Some Advice to Omni-Channel Retailers: Click vs. Shopping Graphic

Some Advice to Omni-Channel Retailers

By Rick Braddock, Former CEO, Priceline and Chairman of the Board, Gravy

Many traditional business models are being buffeted by new technologies, but probably none more so than retail.  Retail ecommerce, now accelerated by the growth of mobile commerce, has wreaked havoc by disintermediating retail supply chains that are significantly cost intensive and generally providing a better, smarter, customer experience to boot.  Amazon is of course the major cause of this disruption and it has intensified its pressure on traditional models by keeping margins low, and more importantly, building a great customer experience as only digital can enable today, by which I mean real time rhythm and superior customer targeting.

Retailers have tried to respond but with little obvious success – the impact is pressuring margins and leading to store closings, etc.  And the fact that only 10% of total retail sales to date are generated by ecommerce (after 20+ years in the market), along with the explosive growth of mobile commerce, means that many of these trends will continue and accelerate regardless of what retailers do.  The power of mobile, based upon its portability, is certain to make it the technology of choice for all, for a long time.  Effectively, the mobile phone now accompanies people through their lives, so both online and offline players will need to respond.

So, what is a hybrid, or omni-channel, retailer to do?  There are no easy answers, and the trend toward ecommerce will continue regardless of individual responses, but there are some ideas, using new technologies, which can either slow the inevitable or build deeper relationships with one’s customer regardless of channel which can offset the pull of the ecommerce world.  I would define two objectives, both of which start with where the best opportunity for a solution exists, with your own customers, by strengthening your relationships (and potential customers):

  • Defend your physicality.
  • Get closer to your customers, both on and offline.

I am Chairman of two companies (Gravy and Pypestream), which offer innovative solutions for the above and which can help retailers fend for themselves better in this challenging new world.

DEFEND YOUR PHYSICALITY

As discussed above, digital technologies, particularly Amazon, have put extreme pressure on retail.  Their prevailing response has been to “become” hybrid models (most really didn’t choose this as opposed to having to respond), and then try to “out Amazon,” with limited success.  While the cost in terms of margins and store closings has been noted, the real damage has been to customer relationships and loyalty as ecommerce provides a better solution for many.

But in the process most retailers have largely ignored the need to upgrade their customers’ offline experience.  They have generally not invested in building real time, dynamic customer databases, and tracking offline behavior, required to know your customer better when they walk into your store.  Now, with mobile commerce in the offing, retailers are forced to respond to the digital threat, and opportunity.

With mobile commerce, its portability meaning that technology is always close to the customer, mobile has “Internetized” the offline world, demanding a customer experience driven by real-time rhythm and customer targeting.  While mobile is the cause of this disruption, it also brings a partial solution, because it not only provides a real-time environment necessary to enhance the offline shopping experience, but also can generate valuable new fields of information on the customers’ offline behavior, and offline retail sales are still 90%+ of the total.

This is where Gravy fits in.  Gravy is a location-based, event-driven consumer intelligence platform which provides information connecting the mobile (digital) and physical worlds.  Gravy is the only verifiable customer intelligence platform delivering predictive analytics and real time insights on how people engage across millions of locations and daily events, sourced from more than 200 million mobile phones.  This will allow retailers to, as I said before, glorify their physicality by understanding the patterns of behavior their customers and potential customers take in and around their stores and using this to target and serve them.  Today, this information is an opportunity for superior customer engagement, but tomorrow, as access and use spreads, it will become a competitive imperative.

GET CLOSER TO YOUR CUSTOMERS, BOTH ON AND OFFLINE

At the same time, the effort to enhance one’s offline marketing by utilizing comprehensive location and event-driven behavioral information is what I would call necessary but not sufficient to optimize a hybrid retailer’s response to its customers in the current environment.  There will still be a pull toward ecommerce along with the likelihood that a relationship created in the offline world loosens in an ecommerce setting with the likes of Amazon and other desperate retailers to compete against.  Conceptually, hybrids must do a better job of deepening their relationships with their customers comprehensively (in other words whether online or offline or both), in order to increase the likelihood that a customer’s journey to ecommerce (mobile commerce) is anchored by a comprehensive, loyal relationship with the retailer.

Pypestream builds upon the current customer platform of choice (messaging, already used by 1.2 billion people and still growing rapidly), to allow retailers to solidify and deepen their customer relationships.  Some of the (customer) values that are embedded in our platform, and which are not in aggregate answered by ANY of the other communications/technology applications available today include: dedicated, secure and private, on demand, real-time, conversational with two way communication, and comprehensive in serving all of a given customer’s interests with the enterprise.  This offers the retailer an ability to communicate directly with each customer, in a secure environment and on their terms, but in a way which is both more efficient and effective. This leads to better delivery and targeting of all marketing programs, enhancing  the customer service experience by turning it from a negative to a positive, (utilizing AI to facilitate), with significant cost save opportunities to boot.  And delivery of efficient transactional services at the core of one’s relationship, from bill payment to purchasing to ticketing, etc.

The core value embedded in the Pypestream offering is to deepen and cement one’s relationship across the whole gamut of ways one’s customers choose to interface with your enterprise, by making it immediate, real time and much more satisfying, leading to a loyalty which will resist the natural tendency of customers who travel from offline to online to venture to other suppliers (Amazon?).  This is not to argue that it will reverse such tendencies, but the deepened loyalty will make your customers much more resistant to those temptations.

Summing this up, there is plenty that retailers can do for their customers today to resist the siren song of ecommerce – applying new technologies that enhance the effectiveness of their offline marketing and deepen their relationships with their customers.  Serving your customers in a better, more targeted way, is certainly the best defense, and the tools now exist to help make that happen.