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The Path To Unified Commerce


The Path To Unified Commerce

While the business pages buzz with glowing reports of climbing revenue driven by a unified consumer experience – now even seamlessly integrated with the customer’s daily life, many retailers just need to know where to start.

Behind the single brand your customers see there can still be a big divide between store and digital, constrained by legacy infrastructure and a cultural resistance to embracing change.

Here in Australia, we read about omnichannel success stories in the US - like Macy’s revelation last year that its customers who shop across channels are eight times more valuable than single channel shoppers.

These rewards don’t come easily:

Macy’s underwent a major journey of organisational change to become deeply customer-centric and support this new world of ‘micro-moment’ shopping.

There are local heroes too. Myer’s latest results show its online business delivering revenue increases of 70%. The rise in profitability, outstripping sales growth, was attributed by CEO and MD Richard Umbers to Myer’s recent omnichannel efforts, in particular expanding instore iPad services and investing in click and collect capabilities.

In 2015, more than two-thirds of retailers from over 45 countries surveyed by the global National Retail Federation expected to increase revenue, margins and brand value thanks to omnichannel.

Yet it is no surprise at all that the road to customer centricity has twists, turns and potholes. According to a November 2015 article in the Wall Street Journal, half of all consumers picking up in store had problems collecting.

And the logistics only get more interesting when you venture into more ambitious omnichannel territory like real-time inventory checks and cross-channel returns and promotions.

So how best to avoid costly pitfalls, and the corresponding negative business fallout? Australian retailers of all sizes are examining their organisational structures and working to establish internal commitment to improving the consumer experience – and ultimately, to place the customer at the heart of operations

Becoming truly customer-centric often starts with the purchase. Technology is a key enabler, allowing Sportscraft, Saba and JAG customers to click and collect, browsing and purchasing online at leisure but still taking home must-have new releases the same day.

Mecca and Michael Hill first established accurate real-time inventory visibility (so consumers can find items in stock at nearby stores). Over time, they added technology to make social content shoppable.

Linking to photos shared by consumers on social media builds customer engagement, and embedding product data and purchase capabilities into social content opens up a brand new channel for purchase .

The best advice is to move at your own pace. Useful things to consider at the start are:

  • Map the ideal customer journey and interaction points for your brand – make the ideal state your roadmap.

  • Execute incremental changes: start small, use pilot trials, measure success and engage with stakeholders across the business to deliver real results.

  • Start by providing real-time inventory visibility to enable your customers to buy across different channels.

  • Investigate click and collect and shipping from store to add flexibility in purchase and fulfillment.

It takes commitment to build the cultural change required, but the rewards justify the effort.

L2Inc data published in 2015 contrasted net sales for ecommerce pureplays (77 cents on the dollar) with omnichannel players offering online purchase and in-store return: 95 cents on the dollar, replacing lost revenue with incremental in-store spend during the return process.

Offering both in-store pick-up and in-store returns delivered even greater value as shoppers exchange and add to their purchase.

The omnichannel buzz isn’t dying down, but it is changing, with talk about moving beyond channel concepts altogether into an uber-unified customer-centric world of ‘digical’ or ‘phygital.

There are plentiful opportunities for Australian retailers to leverage emerging technology to serve the customer better, faster and more efficiently.

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Reducing Return Rates - Perfecting Sizing Online


Reducing Return Rates - Perfecting Sizing Online

Improving product return rates can have a big impact to a retailer’s bottom line. ASOS has previously quantified that a 1% drop in customer returns would translate into an additional $16million to the company’s bottom line.

So how do you improve return rates? Fundamentally, one of the biggest conversion hurdles and a predictor for apparel returns is product sizing and fit. There are significant cost impacts for retailers due to the labour, shipping and inventory expenses involved., a London-based developer of sizing software, estimates that around 80 percent of all clothes bought instore pass through a fitting room, so it’s not surprising that online purchases made without a fitting room interaction need to be returned. The company (used by brands including Adidas, Hugo Boss and T.M. Lewin) interviewed German shoppers and identified that 35 percent aborted potential purchases because of concerns about fit.

Globally, businesses lose an estimated $8.4 billion each year because of incorrect sizing for online purchases, according to a retail research firm IHL Group.

Providing a better fit will see a big reduction in return rates, saving money for retailers and ultimately providing happier customers. Some improvement opportunities include:

  • Improved product photography - leading retailers provide product imagery of their products on model, as well as detailing the model’s height, weight and size worn, such as this example from ASOS. This level of detail allows customers to better approximate product fit. 
  • Body scanning - emerging technologies such as Bodymetrics and Styku that use sensors developed by Microsoft for its Kintect platform to create 3D avatars will help determine the correct size. A customer simply gets scanned instore and the software compares their measurements with the exact dimensions of garments to recommend the perfect fit. Bodymetric’s scanners are already in use in select Bloomingdales and Selfridge’s locations. 
  • Product comparison tools - True Fit provides software to retailers that predicts how other garments will fit based on brands and products that a customer already owns. Their tools have had good success by reducing the return rate for a premium denim retailer from 50% to 20% for 400,000 customers. See it in use at House Of Fraser.

Whilst not directly reducing return rates, providing instore returns presents a convenient option for customers and facilitates another opportunity for brands to interact by allowing  for complimentary or alternate products to be presented. One critical aspect is to ensure that the process is seamless from a customer perspective, particularly ensuring that stores aren’t disincentivised from facilitating customer returns.

Ultimately, allowing customers to better identify sizes and brand preferences will result in a better customer experience and bottom line.


Digital Distruption For Retail Stores


Digital Distruption For Retail Stores

Digital tools and communications continue to influence instore shopping experiences. Deloitte's latest report Navigating the New Digital Divide indicates that digital interactions influenced 40% of instore retail visits in Australia during 2014.

Whilst the level of influence may not be surprising for many retailers, it highlights how digital is rapidly changing the way customers shop and make purchase decisions. Digital and traditional channels are blending and complementing each other along the whole retail customer journey.

Australian shoppers have a similar level of digital influence to those in the US and Canada and are ahead of most European countries. Deloitte's survey ranked digitally influenced retail sales as follows - US (49%), Canada (41%), Australia (40%), Germany (30%), The Netherlands (30%) and the UK (27%).

Digital tools will continue to be crucial to the future of the store, not simply contributing to its demise as some have predicted. Of Australians that are digitally engaged, 65% use digital tools before heading into store or making a purchase decision, with an additional 31% using digital tools during their shopping trip. The top activities that Australian shoppers complete during their shopping trip are comparing products, accessing product information and checking product availability.

The trend is clear - customers are completing substantial research and have a desire to know significant product details before making their purchase decision. All of this research acts as a significant opportunity to drive customers to the store.

The upside for retailers is clear, customers using digital tools and devices before and during their shopping trip convert at a 25% higher rate and have a higher average order value than those that don't.

My key takeaways to succeed in the digital-physical fusion:

  • Measure digital engagement along all customer journey touchpoints – simply measuring online channel sales misses the bigger picture as digital has a significantly broader influence on retailers' success.
  • Incorporate digital into your instore experience - over thirty percent of customers use digital tools whilst instore to compare products, prices, reviews or participate in experiential activities. How can you leverage this interest to assist in their purchase and after sales experience?
  • Base your strategy on the buying habits within in your retail segment - the level of customer research, interactivity and expected after sales relationship will differ dramatically depending on your category or product.
  • Align organisational incentives - it's imperative that there is no conflict between stores and digital sales or servicing channels. Be guided by how your customers choose to interact with your brand.

Fundamentally, retailers must understand their customers’ path to purchase (across time, devices, channels and technologies) to build a series of digital touch points to meet their needs along the way.

View a summary of findings from Deloitte's research below, or read the full research here.


Netshoes Tiny Pop-Up Store


Netshoes Tiny Pop-Up Store

Netshoes, a Brazilian eCommerce sporting goods company has recently launched its first physical store. That 'store' was so tiny that is was squeezed in between two other shopfronts on one of the most popular shopping streets in São Paulo. The pop-up store essentially made over 40,000 products available in a space slightly larger than an iPad. It also exposed the brand to over 35,000 daily passers-by.

The campaign execution is pretty simple and a good PR opportunity for an online only brand. This is further evidence of pureplay retailers continuing to test new retail formats

What other dormant space exists in city centres, malls or airports that could be transformed for your brand?


Top 50 People In eCommerce 2015

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Top 50 People In eCommerce 2015

I'm excited and hugely humbled to be included in Inside Retail's inaugural Top 50 People in eCommerce list. My inclusion is also great recognition for my colleagues in the Michael Hill digital team and their continued success.

A judging panel of eight industry experts selected the Top 50 based on their level of industry influence as well as their active involvement in the digital strategy and implementation for an Australian-based eCommerce business. Other consideration factors were innovation, the individual's impact, market size and value. 

The list is a great sign for the continuing maturity of the Brisbane digital scene with other local talent being nominated including Nathan Bush (Super Retail Group), Michael Gillespie (Domino's Pizza) and Cameron Parker (ex Blackmilk).

The Top 50 is filled with people and businesses that I personally admire and respect including Jane Cay from Birdsnest, the team from Shoes of Prey, Justin and Lex from Surfstich, and the boys from Vinomofo. The calibre of people on the list is high and shows great signs for the continued growth of online retail in Australia.

View the full Top 50 People In eCommerce 2015 list.

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The Internet Of Things For Retail


The Internet Of Things For Retail

The Internet of Things (IoT) is the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment. The topic was a key item on the agenda at the recent National Retail Federation (NRF) 2015 expo in New York and has the opportunity to be truly transformative. It’s an area of retail that is full of buzzwords, but is likely to have a significant influence on future customer retail interactions.

Gartner predicts that there will be 4.9 billion connected things in use during 2015 (up 30% from 2014) and 25 billion in use by 2020. The IoT will impact all facets of consumer’s lives including ‘connected’ cars, homes and offices.

There is a significant opportunity for brands to use the IoT for retail innovation and connected products to make their instore experience more immersive. One tangible example is customer checkout - imagine being able to walk into a store, grab what you want and simply leave. Through a range of sensor technologies placed strategically around stores, retailers will be able to recognise customers uniquely as they enter the store, stores will have customer payment preferences on file, customers will then be billed when they leave the store with the merchandise, essentially bypassing the checkout.

The Internet of Things has the opportunity to be unobtrusive, reduce customer fiction and provide efficiencies (particularly at peak times), however there are opportunities for more immersive experiences. For example, using connected products to allow customers to learn more or have personalised recommendations made for them instore. Retailers could present information in the physical store that the customer has already researched online via their laptop or mobile device. Meanwhile, credit card providers have already partnered with several retailers to offer real-time promotions based on a customer’s location and credit card activity.

The number of connected devices in the IoT will generate inconceivable volumes of data. To provide perspective of the scale of data involved, a new fleet of Boeing planes by Virgin Atlantic will reportedly generate half a terabyte of data per flight. Virgin Atlantic IT Director David Busman recently noted “Literally every piece of that plane has an Internet connection, from the engines to the flaps to the landing gear”.

Ultimately the IoT isn’t just a way to get people to spend more money - it’s an opportunity to help customers get exactly what they need and for retailers to gain a better understanding of each customer’s interests and habits.

Want to learn more?

  • IFTTT (If This Then That) is a service that lets you create powerful connections and a great starting point to understand the possibilities of connected services.
  • Harvard Business Review has a good synopsis of the complexity of managing privacy in the IoT.
  • Cisco has a good visual summary of how the IoT will help retailers and other businesses deliver information and offers to customers.


Interactive Store Hoarding


Interactive Store Hoarding

New York fashion label Kate Spade has created a personalised shopping experience by embedding touchscreens within a construction hoarding at an upcoming store in New Jersey.

The resulting experience merges online and offline worlds, enabling customers to engage with products in new ways and helps Kate Spade maximise exposure and potential sales.

Shoppers interact through touch screens, responding to typically whimsical Kate Spade questions such as – “Sparkle: a little or a lot?” and “Dream dinner party: pizza on fine china or desert served first?” – before being given personalised product recommendations and the option to purchase digitally with complimentary shipping.

As well as making the most of previously wasted retail space whilst store renovations are underway, the brand is also able to capture data on relevant local customers for subsequent instore events and promotions once the store opens.

See the interactive store hoarding in action below:


New Retail Formats


New Retail Formats

The future is a digital-physical fusion

Some suggest that the continued rise of digital technologies will make the role of local retail stores obsolete. However, recent Ipsos research and leading real world examples suggest that the relationship between digital and in-store shopping is far more nuanced and interconnected.

One of the key outcomes from the research was that consumers visit stores for much more than just the purchase transaction - they want a more informative, entertaining and customised experience. The research indicated that shoppers are significantly more likely to shop in stores where they get personalised product recommendations as well as exclusive offers.

In short, we expect more than ever from retailers and want them to anticipate our needs as we progress through a purchase journey. Welcome to the return of retail theatre!


Digital to Physical Transition

Leading digital retailers such as Warby Parker and Bonobos are continuing to launch physical stores, but not in a traditional manner. Andy Dunn, Bonobos CEO states "we were wrong at the beginning. In 2007 we started the company, and we said, 'The whole world is going online only. All we're going to do is be online.' But what we've learned recently is that the offline experience of touching and feeling clothes isn't going away."

Bonobos are a great example of using unique physical spaces with their Guideshops, which provide customers the ability to determine sizing and be styled by experts instore, all during a personalised appointment (you'll even be offered a cold beer from the fridge). Items are ordered on behalf of the customer and are delivered directly to their home or office.

Bonobos have also recently launched Groomshops which allow guys that are getting ready for that special occasion to have as much fun as the Bride - think Say Yes To The Dress for dudes.

Warby Parker’s physical locations provide a similar level of brand experience and product interaction. Their store in Chicago includes a video jukebox corner, a resident portrait photographer and of course the ability to try all of their glasses on before ordering.

Digital leaders are leveraging the scalability and functionality of their digital/ eCommerce infrastructure for efficiency and using their physical spaces to showcase amazing brand experiences. This provides a great mix of customer experience and operational efficiencies (with online distribution centres managing the logistical aspects such as providing the stock holding and shipping).


Physical Leveraging Digital

There are many great examples of digital technologies transforming physical businesses. I've previously highlighted how retailers like Kate Spade and Sportschek are creating immersive digital experiences.

Nordstrom and Walgreens are widely recognised as established retailers that are leading the way in their omnichannel execution. The key tenants of both of their strategies is their achievement of inventory visibility across multiple customer channels as well as leveraging their stores as assets for customer interactions.


The Future Is A Digital-Physical Fusion

Many terms have been created to describe the phenomenon of merging physical assets and digital enablement tools – digical, digital-physical fusion and phygital. Fundamentally, consumers will continue to have high expectations about how they shop. Successful businesses are mapping their customer experience journey to understand how digital technologies can support and enhance each customer interaction.

Combining physical and digital assets promises to transform nearly every aspect of every industry. Are you ready?