A picture is worth a thousand words

The age-old saying has never been truer. Welcome to the age of the visual web! I think its very interesting to see the importance being paid to pictures and photos. Hint: Recently, a 13 person start-up with virtually no revenues was bought out for almost a billion dollars! One of the fastest growing social networks now is Pinterest, which is a visual online pinboard. The revamped UI in Google+ provides a lot more real estate for pictures and photos in your postings and also support animated GIFs, which makes it even more interesting. And Facebook is not far behind either. Almost 300 million photos are uploaded to the social networking giant - they sure know a thing or two about pictures and I am sure their Camera app and the newly acquired Instagram are going to innovate further in this space.

What does this mean to brands? I think this is a tremendous opportunity for brands to take advantage of. In fact brands like Victoria's Secret (easy for them) are already taking advantage of photo-centric features by posting hi-def pictures on their FB wall - enticing their fans by providing great visual imagery about their products but also engaging them in a meaningful manner. Isn't that what social media is all about?