eCommerce Strategy Consultant - Rick Watson - RMW Commerce Consulting

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October 4th, 2021: Amazon’s fall showcase, Bloomingdale’s new Bloomie stores, Content Play from Pinterest and Albertsons, and an IOU Christmas?

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It’s October 4th, 2021  and this is the Watson Weekly - your essential eCommerce Digest!  Welcome to Q4!

Today on our show:

  • What Do Bloomingdale’s New Bloomie’s Stores Add To The New Small-format Retail Trend?

  • Pinterest and Albertson’s Hook Up in an Interesting Content Play

  • Is the eCommerce World Headed For an “IOU Christmas”?  And What To Do About It.


- and finally, The Investor Minute contains 5 items this week from the world of venture capital, acquisitions, and IPOs.


[PAUSE]


BUT FIRST in our shopping cart full of news….

Amazon’s Fall Product Event Showcases its Creativity

In one of the longest episodes of Black Mirror I’ve seen in a couple of years, yesterday Amazon held a new product launch event and in doing so is trying to monitor every inch of your home and body.

The two most interesting items for me were a $1000 Astro Home Robot, which rolls on three wheels and contains a periscope arm with a camera attached to it, and a $250 Echo Show tablet that you can hang on the wall.

One of the reasons Amazon innovates is that it has a long time horizon, and these announcements fit that description.  Many companies wait on a silver bullet before they do anything at all.  Instead, Amazon is being more patient and is attempting to build a few simple things that work, while letting more advanced capabilities evolve over time.  And when they do, Amazon will be farther along than anyone else.

The Astro robot is trying to do only a few things well.  Things like a mobile, remote camera, and the ability to follow people or other objects.  While it may not be obvious, those are simple, useful primitives that the company, or even other developers, could build on top of.  On day one, the “I’m away from my house, please check out what’s going on in this room” scenarios seem the most interesting.

The new Echo Show also has an interesting use case — how to replace the whiteboard or sticky notes near your refrigerator with something digital and connected.  This is one of those products you look at and wonder, why didn’t we already have one of these everywhere?

There’s a lot more in the announcement too, including an Amazon Glow interactive shared video device for kids.

More importantly, Amazon is proving that it can learn from its past mistakes.  Perhaps the biggest lesson it took from the $170 million write-down from the failed Amazon Fire Phone is that some of these newly announced devices have extremely limited availability.  You need to sign-up for the privilege of Amazon selecting you to buy one of its own devices.  Meaning, not only is Amazon trying to limit its inventory risk, it isn’t trying to hit an immediate home run.  Just get a good response and build on successes from there.  

Patience is not a bad approach for any innovation team.


[References:]


Our Second Story

What do Bloomingdale’s New Bloomie’s stores Add to the New Small-Format Retail Trend?

Within the last month, a new concept store called Bloomie’s opened in Fairfax, Virginia in an outdoor shopping district concept called Mosaic.  There are a number of unique aspects to the store.

First, the store is only 22,000 square feet and includes includes a Cuban café and cocktails as part of its design -- although  this is likely just a lure to get new shoppers into the store rather than expecting people to stay a long time at the location.

Finally, instead of having a broad array of low-level staff, all workers there are stylists and merchandise experts.

First things first, is mid-market retail so far gone that employees with actual expertise are an innovative concept?  No wonder department stores are on the decline.

Second, I applaud the overall approach because the stores - even though they’re smaller - have a point of view.  With the supply chain the way it is, bigger stores aren’t filled anyway.  This approach allows the retailer to only stock the stores with merchandise that resonates with the local community.  

The fact that the depth of inventory is smaller also means that the refresh frequency will be higher, prompting more return visits, which is one of retail’s bigger issues right now outside of the grocery sector.  If grocery is the reason people head out to an area, the idea is to give people a reason to pop into a Bloomie’s for a few minutes to be inspired, instead of thinking about it only when the seasons change.

Finally, while both Nordstrom and Target are experimenting with small-format stores, I think this is a bigger nod to Target’s approach.  At 20,000 square feet, the store size is bigger than Nordstrom Local, which – at least in New York City – has barely more than a closet-full of inventory.

Frankly, I’m going to applaud any department store experimentation that does not involve more discounting or financial engineering.  These changes feel like  the right moves directionally and even though they aren’t completely unique and innovative, they are definitely in step with where consumers are headed.


[References:]


Our Third Story

Pinterest and Albertson’s Hook Up in an Interesting Content Play

Last week grocer Albertson’s and social sharing site Pinterest announced a new tie-in that allows you to create a connection between your in-store shopping experience and your pins.  The customer connects a Pinterest login to Albertson’s and gets the ability to shop recipe ingredients from your pins with just a few taps.  Additionally, shoppers are able to scan codes within Albertson’s and see trends and pins related to the products on the shelves.

Whether or not you think these particular things are useful, I think Albertson’s and Pinterest are both onto something here.

One, Pinterest is a good company.  Is it just me or is Pinterest one of the only social media platforms that hasn’t been ruined?  I understand that not everyone is on Pinterest, but for the people who are, I never hear “oh, I don’t use Pinterest anymore.”  

Second, recipes have long had one of the best content plays in food and beverage.  The content surface area is virtually limitless.  

Third, food is important on Pinterest.   Company research finds that 55% of its weekly users actively use the app while grocery shopping.   The company even reports that 93% of weekly pinners use the platform to discover new products.  

Finally, I think Pinterest is also very savvy to tie up with the physical world.  Everything about typical social media and devices is meant to maximize every waking moment of your attention.  This is more like helping you on a family shopping trip.

Can you generalize this to other categories?  I think you can.  Combining community contributions with your weekly habits seems like a winning formula to me.  What if I could scan a barcode in an apparel brand store and see all the celebrities wearing that outfit this week?  Expect this to be coming soon to a store near you, if only the rest of retail can get its act together.


[References:]


And Our Last Story

Is the eCommerce world headed for an “IOU Christmas”?  And what to do about it.

I’m going to coin a new term today so you can say you heard it here first, Watsonians.  The IOU Christmas is what happens when the shipping container crisis meets Shipageddon.  In short, no inventory is in stores, and even if it were, shoppers wouldn’t get it on time anyway.

Let’s recap to catch you up.

Joe Dunlap of CBRE reports that there are a record 65 container ships waiting outside the ports of Los Angeles and Long Beach.

The urgency of that container crisis is highlighted by Sea-Intelligence CEO Alan Murphy.  His general point is that as we head into Q4, all inventory becomes like bananas – whether it’s rotting in a Chinese port or off the US coastline.  If it shows up after the holiday shipping cutoffs, the value of the inventory is essentially zero.  This leads to skyrocketing container costs.

Furthermore, FedEx’s ground network is completely overwhelmed as its delivery metrics continue to decline.  While UPS is in a much better position, if you have a huge spike in parcel demand, your packages will be delayed to help UPS maintain its network performance.

What does this mean for eCommerce brands?  The big decisions like merchandise, pricing, and promotions are all done.  So what we have left to consider are tweaks. Here are the last-minute adjustments I would make heading into the holiday.  

Quick note.  I’m not going to even mention gift cards here.  No one wants to get a gift card, ok?  

Nobody. 

First, start with communication.  If you have less inventory than you should and your conversion is down because consumers don’t trust your product page availability, talk to your customers about it.  Don’t just pretend they won’t notice. I assure you, they will.

Second, start paying close attention to your delivery SLAs by carrier and service level.  Why?  Combined, Amazon, FedEx, Target, Kohl’s and Walmart are recruiting over half a million workers in time for holiday.

What are the chances these companies hire this amount of workers in such a short-term this year without completely disappointing their shareholders?  Almost zero.

Remember in FedEx’s last earnings call, the company said it was already routing over 600,000 packages a day around certain nodes in its network due to staffing challenges.  And that’s before holiday.

Something you can literally implement today is if you are providing a shipping forecast to your consumer only at the time of order confirmation, you need a few more notifications throughout the journey to provide visibility and reduce your customer service workload.  I would not let two days go by without a new update to customers.

Third, inventory alerts on out of stock products and brands are now table stakes.  This means allowing your consumers to tell you they are looking for something you may not have, and letting them know via e-mail or SMS immediately when these return to stock.  Since these challenges are affecting everyone, it’s better to make it easier for your consumers than your competition does.  

Fourth, tweak your product pages to show data freshness.  Last holiday, it was patently obvious. When I saw that something on a website said “in stock” but no other retailer had it, I knew it was out of stock.  

I sometimes say that “inventory is marketing.”  Which means, the winners in uncertain periods are those brands that have things in stock.  Sometimes you win just by showing up.  This marketing can include something as simple as your inventory status.  

I believe that in this environment, every brand should put on their product page when inventory data was last refreshed.  Tell a story about it.

Finally, think carefully about giftable subscriptions.  One way to smooth out supply chain demand is to take one big purchase at Christmas for a friend and spread it out into four smaller quarterly gifts over the course of next year.  Dress it up, give them a nice experience and certificate for the gift.  Perhaps include a gift of something you do have in stock.

The absolute worst thing you can do is allow customers to give their friends an order confirmation email printed out on a janky printer.

Now, you might think of some of these tactics as smoke and mirrors, but this is the point we’re at, folks.  Any new container or air freights are already chartered.  That new warehouse isn’t coming online before peak season.  Some of these tips are very practical and easy to integrate and could help your consumers – that is, if you act quickly.


[References:]



[PAUSE]

It’s That Time, Friends, for our Investor Minute.  We have 5 items on the menu today.

First

German food delivery company DeliveryHero invested in ultra-fast and ultra unprofitable delivery startup Gorillas at a $3 billion valuation.

At the same time, Gorillas paused its US expansion to focus solely on New York City, while at the same time laying off several employees.

This is a competitive market, so this pause could be a serious issue for Gorillas.

https://www.bloombergquint.com/business/delivery-hero-is-said-to-invest-in-gorillas-at-3-billion-value

https://www.grocerydive.com/news/gorillas-pauses-us-expansion/607284/


Second

Robotics firm AutoStore plans to raise over $300 Million on the Oslo stock exchange, which could value the firm at over $10 Billion dollars.

The company reports that only 15% of warehouses today have any kind of automation, so it’s still early innings in the industry.

https://www.bloomberg.com/news/articles/2021-09-28/softbank-backed-autostore-to-raise-315-million-in-oslo-ipo?sref=IruMQhSQ


Third

Live video shopping provider NTWRK just raised $50 Million.  The company primarily focuses on selling limited edition merchandise.

The company plans to use the new capital to expand its team and the categories offered.

Interestingly, one of the recent investors is the Kering Group, which owns iconic brands such as Gucci and Balenciaga.

https://www.axios.com/ntwrk-livestream-shopping-raises-50-million-67010384-6f39-4d88-9558-c79dcc92992d.html


Fourth

Supplier-enablement provider Convictional raised $6.7 Million in a Series A round led by investor Lachy Groom.

The market gap here is that often eCommerce platforms do not focus on either making the lives of suppliers easier, or making it easier for retailers to manage and add large numbers of suppliers.

https://www.forbes.com/sites/frederickdaso/2021/09/22/convictional-secures-67m-to-become-the-digital-backbone-of-modern-futureproof-marketplaces/?sh=2c4af6b726ab

https://www.prnewswire.com/news-releases/convictional-announces-6-7-million-series-a-funding-301383546.html


AND FINALLY …


SoftBank invested in French second-hand site Vestiaire Collective.

The second-hand market is booming in eCommerce of late with companies like Poshmark and ThredUp going public this year.

https://www.bloomberg.com/news/articles/2021-09-22/softbank-invests-in-french-secondhand-site-vestiaire-collective?sref=IruMQhSQ



[PAUSE]


That’s all for this week! 

Till next time, Watsonians.....


[PAUSE]


Hi, I’m Rick Watson, CEO and Founder of RMW Commerce Consulting and host of the Watson Weekly podcast - your essential eCommerce Digest.

Our show is produced by Citizen Racecar.  Alex Brower is the producer and also wrote our theme music. The Executive Producer is David Hoffman.

To hear new episodes of the show every Monday morning, subscribe now at rmwcommerce.com/watsonweekly and wherever you get your podcasts.