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.

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


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

Walmart Drops Membership Requirement For Two-Day Delivery

What Happened
Walmart has discontinued the $49-per-year membership program ShippingPass it introduced in June for two-day delivery service, as the big-box retailer continues to challenge Amazon’s dominance in ecommerce. Accompanying this announcement, Walmart is also lowering its free shipping order minimum from $50 to $35. Over two million items will be available for free express delivery service, according to Walmart. In comparison, Amazon sells Prime Membership, which includes free two-day delivery on over 50 millions of items with no minimum per order, for $99 a year.

What Brands Need To Do
While it seems unlikely that Walmart will be able to convince the majority of Amazon Prime members to switch, the move at least shows Walmart is determined to compete with Amazon for the non-Prime U.S. households. As more and more consumers turn to online shopping for the convenience and flexibility, brick-and-mortar retailers need to learn from their online competitors and start branching out into the ecommerce space and exploring new ways to modernize their shopping experience.

How We Can Help
The Lab has extensive experience working with retail, beauty, and CPG clients to create and implement digitally-enhanced experiences for their stores. The recently-opened NYX Cosmetics store at Union Square is a proud showcase of our team’s work in crafting a digitally enhanced, innovative retail experience. If you’d like to learn more about how your brand can develop an updated retail strategy and implement digital-driven solutions to transform your retail experience, please contact our Client Services Director Samantha Holland ([email protected]) to schedule a visit to the Lab.



Why Walmart Is Investing $50 Million In A Chinese Grocery Delivery Startup

What Happened
Walmart announced on Friday that it is investing $50 million in Chinese online grocery and delivery startup New Dada, a joint venture part-owned by JD.com, Walmart’s strategic ecommerce partner in China. The investment in New Dada, which operates in over 300 Chinese cities and serves 25 million customers, will help Wal-Mart target Chinese shoppers with faster delivery in a highly competitive online grocery market.

What Brands Should Do
Walmart has been leveraging digital tools to modernize its retail experience in order to better compete with its ecommerce rivals. The retail giant rolled out a mobile payment app in the U.S. this summer and partnered with Uber and Lyft for testing on-demand grocery service in Denver and Phoenix. This investment marks a significant step in Walmart’s ecommerce expansion in China so as to better compete with local competitors. Retailers should take a cue from the retail giant and start testing similar on-demand programs to meet the increasing consumer demand for convenience.

To learn more on what retailers can do to reach today’s connected shoppers across sales channels, check out the Boundless Retail section in our Outlook 2016.


Source: Reuters

Walmart Rolls Out Its Mobile Payment Solution Nationwide

What Happened
Want to use Apple Pay at your local Walmart? Well, you may have to wait a lot longer. Today the national retail giant started rolling out its own mobile payment solution Walmart Pay to over 4,600 stores across the U.S. Walmart first started testing the payment app in select markets last December, allowing customers to pay via their iOS and Android devices with almost all major credit cards, debit cards, and Walmart gift cards. The big-box retailer says it already counts 24 million registered users for its mobile app. The nationwide roll-out came right after Walmart launched its free two-day shipping program last week. Together, these two initiatives point to Walmart’s plan of employing mobile payment and expedited delivery to improve the shopping experience it provides so as to better compete with rivals.

What Retailers Need To Do
By officially launching its own mobile payment system, Walmart is once again saying “no” to third-party mobile payment solutions and taking full control of its check-out experience. Time will tell if customers will forgo the native payment solutions on their phones and opt for Walmart Pay. In the meantime, Walmart will get to enjoy the perks of owning its digital payment solution, which helps it to simplify the process of tying purchase data to individual customer profiles for retargeting purposes. As more and more customers incorporate mobile devices into their shopping trips, it would greatly benefit brick-and-mortar retailers to devise a digital payment strategy and incorporate existing reward and loyalty programs into point of sale systems.

For more on what retailers can do to reach today’s connected shoppers across sales channels, please check out the Boundless Retail section in our Outlook 2016.


Source: ZDNet


Walmart To Challenge Amazon With Nationwide 2-Day Shipping

What Happened
Walmart has officially started rolling out its 2-day shipping service to all U.S. shoppers as the brick-and-mortar retail giant steps up its ecommerce game to compete with Amazon. The Bentonville, Arkansas-based company has been testing 2-day shipping in select markets since last summer, and now it is making its ShippingPass membership, which offers free two-day shipping and costs $49 per year, available for all domestic customers. Walmart is also offering a 30-day free trial to entice signups.

What Retailers Need To Do
This move is illustrative of Walmart’s plan of building out its ecommerce services and locking in customers with an Amazon Prime-like membership. This is not the first time Walmart has ventured into quick delivery service – it started a partnership with Uber and Lyft to enable on-demand grocery delivery for customers in June. As more and more consumers turn to online shopping for the convenience and flexibility, physical retailers need to learn from their online competitors and start branching out into the ecommerce space and exploring new ways to modernize their shopping experience.

To learn more on what retailers can do to reach today’s connected shoppers across sales channels, please check out the Boundless Retail section in our Outlook 2016.


Source: AdWeek

Walmart Partners With Uber And Lyft For On-Demand Grocery Delivery

What Happened
Walmart is partnering with Uber and Lyft to test an on-demand grocery delivery service  beginning within the next two weeks in Denver and Phoenix. Walmart will charge a $7 to $10 delivery fee when online orders are placed so customers don’t need to pay the Uber or Lyft drivers when their orders arrive. This new services puts Walmart in direct competition with Amazon, which offers similar services via Prime Now and AmazonFresh.

What Retailers 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 in December and testing an online order pickup program. This new move marks a significant step in Walmart’s ecommerce expansion as the partnership with two leading ride-hailing services gives it a huge logistical boost to fight against Amazon. Retailers need to take a cue from the two retail giants and start testing similar on-demand programs to meet the growing consumer demand for convenience and instant gratification.

To learn more on what retailers can do to reach today’s connected shoppers across sales channels, check out the Boundless Retail section in our Outlook 2016.


Source: The Verge

Walmart Enters Mobile Payments With Walmart Pay App

What Happened
On Thursday Walmart launched its Walmart Pay app for both iOS and Android, officially throwing its hat into the ring of mobile payments populated by tech companies and big banks. The app is compatible with most major credit and debit cards, and is reportedly open to future integration of other mobile wallets. Previously, the national big-box retailer had been one of the most notable hold-outs of Apple Pay due to its allegiance to MCX’s still-in-testing CurrentC.

What Brands Need To Do
By launching its own mobile payment system, Walmart stands to gain great data on shopper behaviors and purchasing patterns, which it can then use to retarget or personalize the shopping experience for its customers. Moreover, the retailer can also leverage the platform to run promotions and offer added value to its customers, similar to what they have done in China in conjunction with Alipay.

With more and more consumers starting to incorporate mobile devices into the shopping experience, brands and retailers need to start developing a digital payment strategy and incorporate existing reward and loyalty programs into point of sale systems.

Source: CNET

Walmart Plans Premium Shipping Service And Tests Mobile Payment In China

Walmart is set to challenge ecommerce overlord Amazon with its own premium shipping service. The No.1 brick-and-mortar retailer will reportedly start testing a yet-to-be-named unlimited free shipping service this summer to expedite the delivery of online orders to customers. Tentatively priced at $50 a year, it will cost half as much as Amazon Prime, which, however, also covers unlimited access to Amazon’s streaming service Prime Video.

In related news, Walmart is aiming to use convenience win over local customers in China by adding support for Alibaba’s Alipay, the most popular e-payment service in China. Customers will be able to check out by having their Alipay Wallet app scanned, and will then be rewarded with cash-back on their purchases. Considering that Walmart is not currently accepting Apple Pay in the US because of its allegiance to MCX’s still-in-beta CurrentC, one has to wonder if this new partnership with Alipay in China serves as a test of in-store mobile payment for the world’s largest brick-and-mortar retailer.

Taken together, these two moves by Walmart suggest a strong intention to bridge the gap between the physical world of retail and digital one. In order to succeed in both worlds, all retail brands will need to step up their ecommerce game while also finding new ways to improve the in-store shopping experience with digital convenience.