Many socioeconomic pundits have bemoaned the trend in modern education and childrearing toward creating an artificially level playing field where everyone gets a participant ribbon for everything they do, regardless of how much effort they put in or how good (or bad) the results are. Whether it’s a game where no score is kept, a ban on musical chairs because only one child gets to be the winner, or allegations of grade inflation at the nation’s top universities, critics say this attempt to make children believe they are good at everything is psychologically damaging and even threatens the future competitiveness of our nation.
My role is not to comment on how kids are being raised these days (though as a parent of two preschoolers I think this “everyone wins” approach is okay until grade school, when kids need to start learning about things like striving to excel and accepting defeat), but on how IT is affecting retail. And the increasing digitization of how goods and services are delivered to consumers is indeed leveling the retail playing field and letting a whole bunch of new competitors earn their digital retail participant ribbons, whether established players like it or not.
Jay-Z sets another trend
Consider the recent announcement that the upcoming album “Magna Carta Holy Grail” from rap superstar Jay-Z will be available for an exclusive 72-hour presale as a digital download for Samsung Galaxy owners. While musical artists have been partnering with various retailers to offer their customers exclusive albums, bonus tracks, etc. for some time, this agreement marks a major departure. One of the world’s most popular musical performers is enabling a technology hardware provider to act as an e-commerce retailer for what will surely be an extremely lucrative product.
Software and IT service providers such as Apple. Microsoft and Google have been playing in the digital retail game for a while now, but to this point hardware providers have been more or less absent. And although Samsung is only joining the fun for three days, nothing precludes Samsung or some other mobile hardware provider from inking an exclusive deal to distribute digital copies of popular albums, films, TV shows, video games, books, software or other digital content.
Needless to say, the non-digital versions of entertainment content are becoming less important to consumers (and by extension retailers and creators) by the day, meaning deals like the one Jay-Z signed with Samsung will only become more lucrative over time. The proliferation of Internet-connected smart devices also extends the type of companies that can potentially enter the digital content market far beyond mobile hardware providers. In addition to wearable Internet devices such as Google Glasses, products such as TVs and radios are increasingly being offered in the “smart” variety and would make for natural digital commerce platforms.
Competition in three dimensions
Retailers also need to consider than an extremely disruptive technology known as 3-D printing, currently in its infancy, holds the potential to exponentially increase the amount of products that can be delivered digitally. Crude but functioning firearms have already been created with 3-D printers, and predictions of products that will in the not-too-distant future be available for 3-D printing include automobiles and even houses. It’s too early to conclude that 3-D printing will radicalize how products are made and sold (remember when the experts said Segway scooters would change how cities are designed?), but at a minimum printers will also soon become legitimate digital commerce platforms.
Nobody can be the best at everything
What are traditional (and at this point pure play e-commerce retailers are “traditional”) retailers to do in the face of all these new players in the digital space? Well, just as the elimination of a score doesn’t change the fact that not all players in a game possess the same natural ability or skill level, the elimination of barriers to entry in the realm of digital retail doesn’t change the fact that not all digital retailers are created equal.
Even though some consumer product manufacturers do engage in direct-to-consumer sales and customer service, it is not their specialty. Retailers, on the other hand, live and die by anticipating and meeting customer wants and needs, which they can do at a highly individualized level in the digital arena.
This means traditional retailers can (and should) introduce some Darwinian competition to the “everybody gets a participant ribbon” modern digital retail environment by doing things like offering individually targeted product assortments, discounts, upsells and cross-sells based on customer behavior and purchase history, offering targeted mobile discounts based on customer location and time of day, and offering full channel integration (where applicable) with features like in-store pickup and returns of items purchased online.
Non-traditional players aren’t necessarily incapable of offering some or all of these features, but they generally have far less skill and background in offering this kind of targeted B2C customer experience. Naturally, retailers should be transparent about collecting customer data to create a personalized digital shopping environment and only offer it on an opt-in basis.
Regardless of the leveling of competition in their younger years, at some point kids grow up and enter a highly competitive world where they must prove themselves or fail. The same is true of digital retailers. Maybe a manufacturer can start selling directly to consumers with a relatively easy digital commerce technology implementation, but that doesn’t mean consumers will accept an inferior customer experience. Participant ribbons are nice, but they don’t guarantee a spot on the varsity team.