Get Ready for T-Commerce

(This article was written by Ben Bajarin for Time).

There is a high degree of probability that the next TV you buy will be a connected Smart TV. My colleagues at Display Search project that in 2014 there will be 123 million connected TV’s sold worldwide. This next generation of TV’s will bring an entirely new, interactive, and social experience to audiences.

If we consider how much the Internet changed PC’s and drove new businesses, new experiences, and new levels of social interactions, it is only logical to assume that the same will be true with connected and smart TV’s.

What t-Commerce Means for You
It is important to note that when a device, appliance or other piece of electronics gets “smarter” it almost always means that it gets more personal and more useful. Therefore the premise for Smart TV is that TV will become more personal.

Consider this: Currently 24 minutes of every programming hour are commercials, most of them largely irrelevant to you the viewer. Imagine a world where commercials and product advertisements are more targeted and more personal to your specific interests.

Layer on top of that the possibility of information from your social graph to encourage you to further explore a product or service. For example, a commercial comes on for a new product or service, then along the side of your TV a “social widget” pops up showing you which of your friends owns or recently purchased this product.

These are the types of new experiences that could drive more economic transactions through the TV known as t-Commerce.

Which Companies Can Make t-Commerce a Reality?
It would be easy to conclude that the usual suspects who drive much of the e-Commerce world stand the best chance to drive t-Commerce. Companies like eBay and Amazon or even larger retailers like Wal-Mart or Target are all logical choices. I would, however, add one more company: Facebook.

I throw Facebook in there for two reasons. First because of their size, with over 500 million active users. Second, because of their ability to use social data to drive transactions. Facebook is already doing this to a degree with the ability to “Like” a brand, product or service.

The next step for Facebook to drive more social transactions could be an “Own” button or a “Recommend” button. If Facebook could tie that data to actual product or service advertisements, they would have a fairly compelling social recommendation engine.

This is not to say that other companies can’t add this same social data that’s useful to e-Shopping; only that Facebook is in a fairly strong position to bring this to fruition.

Ultimately t-Commerce won’t be fully realized this year or even next year. It is simply one of many things I see when I look out at the digital horizon. The question is: When it comes, will you be ready?

Cities and Suburbs Losing Tax Revenue to E-Commerce

(This interviewed was aired on NPR).

The swift rise of e-commerce is creating new challenges for cities and suburbs in different parts of the country. The big problem is a loss of sales tax revenues as online sales climb.

KELLY MCEVERS, HOST:

In certain parts of the U.S., warehouses are in high demand. Online businesses need them for storage. It's happening as people spend more money online and less in traditional stores. And this shift is changing things in a lot of communities, everything from zoning laws to the way police departments are funded. Charles Lane of member station WSHU reports on the demand for industrial space.

CHARLES LANE: Marko Glavadanovic is a commercial real estate broker in Huntington, N.Y.

MARKO GLAVADANOVIC: Good ceiling, high. It's a good column spacing. It is connected to sewer.

LANE: He's showing off a warehouse that he admits is pretty rundown. But there is so little industrial-zoned land in the region that companies are willing to tear down a perfectly good warehouse just to build a bigger one.

GLAVADANOVIC: Absolutely because you don't have a level of supply that is growing. So there is no more room. Big companies like Amazon are pooling on other companies to come here, and they need a space.

LANE: Huntington is an extreme example. Warehouse prices here have jumped 10 to 20 percent in the last year. But across the U.S., industrial vacancies are at a low. Suzanne Mulvee researches real estate for the Costar Group. She says communities, particularly suburbs, have too much space dedicated to retail and not enough zoned for industrial, which would accommodate warehouse fulfillment centers that are creeping closer to customers in order to reduce delivery times.

SUZANNE MULVEE: But you can't open up a million-square-foot warehouse, you know, in downtown Boston. So what you do instead is you open up smaller, you know, centers closer to - or smaller warehouses closer to the city centers.

LANE: Even if local zoning boards could simply swap vacant strip malls for warehouses, they'd still lose a huge source of revenue - sales tax. Max Behlke is budget director for the National Conference of State Legislatures.

MAX BEHLKE: Across the country, it's tens of billions of dollars each year. And as e-commerce continues to grow at 15 percent a year like it has the last six years, those numbers will grow.

LANE: It used to be that local communities would compete for big box stores because getting that sales tax was a politically painless way to fund fire departments and road projects. But according to census data, last year, 22 states had either negative sales tax growth or growth that couldn't keep pace with inflation.

BEHLKE: It definitely is a problem. I think it's something that the public should be better aware of. What's happening to the way we shop? It's going to have an effect down to the revenues that pick up your trash or fix the potholes in your street.

LANE: Instead of raising property taxes, states have tried to figure out ways to make Internet companies like eBay and Amazon collect the sales tax from their third-party sellers. Those companies have resisted. Of the 40 states that have introduced bills attempting to get sales tax from online marketplaces, only nine have been successful. Behlke also blames e-commerce for stealing jobs from local communities, but that might not be true. According to Michael Mandel, an economist at the Progressive Policy Institute, warehouses have added five times the number of jobs that retailers have cut.

MICHAEL MANDEL: You're not in a situation where you're eliminating brick and mortar and nothing is appearing. You're actually creating jobs in a lot of places where jobs didn't exist before.

LANE: Mandel's view is not universally accepted, and he's quick to add that the data could change. But he says there is the possibility that technology might help reduce income equality.

MANDEL: Most of the counties that are getting jobs from the fulfillment centers are not the counties that have gained jobs from the tech boom in the past. This is an expansion of the winner's circle.

LANE: He says these new e-commerce jobs could narrow a widening wage gap in the U.S. labor economy as part-time retail sales jobs are replaced by a full-time, decent-paying warehouse jobs. 

Brand Name Retailers Closing Stores Left and Right

(This article was written by Jeremy Bowman for USA Today).

Every week, it seems a new retailer is shuttering stores.

According to an estimate from Credit Suisse, U.S. retailers are on track for more than 8,000 store closings this year, even more than in 2008, at the peak of the financial crisis. Some have called it a retail apocalypse, as the forces of e-commerce and bloated debt burdens are forcing a number of retailers to declare bankruptcy or downsize.  Urban Outfitters' CEO declared that after years of overexpansion, "the retail bubble has burst."

Here are the seven brand-name retailers that are closing the most stores this year.

1. RadioShack: 1,430 stores

RadioShack, once known as "America's technology store," has been in decline for a long time. After years of losses, the company declared bankruptcy in 2015, but a deal with Sprint (NYSE: S) saved much of its store base at the time. However, that fix proved temporary, as the company filed for bankruptcy protection again in March and then closed 1,000 stores over Memorial Day weekend, on top of 430 it had previously closed. That's left just 70 company-owned stores and 500 dealer-owned locations operating.

 

2. Payless ShoeSource: 800 stores

Privately held Payless ShoeSource is also meeting its maker. The discount footwear chain filed for bankruptcy protection in April, saying at the time it would close 400 stores and later added another 400 to the list.

That's only 20% of its store base of 4,000, meaning we'll probably see more store closings from Payless. As with other mall-based retailers, Payless has suffered from declining traffic to shopping centers, a trend that's unlikely to reverse. Therefore, the prospects of a Payless comeback are doubtful.

 

3. Rue21: 400 stores

Following a long list of other teen retailers, including American Apparel and Aeropostale, Rue21 filed for bankruptcy protection in May, saying it would close approximately 400 stores out of its fleet of 1,179.  The retailer was seeking the court's permission to borrow $175 million in additional financing, and the company expressed optimism for its business after improving its cost structure. Still, the outlook remains dim for a mall-based teen retailer like Rue21.

 

4. Gymboree: 375 to 450 stores

Children's-apparel retailer Gymboree filed for bankruptcy protection just weeks ago, saying it would close between 375 and 450 stores, about a third of its store base of 1,281, as it seeks to free itself of $1 billion in debt.  The retailer lost $324 million in its most recent quarter, and it has struggled even as rival Children's Place has thrived. Gymboree's competitor has had one of the best-performing stocks in recent years.

Unloading debt is a good start, but Gymboree looks like a classic case of overexpansion.

 

5. Ascena Retail Group: 268 to 667 stores

Ascena Retail Group, the parent of brands such as Ann Taylor, Lane Bryant, and Dress Barn, said in June it will close 268 stores and could shutter as many as 667 over the next two years. Ascena is one of the biggest apparel retailers in the country, with 4,850 stores under its umbrella as of the end of its most recent quarter.

Though it posted a small adjusted profit in its most recent report, same-store sales plunged 8%, a sign that the company is over-stored.

 

6. Sears: 265 stores

Unlike the other retailers on this list, Sears Holdings Corp. (NASDAQ: SHLD) has yet to declare bankruptcy, but many expect the department-store chain to fold either this year or next. Sears, which was the country's largest retailer for much of the 20th century, has had a long fall from grace. It hasn't posted an annual operating profit since 2010, and sales have plummeted in the meantime.

The retailer just announced another 20 store closings, bringing the grand total to 265 this year. More are likely to come, as both it and its sister chain, Kmart, are bleeding cash.

 

7. The Limited: 250 stores

The Limited was one of the first retailers to announce mass store closings this year, as the onetime L Brands subsidiary said at the start of 2017 that it will shut down all of its remaining 250 stores. It declared bankruptcy shortly after that.

At the time of the announcement, the company said its website would continue to operate, though it currently has just a "Coming Soon" banner across it.

Private-equity firm Sycamore Partners won the auction for its e-commerce business and intellectual property, with a bid of $26.8 million, and is planning on relaunching the online business.

E-Commerce Starts to Embrace Brick-and-Mortar

(This article was written by Sarah Shearman for The Guardian).

American eyeglass retailer Warby Parker’s foray into bricks-and-mortar retail began in one of its co-founders’ apartments.

Warby Parker launched in 2010 as an e-commerce business enabling customers to order a range of affordable glasses to try at home before sending the unsuitable ones back. After a surge in demand, customers started asking Warby Parker if they could buy the spectacles in person.

Without a store or office, co-founder and co-chief executive Neil Blumenthal let people come to his apartment to try them on, displaying the stock on his dining room table. Dave Gilboa, also co-founder and co-chief executive, used his laptop as the cash register, getting customers to make transactions via the website. “It was clear that some of our customers wanted a physical shopping experience,” says Blumenthal.

This experience became the blueprint for Warby Parker’s brick-and-mortar strategy. After several experiments with pop-up shops, concept stores and a mobile store on a bus, Warby Parker opened its first flagship store in New York City in 2013. Now the business, which is valued at $1.2bn (£908m), has 31 stores across the US. 

“There’s something special about interacting with customers first-hand, and we’re thrilled to have an opportunity to create immersive environments filled with books, locally specific design features and, of course, lots of glasses,” says Blumenthal.

Warby Parker is in the vanguard of digitally born businesses praised for their online business model but taking the plunge into physical retail. Nasty GalEverlaneBonobos and Birchbox are also among those. Even e-commerce megalith Amazon has entered the fray, with a bookstore in Seattle and more reportedly in the works.

This may seem counterintuitive; after all, Amazon’s rise was due to the fact it could undercut high street competitors on price and convenience, contributing to the demise of Borders, among others. But with so many e-commerce businesses opening physical stores, and many traditional retailers bolstering in-store technology, the mass migration of shoppers from offline to online has not been as straightforward as pundits predicted.

“Shoppers will always want to touch and feel and experience a product in the flesh before they purchase it,” says Zoё Kelly, planning director at Vivid, a shopper marketing agency. “They might use digital to research and narrow down their choice, but when it comes to paying, they want to see it in the flesh and make sure it’s the right choice.”

The majority of Warby Parker’s sales are through e-commerce and 80% of its customers who have visited the store have also visited the website, according to Blumenthal. Warby Parker helps customers prepare online for a store visit, such as allowing them to browse frames, book eye exams or reminding them to bring along their prescription. It has also integrated social media in-store. 

“We believe the future of retail sits at the intersection of e-commerce and brick and mortar,” says Blumenthal. “The two experiences should be seamlessly integrated and complementary. The ultimate goal for each shopping experience is the same: to make the process of buying glasses as easy and fun as possible.”

In recent years, many e-commerce businesses launched with the false assumption that it would be cheaper to operate than physical retail, says Ari Bloom, chief executive of Avametric, a fashion tech startup that creates virtual fitting rooms. As the e-commerce landscape becomes more competitive and the cost of deliveries and returns rises with shoppers expecting on-demand and speedier services, the cost of acquiring customers has become higher. 

“It’s hard to present a compelling, sticky brand experience online, especially when selling non-utility items like apparel, accessories, home goods,” says Bloom. “Many companies actually lose money online and are still highly profitable offline.

“Many of us who come from the physical retail world have been waiting for the balance to tip – and I think we are finally see that happening, with more e-commerce first companies finally realising that physical retail is a crucial part of their brand experience and business,” he adds.

Take Birchbox, for example. It delivers boxes full of beauty product samples, with the aim of getting subscribers to buy full-sized versions from its e-commerce site. The dilemma it faces is that many people still buy beauty products in-store, meaning other bricks-and-mortar beauty retailers stores also feel the benefit of customers buying full-sized versions of the beauty product samples. Birchbox opened a store in New York in 2014.

While bricks and mortar presents an ever more compelling business case for online retailers, this does not mean they are following in the footsteps of traditional retailers; the retail space is being reimagined as something different, such as a gallery, museum, clubhouse or events space.

Birchbox’s store is not just for flogging stock. Spread over two floors, it has a beauty and nail salon, and people can use touchscreen devices to create bespoke beauty boxes. The staff have iPads and the in-store tech allows Birchbox to get valuable real-life insights into how their customers interact with the brand.

Similarly, Harry’s, the online razor subscription business, has focused on experience as a way of selling its products. A few years ago it opened a barber shop in New York, where its barbers introduce customers to its various products. It also uses an app so customers can get the same haircut each time.

This trend is being driven by a desire to tap into the rise of the experience economy: people choosing to buy experiences over products. While e-commerce is convenient, customers are still looking for surprise and spontaneity in their shopping experience, which can be achieved in the physical environment, says Michelle Du-Prat, experience strategy director at retail design and branding agency Household.

“There’s a positive tension between convenience and smart shopping, in the knowledge there will be this experiential element too,” she says. “That’s being pushed by millennials, who want to spend money on experiences as much as items.”

But traditional retailers also have the opportunity to compete with the internet upstarts by reimagining the shopping experience. Homeplus, for example, experimented with a virtual reality store that enabled people to buy their groceries in real life using their smartphones.

According to Du-Prat, there is also an untapped opportunity in click and collect, which is growing in popularity for traditional retailers such as John Lewis and Marks & Spencer. She says they could create engaging brand experiences for customers when they pick up items, which might compel them to shop in-store more.

“It’s about understanding different needs of customers and meeting them in interesting and quirky ways, not just online and offline, but the link between them all,” says Du-Prat. “It’s about how you can disrupt that.”

Why Self-Driving Trucks Aren't a Silver Bullet

(This article was originally written by Mike Roeth for GreenBiz). 

Autonomous trucks. Driverless trucks. Robo trucks. The technology that claims it will eliminate the need for drivers is all over mainstream media today. Autonomous trucks are being hyped as the next great thing to hit the trucking industry — a silver bullet.

They are being touted as the answer to a lot of the problems plaguing the trucking industry and as the way to make the trucking industry more efficient.

While it is true that autonomous trucks will bring some benefits to the trucking industry, the reality is that fully autonomous trucks driving on the nation’s highways are still fairly far off. Things such as public perception, cost and regulatory issues are yet to be addressed.

We need to remember that autonomy is a continuum, and there are steps along the way to reach the point of a driverless truck. The U.S. Department of Transportation’s National Highway Traffic Safety Administration defined five levels of autonomous driving from 0 to 5. In Level 0 the driver controls all functions. Level 1 is the drive assistance level where the driver controls most things but a specific function can be done automatically. Level 2 means "the driver is disengaged from physically operating the vehicle by having his or her hands off the steering wheel and foot off the pedal at the same time." Level 3 still requires drivers but "safety-critical functions" are shifted to the vehicle. Level 4 autonomous vehicles perform all safety-critical functions and monitor road conditions. With Level 5 vehicles, the vehicle’s performance is equal to that of a driver in every driving scenario.

Today’s trucks already are equipped with technologies that fall on the autonomous scale. Collision avoidance and adaptive cruise control are two such technologies where some driving decisions are taken out of the driver’s hands.

Further on the autonomous scale is two-truck platooning, or Driver Assisted Truck Platooning (DATP), which has shown fuel savings improvements for both the lead truck and the following truck. The North American Council for Freight Efficiency completed a Confidence Report on this and concluded a fuel savings of around 4 percent as an average for each paired truck. This is something we are likely to see in a much shorter time frame than true driverless trucks.

And while all the talk of autonomous trucks and other "futuristic" technologies such as trucks powered by fuel cells catch the public’s eye, the reality is that full-scale deployment of these "hot" technologies is still pretty far down the road. Some predictions are that it will be 2030, 2040 or even 2050 before we see fully autonomous trucks driving on the nation’s highways.

Plenty of innovation aside from autonomy

While folks are working on turning autonomous trucks into reality, the rest of the trucking industry isn’t just sitting around and waiting.

Truck manufacturers are leading the way by continuing to improve the aerodynamics of the base truck and integrating engines and transmissions to improve the efficiency of the powertrain. They recently reinforced their commitment to improving fuel economy in part because their customers — truck fleets — are asking for more fuel-efficient trucks.

Component suppliers, too, are doing their part to make their products more efficient including using lighter-weight materials in their construction.

Most important, forward-looking, bold fleets are making the investment in these technologies to continue to push out their miles-per-gallon (MPG) numbers.

All this is taking place in an environment where fuel prices are low and where payback for technology investments takes longer and return on investment becomes more of a challenge.

I know the thought of driverless trucks is exciting to a lot of people, but we have to remember we are not looking at something that can happen overnight. Laws are still on the books in many states that require a driver be in a truck when it is operating.

So where does that leave us? We can sit around and wait for this next great thing or we can continue to make incremental gains in our drive to move the average fleet MPG from 6.4 to 9, as seven fleets are hoping to demonstrate when they participate in Run on Less, a first-of-its-kind cross-country road show that will feature real trucks hauling real freight.

It's a bird, it's a — SuperTruck

These seven fleets have invested in fuel efficiency technologies and practices that have them outpacing the average fleet and saving money on their fuel costs. And these fleets will continue to invest in new technologies. They closely watch the work of the Department of Energy’s SuperTruck program.

Trucks in that program are working on technology combinations that will get us to the 12-MPG level. One goal of the SuperTruck program is to identify promising technologies so manufacturers can work on making them commercially viable.

Commercial viability is the key. While things such as autonomous trucks and electric or fuel cell trucks sound sexy and interesting, their business cases are at this point unknown. As those technologies and others like them gain traction, the prices will come down and fleets will be able to invest in them.

For now, however, fleets need affordable technologies that are readily available so they can continue inching closer to 9, 10 and even 12 MPGs. 

The fleets’ wallets and our environment can’t wait for the next whiz-bang solution to come out to solve their driver shortage problem and improve their fuel efficiency. They need help today not only for their own bottom line but for the sake of our environment and improving the environment for everyone.

Then when the next great thing — such as autonomous trucks — becomes a reality, it will make trucks even more efficient.

 

 

What to Know About USPS Informed Delivery

(This article was originally written by Paul Bobnak for Target Marketing).

You probably don’t like spoilers for movies, but how about for your direct mail?

The reason I’m asking is because the U.S. Postal Service has rolled out a new tracking feature called Informed Delivery in the last few months. And it has implications for how the customer, the mail service vendor, and marketers operate in the mailstream.

The first time I heard of it was in September 2015, when I spoke at the National PCC Day event in New York.

In his remarks, USPS Chief Marketing Officer Jim Cochrane mentioned a service undergoing trials that would let people see their mail before it gets delivered.

I was intrigued, and still am, as Informed Delivery is being implemented this year.

I agree with Tom Glassman, Director of Data Services and Postal Affairs at Wilen Direct. He calls it “a great integration of digital and physical mail.”

So last week, I signed up for the program and waited to see what happened.

How It Works

Consumers can enroll online for a free, password-protected account that creates a digital mailbox for the direct mail they receive at their house. Before it’s even physically delivered, they can log in and see a grayscale image of the front of a common-sized mail piece, like a #10 envelope or folded self-mailer.

It’s not available yet for P.O. Box customers. And jumbo mailers, catalogs, and packages aren’t included in the mix at this time.

What Marketers Should Think About

So if you’re a marketer, you’re probably asking, “What’s in it for me?” What’s the ‘why’?” There are complex answers to these questions.

If this service were only about giving consumers a sneak preview of their mail, one more impression of an offer, well that’s not too bad.

But Informed Delivery is more than that.

Marketers can build campaigns using the Intelligent Mail barcode (IMb) to reach target audiences in the digital and physical worlds simultaneously. Under the program, marketers can enhance a physical mail piece when it’s scanned into the mailstream with a representative full color image, interactive content, and a click-through URL, with individual URLs coming this fall.

I’m not going to get into all of the technical details about campaign management and how to set up Informed Delivery. That discussion needs a much deeper dive, so it can wait for another time and place.

And I fully expect USPS to change features based on feedback from industry users and the public.

But I do have some recommendations.

First, consider how your direct mail – or at least some of it – can stand out in a grayscale image. This means paying special attention to your images, teaser copy, etc., and testing all of them

Second, think about all how your mail or your client’s mail can be enhanced with an Informed Delivery campaign. So off the top of my head, I can see uses for retailers, transpromo, insurance, utilities, and financial services.

Finally, there are some great resources to consult for more information about why and how to implement Informed Delivery.

One other thing. Remember the words of the late Mal Decker: “Rule No. 1, test everything; Rule No. 2, see Rule No. 1.”

Millennials Going Green Means Retailers Must Follow

(This article was originally written by Dayana Cadet for Total Retail).

Today, there are over 92 million millennials in the U.S. alone, spending about $600 billion each year. In a world where trust has become a form of currency, and with this generation’s socio-civic beliefs leaning more heavily towards environmental initiatives than ever before, businesses are feeling the pressure to adapt both in their social and environmental practices.

Retailers have become aggressive in their efforts to leverage environmentally-friendly brands in a bid to improve performance, better their reputation and cushion their bottom lines. As an example, the term “non-GMO” has seen an 82 percent increase this year on Hubba.com, becoming the top search by retailers looking for greener products to stock their shelves.

This tell us that brands are at a particular advantage: consumers are demanding sustainable products, and retailers are scrambling to meet the demand by carrying eco-friendly brands.

Understanding How Millennials Think

Despite having less overall brand loyalty than baby boomers, there’s one thing that can almost guarantee millennial consumers will come back every time — the green movement. Studies show that 45 percent of millennials said that they could be swayed to purchase products from companies committed to helping the environment. This is true across all product categories, including pet, apparel, beauty, and, of course, food and beverage.

Millennials are dedicated to wellness — not just for themselves, but for the planet as well. In fact, 54 percent of them believe they’ll make a significant contribution to better the environment. Unlike their predecessors, it’s not just a passing thought, but something that touches every aspect of their lives, defining which products they will or won’t consume. As a result, they place a higher value on brands and retailers that clearly align with their overall lifestyle.

“Brands that establish a reputation for environmental stewardship among today’s youngest consumers have an opportunity to not only grow market share but build loyalty among the power-spending millennials of tomorrow, too,” says Grace Farraj, senior vice president, public development and sustainability, Nielsen.

Indeed, 76 percent of millennial consumers think more highly of companies that help them support causes they care about. And keeping in line with their mobile-first mind-set, 69 percent of them have posted about their favorite causes on social media — great news for craft brands wanting to build awareness.

Gives Brands the Ultimate Advantage

To put it simply, if you want millennials to buy your product, they need to buy into your brand story first. As quick as they are to rave about their favorite eco-friendly brand, they can just as quickly and easily sniff out when “going green” is just a ploy to get at their wallets.

However, as much as millennials are leading the world of retail to greener pastures, brands have a say in it as well. Consider that 86 percent of millennials want to learn about relevant environmental issues directly from a brand itself, creating a new opportunity to engage consumers through education. In fact, we see this in the eight out of 10 millennials who correlate their purchasing decisions to the responsible efforts a company is making. This attitude bodes well with up-and-coming craft brands as well — 73 percent of millennials are willing to try a new, unfamiliar product if it supports a cause, with more than a quarter willing to pay a higher price when a product is associated with a good cause.

Millennials have changed the retail landscape in many ways. While adapting to their ever-changing needs can seem daunting to an upstart brand, these consumers are uncompromising when it comes to their values. The best thing a company can do is understand that and quickly adapt.

Kellogg's New Supply Chain Model

(This article was originally written by Kate Patrick for Supply Chain Dive).

John thought his job delivering Kellogg snacks to stores to sell by retail was secure — but he says his contract to sell Kellogg snacks was unexpectedly terminated a month ago, and now he doesn’t know how he’s going to pay his mortgage in August.

Since Kellogg began moving its U.S. Snacks segment away from the direct store delivery (DSD) model to the warehouse model (also known as “Project K”), the company has been terminating distributor contracts left and right, putting thousands of workers out of a job.

U.S. Snacks is the last Kellogg segment to switch distribution models, the company said. Kellogg said it expects up to 15% in cost savings as a result of the switch. The company originally announced it would shutter 39 distribution centers, and already 4,499 jobs have been eliminated in 30 centers nationwide, according to data compiled by Supply Chain Dive from previously reported news articles and state filings.

E-commerce and consumer demand are disrupting supply chains, and for many companies, there may not be an easy way to reconcile contract worker interests with the profitability of the company.

The human cost of a new distribution model

John — a sub-distributor for Kellogg with W.M. Brown — isn’t the only one struggling with Kellogg’s decision: David, another sub-distributor, said he will lose more than $300,000 and said it is “devastating.” John, David, and other sub-distributors feel that they’ve been mistreated by Kellogg, which is why they’ve sent a letter to W.M. Brown Group, Premier Snacks, and Kellogg demanding injunctive relief and compensatory damages for lost profits. The letter accuses them of “breach of contract,” “lack of fair dealing,” and “unjust enrichment,” among other charges.

If the distributors and Kellogg don’t respond by tomorrow, the third-party distributors say they plan to file a class-action lawsuit against Kellogg.

John was aware of Kellogg’s February announcement to switch distribution models this year, but said he’d been reassured by W.M. Brown that he wasn’t going to lose his job as an exclusive distributor of Kellogg snacks.

"They told the distributors that they got assurances from Kellogg and that we are safe and that they wouldn’t touch us at all and that we are the most profitable part of their business,” he said. “When I found out [I was losing my job] I was quite devastated because I am now turning 60 years old, so my retirement is gone.”

Abe George, the attorney representing the sub-distributors, said his clients borrowed “significant sums of money to acquire the exclusive property rights to distribute these same Kellogg snack products.”

According to George, Kellogg’s dissolution of the distributor contracts is reprehensible. Kellogg’s agreement with W.M. Brown gave them exclusive rights to deliver Kellogg snacks and pursue new clients for Kellogg, George said.

The sub-distributors were not classified as employees despite having a full work load delivering for Kellogg. As soon as Kellogg switched business models, the company terminated the contractual workers without offering severance packages, George said, because they weren’t true employees of Kellogg.

“For Kellogg to now wave a wand to completely divest my clients of their routes without any consideration is a wanton breach of my clients' rights,” George wrote in an email to Supply Chain Dive. “Clearly, Kellogg is simply enriching itself to increase its bottom line while getting leaner and meaner.”

Supply Chain Dive reached out to W.M. Brown and Premier Snacks, but both declined to comment.

Kellogg did not return or respond to repeated calls and emails requesting comment.

Why Kellogg is shifting to a warehouse model

Kellogg’s decision comes at a high cost, but will ultimately allow the company to grow and increase profits. In the wake of the Amazon effect, brick-and-mortar retail stores are struggling to adjust to consumers’ desires to get products cheaply and quickly. This then creates a demand problem where stores struggle to maintain inventory of the products consumers want to buy.

In Kellogg’s old distribution model (the DSD model), Kellogg would deliver snacks to its own warehouses, and from there distributors would deliver the snacks to retail stores. In the new warehouse model, Kellogg will deliver snacks directly to retailer warehouses, which will then deliver to stores or directly to consumers.

The warehouse model allows Kellogg to more accurately gaugeconsumer demand and stock inventory accordingly. In Kellogg’s 2016 10-K, the company described the warehouse model as a “more efficient and more effective go-to-market model in 2017,” and noted in its February 8-K that Project K is expected to generate $600 to $700 million in cost savings by 2019.

Kellogg also noted in the 8-K that the transition is expected to negatively affect net sales and gross margin in 2017 and 2018, but expects the transition to increase the company’s profit margin in the long run.

Kellogg's new distribution model will alleviate risk and allow the company to better gauge consumer demand.

Project K is one example of a growing trend among major manufacturers: last year, Coca-Cola executed a similar move when it sold its bottling plants and contract distributors. This is a result of the Amazon effect: more and more manufacturers want to control the delivery process from start to finish so as to maximize profit margins and alleviate risk. As brick-and-mortar retail stores struggle to adapt to the demands of e-commerce, switching to a warehouse model will allow Kellogg to sell directly to consumers if retail stores fail to meet demand.

Although Project K will streamline the company’s supply chain, it is also causing the layoffs of thousands of contractual workers who depended on Kellogg for their livelihoods.

For someone like David, Kellogg’s gain is causing him to lose more than $300,000. And for John, who is almost 60 years old, Project K means he may not find a new job and might not have enough money to retire.

“I’m not crazy about Kellogg’s anymore,” John said. “Corporate greed won out over people.”

The Amazon/Whole Foods Deal Means That Every Retailer's Three-Year Plan Is Obsolete

(This article was originally written by Darrell K. Rigby for Harvard Business Review).

When Amazon announced last week that it will acquire Whole Foods Market, a grocery chain with over 450 retail stores and deep industry talent, for $13.7 billion, Amazon’s stock price rose 2.4% on the news, increasing its market capitalization by $11 billion. At the same time, the price of SuperValu plummeted 14.4%, Kroger dropped 9.2%, and Sprouts fell 6.3%. You could almost hear the three-year plans of every grocer, and nearly every other traditional retailer, grinding through the shredding machines.

Nobody in the industry should be surprised that the future of retailing is moving toward a fusion of digital and physical experiences. However, Amazon’s announcement makes the nature and speed of that movement far more challenging. Too many traditional retailers have built their plans on three questionable premises: (1) They can add digital capabilities faster than Amazon can add stores; (2) Amazon’s competitive space (e-commerce) is still constrained to only around 8% of U.S. retail sales, or $391 billion of $4.9 trillion per year; and (3) store-based retailers could profitably transition to a digital world by growing e-commerce sales cautiously enough to avoid diluting earnings and cannibalizing higher-margin store sales, while retreating to the most profitable stores and product categories that would be hardest for Amazon to attack. Until last week, food was considered such a safe haven.

Now it’s clear that Amazon aims to sell customers everything, and therefore no retail spaces are safe. If Amazon can acquire its way into groceries, what will prevent it from entering department stores — as Alibaba has done in China — or furniture and appliance stores, electronics stores, or even drug stores? Moreover, if Amazon decides to use groceries to increase the frequency of customer deliveries, imagine the range of products it could quickly and profitably pile onto home delivery vehicles (or perhaps even provide for customer pickup). From today onward, the only viable retail strategy is to try to advance and merge digital and physical capabilities faster and better than Amazon does. That means retailers must learn to compete head-on with Amazon in two fundamental capabilities: agile innovation and expense management.

Amazon’s greatest competitive advantage is not its e-commerce network; it is its innovation engine. To understand this strength, take a look at the sample of innovations in the table below. The successes are impressive even before 2007, when Amazon was smaller than Bed Bath & Beyond, JC Penney, or SuperValu are today. Back in 2005, Amazon Prime was conceived, developed, and launched in about two months. Note also the innovation efforts that Amazon has abandoned (highlighted in red in the chart below and making up about 25% of this sample). Many retailers would consider these failures, but most of them contributed valuable learning toward eventual hits. For example, Amazon abandoned Auctions and zShops, yet both laid the groundwork for the enormous success of Amazon Marketplace.

To compete with Amazon’s relentless flow of innovations, traditional retailers have no choice but to relearn how to innovate like the successful startups they once were. This innovation in innovation requires moving from predictive plans (based on increasingly unpredictable market conditions) to adaptive, agile innovation teams. Agile innovation teams are small. Amazon CEO Jeff Bezos famously believes that if you can’t feed the team with two pizzas, it is too large. They’re also multidisciplinary (with all the digital and physical skills to complete the task), self-governing, and geared for rapid pivots rather than predictable straightaways. These teams value creative working environments more than hierarchical bureaucracies, working prototypes over excessive documentation, customer collaboration over fixed specifications, and responding to change over adherence to plans.

Yet many traditional retailers still lack the digital expertise and the right focus to make their teams succeed. Three out of four consumers say that they want more technology in stores and are more likely to visit stores that use technology effectively. But one major cross-industry study found that 70% of consumers feel that companies are getting the digital experience wrong. Indeed, many retailers are guilty of offering splashy virtual reality rooms, digital displays, and voice commands that consumers say don’t work as expected, are not convenient, are hard to use, and are confusing. While executives aim to give consumers an increased sense of control and appeal to the most digitally savvy, consumers say they want technology that simply saves them time, increases convenience, and gets faster results.

A few smaller retailers, including Warby Parker and Rebecca Minkoff, are frequently cited for getting the digital-physical fusion right. Now some major players are investing to raise their game. Walmart, for example, is making digitally focused acquisitions such as Jet.com (with its Smart Cart algorithms), Bonobos, and Moosejaw to acquire technology, talent, and customers. It is developing next-gen stores, installing pickup towers and an automated online grocery pickup facility, rolling out Walmart Pay and Scan & Go technologies to avoid checkout lines, touting free two-day shipping for online orders, and even testing associate deliveries of those orders. Most important, it is changing the culture, increasing the pace of innovation, obsessing over customer experience, and improving results.

But there are two major challenges for traditional retailers hoping to accelerate their innovation engines: First, it’s expensive; second, many retailers have delayed innovation funding for so long that the “strategic debt” seems overwhelming.

To give you a sense of the expense required, Amazon spends over $16 billion(11.8% of sales) on “technology and content.” This is not all innovation R&D or IT, but it’s mostly that. Meanwhile, Gartner reports that retail and wholesale companies spend about 1.5% of sales on IT. (Most of my retail clients seem to fall into the 2%–3% range.) Research and advisory firm IHL Group recently asked top retail CIOs how much their IT budgets are currently increasing and how much they should increase to compete against Amazon. The answer: Budgets are growing by 4.7% but would need to increase 87% to 237% to start closing the gap.

How will retailers find this kind of money? By reallocating spending away from people and activities that matter more to managers than to customers. An effective approach applies the same kinds of agile innovation teams that develop new products to the improvement of processes and business models. Retailers love to say that “retail is detail,” but perfecting increasingly irrelevant business models is wasting money that is desperately needed to fund innovative growth. Substantial amounts of money often lie fallow in the debilitating layers of approval required for innovations or other urgent decisions, in the artificial accuracy of trying to make perfect predictions, and in manual processes that could be done better, faster, and cheaper with machine learning.

Last week the retail world learned the limitations of predictive planning compared with adaptive innovation in an increasingly unpredictable market. This week retailers will need to rapidly and radically adapt their lists of strategic initiatives, the prioritization and sequencing of those initiatives, as well as the speed and funding of their execution. We’ll know traditional retailers are getting it right when announcements of breakthrough innovations start driving their stock prices up, finally raising doubts about Amazon’s ability to respond.

 

 

 

 

  • C

The Changing Role of Physical Stores

(This article was originally written by Elliot Maras for Retail Customer Experience.)

Amazon's $13.7 billion acquisition of Whole Foods Market signals a major boost to grocery ecommerce, and it could do more to change grocery retailing than any development of the past several decades.

While much attention is focused on how this major acquisition will further boost ecommerce, the merger also points to the growing importance of physical stores in the rapidly unfolding ecommerce paradigm.

It is yet another sign — the biggest to date — that retailing is being redefined by multiple shopping channels. Amazon and others have recognized that technology has enabled an "endless aisle" that integrates warehoused goods that consumers can access online and at stores and pickup kiosks.

The Whole Foods acquisition — Amazon's largest to date — provides further evidence that retailing's future lies in the integration of physical stores with online shopping. The digitization of retail information has given new relevance to physical stores in this evolving equation.

Targeting millennials

Millennials are driving the need to integrate physical stores with online shopping, which partly explains Amazon choosing Whole Foods.

Millennials, the most Internet savvy consumers, consider physical stores more important than do Gen Xers and baby boomers — a finding that raised eyebrows during a panel at the recent Interactive Customer Experience Summit in Dallas. Millennials are doing their research online, but for certain items, they want to touch the merchandise before they buy.

When millennials were asked during the summit session to name their favorite shopping venue — online site or physical store — three of the seven said "specialty stores," Kroger and Target, while the others named Amazon, Google, eBay and Talkville.

Whole Foods has focused on millennials with its emphasis on wellness, its environmentally friendly packaging and its commitment to fair business practices.

The company has even harnessed self-serve kiosks in merchandising specialty food ingredients in pursuit of millennial shoppers. A kiosk provided by Baldor Specialty Foods, a fresh produce distributor in the Northeast and Mid Atlantic, makes the selection of unique culinary items available to home cooks. Shoppers place their orders at the Baldor Forager and return for in-store pick-up in a day or two. The digital interface encourages exploration, discovery and a retail experience focused on customization.

Amazon seeks leverage

If Amazon can win the millennial grocery shopper, it stands to gain more leverage in winning consumer sales for other goods. Becoming a destination for grocery purchases will boost shopper visits to its online portal, netting add-on sales.

The recent acquisition marks the latest step in a journey that began 10 years ago when it introduced its Amazon Fresh home delivery service.

The company has since invested in grocery pickup kiosks in Seattle and has also introduced a convenience store concept, Amazon Go, where shoppers scan themselves into the store using an app, place items from shelves into a shopping bag and get billed automatically.

It won't happen overnight

Taking on the struggling grocery sector, with its razor thin margins and logistical complexities, promises to be the retail technology behemoth's biggest test to date.

Consumers have been slower to buy groceries online than hard goods due to issues such as freshness, product damage and fear of losing their personal connection to food. Retailers, for their part, have been hampered in developing grocery ecommerce because of the challenges of temperature controlled delivery, lack of volume and low profit margins.

In its quest to further expand its online footprint, Amazon has recognized the need to target millennials and to integrate physical stores with ecommerce.

Ecommerce is changing the role of physical stores, but it is not replacing them.

Here Are the Takeaways From the Mary Meeker 2017 Internet Report

(This article was written by Rani Molla for Recode).

Here’s a first look at the most highly anticipated slide deck in Silicon Valley. This year’s report includes 355 slides and tons of information, including a new section on healthcare that Meeker didn’t present live.

Here are some of our takeaways:

  • Global smartphone growth is slowing: Smartphone shipments grew 3 percent year over year last year, versus 10 percent the year before. This is in addition to continued slowing internet growth, which Meeker discussed last year.
  • Voice is beginning to replace typing in online queries. Twenty percent of mobile queries were made via voice in 2016, while accuracy is now about 95 percent.
  • In 10 years, Netflix went from 0 to more than 30 percent of home entertainment revenue in the U.S. This is happening while TV viewership continues to decline.
  • Entrepreneurs are often fans of gaming, Meeker said, quoting Elon Musk, Reid Hoffman and Mark Zuckerberg. Global interactive gaming is becoming mainstream, with 2.6 billion gamers in 2017 versus 100 million in 1995. Global gaming revenue is estimated to be around $100 billion in 2016, and China is now the top market for interactive gaming.
  • China remains a fascinating market, with huge growth in mobile services and payments and services like on-demand bike sharing. (More here: The highlights of Meeker's China slides.)
  • While internet growth is slowing globally, that’s not the case in India, the fastest growing large economy. The number of internet users in India grew more than 28 percent in 2016. That’s only 27 percent online penetration, which means there’s lots of room for internet usership to grow. Mobile internet usage is growing as the cost of bandwidth declines. (More here: The highlights of Meeker's India slides.)
  • In the U.S. in 2016, 60 percent of the most highly valued tech companies were founded by first- or second-generation Americans and are responsible for 1.5 million employees. Those companies include tech titans Apple, Alphabet, Amazon and Facebook.
  • Healthcare: Wearables are gaining adoption with about 25 percent of Americans owning one, up 12 percent from 2016. Leading tech brands are well-positioned in the digital health market, with 60 percent of consumers willing to share their health data with the likes of Google in 2016.

Amazon Goes Low (Income)

(This article was originally posted on PYMNTS.com).

Amazon already has a hold on high-income shoppers in the U.S., but the online retailer now wants to attract lower-income customers to the site with a 45 percent discount on Prime memberships.

According to Recode, Amazon announced the new deal on Prime — $5.99 a month instead of $10.99 month — to U.S. residents receiving government assistance.

Shoppers with an Electronic Benefits Transfer card, which is used for benefits like the Women, Infants and Children Nutrition Program, are eligible for the lower price. These customers will then have to re-qualify every year for up to four years.

This new offer comes a little more than a year after Amazon introduced the $10.99 monthly payment option for Prime, which was previously only available for an annual fee of $99. Both options have the same perks, such as free two-day shipping on tens of millions of items and access to a large selection of online movies and TV shows for no extra charge.

Since the company starting offering the monthly payment option, Prime membership growth has been the strongest with households making less than $50,000 annually. With Amazon Prime customers spending more and buying more frequently than non-Prime members, CEO Jeff Bezos has said he wants to add so much value to the membership that it becomes irresponsible to not use it.

And this latest discount is the result of a renewed rivalry between Walmart and Amazon since Walmart acquired Jet.com last year. The two sides are currently engaged in a price war in packaged goods, and Amazon has followed Walmart’s 500-store expansion of a grocery pick-up model with two locations of its own. Amazon also lowered its free-shipping threshold to $25 to combat Walmart’s free, speedy delivery offering.

Amazon also announced this year that it would start accepting food stamps for its grocery items beginning this summer. Amazon’s grocery service costs an additional monthly fee on top of the Prime membership.

 

Fulfillment and Retail Are Converging

(This article was originally written by Daphne Howland for Retail Dive).

Dive Brief:

  • The growth of e-commerce and the increasing emphasis on delivery speed and in-store pick-up is precipitating a convergence of industrial distribution and retail real estate, according to a report from Fitch Ratings emailed to Retail Dive.

  • As e-commerce continues to grow at the expense of brick-and-mortar retail, leading to tenant and retail property softness, the future of shopping centers and lower-quality malls is in question, but well-located retail properties and REITs with portfolios centered on consumer demographics will experience continued demand as centers for delivery and pickup services, according to Fitch.

  • As a result of the shift, lenders, investors and operators must refocus their attention to demographics, Fitch warned. When it comes to last-mile retail distribution, underwriting on location based on consumer demographics may become as meaningful as in-place net operating income, according to the report.

Dive Insight:

At this point, many retail stores / warehouses and e-commerce last-mile distribution centers essentially serve as distribution or staging of goods for sale to the end user: One has a delivery focus without public access, the other has public access without a delivery function, Fitch noted. “Retail centers that exhibit the best demographics, which include per capita income and population density, will be most easily repositioned and most capable of managing the secular shift in how goods are sold and purchased in the 21st century,” Fitch said.

Owners of retail locations optimized as delivery and pickup locations will likely win in this environment. Because retailers and e-commerce distribution facilities are serving such a similar service — getting goods to customers — both should be analyzed similarly, according to Fitch. Mall values have long been measured by their proximity to population density and an area’s per-capita income, and that applies to any site’s ability to draw from consumer traffic and buying power.

“The old real estate axiom, ‘Location, Location, Location’ applies, possibly now more than ever,” Fitch said.

As last-mile operations continue to evolve, including employing ride-sharing services like Uber and, eventually, self-driving cars, REITs are contemplating the possibility of having excess parking and retail space; those could be converted to delivery and pickup areas. Zoning authorities will also have to contemplate changes, or risk contending with blighted centers and the loss of jobs and tax revenue, Fitch warned. To smooth that, real estate owners should find ways to make mixed-use retail / distribution sites palatable for residents, according to the report.

E-commerce is also forcing mall landlords to find new ways of calculating their centers’ and their tenants’ productivity — as should their tenants themselves, says Hongwei Liu, co-founder and CEO of wayfinding technology firm Mappedin. “Traffic as we all know is only going in one direction, but revenue is going up,” Liu told Retail Dive earlier this year, noting the value of traditional store and mall metrics is “breaking down because of accounting, not because of Amazon. When the customer wants red jeans instead of blue, and comes in and tries them on the store and orders the red — you know that your store created that value. That’s where productivity is."

E-Commerce Trends and Predictions for 2017

(This article was originally written by Mikael Froger for Multichannel Merchant).

2016 saw some huge developments in the world of ecommerce. From leaps in social media and mcommerce to pushing the boundaries of omnichannel strategies, ecommerce made some significant moves forward. So, what’s in store next year? Here are our predictions for 2017’s ecommerce trends.

 

Social media will continue to earn its place in Ecommerce

Perhaps one of the biggest developments in ecommerce this year was the response from social media networks. The integration of Facebook Dynamic Ads on Instagram, and Facebook’s launch of product tags are just a couple of examples of how social media platforms took the industry forwards a huge step. And this is only set to continue.

Often overlooked in the world of social media marketing, Snapchat is taking ecommerce in its stride with new advertising strategies becoming more widely available in 2017. This year saw the video shopping ads that launched in April in the discover, local, and live sections, and were tested by Target and Lancôme to advertise their products in short videos that had a built-in buying option. This involved the user swiping up from the ad to order the product.


Even though all the advertising features are not widely available yet, the platform can still be used as an innovative marketing tool with sponsored geofilters, regular filters, and live stories. As more and more brands begin to pick up on these opportunities, Snapchat will no doubt grow into the next biggest thing in social commerce.

Another aspect of social media in ecommerce that is likely to become more popular in 2017 is the use of Chatbots, especially in messaging apps. Chatbots are a type of robot agent that help customers whilst browsing on their site or on a messenger app, by simulating intelligent conversation to help answer any queries. According to Venturebeat.com, 51% of people say a business needs to be available 24/7, and 49.4% would rather contact a business through a messaging service than on the phone.

With an increasing demand for speed in customers’ buying behavior, 2017 will no doubt see the rise of these Chatbots as they can respond to some questions or concerns, without the customer having to spend hours listening to music whilst being put on hold and racking up a (sometimes quite costly) phone bill. They can’t respond to all questions, of course, and it still has it’s limits, but it’s an important step in ecommerce that will undoubtedly be developed in 2017.

Social media could also take a more cross border approach in 2017. In the Western world, most of the same social media platforms are used (Facebook, Twitter, Instagram, etc), but in countries such as China, for example, completely different platforms are used that Western retailers would do well to consider in their marketing strategy.

The most popular social network in China is called WeChat, and Western retailers have already started to pick up on the big selling opportunity it presents. With more than 818 million monthly active users, 200 million of which have credit cards attached to their accounts, WeChat is far more than a messaging application. As well as text, video and voice messaging, users can make mobile payments, browse stores, play games, and even book taxis.

At the moment, most Western brands selling on the app are luxury brands, such as Burberry, Chanel, Coach, and Mulberry. According to a survey by Bain & Company, 60% of Chinese consumers name WeChat and Weibo as their main source of information online for luxury goods. In 2015, Coach ran a campaign across WeChat and Weibo called #MyFirstCoach, about the relationship between mothers and daughters. The campaign gained them 35,000 more followers on WeChat, with 2 million impressions in three weeks.

However, there are some high street brands that are selling well on the app – in 2012, Starbucks were early to launch on the platform, and after a month were receiving on average 22,000 messages a day, and had attracted 62,000 fans. Sportswear brands have also taken to WeChat, such as Nike, Adidas, and the NBA. 2017 will, therefore, most likely see more and more retailers from different ecommerce sectors expanding their businesses to China.

 

 Omnichannel will be everywhere

Bridging the gap between physical and online shopping has been a big trend in ecommerce this year – with Google Local Inventory Ads to show online shoppers product availability in nearby physical stores, and with innovative apps like the Glitch app from Adidas, it’s clear that retailers are now finding new ways to link both their bricks-and-mortar stores and ecommerce sites. It’s fair to assume that in 2017, retailers will be pushing this even further.

More retailers are now moving towards a strategy that involves multiple selling touchpoints for consumers to interact with. 2017 will probably see more online retailers opening showrooms, pop-ups and permanent bricks and mortar stores. Having a physical store for customers to visit encourages a deeper personal relationship with customers, instead of constantly interacting through a screen.

Last month saw online fashion site Missguided open its first bricks-and-mortar store in Westfields Shopping Center in London – the hype around the opening was enormous, and the brand is said to be adding a nail salon and braiding bar soon. Even though the ecommerce market is booming, it’s true that customers prefer to have the choice of buying online or in-store. The store also has a collection point where customers can pick up items they’ve bought online, and soon will also be able to return website purchases. It also has a strong outlook on social media, encouraging shoppers to take selfies with their hashtag #BabesofMissguided. Nitin Passi, Missguided founder and CEO, said that “As a brand, it is important for us to be present wherever our customer wants to shop us, be it online or offline.”

Click and collect is also fast becoming a very popular delivery method, especially in the UK. Currently, 35% of online shoppers in the UK buy online and self-collect, compared to 13% in the U.S. and 5% in Germany. With 25% of shoppers in the UK abandoning their shopping cart due to unexpected shipping costs, it’s an obvious solution to the issue. Shoppers don’t need to pay for delivery, and they can pick up their items in store at a time and place that fits around their schedule. It seems evident that this payment method will only grow in 2017, as Planet Retail predicts. This rise is also imminent in other European countries where the rate is still low, if more retailers begin to offer it.

 

November will be the ultimate shopping month

November holds three major global shopping events: Singles Day, Black Friday, and Cyber Monday. Regarding the last two, it’s likely that in future they will merge to form the ultimate online shopping discount month. Instead of having the two separate shopping days, it’s very possible that we’ll head more towards a sort of ‘Cyber November’, with an increasing number of people preferring to take advantage of the sales online. According to IMRG, 2016 saw an estimated online spend of £1.23bn on Black Friday, 12.2% higher than in 2015. They also found that 44% of the UK’s Top 100 retailers launched Black Friday sales in the 4 days before Black Friday, with many continuing into the following week after Cyber Monday.

It’s clear that in the UK, as well as in many other countries, people are leaning more towards Cyber Monday than Black Friday, with a strong preference for shopping from the comfort of their own homes than getting caught up in crowded shopping centers. Retailers are picking up on this and offering Black Friday discounts both online and in-store, as well as extending the discounts to last for a couple of weeks. This year, Amazon’s Black Friday sales lasted for 35 days – what was once a one day event can now last over a month.

Ecommerce marketing agency Absolunet made a good point about the Cyber November phenomenon:

“Retailers would benefit from spreading their promotions out over an entire month, making adjustments along the way, instead of betting it all on just one weekend. Logistics would be easier to manage, not to mention that they’d avoid the headaches related to the hordes of shoppers that can grind some stores – online or physical – to a halt during Black Friday weekend.”

So, with more logistical practicality and more opportunity for sales, having a ‘Cyber November’ is a definite possibility, and one that retailers would no doubt benefit from. Another big shopping day that UK retailers would be wise to get involved with is the Chinese shopping festival Singles Day, or Double 11. Commercialized by the Alibaba Group in 2009, Singles Day has now become the biggest global shopping day. This year, the Alibaba Group raked in $17 billion, with 657 million orders placed, just in 24 hours.

But it’s not just Chinese retailers that are benefiting from this retail boom. In 2015, Marks and Spencer were very successful as they sold select products on Tmall, with sales going up 80% from the previous year. This year, 33% of Chinese consumers were said to have bought items from international brands. Amee Chande, Alibaba Group managing director, UK, said:

“Increasingly we see Chinese consumers searching for unique food items that represent a culture or lifestyle they cannot find in China. McVitie’s is one such brand that has created a wonderfully British product that has the heritage and quality that the Chinese consumer is looking for.”

With a market that’s got a strong interest in British products, and who are looking to spend on a day dedicated to shopping, it’s a no brainer: Singles Day is the next shopping event that UK brands need to start tapping into, and hopefully 2017 will bring just that.

These are just a handful of possible trends that may occur next year – whether they do come to light is another matter, but one thing is for certain. No matter what the specific trends are, judging by everything that’s happened this year, 2017 will undoubtedly reveal a great deal of exciting advancements for the ecommerce industry.

 

Is Facebook Good for Retailers?

(This article was originally written by Leanna Kelly for Total Retail).

There are 5 million advertisers on Facebook right now. However, there are still many retailers that hesitate to advertise on the platform. At CPC Strategy, we believe some of this hesitation stems from uncertainty about what users want. Therefore, with our first “2017 Facebook Consumer Survey,” we modeled our questions around two core thoughts:

  • How do Facebook users view ads? Is it positive or negative?
  • How do Facebook users engage with ads?

The answers to both of these questions can shed light on the biggest question on many retailers’ minds: Is Facebook advertising worth it?

We decided to partially answer this with a consumer survey. Using Survata, we surveyed 1,500 online respondents between March 14, 2017 and March 15, 2017.

Here are some of the results from the survey, as well as some key takeaways.

  • Twenty-six percent of users who reported clicking on an ad also reported that they completed a purchase. Users who clicked on an ad were three times more likely to purchase a product they first saw on Facebook than nonclickers. Additionally, women were more likely to make a Facebook-driven purchase than male respondents. This stat may seem like a no-brainer, but it’s reassuring to see that increased clicks can actually result in increased conversions. And for retailers that cater to women, it’s a good indication that this demographic is comfortable shopping and making purchases on the platform.
  • 47.4 percent of respondents were introduced to a new brand or product on Facebook. Nearly 50 percent of respondents reported they were first introduced to a new brand or product via Facebook in the “past 30 days.” The fact that these respondents could recall seeing a new brand on the channel was exemplary, and promising for new brands seeking greater awareness via Facebook.
  • 17.9 percent overall communicated with a brand or retailer via Facebook Messenger. Facebook Messenger is still in the early phases for direct product sales and overall communication., however, while we don’t recommend retailers invest in Messenger heavily right now as a direct sales channel, this may change. In addition, keep an eye out for opportunities to advertise on the Messenger platform in the next few years as the app continues to add users.
  • Facebook users “like” for customer service and content. What makes a Facebook user “like” your page? While this will vary for every retailer depending on their target market, we discovered that the majority of users ranked “customer service” and “content” as their top two reasons to like a brand or retailer’s page on Facebook. Stay on top of your customer service and curate solid original content and you’ll probably see “likes” rise.
  • 54.6 percent of respondents feel positive or indifferent about ads on Facebook. This was the most surprising statistic of all. Not only do the majority of Facebook users not mind (or actually enjoy) ads, another key segment reported that they “do not notice ads on Facebook.” Unlike banner ads or pop-ups, Facebook ads in the news feed strongly resemble other organic posts. This makes it easier for Facebook users to let their “ad alert” guard down and invest in a brand’s ad that interests them.

Our conclusion after analyzing all of the survey findings? There’s never been a better time for retailers to invest in Facebook ads. The platform will only get more expensive to invest in as time goes on, and those that have a pre-built organic audience, original content and on-point demographic targeting will see the best results right now.

9 Trends in Last Mile Delivery

(This article was originally written by Deborah Abrams Kaplan for Supply Chain Dive).

Supply chains and carriers have business-to-business delivery down to a science, but the rise in trends like e-commerce, crowdsourcing apps and same-day delivery has upended the last-mile delivery segment. If the last mile is ripe for disruption, supply chains must begin to perfect those fulfillment processes to find new and cost-efficient ways to deliver products to customers.

Amazon Prime is spurring a lot of this innovation and disruption. The service has been growing 30% a year since 2011, says Andre Pharand, Accenture’s global management consulting lead for the postal and parcel industry.

Customer-centric logistics solutions have become a strategic imperative. What do you need to know in order to choose the right one?

Of course, delivering to residential customers is inefficient and more expensive than delivering to companies. Carriers are bringing single packages to low density areas, and often the resident isn’t home. Yet customers are demanding faster and cheaper deliveries.

Here are nine trends that are affecting last-mile delivery:

1. Faster fulfillment

There’s an emphasis on logistics and fulfillment due to an increase in on-demand or same-day delivery.

“We’re noticing a huge push and pressure on the fulfillment side to get orders turned around on a much faster scale and pace than a lot of the technology is capable of doing today,” says Michael Armanious, vice president of sales and marketing at Datexcorp, a third-party logistics (3PL) management and warehouse solutions provider. “What normally would have taken less than an hour, all of the sudden needs to go out within minutes, which poses challenges in terms of planning.”

Examples include pharmaceuticals and food delivery. Customers want a window of delivery within a few hours. “By the time the order comes in, it has to be processed and ready to go, for us to meet that very narrow window,” says Armanious.

2. Gig economy/crowdsourcing apps

There’s no better way to demonstrate the rise of the gig economy and use of crowdsourcing apps than by looking at venture capital flowing into the last mile delivery and urban logistics sectors.

In 2015, venture capital investments in supply chain and logistics start-ups was more than four times higher than in 2014 ($1,202 million versus $388 million), said Pharand, and venture capital dollars invested in the same space in the first quarter of 2016 alone was $1.75 billion.

Companies like UberRUSH for parcels, Postmates, Deliv and even Amazon Flex provide spot-market deliveries by independent drivers. The companies post delivery jobs on their apps to alert drivers to available gigs. “Picking up and delivering ad hoc isn’t as efficient as delivering something where you have strong route management, with items in your truck and you know where you’re going,” said Pharand. But technology leverages this vehicle utilization, and those with a car (or even a bike) who want to earn extra money can do so.

These services have limited geographic reach and are not yet widespread like the legacy carriers. Usually they deliver only in larger cities. “It’s a concern for legacy carriers, but they haven’t yet made an impact,” said Pharand.

The venture capitalists are interested in companies based on information and technology, not on assets like vehicles. They are focused on companies using analytics and information to figure out how to do the job for less, and leveraging drivers with their own cars as excess capacity. “There will be a battle between the guys with the buildings and assets, versus the guys with the apps and information. The winner will be a combination of both,” Pharand said.

3. Focus on visibility

Legacy carriers have improved traceability, with proof of delivery and tracking information. Regional and local last-mile delivery organizations don’t necessarily have the technology bandwidth to provide that data.

“You end up with a mishmash of data requirements for how to communicate with them, and it makes it a lot more challenging,” says Pharand. That data is important for traceability, if a package is late or gets lost. But smartphone apps have revolutionized the process for tracking with GPS.

Now, customers can see where the driver or package is. “We’re able to do very simple and cost effective proof of delivery with signature capture at the point of delivery,” says Pharand. “We can capture if that person doing the delivery went to the physical site or not.” Although the process is not yet standardized across the board, consumers will increasingly demand the industry move in this direction.

4. Postal service evolves

Legacy carriers like the United States Postal Service (USPS) are changing with the times and continuing to grow. Given declines in mail delivery, increases in e-commerce package delivery couldn’t come at a better time.

Adding a parcel to a home delivery is only an incremental cost to the USPS, since the carrier is going to the house anyway. It’s more expensive for UPS or FedEx to make that same delivery, since it’s an independent stop.

There’s been a resurgence with the USPS in handling nonconventional deliveries as well, said Armanious. “A lot of clients are bringing them back into the fold to do same-day or multi-day deliveries of special products,” he said. And Sunday package delivery is another change.

Further change may be on the horizon, too, if other national mail services are an example. While the USPS doesn’t deliver restaurant meals, the New Zealand Post started a pilot to deliver Kentucky Fried Chicken to boost its income as its mail delivery slumped in recent years.

5. Insourcing deliveries

An increasing number of companies are using their own or shared vehicles for last mile delivery – and that includes Amazon. “Traditionally, our clients weren’t in the transport business. They didn’t own trucks or vans or vehicles, but now they’re starting to deal with a co-op with competitors or other companies in the regional area, to utilize each others’ transportation assets,” said Armanious.

Some 3PL companies now have their own local delivery services as well. They have their own vehicles and drivers on payroll for local, not long haul, deliveries. “We have a client in New York that has 400,000 square feet of warehouse and 17 vans, and all day long they shuttle the product pickups and deliveries, based on the customers’ requests,” Armanious said.

6. City warehouses

There were at least 58 Amazon Prime Now hubs in the US last year, for customers demanding same-day instant delivery. The growing trend is for organizations to build or take advantage of this urban warehouse space and have easy access to products for fast customer deliveries.

“That is the only way you can reduce speed of deliveries or transit time,” said Pharand. He says Amazon’s two-hour delivery is unheard of. “That’s what’s disrupting everyone. I haven’t heard of any retailer or delivery company that can offer a counter value as big as Amazon’s right now.”

Amazon has the first-to-market advantage, and most retailers are struggling to catch up. The large big box stores are offering two-day delivery for a minimum order, whereas Amazon is offering two-hour delivery. Three-day delivery used to be considered fast, says Pharand.

7. Carrier becomes salesman

Using Big Data, retailers can predict what else a customer might want, even if they didn’t order it. The concept of a mobile warehouse is gaining steam. The fulfiller can load noncommitted inventory into delivery trucks, allowing drivers to upsell during the delivery process.

Just as Amazon shows customers additional products they might like during the checkout process, the driver can bring items the consumer has ordered in the past or might need or want, processing a potential additional order in person. “We’re seeing this on the food side,” said Armanious, as well as with household commodities and even apparel. On the pharmaceutical side, drivers can sell pill cutters and syringe disposal products.

8. Smart technology and sensors

In addition to wanting visibility at each point in the fulfillment and delivery process, customers want to track temperature sensitive items.

“A lot of our clients are putting different probes and monitoring devices in the packages themselves,” said Armanious. This way the pharmaceutical company, frozen foods or spirits manufacturer will know the probe temperature and possibly the humidity level at every step. It’s becoming an industry standard, he said.

Fulfillment centers use weather data for planning, to add additional packing materials to account for temperature variation. If they know they’re delivering to Tulsa, OK in the summer, and the temperature will be 102 degrees, they can add extra freezer packs or dry ice. Carriers then use the probe data to route the product accordingly.

9. Delivery by self-driving cars, drones and robots

While these futuristic delivery options are being developed and tested, they’re not yet trending. But keep your eyes on them for the future.

If parcels can be delivered by autonomous vehicles or drones, that will change the game considerably, said Pharand. The highest cost in delivery is labor, which accounts for 60% of the cost. Deliveries are currently limited by labor cost, availability and shifts. Robotic delivery could be done 24 hours a day. Drone deliveries, however, may have limited use in highly urbanized areas due to regulatory and operational issues.

Robot delivery is already being tested in San Francisco for Yelp Eat24, using a Marble robot on city sidewalks. One downside? The robot needs human accompaniment in case it has a problem. McKinsey envisions envisions a future where autonomous vehicles and drones will deliver 78% of all items, with traditional delivery accounting for only 20% and another 2% by bike couriers.

Whether or not the future is autonomous, these nine trends show stakeholders throughout the supply chain are actively trying to perfect the last mile in order to keep up with greater consumer demands.

What Caused the Retail Apocalypse?

(This article was originally written by Jeff Spross for The Week).


By now you've probably heard of the retail apocalypse. Employment in general merchandise stores has fallen by almost 90,000 jobs since October. Just like manufacturing jobs before them, brick-and-mortar retail jobs are finally falling to the twin forces of technology and globalization — this time in the form of Amazon and e-commerce. Or so goes the narrative.

But while not entirely wrong, this story vastly oversimplifies what's going on with retail. And it completely misses what's arguably the key detail.

To lose so many jobs is indeed eye-popping — especially since the underlying fundamentals in the economy suggest it's slowly-but-steadily improving. But this isn't the first time that the sector has seen a sudden job loss on that scale. Zoom out to the historical trend since 1992, and the number of people employed in general merchandise is headed up. From that perspective, last year's 90,000 plunge looks more like an (admittedly dramatic) blip. It could signal a fundamental shift. But we just don't know yet.

Since 1950, wholesale and retail trade has indeed slowly shrunk as a share of all employment, from 15.9 percent to 11.5 percent in 2009. But retail is still considered a better gig than, say, fast-food work. In fact, as the economy continues to improve, retail employment is poaching staff from fast-food chains to deal with a high turnover rate.

But things get interesting when we pick apart what we mean by "retail." Employment in department stores has bled 500,000 jobs since 2001 — 18 times the number of jobs the coal industry lost in the same period.

Recognizable brands like Macy's and Sears are looking shaky: the former plans to close 68 stores and lay off 10,000 workers, while the latter's business model has been rotting for years and may collapse altogether. Malls across the country — long the home of these department store chains — are dying and emptying out.

That's significant because department stores like Macy's and Sears rely on a particular kind of consumer base: middle-income, but also geographically dispersed. If you're going to have a mall with department stores in every decent-sized town, you need middle-class consumers in every decent-sized town, too.

That's precisely the sort of consumer we've lost. For the last few decades, middle- and lower-class wages have stagnated, while the portion of Americans high up the income ladder provide more and more of all consumer spending. The national economy has also gone through a remarkable geographic shift, in which pretty much all new job and business creation occurs in major cities.

By far the best kind of equitable income distribution program is a tight labor market, where there are perpetually more job openings than workers. A surplus of opportunities force employers to compete for workers and keep pay high. But they also ensure that whenever technology or economic shifts destroy old industries (as inevitably happens), new good-paying jobs are readily available to pick up the displaced workers, and employers in new sectors have no choice but to provide on-the-job-training on their own dime.

But since the 1980s, American fiscal and monetary policymaking has largely abandoned the Keynesian approaches that maintained tight labor markets. Instead they've focused on balanced budgets and low inflation, creating a perpetual situation in which the supply of workers outpaces the supply of jobs. Economists largely agree, for instance, that opening up trade with China eliminated about one million U.S. jobs — but the really important point is that they weren't replaced with anything. Job creation in the U.S. economy is just in a perpetual funk. Hence the decline of good-paying middle-class jobs, and the rise of poorly compensated service work.

In fact, starting in 2001, after the entrance of women into the labor force ran its course, the employment rate among prime-age workers started steadily falling. That trend, as it happens, matches up nicely with the decline of department stores.

So it shouldn't surprise us that business models that rely on the idea of broadly shared middle-class prosperity are dying.

The point here is not to completely discount the importance of the internet and technology in the decline of department stores. That the fall-off began around 2001 is pretty telling. But if American policymakers had stuck with the mid-century's devotion to full employment, the arrival of e-commerce would have had a much different effect.

For instance, manufacturing has been in decline as a share of all jobs since the 1950s, but no one really complained up until the 1980s. Before then, unions remained strong, jobs in new industries paid well and accommodated workers transitioning from other sectors, and new job openings were readily available to people leaving shrinking industries.

Another example: As the Times reported, many retail stores still pay salespeople based on commission, even though more and more shoppers go to the brick-and-mortar establishments just to look, and then buy online. An empowered workforce would be able to demand a cut of that revenue. But in a world where unemployment is a perpetual threat and employers hold all the power, workers are stuck taking whatever offer they can get.

In that alternative world, the decline of department stores would likely not have been nearly as bad. And workers would have had far more leverage to demand better deals as their employers introduced the new technology.

In this sense, department stores and the retail sector are like a human body. If it's already healthy and robust, any unexpected shock to the system (like Amazon, for instance) can be weathered easily. But if it's already sick and exhausted, that same shock might just kill it.

Amazon Posts $7.2 Billion Shipping Loss

(This article was originally posted on PYMNTS.com).

Last week, Amazon released its Q4 earnings report for 2016, and while the company posted revenue of $43.7 billion, the reality fell below The Street’s $44.7 billion expectations, sending shares down 4 percent in after-hours trading as a result.

Looking at Amazon’s year-end numbers, it’s clear that at least part of the reason Amazon lost out a bit in Q4 has to do with the retail giant’s giant cost of shipping for the year.

While in 2015, Amazon showed a net shipping loss of $5 billion, said GeekWire, shipping costs grew over 40 percent year on year, hitting $7.2 billion by the end of 2016. Looks like free two-day shipping is starting to take a toll on Amazon’s revenue, especially as the number of goods shipped for free continues to grow.

CEO Jeff Bezos said in the company’s year-end earnings release that more than 50 million items sold on Amazon’s retail site are currently eligible for free two-day shipping, representing an increase of 73 percent from the previous year.

“We’re doing fulfillment for ourselves and for our partners at a much greater clip,” said Amazon CFO Brian Olsavsky in a conference call. “It’s the usual impact of the additional free shipping programs, as well as the shift toward a higher Amazon Fulfilled growth rate.”

Still, Amazon managed to post a net profit of $2.4 billion in 2016, way up from $596 million in 2015. This was largely due to the $12.2 billion in sales Amazon’s AWS cloud computing service raked in over the last year. AWS’ operating profit for the year alone hit over $3.1 billion.

Amazon has also been hard at work building out its logistics capabilities in the last year or so, including Prime Air and ocean freight, trucking, drones and flying warehouses (seriously), which could eventually help quell shipping cost concerns by cutting out payments to third-party logistics providers.

Books as an Art Form

(This article was originally written by Rebecca Mead for The New Yorker).

The University of Göttingen, in Germany, owns one of the world’s rarest books: an intact Gutenberg Bible. When Gerhard Steidl, a printer and publisher of photography books, was growing up in Göttingen, in the nineteen-fifties and sixties, the book—one of only twenty surviving complete copies, and one of only four printed on vellum, rather than on paper—was sometimes on display at the university’s library. Steidl, whose father worked as a cleaner in the presses of the local newspaper, had developed a precocious interest in the technical aspects of printing, and one day he asked the librarians if he might examine the book. “I wanted to learn as much as possible about Gutenberg, who invented the movable letters for printing, and I wanted to see the first result,” he said recently. The librarians placed the Bible on a desk and walked away. “It was not even secured!” he recalled.

Steidl was struck by the book’s durability: despite having been made in the fourteen-fifties, it looked almost new. Otherwise, he was disappointed. “I was really expecting that it was more industrially produced,” he said. “But it was all more or less handmade—the color was by hand, the drawing was by hand. The letters were used to print the text, but there were many variations. Let’s say it was interesting. But I was not impressed.” As much as Steidl admired Gutenberg’s revolutionary contribution to the dissemination of knowledge, the Bible itself was “a baroque illustrated object that was absolutely not to my taste.”

Despite his dissatisfaction with the handiwork of the father of printing, Steidl considers himself to be in the tradition of Gutenberg, and he appreciates the proximity of the relic to his own printing and publishing business, which he established in Göttingen in the late nineteen-sixties. He has been pursuing his craft there ever since. “I always say that the good spirit of the Bible, which is so nearby, brings a warm, creative wind here in my factory,” he said. Among photographers and photography aficionados, Steidl’s name recognition equals that of Johannes Gutenberg: he is widely regarded as the best printer in the world. His name appears on the spine of more than two hundred photography books a year, and he oversees the production of all of them personally. He also publishes literary books, among them the works of Günter Grass.

Steidl prides himself on being a canny businessman, but his admirers say that he is engaged in a loftier project than merely selling books.Photograph by Mark Peckmezian for The New Yorker

Steidl, who is sixty-six, is known for fanatical attention to detail, for superlative craftsmanship, and for embracing the best that technology has to offer. Edward Burtynsky, the Canadian photographer, who specializes in large-scale, painterly aerial images that show the impact of humans on the environment, said of Steidl’s operation, “It is like the haute couture of printing. He takes it to the nth degree.” Steidl seeks out the best inks, and pioneers new techniques for achieving exquisite reproductions. “He is so much better than anyone,” William Eggleston, the American color photographer, told me, when I met him recently in New York. Steidl has published Eggleston for a decade; two years ago, he produced an expanded, ten-volume, boxed edition of “The Democratic Forest,” the artist’s monumental 1989 work. Eggleston passed his hand through the air, in a stroking gesture. “Feel the pages of the books,” he said. “The ink is in relief. It is that thick.”

Artists who work with Steidl typically travel to Göttingen, which is about four miles west of the old border with East Germany. They wait, sometimes for years, to be summoned, and are expected to drop everything when he calls. “It is like going to kiss the Pope’s ring,” Mary Ellen Carroll, the conceptual artist, said. (In 2010, she published “MEC,”—a book of her work, divided into categories including Mistakes, Boredom, and Lies—with Steidl.) When artists arrive in Göttingen, Steidl is often not quite ready to give them his attention, and so they must while away entire days in a library four floors above the company printing press, which runs non-stop, seven days a week. Steidl does not want artists straying into town, or dawdling at a restaurant or a bar where he cannot find them. “He is like a monk,” Robert Polidori, whose work Steidl has published since 2001, says. “He is not a priest—he is there to work, but he doesn’t perform miracles, or sacraments. He delivers.”

Steidl can be brusque. “I have seen situations where grown men and women have cried,” Polidori says. A certain submission is required. Dayanita Singh, an artist who lives in New Delhi, has been publishing with Steidl since 2000. She told me, “Everything is done to keep you focussed on whatever you are doing. There is this utter concentration—nothing else that is going on in your life is relevant. It’s like if you went to a Vipassana retreat for ten days.” She added, “He might call you down at five in the morning and you could be stark naked, and he wouldn’t notice.”

Göttingen, which was barely touched by Allied bombs during the war, retains a Teutonic quaintness, with its many half-timbered buildings. Steidl’s factory is on a street in the center of town; next door, he owns a private guesthouse known as the Halftone Hotel, where his photographers stay while visiting. The compound is known familiarly as Steidlville, and his employees liken a stay there to entering a submarine: the door closes irrevocably behind you, and there is nothing to do but descend. The guesthouse is decorated with spartan luxury: there are narrow metal-frame beds, as in a dormitory, but the mattresses are excellent. Each room is named for an artist with whom Steidl has worked: one features Edward Ruscha prints; another has a plaque on the wall, a readymade that reads “Prof. Joseph Beuys Institut for Cosmetic Surgery / Specialty: Buttocklifting.” A third room has photographs by Karl Lagerfeld, the designer of Chanel. Steidl executes much of the fashion house’s printing and stages all of Lagerfeld’s exhibitions.

“Sundays we like to walk around being insufferable about our routine.”

Three-course, spa-like lunches—lentil salad, vegetable soup, dates with yogurt, juice extracted from the apples that grow in the back yard of Steidl’s factory—are provided by an in-house chef, Rüdiger Schellong, in a dining room where a long table is set with flowers arranged in a vase of Lagerfeld’s design. Steidl’s place at the head of the table is indicated by a stack of cream-colored notecards, made to his specifications at a nineteenth-century paper mill on the west coast of Sweden. He uses notecards to annotate his conversations, and writes on them with Staedtler pens, which he keeps, lined up, in the breast pocket of the white lab coat he wears while working. All of Steidl’s choices are refined. “He has the best paper scissors on earth,” Singh told me. Steidl likes his clients to prepare for consultations by cutting up their own photographic proofs and gluing them into mockup layouts. It is not unusual to see world-renowned artists bent over the dining table, cutting and pasting like kindergartners.

Steidl lives around the corner from his factory. He prefers to sleep in his own bed, and he often arrives in New York City on the first flight in the morning, and leaves on the last flight the same day. To prepare for the opening of Chanel’s cruise collection last spring, which took place in Havana, Steidl flew from Germany to Cuba for the day, four Fridays in a row. On another occasion, after being honored at an early-evening award ceremony in London, he got on a plane to New York, arriving in time for another early-evening engagement—a screening of a documentary, “How to Make a Book with Steidl,” at the Museum of Modern Art. His artists like to say that he moves faster than jet lag.

The proximity of his workplace and his home is convenient, but there is a serious political motivation underlying it, too. When Steidl was a teen-ager, he spent several weeks volunteering at Auschwitz, clearing paths for visitors and sleeping in a former barracks. His father had served in the German Army, and Steidl participated in a program that had been established, he said, to show young Germans “what the parents had done.” The experience helped him confront “the dark side of Germany.” One thing that he contemplated was the ethics of separating one’s work from one’s domestic life. “I read about how the homes of the officers were outside the concentration camp, where they had a wife and children, and a little dog, and they were the nicest people you can expect,” he told me. “And then they were going to work—they were shooting and murdering and sending people to death. So I also thought that it makes a huge difference when you are not isolated from your work, when working and living is a symbiosis. Normally, when you have a business and you produce something industrial, you have the plant somewhere and it makes a lot of dirt, and poison, and noise, and destroys the environment. You are working there all day, and then in the evening you drive home and you have your pleasant place to stay, with clean air, while poor people have to live with the dirt you are producing. I control my noise, because I am sleeping there, with an open window, every night.”

Largely because of his profitable relationship with Chanel and other corporate clients, Steidl is free to disregard commercial viability when choosing the photographers he wishes to publish. He tends to print editions of three or five thousand, which, for art books, is the equivalent of mass production. Steidl’s books are expensive, but not prohibitively so. Polidori’s most recent book, “Hotel Petra,” sells for fifty-five dollars; the list price of Edward Burtynsky’s “Salt Pans” is seventy-five dollars. Steidl typically pays his artists a modest royalty up front. Copies on the secondary market can go for considerably more than the list price. The American fine-art photographer Joel Sternfeld, who has published with Steidl for years, told me, “He is creating, almost by himself, this new category, which is the semi-mass-produced book as a work of art. He has an unswerving commitment to the artist.”

Steidl (pictured here with the Italian photographer Massimo Vitali) is engaged in an effort to print and catalogue work that might otherwise not be available, and to use advanced industrial means to distribute it widely. It is a Gutenberg-like goal, with the history of photography substituting for the word of God.Photograph by Mark Peckmezian for The New Yorker

Steidl prides himself on being a canny businessman: he has always wanted to make money, and funnels it back into the business when he does. But his admirers say that he is engaged in a loftier project than merely selling books. “Gerhard has an intense quest for making an encyclopedic, wide survey of the world of photography,” Polidori says. “It is almost a race with him—to get as much done while the money lasts, and while his life lasts.”

Photography arrived late in the development of the visual arts, and, because of technical advances, its methods have been more quickly rendered obsolete. The last facility that processed Kodachrome film, which many mid-century photographers used, ceased to do so in 2010. An undeveloped roll of Kodachrome found in a late photographer’s archive today could contain an unlocked masterpiece that may never be seen. As the photographers who worked in the second half of the twentieth century reach the end of their lives, Steidl is engaged in an effort to print and catalogue work that might otherwise not be available, and to use advanced industrial means to distribute it widely: it is a Gutenberg-like goal, with the history of photography substituting for the word of God.

“Gerhard grasped that there was a historical moment—almost an imperative—to get this work, publish it, and put it in the historical record before it is too late,” Sharon Gallagher, the president of Distributed Art Publishers, which distributes Steidl’s books in the U.S., told me. “I think he sees what he is doing as a praxis—a social action toward political ends.” Steidl told me, “If you read a book, or a visual book—for me, it is all reading—or if you are in a gallery or a museum, and the curated show was done by an educated person, that educates you visually. That all adds up. I will not say it brings you to a higher level, but it makes life more valuable, than to be stupid.” Steidl is not sentimental about print qua print; he reads the newspaper on an iPad when he is travelling. But there is nonetheless a moral dimension to his bookmaking, a conviction that the book remains an ideal vehicle for culture’s remediating powers.

One Monday morning in October, Steidl was at work in his long, narrow press room with the American photographer John Gossage. Gossage’s best-known work, “The Pond,” published in 1985, is a series informed by Thoreau; it includes black-and-white images of a scrubby body of water near Gossage’s home, in Washington, D.C. The work at hand had been among Steidl’s projects in progress for more than five years, and Gossage’s notes and technical specifications had languished in Steidl’s analog filing system—dozens of trays lining a wall in his office—while more pressing assignments jumped to the head of the line. A photographer typically makes three visits to Göttingen: the first to conceptualize the work, the second to print pages and test materials, and the third to print the book. Gossage was at the final stage. “I don’t care if it’s late, so long as it’s perfect,” he said.

Steidl gets his paper from factories around the world. When it arrives in Göttingen, it sits in the warehouse for about two weeks, in order to reach the optimal temperature and humidity for absorbing ink.Photograph by Mark Peckmezian for The New Yorker

The book, to be called “Looking Up Ben James,” was a record of a trip through Britain that Gossage had made with Martin Parr, the English photographer, who is best known for somewhat grotesque representations of working-class communities in Britain. Gossage’s images were more abstract and allusive: a curving road through overgrown hedgerows; a view over Welsh hills. Steidl told me, “I like his work because it is a kind of literature and photography. Many photographers say that they are telling a story, but it’s not really a story—it’s a set of images lined up. But John is telling a story.”

The book presented a technical challenge: though many of the images were black-and-white, some of them were to be printed amid a field of color—red, blue, yellow—making the image look as if it had been printed on tinted paper. Steidl’s press can print six colors—or five colors and a lacquer—at once. For Gossage’s book, ten colors were required, which meant that each sheet had to go through the printer at least twice. “There’s no other printer in the world that could make this book,” Gossage told me. “But, if Leonardo comes to your house, do you have him touch up the kitchen, or paint the ceiling? I’m having Gerhard paint the ceiling.” Steidl makes for a slightly unprepossessing Leonardo: he is a slight, tidy man, precise and contained, with cropped dark hair and glasses worn over owlish eyes. He was dressed that day, as he often is, in a dark plaid shirt, jeans, and sneakers under his lab coat, a uniform that gives him the aspect of a nerdy twelve-year-old.

Gossage’s book was to be printed on matte, uncoated paper, which is typically used for literary books, not for photography; to achieve the desired pictorial density, Steidl would be using multiple blacks and grays. Standard tritone printing uses black and two shades of gray; a preferred Steidl technique is to print with three different blacks and two shades of gray, with results that closely mimic the appearance of photogravure. The inspiration for the choices of paper and ink was Henri Cartier-Bresson’s canonical book “The Decisive Moment.” First published in 1952, Steidl reprinted it two years ago. He showed Gossage a copy of the 1952 edition—which he had bought secondhand a few years ago—as well as his reproduction, running his fingers over the surface of the page like a skater doing turns on ice.

In the press room, large sheets of blank paper were piled on wooden pallets in stacks, which looked like blocky pieces of contemporary furniture. Steidl gets his paper from factories around the world. When it arrives in Göttingen, it sits in the warehouse for about two weeks, in order to reach the optimal temperature and humidity for absorbing ink. Shelves were lined with inks made by a company near Hannover: warm gray, cool gray, something called “skeleton gray,” and high-body intensive black. “Cheaper inks cost five dollars for one kilogram—this ink costs thirty dollars,” Steidl said. “It’s like good cuisine. If you use better product, the results are better.”

Steidl had printed three versions of a single image: empty milk bottles arrayed on the doorstep of a Georgian town house. To the casual eye, they looked identical, with the glass showing a delicate luminosity against the stone. Closer examination revealed minutely differing degrees of density in the black of the shadows.

“What do you think?” Steidl asked.

“On the other hand, he’s really good on infrastructure and tax reform.”

Gossage examined the pages; he preferred the look of the middle image. “The three blacks, with this new ink,” he said. “It looks more photographic to me. It looks more delicate.” Steidl, who referred to the book as “the art work,” was now ready to print. While the process took place, in the course of the next three days, Gossage moved between the library and the press, spending abbreviated intervals in his bed at the Halftone Hotel—the kind of half-active, half-inactive twilight familiar to the parents of a newborn.

Steidl has never lived anywhere but Göttingen, unless you count the many hours he has spent in the first-class cabins of Lufthansa. (Joel Sternfeld tells a story of being on a plane to Frankfurt and getting up to use the bathroom; when he returned to his seat in coach, he found an impish Steidl sitting in it.) His parents were refugees from the East. In 1945, they spent a year in a British-run transit camp, with Steidl’s older sister, then a toddler. Then a Catholic charity organization settled them in a modest apartment on the top floor of a building just outside the city walls. The camp, Friedland, now houses Syrian refugees.

Steidl’s family was poor, and his parents had received no formal education. There were few books at home, and it was momentous for Steidl when he received one—Hans Christian Andersen’s “Thumbelina”—as a Christmas gift. Steidl begged his sister to read it aloud to him immediately, and afterward he told his father how much he had loved it. Steidl’s father, angered that the children had finished the book so quickly, struck the sister. Years later, Steidl’s father explained that he had believed the book, having been read through, was now useless; before buying the gift, he’d never been in a bookstore.

Steidl received a scholarship to attend a Catholic school. (He is not religious, but, in gratitude for the early support, he helps fund a local soup kitchen run by the Church.) He ended his studies at the age of fifteen. By then, he had developed an interest in photography—he built a darkroom in the basement of the family apartment building—and in printing. He began designing posters for local student theatre, using photographs he shot himself, and printing them with paper and ink that, with his father’s help, he purloined from the newspaper. At sixteen, he bought his first printing equipment with money that he had raised by selling diet pills—speed, essentially. A chubby child, he had been prescribed the medication to lose weight. “The empire was built on family crime,” he told me, with satisfaction.

His earliest contact with the art world came in the late sixties, when he began hanging out at Kenter, a local club and performance space. “We played the Velvet Underground, and a lot of free jazz, and of course there was a lot of marijuana involved, which I never did,” he said. “And a friend of mine had the idea to make exhibitions in this space—not prints on the wall, more concept art with readings.” Steidl printed posters for the club, and also produced political posters; at Kenter, he formed connections with members of the Social Democratic Party, including Gerhard Schröder, the future Chancellor, who was attending the university’s law school. Steidl remains active in politics, and for some years he was a member of Göttingen’s city parliament.

There is a moral dimension to Steidl’s bookmaking, a conviction that the book remains an ideal vehicle for culture’s remediating powers.Photograph by Mark Peckmezian for The New Yorker

Steidl curated shows at Kenter, and began following the international art scene. “I was reading in the local newspaper that there is a new style of art coming from the U.S.A. called Pop art, and that in Cologne there is an exhibition of one person who is a master of this Pop art, Andy Warhol,” he recalled. “I went to Cologne and met Andy, and I was asking him, ‘What is the technique you are providing here, and are you doing it by yourself?’ I liked it a lot because the inks were so strong, and it looked totally different than etching or stone lithographs.”

Warhol explained that the technique was screen printing, and invited Steidl to visit the Factory, in New York, to learn more. “Of course, I had no money to fly to the United States, but I wrote a letter to Gerard Malanga, his studio manager, and he gave me all the instructions.” In the late seventies, a gallerist gave Steidl, in lieu of payment for a printing job, a portfolio of Warhol’s “Marilyn” prints. They hang on the walls of a library he recently built next to his home—a repository for all company publications and for Steidl’s private collection of several thousand art books.

By the early seventies, Steidl’s printing business had grown sufficiently that he had several employees. Through Klaus Staeck, a publisher of political poster art, Steidl began to work with Joseph Beuys, first as his printer and then as a kind of factotum. “He was my private professor,” Steidl says. “I saw him every day, or week. He was giving serious answers to all my stupid questions. I would ask him something in the world of art, or art theory. He wanted me to do a good job for him and, therefore, he was explaining without getting tired.” In 1974, Beuys made his first visit to the U.S., and Steidl accompanied him, as his personal documentarian. One of the few Steidl publications of which Steidl is a de-facto co-author is “Beuys in America,” a collection of photographs of the tour. Four images chronicle a visit with a feminist group in New York—in one of them, Yoko Ono is present, in the background, holding a cigarette. And Steidl was the cameraman on a short video that Beuys made at the Biograph Theatre, in Chicago, where John Dillinger was shot.

Steidl is aggressively modest, insisting that as a printer he is a technician, not an artist. He abandoned his own aspiration to become a photographer as a young man, after realizing that he would never be as good as the artists he admired. “But it helps me a lot that I have all this knowledge about photography processes—what kind of lens, what is the perspective, contrast, the darkroom work,” he said. “I meet the artist on the same level—not intellectual, but on the same level of realization of the art piece.”

Steidl collaborated with Beuys until the artist’s death, in 1986. On the wall of the library in his factory, behind glass, hangs a chalkboard with a handwritten manifesto by Beuys: “The mistake has already begun when someone seeks to buy a stretcher and canvas.” Steidl says, “I learned from him to use very basic materials. And I got a sense of a book not as an industrially produced product but more as a handcrafted object, made in a manufacture as a work of art—but always serial. I never wanted to be selling unique pieces, or originals. I was always interested in serialization. I was interested in finding out how can you make a semi-industrial production highly individual.”

In the early eighties, Steidl forged two important relationships. He began printing books for Walter Keller, a publisher whose company, Scalo, was in the vanguard of photography. When Scalo eventually went bankrupt, Steidl became the publisher for many of Keller’s artists. The other central figure for Steidl was the novelist Günter Grass, who was also a visual artist, though this work was less well known. Steidl came across an exhibition of Grass’s etchings and lithographs at a gallery in the south of Germany. He recalls, “I tried to find a book, but there was nothing existing, so I was writing him a letter, saying, ‘Can you give me some advice, is there a publication in Germany or another country?’ ” Grass wrote back, saying that there was no such book, because his publisher focussed exclusively on literature. “There was a footnote to his letter, saying, ‘I see from your stationery that you are a printer and publisher. Maybe this is something for you.’ ”

Steidl went to Berlin to meet Grass, and they prepared a catalogue raisonné of his art work. “His publisher was writing to me a very furious and angry letter, saying, ‘If you touch again my Günter Grass, I will really put you out of business, and I have the power to do it.’ I was writing back to him, saying, ‘O.K., make the art book with Grass, if you have the know-how—he will be very pleased.’ But they didn’t have the know-how.” Eventually, Grass entrusted all his books, including fiction, to Steidl. In 1999, Grass won the Nobel Prize in Literature, and Steidl subsequently sold hundreds of thousands of his books. Several years ago, Steidl bought the building next door to the Halftone Hotel, thinking that he would tear it down and build an archive for Grass’s publications and editions. Analysis of timbers revealed that the building dated to 1307. Steidl renovated the building instead, restoring the exterior while transforming the interior into a showcase of medieval and modern-day technology. Iron girders support wattle-and-daub walls, and there is an enormous illuminated glass cabinet for Grass’s books—a time capsule preserved for a future civilization. Steidl said of the building, “We decided to open it up, like a book.”

Next door to the Grass archive is an empty lot; Steidl plans to build an art gallery there. Nearly the entire block is now part of Steidl’s domain, and includes his own home, which is on a pleasant square facing a church. He lives there with his girlfriend of thirty-six years, Gundula Kronewicz, a schoolteacher. Although they have no children, Steidl paid for the installation of a public playground in the space behind his house. Kronewicz tends not to have much to do with Steidl’s work, and many of his artists have never met her. (When Steidl was showing me around his house one afternoon, we came across her in the kitchen, reading a book and sipping a glass of wine.) From his living-room window, Steidl can see the Halftone Hotel and his factory, which has a garden growing atop an extension that contains the printing press. Though he can walk from the back door of his home to the back door of his factory without venturing into the street, he told me that he goes to work “around the block, to see something from the real life.”

Steidl abandoned his aspiration as a young man to become a photographer, after realizing that he would never be as good as the artists he admired. He insists that he is a technician, not an artist.

Steidl is often overextended, and therefore late in delivering the books he has promised, to the frustration of his distributors. “He sees he has a role to do,” Sharon Gallagher, of D.A.P., told me. “The irony is that he can’t keep to a schedule while he does it. He’s oriented in history, but not in time, perhaps.” Steidl has only one working press—he has another in storage, for spare parts—and never allows his staff count to rise above fifty, to avoid the need for an extra layer of management. He knows how to run the machines with the same skill and delicacy as his employees, many of whom have been working with him for decades. Steidl also serves as his own janitor: typically the last to leave the office, he empties the trash cans every night. He finds it calming.

He prints only one book at a time. “When you’re on press, it’s like you’re a couple,” Steidl told me. “If there is another lover, it does not work at all.” During this period, however, he is typically also working with other photographers whose projects are at earlier stages of development. While Gossage’s book was being printed, Steidl turned his attention to a Swiss photographer named Benoît Peverelli and his assistant, Rodolphe Bricard. Both men had just arrived in Göttingen.

Peverelli had already printed a book with Steidl, in 2014: a collection of photographic studies for paintings that Balthus made late in his life. (Harumi Klossowska de Rola, Balthus’s daughter, is Peverelli’s longtime partner.) This visit was to set in motion a new project: a book of backstage photographs taken by Peverelli at Chanel fashion shows. Peverelli had several thousand images from which to choose. “I need a strong concept, so I am counting on this guy,” he said. “I’m a very bad editor, and it’s all about editing.”

Late in the afternoon, Steidl called Peverelli and Bricard in from the library, and sat down with them at the long dining table, in order to begin sorting through images of models in their finery. The photographs were front-lit, with flares of light in the frame. To achieve the effect, Bricard had stood in front of the camera, holding a light, and was then Photoshopped out. “I don’t want to show the cables on the floor, the dressers, the guy who goes and cleans up the can of Coke on the floor,” Peverelli said. “Everyone does that.” They discussed whether the images should bleed to the edge of the page, or be framed by white space. A lot of white, Peverelli said, would “give it some class.”

Peverelli seemed slightly abashed at the images’ potential elevation from commerce to art. There was a discussion of size: Should the book have a coffee-table format? “I find a coffee-table book pretentious, but I don’t know if people are going to look at these photos if they are not big,” Peverelli said. Steidl favored something smaller—he dislikes oversized fashion books. “After a few years, it is like a graveyard for photos,” he remarked.

Being published by Steidl provides a commercial photographer with an imprimatur of seriousness, and can have substantial consequences on a career. Henry Leutwyler, a Swiss photographer based in New York, had secured prominent assignments from magazines, but had never published a book until Polidori connected him with Steidl. “Gerhard called on my mobile, and I almost dropped it,” Leutwyler told me. “In our world, we play these jokes on each other—‘Hello, this is Anna Wintour calling.’ ” Steidl visited Leutwyler in his apartment, and looked over a box of prints connected to a magazine assignment in 2009: shots of personal items belonging to Michael Jackson, which had been crated up when the singer, in dire financial straits, planned to auction off his memorabilia. In 2010, the year after Jackson’s death, Steidl published “Neverland Lost,” a poignant portrait told through the star’s possessions: a dime-store tube sock stitched all over with sequins; a white dress shirt with what looks like a pair of sturdy panties attached, to prevent shirttails going astray during strenuous dancing. “Gerhard opened that door I didn’t know existed, which is the art world,” Leutwyler said. “Until 2009, I gave away my prints as gifts. In 2010, we started selling them.” Since then, Leutwyler has done ten solo shows; a print of Michael Jackson’s sequinned glove can sell for fifteen thousand dollars.

Each Steidl title is unique, printed with a bespoke combination of inks and papers. But to the informed eye, and the informed hand, a Steidl book is as distinctive as an Eggleston photograph. Unlike another German art publisher, Taschen—which is known for reproducing risqué images by the likes of Helmut Newton in enormous formats that would crush most coffee tables to splinters—Steidl produces books that invite holding and reading. Steidl dislikes the shiny paper that is often found in photography books, and prefers to use uncoated paper, even though it takes longer to dry and thus makes a printing cycle more expensive. He opts for understatement even with projects that would tempt other publishers to be ostentatious. “Exposed,” a collection of portraits of famous people by Bryan Adams, the rock star turned photographer, has no image on its cover. Bound in blue cloth, the book looks as if it might be found on a shelf in an academic library. Steidl wants his creations to satisfy all the senses. When he first opens a book, he holds it up close to his nose and smells it, like a sommelier assessing a glass of wine. High-quality papers and inks smell organic, he says, not chemical. To the uninitiated, a Steidl book smells rather like a just-opened box of children’s crayons.

Steidl’s biggest client, by far, is Chanel. He suggested to me that he could still function without it, but added, “Let’s say that what I earn from the fashion business makes life more comfortable.” His relationship with the company began in 1993, after Lagerfeld won a prize in Germany that included the making of a monograph printed by Steidl. “Karl said, ‘The last thing I want to have in my life is a monograph about my work, so go to hell—I don’t want it,’ ” Steidl recalls. “I was pissed, because I needed the money. So I was writing him a letter, saying, ‘If you don’t want a monograph, in what are you interested?’ He said he had just had a photo book with another publisher that was really badly printed, and he was disappointed. I said, ‘O.K., I am a printer, and we can make a test. Send me some photos, and I will print them for you, and you can decide whether it is worth it.’ ”

Lagerfeld evidently decided that it was worth it; eventually, he proposed that Steidl take over much of the printing for Chanel. Steidl went to Paris to meet with Lagerfeld, taking with him several test prints. Presenting one image, Steidl cautioned, “This is beautiful paper, but it is very expensive.” Lagerfeld responded with four words: “Gerhard, are we poor?”

Steidl owns a private guesthouse known as the Halftone Hotel, where his photographers stay while visiting. The compound is known familiarly as Steidlville, and his employees liken a stay there to entering a submarine: the door closes irrevocably behind you, and there is nothing to do but descend.

On behalf of Chanel, Steidl is driven to Paris dozens of times a year. He makes the trip in a Volkswagen Phaeton in which the passenger-side seats have been replaced by a bed, as in the first-class cabin of an aircraft. He drinks a glass of good red wine before leaving Paris, and is asleep, sandwiched between two pillows, by the time the driver has reached the periphérique. “I wake up when the car gets off the highway—I see the Burger King sign, and I know I have arrived in Göttingen,” he told me. “Not one minute earlier.”

Steidl was just back from Paris when I was in Göttingen, and I watched him one afternoon scanning the pages of the latest Chanel catalogue, looking for rogue pixelations as expertly as a dermatologist checking for moles. He lavishes as much attention on Lagerfeld’s photographs of models as he does on the photographs of artists like Gossage, whose book took four days to print. Binding is the only part of the process that Steidl outsources—sometimes to a fifth-generation bookbinder across the street from his factory, sometimes farther afield.

One evening, I joined Steidl and Gossage as they made the final decisions about the book’s packaging. We sat at Steidl’s cluttered desk—a counter, really, stacked with boxes and papers. Steidl uses a special stool that allows the sitter to incline forward, like a drunk at a bar. On a nearby shelf was a gold-colored insulated teapot filled with peppermint tea, which Steidl drinks in the afternoon. (In the morning, a silver-colored teapot is filled with black tea.)

Designing a book’s packaging is a process Steidl particularly relishes. “He wants to pick the cover, he wants to pick the endpapers,” Polidori told me. “He treasures this limited one-on-one time with the artist. It’s almost a love act.” Sometimes Steidl indulges in a brightly colored ribbon for a bookmark, like statement socks worn with a formal suit. He pays attention to elements that barely register with most readers, such as the head and tail bands—colored silk placed where the pages attach to the spine. “It’s a tiny bit of fashion,” Steidl said. “With Karl, it is the buttons. With me, it is the head and tail bands.” For Gossage, he chose black bands and black endpaper, to contrast with the colored ink on the pages. The endpaper was made from cotton, and would cost thirty cents per book, as opposed to the seven cents it would cost if he used offset paper. “Using the cheaper one saves significant money for the shareholders,” he said. “But I am the only shareholder.”

Earlier that day, I was in the library when Steidl brought the finished pages upstairs. Gossage held them up to the window, to see them in daylight, and then let out a laugh. “This is such good printing—you have no idea how happy I am,” he said. “I could conceive that it was possible to do it, but I had no idea how to get there.”

Gossage turned to Steidl. “The only question, Gerhard, is do I kiss you now, or later?” he asked.

“Later,” Steidl said.

Two days before Christmas, Steidl flew to New York. Given the timing of his appointments, he could not avoid spending a night in the city. He took the last flight from Frankfurt and arrived at J.F.K. on Thursday night, then checked into the Mercer Hotel, in SoHo.

On Friday morning, he stopped off at the East Village apartment where Saul Leiter, a pioneer of street photography, lived from 1952 until his death, four years ago. Steidl has been working with the director of the Saul Leiter Foundation, Margit Erb, to publish “In My Room,” a collection of intimate photographs of Leiter’s wife and other women, selected from three thousand prints that Leiter made but never published. Steidl’s first book with Leiter, in 2006, helped to restore the artist’s reputation. Erb explained, “Saul had no money—he was in debt, he had a reverse mortgage, he would sell four or five prints a year. After the book came out, within one month he had paid back all his debts.” Leiter went on to become a top seller at the Howard Greenberg gallery. “He died a wealthy man, because of this book,” Erb said.

Steidl returned to a waiting car, driven by Lagerfeld’s chauffeur, holding a box of Leiter’s prints—ninety thousand dollars’ worth of art work. Steidl tucked the images in his shoulder bag, by the front seat. “I have only lost one print in my life—an Eggleston chrome,” he said. “It is somewhere, slided, in my files, but I cannot find it. It happens when I am not concentrating. One second you are not concentrating, and after a day you don’t remember, and things are put on top.”

Steidl’s respect for the elders of the field is immense, but his approach is practical rather than reverential: he is seeking their authorization while they still can give it. “I feel myself in a position like a doctor,” he said. “A doctor cannot be sentimental.”

Later in the day, Steidl met with Robert Frank, who, at ninety-two, no longer makes the trip to Göttingen. One of Steidl’s paramount projects has been to reprint the works of Frank, including his landmark work from 1958, “The Americans,” which Steidl reprinted a decade ago.

Steidl climbed a rickety staircase to the unrenovated downtown loft where Frank and his wife, June Leaf, have lived since 1971. “I brought cookies,” Steidl announced, holding forth a small brown parcel. “I would have brought more, but I did not have the capacity.” (Steidl travels with nothing but two Marimekko shoulder bags—one blue, one black.) Frank sat at a small table by the window, wearing a robe. Seating himself opposite, Steidl brought out a small pile of books that had been individually wrapped in glassine paper, like birthday packages.

“I like this moment,” Frank said, slowly.

One package contained a past Frank publication, “The Lines of My Hand,” which Steidl had printed in 1989. “In 2004 and 2005, we made a list of all the books that should be reprinted,” Steidl said. “We said this one should not be reprinted. I looked again, and I think it is really a good book. I cannot think of a reason why it should not be reprinted.”

“First of all, I think it is too big,” Frank said. “It made sense then. It doesn’t make sense now.”

Steidl agreed that the reprint could be smaller. “The contents are very good,” he said.

Frank turned the pages. “It is well printed,” he allowed. “Did you print it?”

“Yes,” Steidl said, gently. “When I was a baby.”

Frank then turned his attention to a dummy of a catalogue he intended to publish, featuring all of his collaborations with the publisher. Steidl held the book in front of him, like a teacher with a child, as the artist turned the pages with interest. One page showed family snapshots made by Frank’s father. Frank smiled.

“Is that your mother?” Steidl asked.

Frank nodded. He appeared to be pleased with Steidl’s efforts. “It’s a long catalogue,” he said.

“We did a lot of things, Robert,” Steidl said. The catalogue listed Frank’s books, but, as Steidl explained, the list did not place them in the order in which Frank had made them. “It’s in chronological order,” he said. “As published by Steidl.” ♦

These Are the Leading Credit Card Processing Companies

(This article was originally written by Andrew Meola for Business Insider).

Credit card processors are mostly responsible for data transmission and security when you use your card at a store or online to make a purchase.

There are two types of processors in the payment-card system. Front-end processors route transactions from merchants to the cardholder's bank to gain authorization; that is, they make sure a customer has enough available credit or funds to make a purchase. Back-end processors are responsible for a fund's settlement, which ends with the merchant receiving a deposit for transactions. 

Below, we've outlined the major players in credit card processing and described their major strengths.

  • Bank of America Merchant ServicesBank of America Merchant Services has the advantage of functioning within the second-largest bank in the U.S. The service promises acceptance of all kinds of payments (credit cards, debit cards, electronic checks, and gift cards), access to funds on the next business day, and mobile support.
  • Citibank:  The consumer division of Citigroup processes transactions in more than 100 currencies. It offers end-to-end processing services, from pricing to transactions, reporting, customer service, and billing.
  • Wells Fargo: One of the "Big Four" U.S. banks, Wells Fargo offers next-business day funding, encryption and tokenization technology, and support for both PIN and signature transactions.
  • Chase Paymentech: The payment processing arm of JPMorgan Chase, the largest bank in the U.S., authorizes and processes payments in more than 130 currencies. And like its peers, it offers analytics, fraud detection, and security solutions.
  • Barclays: Barclaycard payment solutions facilitates in-person, phone, web, and even mail order payments through desktop and portable card machines.
  • Vantiv: Vantiv has been successful thanks to its nearly error-free purchases, authorizations, and captures. In May 2015, it successfully completed 95% of these transactions, ahead of competitors such as Worldpay, PayPal, and Braintree. The company also has a significant speed advantage, as it often processes payments data in less than a second.
  • First Data: First Data facilitates small business payments with its Clover suite of products, including a mini reader that works without Wi-Fi and a mobile reader that attaches to other devices in order to process payments on the go.
  • Cielo: Cielo is the largest Brazilian credit and debit card operator and the largest payment systems company in Latin America. The company debuted on the Sao Paulo Stock Exchange in 2010.
  • TSYS: Short for Total System Services, TSYS supports millions of buyers and sellers around the world through four major branches: issuing services, acquiring services, prepaid solutions, and merchant solutions.
  • Global Payments: Global Payments focuses on ensuring businesses accept all major forms of payments. To that end, its services include credit/debit/purchasing cards, electronic check conversion, money transfer, verification and recovery services, gift/loyalty cards, check guarantee, ACH checks, financial EDI services, and point-of-sale equipment.
  • Worldpay: The UK-based company is one of the longest-tenured online payment platforms. The company provides several payment services for both online and in-store channels. As of August 2016, the company had 400,000 merchant clients. In 2015, it processed 13 billion transactions valued at more than $526 billion. Worldpay has grown its volume primarily because of early-mover advantages that have allowed it to build scale. It also provides many different services across channels, which diversifies its revenue streams. 
  • Moneris: Moneris is the largest credit and debit card processor and acquirer in Canada. It processes more than three billion transactions each year for more than 350,000 merchants, and the company employs more than 1,900 people in North America.
  • Fiserv: American Banker and BAI ranked Fiserv third by revenue among technology providers to U.S. banks in October 2015. Fiserv provides services in account processing, electronic payments processing, check processing, web and mobile banking, and more.
  • Adyen: Adyen provides e-commerce companies with a payment platform that includes gateway, risk management, and front-end processing services. Adyen is a full-stack gateway and has famous merchants like Facebook and Spotify as clients. The company has brought in merchants thanks to its single platform that can support payments in any channel across 100 different payment methods and 200 countries. The firm processed $50 billion in 2015, up 100% from $25 billion in 2014. It earned $350 million in revenue in 2015, and expects to break $500 million in 2016. 
  • Heartland Payment Systems: Heartland helps businesses move beyond accept ng major credit cards. The company facilitates payment processing in-store, online, and offsite through multiple methods, such as EMV, Apple Pay, Samsung Pay, Android Pay, and gift cards. It also offers next-day funding, real-time reporting, and 24/7 customer service in the U.S.
  • Elavon: Formerly known as NOVA, this company is a subsidiary of U.S. Bancorp. Elavon processes payments in more than 30 countries for more than one million merchants.