Updates On Boundless Retail: From Omni-Channel To Customer-Centric

In this first entry of our “Updates on Boundless Retail” series, we take a closer look at Amazon’s and Walmart’s recent acquisitions, how they are becoming more alike than ever in terms of the shopping experience they provide, and why a customer-centric approach is what will define the next stage of Boundless Retail.

On June 16, the retail world was shaken up by two major acquisitions. Amazon announced its $13.7 billion acquisition of Whole Foods while Walmart announced it is buying premium menswear brand Bonobos for $141 million. For us, these two announcements offer a rather intriguing juxtaposition to re-examine the current state of retail and the way an emerging convergence of online/offline retail channels is shaping the sector’s future.

On one side, the Whole Foods acquisition solidifies Amazon’s entry into brick-and-mortar retail, as the deal bought Amazon “431 upper-income, prime-location distribution nodes” that will further boost its logistical prowess, particularly in the food and grocery categories. On the other, Walmart, the biggest physical retailer in the world, is buying a fashion retailer that uses its physical stores strictly as showrooms and sells everything through its website. As a result, both companies are racing against each other to become more like each other, as they blur the line between physical and online retail.

In our 2016 Outlook trend report,we observed:

“As ecommerce, physical, and on-demand retail become tightly integrated, our smartphones are becoming our passports, connecting our online preferences, profiles, and activities to our offline shopping experiences, and vice versa. Boundless Retail allows consumers continuous access to sellers who build relationships through multiple touchpoints and channels.”

Now, halfway into 2017, it is becoming clear that the concept of Boundless Retail is evolving into an even more seamless and customer-centric stage. The omni-channel approach that most traditional brick-and-mortar retailers have started to adopt is certainly helpful in meeting the increasing demand in ecommerce. However, it lacks the fluidity that exemplifies the reality of shopping today, where the customer journey no longer follows through one particular sales channel but rather would jump between various channels as they wish. For instance, they may discover your product on a social channel during commute, order it on a desktop device when they are at work later, and then decide to pick up the item in store on their way home. Or they may discover your product when they are window shopping and later decide to make an impulse purchase on their mobile device.

This kind of random and mutable shopper behavior enabled by the abundance of retail channels renders the previous channel-defined strategies no longer efficient, since the siloed way of thinking prevents retailers from truly embracing a customer-centric approach that prioritizes consistently optimized customer experience over driving customers down particular sales channels. Amazon and Walmart, as the biggest retailers in ecommerce and brick-and-mortar respectively, understand this new retail reality. On a closer look at these two acquisitions, it is clear that both companies are actively implementing a more seamless shopping experience that is not so much as omni-channel but rather channel-agnostic.

Amazon has been trying to get into the grocery business for a couple of years now, first with private-label food products sold on Amazon.com and later with AmazonFresh slowly rolling out to select markets. In fact, one could say that Amazon has been eyeing the grocery market since 2012 with the acquisition of Kiva system, which span out from Webvan, the first ever on-demand grocery platform. Buying Whole Foods instantly gives Amazon access to the premium grocery customers they have been chasing after and, more importantly, the mass scale it needs to make the grocery business operational as a modularized service.

As analyst Ben Thompson pointed out in his Stratechery post, buying Whole Foods sets up the infrastructure that Amazon would need to launch Amazon Grocery Service, where the ecommerce behemoth would leverage its distribution scale to take over the perishable goods market and disrupt all food-related businesses. Amazon chose to commoditize its cloud platform and made Amazon Web Services (AWS) a white-label product that all businesses can use and build upon, which ended up dominating the web service market with it unparalleled scale and cloud computing power. Now it is aiming to do the same with perishable goods.

Amazon could care less if a rival online retailer wants to host their website on Amazon Web Services, as it will only feed into their cloud business. (Walmart, understandably, aims to undermine Amazon by ordering its vendors to use AWS competitors instead.) Similarly, the perishable goods that Amazon holds under its grocery operations now gain a high-volume brick-and-mortar channel, and vendors could care less about whether their products are being sold via Amazon Fresh or Whole Foods stores. Buying Whole Foods provides Amazon with a guaranteed, large-volume customer of the perishable goods in its network so as to justify scaling up its wholesale grocery operations and better compete with other grocery retailers.

Make no mistake, Amazon still has a long way to go in its quest to conquer offline grocery business the way they did with their cloud service. At the moment, Walmart still controls the biggest share of the U.S. food and grocery market (about 14.5%), followed by Kroger (7.2%), according to estimates by GlobalData Retail. In comparison, Whole Foods currently sits a 1.2% market share and Amazon with a 0.2% share. But with Whole Foods now under its control, Amazon can start pushing for a grocery shopping experience for its Prime members that is totally fluid and channel-agnostic, using the Prime account as the cross-channel identification key, and convert more grocery shoppers into its ecosystem with the combined appeal of Whole Food’s high-end brand and an optimized shopping experience.

Of course, Walmart is not going down without a fight. The decision to acquire Bonobo’s shows the supermarket chain is determined to work towards building a more fluid, customer-centric shopping experience. Already, the company has been steadily rolling out curbside grocery pickup services in select U.S. markets. Last month, it took that concept one step further with a trial run of automated pickup grocery pickup kiosks at an Oklahoma City store.

The sustained success of Bonobo’s unique ecommerce-led, showroom-supporting strategy will provide Walmart with some much-needed insights into how to develop a flexible online/offline shopping experience to take on Amazon’s advances in online apparels, evidenced by the new fashion-minded Echo Look and Prime Wardrobe service, which brings the “try-before-you-buy” model to Prime shoppers. It will be fascinating over the next few years to watch the two retail giants battle it out over grocery and fashion retail.

So, given the current state of the retail market and the way its future is shaping up to be, what’s a U.S. retailer whose name is neither Amazon nor Walmart to do? Well, the first step is to recognize the fact that there is no way you will be able to compete with those two behemoths in terms of scale. Amazon has pretty much dominated ecommerce traffic and will continue to buy its way into the brick-and-mortar market, whereas Walmart will still have the largest physical retail store count in the world as it continues to grow and improve its ecommerce operations. There is simply no viable way to compete with their massive scale and the operational advantages that come with it.

That being said, retailers can still carve out a sustainable and profitable business by focusing on differentiation and perfecting the shopping experience they provide. As Andy Dunn, CEO of Bonobo’s, astutely pointed out, retailers need to focus on developing a unique brand identity with proprietary differentiation points that will offer customers a good reason, be it low cost, exclusive selections, personalized recommendations, or a unique shopping experience, to choose you over their default retail choices. As the kind of purposeful shopping, where the shoppers already know what they want to buy, becomes increasingly expedited and even automated by digital tools, the experience is becoming the ultimate differentiation point that retailers need to focus on.

Not every retailer can afford to be omni-channel, but every one can find a way to make their products, services, customer experience, and ultimately your brand, different enough to attract a loyal customer base. In the next stage of Boundless Retail, the end goal is not simply to be present on every sales channel, but to build a retail brand that is so distinguished and beloved by your customers that it won’t matter which channel you are on.

Here Comes Dash Wand, An Alexa-Powered Barcode Scanner For Your Kitchen

What Happened
Amazon continues with its master plan of conquering every room of the smart home with the launch of yet another Alexa-powered connected device. The Dash Wand, which the ecommerce giant unveiled on Wednesday night, is a cordless barcode scanner with Alexa integration. Designed specifically for kitchen use with its water-resistant, durable design, it focuses on facilitating grocery shopping from AmazonFresh. Prime members can either push a button and tell Alexa what to add to their shopping cart, like they would with an Amazon Tap. or simply use it to scan a barcode of the item they’d like to repurchase.

Thanks to the full Alexa integration, the Dash Wand also doubles as a smart kitchen aid, capable of finding recipes, converting units of measurement, or even finding nearby restaurants when your own culinary attempt fails. Notably, Amazon is essentially giving out this $20 device for free, as Prime customers will get 20 off their next purchase after registering the device.

What Brands Need To Do
Amazon created a smart home product with an incredibly focused user case – helping people cook. With a water-resistant, durable design, it is designed to be used in the kitchen. From finding recipes to getting the ingredients to setting timers for the oven, Alexa can do it all, making it a super valuable addition to a modern kitchen.

For Amazon, this device serves as a gateway to attract more shoppers to use AmazonFresh, which underscores Amazon’s aggressive push into the grocery market. According to a recent report from Food Marketing Institute and Nielsen, about a quarter of American households currently buy some groceries online, and more than 70% will engage with online food shopping within 10 years. In fact, online grocery sales are expected to hold 20% of the market by 2025. No wonder Amazon is willing to give away Dash Wand for free in exchange of further locking Prime members into its ever-expanding ecosystem.

As Amazon continues to push into the grocery market, it is becoming increasingly crucial for grocery and household CPG brands to make their products available and discoverable through Amazon. For food retail chains, this should come as a wake-up call to invest in ecommerce channels of your own or forge alliances with Amazon rivals that can surface your online services via their competing smart home devices so as to reach grocery shoppers right in their kitchens.


Source: Amazon

Header image courtesy of Amazon’s promotional image

Walmart Trials Automated Grocery Pickup Kiosk At Oklahoma City Store

What Happened
Walmart is testing a new way for shoppers to pick up their online orders with a 24/7 automated kiosk, the brick-and-mortar giant announced on Tuesday. It unveiled a pick-up kiosk outside the Walmart Super Center in Oklahoma City. More than 30,000 grocery items, including fresh produce, meats,and dairy products, can be ordered online for the same price they cost in the store and can be picked up free. Barring a minimum purchase of $30, the online grocery ordering process for customers will be the same.

What Brands Need To Do
Walmart has been taking measures to modernize its online retail experience in order to effectively compete with Amazon, including launching a mobile payment app and rolling out an online order pickup program. This new move marks a significant step in Walmart’s continuous experiments to improve its customer experience and streamline the offline shopping process. More retailers should be leveraging new digital tools to improve their customer experience to meet the growing consumer demand for convenience and instant gratification.



Source: NewsOK


Telegram Adds Apple Pay Support For Chatbot Payment

What Happened
Encrypted messaging app Telegram has updated its iOS app to add support for Apple Pay for its Bot API, allowing chatbots on its platform to accept payments and complete transactions without leaving the app. Users can now buy a cute handbag, order food deliveries, or hail a cab simply by chatting with one of the bots available on Telegram before authenticating the purchases via TouchID. Telegram first introduced chatbots nearly two years ago, and it is working with Stripe to enable payments. The company also has plans to add support for more localized options so as to support conversational commerce on its platform in global markets.

What Brands Need To Do
While Telegram’s user number pales in comparison to that of Facebook Messenger and WhatsApp, this Apple Pay integration nevertheless shows a good example for designing a frictionless user experience to facilitate conversational ecommerce. With messaging apps quickly taking over texting and phone calls, especially among the younger generations, it is important that brands keep a close eye on the development of conversational ecommerce and evaluate each platform to determine the ones that they can reach customers with.

How We Can Help
The Lab has extensive experience in building chatbots to reach consumers on messaging interfaces. So much so that we’ve built a dedicated conversational practice called Dialogue. The NiroBot we built in collaboration with Ansible for Kia is a good example of how Dialogue can help brands build a conversational customer experience, supercharged by our stack of technology partners with best-in-class solutions and an insights engine that extracts business intelligence from conversational data.

If you’d like to learn more about how to effectively reach consumers on conversational interfaces, or to leverage the Lab’s expertise to take on related client opportunities within the IPG Mediabrands, please contact our Client Services Director Samantha Holland ([email protected]) to schedule a visit to the Lab.


Source: TechCrunch


Wayfair Launches Visual Search For Finding Similar Home Goods

What Happened
Online home goods retailer Wayfair has launched “Search with Photo,” a visual search tool that leverages artificial intelligence to enable shoppers to find matching home furnishings to the items they take photos of. Available across mobile and desktop devices, shoppers can access the feature via the camera icon in the Wayfair.com search bar, which allows them to snap a photo or upload one from their photo library. The search engine will quickly returns visually similar items available from Wayfair’s inventory for direct purchases. Users can add the products they like to an Idea Board to save for later or share with others.

What Brands Need To Do
This new visual search engine should help Wayfair maintain a competitive edge over other ecommerce sites. With the quick advancement of machine learning and AI-powered solutions, we are starting to see examples of brands primarily using the camera as an input source of the mobile user interface and leverage images to learn about user intent. Previously, Pinterest and Amazon have both launched similar visual search feature that uses the camera as the input source for better understanding what users are looking for and optimize the product discovery process. Brands looking to stay ahead of the digital curve will need to start formulating a “camera strategy” and broaden their methods of customer data collection.


Source: TechCrunch

Liquor Brand Diageo And Amazon Team Up To Create A Shoppable Show

What Happened
British alcoholic beverages company Diageo teamed up with Amazon for a shoppable video series to promote its “Reserve” portfolio of premium liquor brands. Titled “World Class List,” the series is done in the style of an unscripted travel documentary that sees a host visiting and tasting locally flavored cocktails in five cities around the world: Barcelona, Mexico City, San Francisco, Sydney, and Taipei.

The show is now available on Amazon Prime Video in the U.S., U.K., and Germany, with further video-on-demand partners and markets to follow. Curiously, the shoppable version is not currently available in the U.S., but U.K. and German viewers can click on embedded links to shop the liquors featured in the show from Diageo’s ecommerce site.

What Brands Need To Do
This is an interesting case of a CPG brand leveraging an OTT streaming platform to distribute shoppable branded content and directly drive sales. Amazon Prime currently boasts over 76.2 million users worldwide, which makes it a valuable channel for brands to put their branded content on. In addition, recent reports claim that Amazon Prime Video is coming to Apple TV soon, which should further expand its reach.

For more in-depth analysis how brands can leverage global mega-channels and niche micro-channels to effectively reach key audiences, check out the Global Culture section of our Outlook 2017.


Source: AdAge

Header image courtesy of Diageo’s YouTube

Walmart Ventures Into IoT Commerce With Connected Sensor Patent

What Happened
Walmart has started exploring IoT commerce as it filed a patent describing a system of connected sensors that track CPG product consumption at home. Utilizing a wide range of technology such as radio frequencies, Bluetooth, conventional barcodes, and RFID tags, the sensors will be attached to various products and can alert the customer to restock when they are running low on certain household products. Listed in the patent filing are several scenarios that Walmart envisioned to leverage the sensors to learn more about their customers, including an in-fridge one that tracks food consumption and expirations and a RFID system to monitor how much toothpaste is left.

What Brands Need To Do
As smart home technologies continues to evolve, more and more brands are realizing the big potential that connected devices holds for reaching customers at home and collecting relevant data. Venturing into IoT commerce is a timely move for Walmart, but it still has a long way to go before it can catch up with its arch-rival Amazon. While there is no guarantee if any of the ideas that Walmart outlined in this patent will be brought to market any time soon, at least Walmart is actively exploring this area to further implement an omnichannel approach, a strategy that more brands should adopt, with methods to protect user privacy, to reach consumers and learn more about their consumption habits.


Source: The Verge

Amazon Allows Alexa Developers To Edit Built-In To-Do & Shopping Lists

What Happened
On Wednesday, Amazon announced new permissions that allow developers to read, add, and delete items in Alexa’s built-in shopping and to-do lists from within third-party skill. This makes it easier for customers to keep track of their important tasks and shopping items through third-party skills. This feature is now available worldwide for developers building skills for the US English, UK English, and German language models.

What Brands Need To Do
This simple update allows brands to develop Alexa skills that can directly insert brand-related reminders or additional information into the two native lists in the Alexa app, which may help brands establish a lasting presence on Alexa and provide convenient access for users. CPG brands can, with permission from the users, integrate the shopping list into their Alexa skills to remind users of replenishment as needed, whereas a fitness brand can create a skill that sends daily workout challenges to user’s to-do list.

How We Can Help
The Lab has extensive experience in building Alexa Skills and chatbots to reach consumers on conversational interfaces. So much so that we’ve built a dedicated conversational practice called Dialogue. The “Miller Time” Alexa Skill we developed with Drizly for Miller Lite is a good example of how Dialogue can help brands build a conversational customer experience, supercharged by our stack of technology partners with best-in-class solutions and an insights engine that extracts business intelligence from conversational data.

If you’d like to learn more about how to effectively reach consumers on conversational interfaces, or to leverage the Lab’s expertise to take on related client opportunities within the IPG Mediabrands, please contact our Client Services Director Samantha Barrett ([email protected]) to schedule a visit to the Lab.


Source: Amazon Developer – Alexa Blog

eBay Plugs Machine Learning Into Email Marketing

What Happened
eBay is supercharging its own email marketing platform with machine learning so as to send individually personalized offers to subscribers based on their browsing history on eBay’s site. By dividing deals into virtual “buckets” such as shoes, consumer electronics, or collectibles, eBay’s proprietary algorithm is able to insert the relevant deals from one of the “buckets” that a user frequently views. The new platform also monitors user actions and react in real time. For example, when the price changes on an item a customer has viewed, eBay can automatically send that customer an email alert.

What Brands Need To Do
eBay joins a growing list of companies that are experimenting with AI-powered marketing solutions. Last month, Nielsen integrated artificial intelligence into its cloud marketing platform, whereas H&R Block enlisted IBM’s Watson to help with tax filings. As cloud-based services and machine learning technologies continue to mature, brands need to explore the kind of hyper-personalized messaging and experiences that AI-powered marketing solutions can deliver.

For more information on how brands may tap into the transformative power it will bring to marketing, please check out the Augmented Intelligence section of our Outlook 2017.


Source: eMarketer

Home Design App Houzz Adds AR Preview Mode

What Happened
Home design and furniture shopping app Houzz is the latest ecommerce player to add an AR twist to its platform. The Palo Alto-based company updated its iOS app to add a new virtual preview mode that supports 3D objects. With this new feature, viewers can get a better idea of how the furniture items would look in their own space before making a purchase. As of now, only about 300,000 items out of the eight million products available on Houzz’s marketplace support this new AR preview mode, but Houzz says it will work to add more items.

What Brands Need To Do
Besides Houzz, other furniture sellers such as IKEA or Hutch have also been exploring AR as an online shopping aid for their products. This new feature provides yet another example of the ongoing shift in designing mobile user experience, where the camera becomes a prominent input source that enables virtual product sampling. As more and more companies start to realize the potential of augmented reality, more mobile-based AR use cases can be applied to enhance ecommerce and marketing. Brands looking to update their digital user experience should take note and start thinking about how to use AR to add value to the customer experience.

Source: The Verge

Images courtesy of Houzz