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Walmart and Jet.com: The future of clicks and mortar

BY CSA STAFF

On Aug. 8, Walmart announced it would buy Jet.com — one of the fastest growing e-commerce companies in the U.S. — for a whopping $3 billion.

The purchase is the latest in Walmart’s attempt to better compete with e-commerce powerhouse Amazon, whose $107 billion in sales dwarfs Walmart’s $13.7 billion in online sales for 2015. This year alone, Walmart rolled out Shipping Pass, a subscription service to compete with Prime at half the cost, and offered a week-long free shipping promotion in the run up to Amazon’s Prime Day in July.

The acquisition is a smart move for Walmart for several reasons. Where the company’s “Everyday Low Prices” approach has made them a master at brick-and-mortar sales, it traditionally struggled to grow its e-commerce business. Now, with the Jet acquisition, the company is set to make a much stronger e-commerce play.

The purchase also puts experienced e-commerce vet and Jet CEO Mark Lore — who successfully built Diapers.com and sold it to Amazon before starting Jet — at the helm of Walmart’s online division. Where online has also been a secondary market for the retailer, Mark will give Walmart an “e-commerce first” perspective, with a proven track record of building and scaling (quite quickly) massive online operations.

What’s more, the Jet acquisition gives Walmart some street cred. Where the company has traditionally failed to appeal to younger, tech-savvy consumers, bringing Jet on board now gives them direct access to that demographic. Will they have to fight to keep those customers? Of course. But retaining the Jet customer base will likely prove easier than acquiring those customers net-new. And then there’s the data.

In addition to getting access to Jet’s pricing algorithm, Walmart now owns the company’s warehouse and customer data. Combined with the company’s existing data — and the mobile payment data they’ll now be gathering as they roll out their new Walmart Pay capabilities — the company is now equipped with deep data insights to inform their long-term e-commerce strategy.

While on the surface, it appears to be a one-on-one battle of the giants, Walmart’s recent moves offer solid proof of how changing customer expectations are driving the future of the industry — and all retailers should take note.

Bricks and clicks

From curbside pickup of online orders to in-store returns of online purchases, today’s consumers expect a seamless omnichannel experience. While the last several years have largely been focused on physical retailers’ move to e-commerce, we’re now seeing online retailers like Bonobos and Amazon opening brick-and-mortar locations as they recognize the importance of delivering an in-person brand experience. This shift is critical — but it’s testing the traditional boundaries and structure of retail organizations.

For many retailers, the online and in-store teams are still siloed, often competing against each other for high revenues and low return rates. But for long-term success, organizations will need to unify their channel teams, setting company goals that have them working together to achieve long-term success.

Speed

Long gone are the days when customers were satisfied with waiting 10 days, even two weeks to receive their newly purchased products. Today’s consumers want near-instant gratification, and expect everything about their shopping experience to be fast and easy — from the initial product search to the purchase process to the final product pickup or delivery.

Walmart’s roll out of the Walmart Pay feature on its mobile app — which also gives shoppers access to promotions and helps them locate products in stores — is the latest example of retailers turning to mobile to add a layer of convenience to the shopping experience.

We’ll continue to see retailers use mobile and its location-based capabilities in innovative ways to engage with consumers and capture valuable data to inform marketing strategies. Beyond price and product selection, Walmart’s unveiling of two-day delivery subscriptions shows delivery times can now be make or break for retailers. In fact, recent data from Dropoff highlighted the direct connection between delivery times and cart abandonment, showing that 60% of consumers have decided not to purchase from a retailer due to slow delivery speed.

It’s all about the data

The deciding factor in a brand’s’ ability to succeed in today’s evolving retail environment will ultimately be their ability to effectively collect and use data. As retailers like Walmart look to bolster their omnichannel capabilities — through acquisitions or in-house efforts — smart integration of data sources will be key to successful execution.

Bringing all existing data sources into one unified view of the business — from in-store and online transaction history to preferred delivery times and mobile app usage — will give retailers more comprehensive customer profiles allowing for better targeting, engagement and conversion.

But while new channels allow for a higher volume of data collection, only the retailers who effectively turn that information into action will survive. Data tools created for retailers like store relationship management software now give brands the ability to provide organization-wide access to data, tie it to action plans, and measure progress against shared goals, helping them shift from simply chasing data to driving insights that yield real results.

Walmart is making significant strides in its attempt to bolster the brand and deliver on changing consumer expectations. The upcoming holiday season will really put these latest moves and the company’s evolving brand strategy to the test — now, it’s all about execution.


Chris Taylor is the founder and CEO of Square Root, an Austin-based SaaS company whose store relationship management (SRM) platform, CoEfficient, helps retail and automotive enterprises turn data into action to align their organizations, increase transparency, encourage collaboration and improve store performance.

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Best Buy puts out welcome mat for connected store concept

BY Marianne Wilson

Best Buy has opened a pop-up dedicated to smart technology products for the home in the rotunda of the nation’s largest mall.

Part of Best Buy’s 50 anniversary celebration, Tech Home is located at Mall of America, Bloomington, Minn. It is designed as a hands-on display of smart devices and appliances, all seamlessly connected in a mock home, complete with kitchen, living room, bedroom, office space and entryway. The display includes options for Wi-Fi, security, comfort and organization, with gadgets from Samsung Smart Things, Netgear, Canon, Philips Hue, Qualcomm Technologies and more.

As they exit the space, customers can buy the featured products showcased in the pop-up online, on special laptops set up for that purpose. The merchandise can be delivered to the customer’s home or picked up at Best Buy's store at Mall of America.

Both Sears and Target have experimented with stores dedicated to smart home devices.

Best Buy’s Tech Home will be open through Sept. 17.

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Q & A: Meeting the Rising Demands of Consumers in an Omnichannel World

BY CSA STAFF

John Byrde, General Manager, Omnichannel Technologies of omnichannel commerce solutions provider Radial, discusses challenges and opportunities for retail CFOs who are evaluating IT decisions.

Chain Store Age: How do you meet the needs of the modern omnichannel consumer?

John Byrde: One of the biggest problems retailers are facing is effectively responding to consumer demand in a seamless way regardless of where, when or how a customer chooses to engage. To solve that challenge, retailers must integrate every sales, fulfillment and service channel. This can be really complex, but is imperative to stay competitive.

At the same time, retailers are looking for solutions that won't cost millions of dollars, or take years to deploy like on-premise technology typically does. If I'm a retail CFO, how do I get segmented channels integrated in a cost-effective way that doesn't cripple my resources and budget to implement?

The answer is that today's retailers are leaning toward the cloud and managed services for lower cost and faster time to market.

CSA: What advantages can a best-of-breed software strategy offer retailers?

JB: The market is shifting; technology vendors are making it easier for retailers to integrate and launch systems. This also means retailers have more options, and with that comes the ability to consider best-of-breed. In many cases, retailers are matching best-of-breed solutions to legacy systems they may not want to rip and replace. It results in quicker time to market and provides faster ROI than an enterprise implementation.

CSA: What type of solutions ensure a positive seamless experience?

JB: Retailers know they need to provide a seamless experience anywhere the consumer engages. Your order management system (OMS) is key to deliver on that promise and can only do so if it provides full visibility to your entire inventory (stores, warehouses, in-transit, etc.), and uses that full view of your inventory to source orders/items from the optimal location to drive the best profitability while still meeting the service level agreement (SLA) you have promised the customer.

Beyond your OMS, customer service needs to be seamless across channels. A customer who initiates an inquiry via chat should be able to continue it later through the call center or any other channel without having to reiterate. Anyone interacting with a customer should have access to that customer's contact history -order, open carts, inquiries, previous contacts, etc. If you do this, you will see a real uptick on client satisfaction and increased revenue per customer as you can capitalize on upsell opportunities.

CSA: How can retailers mitigate fraud risks?

JB: Card present fraud has become more difficult with the introduction of chip-based payment cards, which means criminals will continue to shift their attention to e-commerce. In fact, e-commerce fraud is estimated to increase 100% in the United States over the next three years. Retailers need to understand their true cost of fraud and determine if trying to manage it in-house is feasible.

There are a lot of tools out there, but with the shift in liability moving to retailers, it's more critical than ever to take a closer look at managing fraud. Are they turning away good orders; what's the impact to their customers; are they losing revenue and customers? Answering these questions could be an eye-opener. The best solution could be outsourcing not only to eliminate the burden of managing fraud, but also to remove the fraud liability they now face with EMV requirements.

CSA: What solutions does Radial offer that can help retailers and CFOs with these issues?

JB: Radial offers a comprehensive set of cloud-based omnichannel commerce technology and operations solutions, enabling brands and retailers to profitably exceed retail customer expectations. Our solutions connect supply and demand through efficient order management, store fulfillment, dropship technology, fulfillment, freight and customer care services and fully outsourced payments, fraud and tax services. They add flexibility and scalability to retailers' supply chains and optimize how, when and where orders go from desire to delivery.

Click here to learn more about solutions from Radial.

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