High Delivery Expectations for the Holidays

(This article was written by Daphne Howland for RetailDive).

Dive Brief:

  • Two-thirds of frequent online shoppers have used Amazon Prime in the past year, and that has fueled expectations that shipping should be fast, free and trackable, according according to new research from public relations firm Walker Sands. A massive 81% say that free shipping is a primary motivator for shopping online more frequently, according to the report, which was emailed to Retail Dive.

  • For retailers that, unlike Amazon or Walmart, don't have a vast fulfillment network of their own, shoppers are open to getting their packages from third parties. A majority (57%) are willing to pay at least $5 for next-day shipping while another quarter (24%) would pay between $6 and $20, according to the report.

  • Frequent online holiday shoppers are demonstrating other intriguing behaviors, like a willingness to buy bigger ticket items without seeing them first. Nearly a third (30%) reported having spent more than $500 online without seeing an item first, and 13% have spent more than $1,000 without seeing an item first.

 

Dive Insight:

Shoppers are using their phones, voice assistants and other online searches to find items at the same price anywhere, and they want to ensure timely delivery of their gifts, according to Walker Sands. That makes high-quality images, up-to-date inventory and transparent delivery tracking critical.

Last-mile delivery — that great separation of online and in-store shopping that is eating into many retailers' margins — can be rationalized somewhat if retailers take into account consumers' willingness to pay for super-fast delivery and leverage their stores for pickup services for online orders, Walker Sands' research suggests. 

"Shoppers are more concerned with timely delivery than a reasonable delivery charge," according to the Walker Sands report. "Other options to consider include in-store pickup and third-party delivery services such as Uber or Deliv."

Some 41% of shoppers say they want hyperlocal delivery and 38% would pay for it, according to the "State of Shipping in Commerce" survey released earlier this year from fulfillment software company Temando. Just 24% of retailers offer it now, though 18% of retailers would like to offer it in the next 12 months. Almost 100% of shoppers also say they would like delivery date estimates, yet more than half of retailers currently don't offer this feature.

Voice has also emerged as a powerful ordering tool among frequent online shoppers. Nearly a quarter (24%) of self-identified frequent online shoppers 'often' or 'always' purchase through voice-controlled devices, and that could rise further this year, Walker Sands said. Some 44% of total survey respondents said they are 'somewhat' or 'very likely' to make a purchase through a voice-controlled device in the next year.

Amazon's Echo is dominating in that space, but Google Home is fighting hard with new retail partnerships. Amazon devices like the Echo and Dot speakers, along with apps in mobile devices, could provide some $10 billion in revenue by 2020 and be a "mega-hit," according to a note published this spring by investment bank RBC Capital Markets. That said, Google has been working hard to add features that Alexa doesn't have and enjoys a wide-open ecosystem.

The Home Depot said last week that it's joining Google Express this fall, adding Google Assistant's voice shopping ability for customers via the the Google Express website and app. Last month Walmart similarly announced its partnership with Google to bring voice shopping to Walmart customers. Some 35.6 million Americans will use a voice-activated assistant device at least once a month this year, according to research released in May from eMarketer. If that forecast proves correct, it would be a 129% jump in voice engagement with virtual assistants over last year. 

The battle is just getting started and will be fueled by the upcoming holiday season, according to Luke Starbuck, vice president of marketing at customer care automation platform Linc, who notes that the perception of voice assistance as futuristic has become a reality. A huge majority (87%) of retailers expect to be using AI for customer service and engagement within the next 24 months, while 41% are using it or experimenting with it already, according to Linc's research.

"This increasing popularity, coupled with retailers' desire to partner with voice platforms, will continue to snowball until voice platforms are the norm and an essential asset for any brand," Starbuck told Retail Dive in an email. "Especially following the announcement of the Walmart's partnership with Google Home just a few weeks ago, [Home Depot's] latest move indicates that there will be an ongoing battle for market control between Amazon Alexa and Google Home, especially as we head into the 2017 holiday sales season."

Amazon Predicted to Triple in Value Within 8 Years

This article was written by Tae Kim for CNBC).

One Wall Street firm predicts Amazon will be worth significantly more than $1 trillion in the coming decade.

MKM Partners reiterated its buy rating for the internet giant, saying Amazon will continue to dominate the e-commerce and cloud computing markets.

We think Amazon "should continue deploying all available capital until reinvestment opportunities become more limited or more risky," analyst Rob Sanderson wrote in a note to clients Thursday. "Our detailed scenario analysis implies that AMZN could exceed a $1.6 trillion valuation over the next 7-8 years."

Amazon has a market value of $465 billion through Wednesday, according to FactSet. Its shares have rallied 29 percent this year, compared with the S&P 500's 10 percent return.

Sanderson reiterated his $1,275 price target for Amazon, representing 32 percent upside from Wednesday's close.

He said Amazon's market share of U.S. retail spending rose nine times from 2008 to 2016, to 5.1 percent. He predicts the e-commerce company will reach 15.5 percent retail spending share by 2025 and "surpass Wal-Mart over time."

Sanderson is also bullish on the growth prospects for Amazon Web Services. He forecasts the company's cloud computing business can grow its sales 20 percent annually for the next eight years.

"We agree that cloud is the largest redefinition of computing since the PC-era and will significantly redistribute value across the tech food chain," he wrote. "AWS is growing much faster than Microsoft did on its path to PC-era dominance."

The analyst noted that Microsoft was able to grow its sales by more than 20 percent annually for 23 years after first reaching its leading technology position.

Post-Modern Nordstrom

(This article was written by Phil Wahba for Fortune).

Nordstrom is trying a smaller store on for size.

The upscale department store on Monday announced that it was opening a tiny 3,000 square foot store—a small fraction of its typical 140,000 square-foot emporia—in Los Angeles that will not carry any clothing merchandise but instead offer services like personal stylists as well as refreshments like beer and wine. Nordstrom, which operates 121 full service department stores along with a chain of Rack discount stores, said the move was a reflection of changing customer tastes and behavior. The Nordstrom Local store, as will be called, is set to open Oct. 3.

"As the retail landscape continues to transform at an unprecedented pace, the one thing we know that remains constant is that customers continue to value great service, speed and convenience," said Shea Jensen, Nordstrom senior vice president of customer experience, in a statement.

Nordstrom is just the latest major retailer struggling with declining sales at its physical stores, a particularly acute problem at department stores, and looking to smaller format stores as way to reach more customers - comparable sales at Nordstrom's full-service department stores fell 7% in the first half of the current fiscal year.

Such retailers include the likes of Target, which is focusing those efforts on city centers, and Kohl's  and Sears  which are shrinking many existing stores. Amazon.com has opened a number of bookstores with a far more limited selection than a Barnes & Noble  store on the bet that shoppers don't want to be overwhelmed by a physical store and that an e-commerce site can fill any gap.

This isn't to say Nordstrom will not continue to focus on its department stores- it is opening a new location in Toronto this week. Nor will one store, a small one at that, move the needle. But what it does show is Nordstrom's efforts to test out formats and services to anticipate where shoppers are going in terms of habits.

The Nordstrom Local will have eight dressing rooms to allow shoppers to on clothes and accessories like shoes, even though that merchandise will not be stocked at the store. Personal stylists will instead collect goods from nine area Nordstrom stores or via nordstrom.com. That harkens back to the more traditional approach of selling luxury goods, where a shopper trusts an expert to help select items. Still, that is not without risk at a time shoppers have ample tools at their disposal to figure out what trends are hot and appealing and are more likely to trust Instragram influencers that a store employee.

The store will offer services like manicures, as well as wine, beer, coffee or juice from an in-store bar in the hopes of turning a trip to Nordstrom into an outing. The notoriously tight-lipped company didn't say whether it had plans to expand the concept to more location. But Nordstrom Local would certainly provide a boon in terms of getting into new submarkets and providing new points of pick up for customers, crucial as the e-commerce wars heatup. Any orders placed on Nordstrom.com by 2 p.m. can be pick at the Nordstrom Local, and the store will also accept returns of items bought online or from other Nordstrom stores. What's more, Nordstrom Local will staff tailors to provide alterations.

Should You Fear the Robot Apocalypse?

(This article was written by Kevin Drum for Mother Jones).

People  need to be very clear on the difference between automation and artificial intelligence. You can’t just casually refer to “the job-destroying potential of robots, artificial intelligence and other forms of automation.” These are totally different things.

Plain old automation does indeed usually produce more jobs than it destroys. This applies to more than just steam engines and electricity, and an ATM is nothing special in this regard. It’s ordinary, old-school automation even though it relies on microchips and communications networks. Of course ATMs can’t do relationship banking. How could they?

Artificial intelligence is entirely different. If you don’t believe we’ll ever get it, that’s fine. Make your case. But if you do believe it’s coming in the near future, then you need to treat it as a completely different thing. Pretty much by definition, true AI will be able to do anything a human can do. So no matter what new jobs you think AI will create, then by definition AI will be able to do those jobs too. If true AI is in our future, the robot apocalypse is very much something we should worry about.¹

 

 

Google and Walmart Partner Against Amazon

(This article was written by Daisuke Wakabayashi and Michael Corkery for The New York Times).

SAN FRANCISCO — Google and Walmart are testing the notion that an enemy’s enemy is a friend.

The two companies said Google would start offering Walmart products to people who shop on Google Express, the company’s online shopping mall. It’s the first time the world’s biggest retailer has made its products available online in the United States outside of its own website.

The partnership, announced on Wednesday, is a testament to the mutual threat facing both companies from Amazon.comAmazon’s dominance in online shopping is challenging brick-and-mortar retailers like Walmart, while more people are starting web searches for products they might buy on Amazon instead of Google.

But working together does not ensure that they will be any more successful. For most consumers, Amazon remains the primary option for online shopping. No other retailer can match the size of Amazon’s inventory, the efficiency with which it moves shoppers from browsing to buying, or its many home delivery options.

The two companies said the partnership was less about how online shopping is done today, but where it is going in the future. They said that they foresaw Walmart customers reordering items they purchased in the past by speaking to Google Home, the company’s voice-controlled speakerand an answer to Amazon’s Echo. The eventual plan is for Walmart customers to also shop using the Google Assistant, the artificially intelligent software assistant found in smartphones running Google’s Android software.

Walmart customers can link their accounts to Google, allowing the technology giant to learn their past shopping behavior to better predict what they want in the future. Google said that because more than 20 percent of searches conducted on smartphones these days are done by voice, it expects voice-based shopping to be not far behind.

“We are trying to help customers shop in ways that they may have never imagined,” said Marc Lore, who is leading Walmart’s efforts to bolster its e-commerce business. He came to Walmart last year after the retailer bought the company he foundedJet.com.

Google is a laggard in e-commerce. Since starting a shopping service in 2013, it has struggled to gather significant momentum. Initially, it offered free same-day delivery before scrapping it. It also tried delivery of groceries before abandoning that, too.

If Amazon is a department store with just about everything inside, then Google Express is a shopping mall populated by different retailers. There are more than 50 retailers on Google Express, including Target and Costco. Inside Google Express, a search for “toothpaste” will bring back options from about a dozen different retailers.

Google said it planned to offer free delivery — as long as shoppers met store purchase minimums — on products purchased on Google Express. Google had charged customers a $95 a year membership for free delivery. Amazon runs a similar program called Amazon Prime, offering free delivery for members who pay $99 a year.

The partnership with Google represents one of several steps that Walmart has taken over the past year to strengthen its online business.

Walmart’s app. Walmart said last week that its online sales increased 60 percent in the second quarter from a year earlier. CreditGoogle Express

In January, Walmart began offering free, two-day shipping on more than two million items — a move that takes direct aim at Amazon Prime, whose members who pay an annual fee for fast shipping and other services like movie streaming.

Walmart has also been trying to integrate its digital business with its vast network of more than 4,690 stores.

Many brick-and-mortar retailers are struggling with what to do with their increasingly empty stores, but Walmart is partially repurposing its stores into e-commerce fulfillment centers.

Customers can now order their groceries online and then pick them up at hundreds of stores. For some items that they purchase online and pick up in a store, customers receive a discount. In-store pickup reduces shipping costs for Walmart, but offers a similar level of convenience to the shopper as home delivery.

The efforts seem to be paying off. Walmart said last week that its online sales — including online grocery — increased 60 percent in the second quarter from a year earlier. It was a big driver in the company’s overall increase in quarterly sales.

Efforts like online grocery seem to be gaining traction, but Walmart hopes the benefits of other moves — like its $3.3 billion acquisition of Jet.com, an online retailer focused on urban millennials, and its purchase of the boutique clothing businesses Modcloth and Bonobos — will come down the road.

Some analysts question how Walmart will add to its core low-price retail business at the same time it is trying to manage bolt-on acquisitions. While the company’s sales were up, its profit margins in the second quarter slipped, in part because of its spending on e-commerce initiatives. With this new partnership, Google Express will offer items only from Walmart.com, and not from Jet.com or Walmart’s online clothing sites.

“Walmart can’t lose on the low-cost proposition,” said Erich Joachimsthaler, chief executive of Vivaldi, a brand consulting firm. “But convenience, convenience that is where the game lies.”

Walmart has a long way to go to catch Amazon. Walmart’s website sells 67 million items, up from 10 million early last year. Amazon sells hundreds of millions of items.

In July, about 83.6 million people visited Walmart’s website, nearly half as many visitors as Amazon had, according to comScore, a media measurement company. Jet drew an additional 10.9 million visitors.

“I am not saying Walmart is ever going to catch Amazon online,” said Craig Johnson, president of Customer Growth Partners, a retail research and consulting firm. “But instead of being embarrassed by Amazon, it can be a strong No. 2.”

Larger Orders and Mobile Traffic Fuel E-Commerce

(This article was written by Glenn Taylor for Retail Touch Points).

It’s not exactly news to note that more consumers are shopping online more often. What is different is that this growing group also is spending more on their purchases. For the first time, shopper spend growth (8%) has outpaced traffic growth (6%) as the primary driver of digital commerce growth (14%), according to the Q2 Salesforce Shopping Index.  

Mobile is playing a role in this growth, with its traffic share jumping to 57%, a 23% year-over-year increase. An even higher percentage of consumers (59%) reported using their phones while shopping in a physical store within the last three months.

“For years, we’ve been thinking that mobile is purely digital, but it turns out mobile actually has more of an impact on the store environment,” said Rick Kenney,Head of Consumer Insights at Salesforce Commerce Cloud in an interview with Retail TouchPoints. “We see that as a massive opportunity. It’s clear that mobile is the most disruptive force on retail — not just digital — since the onset of e-Commerce in the 1990s, but the investments thus far have primarily been geared towards the digital side of the experience.”

While there remains a gap between mobile’s traffic share (57%) and its order share (33%), the latter figure has steadily increased from the 20% in Q2 2015. Kenney believes integrated mobile payments are going to be the next step that drive increased order shares and “cuts the entire second half of the sales funnel off.” He noted that Salesforce customer Deckers experienced significant improvements last holiday season after introducing Apple Pay, including reduced fraudulent orders and increased conversion rate.

“85% of the people that used Apple Pay did it prior to starting a checkout,” Kenney said. “They either used Apple Pay on the cart page or the product detail page, and didn’t need to see a checkout. That’s the friction-reducing hope of that single-tap experience, that you can buy without having to fumble through a credit card or fill out form fields.”

3 Ways To Improve The Shopper-Product Connection

The Index highlighted three areas of investment that will lead towards improving the shopper-product connection:

  • Findability;

  • Personalization; and

  • The Brand Connection.

Findability is important because today’s consumer is so engrained in site search, particularly through channels such as Google and Amazon. Site search accounts for 10% of site visits and 23% of all revenue. But Kenney argued that the most important part of findability is what happens when shoppers receive search results. This findability goes hand-in-hand with personalization, which retailers must use beyond the product page if they want effective campaigns.

“Shoppers are starting to use personalization in site search results,” Kenney said. “You and I can search on the same exact site and both type in ‘blue jeans,’ but perhaps I tapped around in the sales section before I made a search while you came in through a paid link or a new arrival. You, as the full-price shopper, might see the full-price jeans at the very top at that site search set, whereas I’m going to see the sale jeans at the top of my search set.

“It’s the same terms with different shoppers, different result sets, and that’s a great spot to impact,” Kenney added. “Bringing personalization into a productive setting such as a site search increases the likelihood of connecting the shopper with a product they’d be interested in.”

The third investment area, the brand connection, may seem obvious for retailers, but differentiation is often difficult in a market oversaturated with companies selling the same products. Retailers must elicit specific feelings that shoppers want to experience throughout their journey, regardless of where or what they are purchasing.

Kenney pointed out American Giant as a brand that successfully uses storytelling on its web site and within its product pages to emphasize its premium apparel, which is entirely manufactured in America.

“If someone may be turned off by the price point, by the time a shopper reads through that story, they may say, ‘I get it. I want to try this out.’” Kenney noted. “There is an educational aspect of storytelling that exists to actually connect with that shopper.”

The Shifting Winds of Retail

(This article was written by Beth Corby for Business2Community).

JCPenney is down to its last cents. In March, the company announced it would close 138 department store locations, and its stock hit an all-time low price of $4.73, less than its opening day price in 1978. Its sales figures have shown a desperate downturn, down 37% from 2006. All roads lead to bankruptcy for the once-respected retailer.

What went wrong?

After the financial crisis, JCPenney was poorly positioned to adapt to changing consumer behaviors. They were dependent on foot traffic from suburban malls, which were failing because too many had been built, people were buying less, and online shopping was gaining momentum. They were loath to build a satisfying e-commerce experience because their core customers skewed older and less tech-savvy. Even now, search “JCPenney mobile” and the first result is a physical store location in Mobile, Alabama.

The fall of JCPenney marks the end of an era of American shopping, one that relied on customers seeking a particular kind of convenience — a one-stop destination where you could get everything you needed, from big-and-tall suits to BBQ brushes, at middling prices. As the megastore dies out, however, new modes of shopping are taking its place.

Welcome to the ‘Death of Retail’

The demise of JCPenney is part of a larger phenomenon that has grim reaper analysts announcing the “death of retail.” With Amazon and other online shopping outlets offering a greater selection of goods than ever before, customers no longer need the bundled convenience of department stores and shopping malls. A forecast from Credit Suisse predicts that by the end of 2017, 8600 stores will close, and by 2022, 25% of American shopping malls will no longer exist. As of March the report seemed to be on track, with 3571 closures announced. JC Penney sits in the troubled company of its competitors, including Sears, Macy’s, Dillard’s and Nordstrom, who are all downsizing. In May 2016, 6,000 in-store retail jobs were lost.

On the other hand, Amazon is seeing enormous growth. In 2015, Amazon announced $82.7 billion in sales, compared with Walmart’s $12.5 billion. Amazon has quite literally eaten other retailers with acquisitions of Whole Foods and Zappos. In an incredible statistic, half of U.S. households have Amazon Prime subscriptions. Industry standards are being reset in Amazon’s image. In order to survive, retail brands have to offer free shipping and returns, lower price points, instant checkout and delivery everywhere.

Consumer preferences don’t indicate that Amazon should be the only shopping option on the planet, however. Buyers still want the personal care and attention that specialty shops offer and the prices that big, efficient businesses do. They want to identify with brands. And finally, they want the shopping experience to be stress-free. The changes in shopping are only making the retail industry more democratic, competitive, and crowded than ever. Yes, the so-called “death of retail” is a misnomer. In fact, where JC Penney reported its worst holiday season ever in 2016, the overall sector saw the best numbers in recent history.

Survival of the Stylish

The best and brightest retail brands have bet big on technology, employing cutting edge methods for more personalized service. Their dedication to modernization has earned them the trust and admiration of a new generation of buyers, who are used to having everything at their fingertips. And while businesses are sweating to keep up, shopping has never been breezier.

So without further ado, let’s look at some of the downright Darwinian adaptations companies have made to stay alive in the face of doom, gloom, and Jeff Bezos.

The best and brightest retail brands have bet big on technology, employing cutting edge methods for more personalized service.

Urban Outfitters – Think big, stay local

Urban Outfitters speaks authentically to millennial customers through hyper-local marketing efforts and behavioral analysis. In early 2017, they sent out a series of push notifications directed at women in cities who like going out. The notification about finding a party dress linked directly to a page in the Urban Outfitters app where users could buy one. The campaign was hugely successful, resulting in a 146% lift in revenue and a 75% increase in conversions.

How did they do it? They:

  • Created segments of women who had checked into nightclubs or bars from their phones in certain cities. To ensure the data was accurate, Urban Outfitters partnered with location marketing specialists at PlaceIQ and mobile marketing wizards Appboy.
  • Sent out a personalized push notification with an emoji for added fun
  • Deeplinked to the dresses page in the app so customers didn’t have to search once they swiped open the notification

The notification was the opposite of disruptive to those who received it. Rather, it provided a brief message in a familiar SMS-like format. It proved that the UO app was worth the download, offering relevant information that was unavailable elsewhere, without sounding like spammy brandspeak.

PacSun – It pays to be social

Once a mallrat staple for surf bums and wannabes, Anaheim-based PacSun has proven that they can keep pace with a new teenage demographic by showing a deft understanding of what makes compelling social media content. In particular, they’ve leveraged the power of Instagram. Through evocative filters, recognizable faces, and crowd-sourced photos, PacSun has amassed over 1.8 million followers on the platform. To get young ‘grammers’ attention and stand out in the feed, they:

  • Invest in famous influencers – PacSun has partnered with Kendall & Kylie Jenner since 2012 on a clothing line, which they promote heavily on Instagram.
  • Invest in microcelebrities –They’ve smartly picked up on the rise of lesser-known influencers, who amass followers on Instagram through a combination of looks, personal style, and je ne sais pas. PacSun always tags models in posts, like Sophia Gasca, who has 45K followers herself.
  • Started a multi-dimensional hashtag – #mygsom stands for “My golden state of mind” and centers around the theme of California cool. The tag has amassed over 206k Instagram posts of surfers, skateboards, sun-drenched afternoons, music festivals, palm trees and mountains from users around the world. The company also launched a content-rich site around the tag, complete with a contest to win a trip, and a rewards program for buyers of PacSun goods.

A strong online identity has the power to shape real-life consumer behavior, especially for young buyers who spend tons of time on social media. PacSun has struck gold with a true-to-its roots, nostalgia-tinged brand identity, and the real people who live out its free-spirited dream. Teenagers naturally want to be a part of it.

Fabletics – Site to store, without breaking a sweat

At first glance, it seems Fabletics is reverse-engineering the death of retail by turning its online business into brick-and-mortar shops. Kate Hudson’s subscription-based athleisure brand charges consumers $49.99 monthly for discount athletic apparel. They recently opened 22 stores with the aim of providing shoppers with what e-commerce cannot: the ability to try before they buy, and an opportunity to bump into other shoppers who embody the fit lifestyle they aspire to.

Their site-to-store strategy is based on a few key factors:

  • Syncing online with reality – “We want to completely mirror the stores to the online experience,” parent company JustFab CEO Adam Goldenberg told Forbes. He also mentioned that 40% percent of Fabletics’ in-store purchases have been made by online shoppers who wanted to try things on in person. If they’re not ready to purchase, or something’s out of stock, customers are able to record what they liked about a product and access that information from the Fabletics site or app anytime.
  • Selling subscriptions in person – Fabletics store employees are encouraged to recruit shoppers to the online VIP program, making the most out of face-to-face conversations.
  • Compare and contrast – Fabletics positions stores next to its more famous (and more expensive) competitors, Lululemon and Athleta, making the association between the brands more apparent.

An e-commerce-first brand like Fabletics may already be a step ahead of other retailers, but by adding stores, the company is committing to its longevity. No matter where the point of sale happens, Fabletics knows that customers crave the personal interactions they have with sales reps, the sense of belonging to a community of healthy people, and the thrilling feeling of finding the perfect fit.

Starbucks – that’s a latte loyalty

Like Fabletics, Starbucks aims for a seamless and personalized digital-to-real life experience. Its strongest digital asset is its industry-leading loyalty program, Starbucks Rewards, which rewards customers not only with free beverages, but also more personal convenience as use increases. In 2016, Starbucks Rewards had over 12 million members and surpassed the $1 billion mark in funds uploaded by users to their loyalty cards. In Q1 of 2017, rewards customers accounted for 36 percent of the company’s U.S. revenues.

 

 

Walmart's E-Commerce Acquisition Spree

(This article was written by Yuyu Chen for Digiday).

Amazon poses a threat to brick-and-mortar stores that are having trouble getting shoppers to visit their stores. For Walmart, that means fighting back against Amazon by beefing up its digital portfolio. The chain has been on an acquisition spree lately, snapping up Jet.com, Bonobos, Moosejaw, ShoeBuy and ModCloth, and it is now reportedly in talks to acquire Birchbox. Here’s what you need to know about Walmart’s recent e-commerce acquisitions.

The key numbers:

  • Walmart’s e-commerce sales have increased 63 percent in the first three months of this year, compared to 29 percent last quarter. (Walmart doesn’t disclose overall e-commerce sales in its quarterly report.)
  • Acquisition spending: $4 billion, including Jet.com, which Walmart bought in 2016
  • At $3.3 billion, Walmart’s purchase of Jet.com could be the most expensive e-commerce acquisition in history.
  • On average, e-commerce preference for Walmart has dropped by 2 percent year over year from 2011 to 2016, compared to around 15 percent year-over-year increase for Amazon, according to research firm Prosper.
  • On average, only 10 percent of Walmart consumers shop online, according to a survey of 2,750 U.S. consumers ages 18-74 by marketing consultancy Magid Associates.
  • Amazon agreed to acquire Whole Foods for $13.7 billion, with $13.4 billion in cash and the remainder in debt.

What Walmart is buying
Under the leadership of Marc Lore, head of e-commerce for Walmart and former CEO of Jet.com, the retail giant has made bold moves in snapping up e-commerce startups across footwear, men’s fashion and potentially subscription boxes. Jim Cusson, president of retail branding agency Theory House, said that through those acquisitions, Walmart is buying a new consumer base — upper-middle-class people who normally wouldn’t shop at Walmart — and these new relationships would bring higher margins.

Meanwhile, Walmart is acquiring knowledge, as each new e-commerce acquisition brings new talent on board with startup mentality and bravado that can accelerate learning and decision-making. “I’d argue that Lore is making decisions with more speed and decisiveness than your ‘homegrown’ Walmart executive would traditionally make,” said Cusson.

Wells Davis, chief strategy officer for agency David&Goliath, also said Wall Street rewards Walmart’s strategy, as the company sees an immediate return on those investments. “It would be very expensive for Walmart if it just invests in its in-store experiences, and it would take a long time for the company to see the results,” said Davis.

But brick-and-mortar stores are still Walmart’s major focus. As Doug McMillon, CEO for Walmart, described in the earnings call in May, while those acquisitions have received a lot of attention, the company’s plan in e-commerce is not to buy its way to success. “The majority of our growth is and will be organic,” he said.

Would e-commerce acquisitions help Walmart compete with Amazon?
Yes, at least from a search perspective. Most retail purchases — even if they take place in store — started with online searches that Amazon typically owns. So acquiring more e-commerce retailers is a game of trying to win consumers’ online searches, said Cusson.

“We know that Amazon is currently capturing much of that traffic, so if Walmart can introduce a great number of opportunities to be found, it will help in its battle with Amazon,” he said.

Davis also believes that e-commerce startups can help Walmart become a more upscale brand and offer shoppers more customized experiences.

But it’s still too early to tell how successful Walmart can be with those acquisitions. After all, driving the lowest price is still a core value of Walmart, but that is not the foundation of the e-commerce brands Walmart has purchased. And company culture could be a big challenge. For instance, Walmart reportedly doesn’t allow in-office drinking, so Jet.com had to move its regular Thursday evening happy hour out of the office.

“Some of those brands are favored by niche consumers. But when Walmart puts its hand on them, it bends their customer loyalty,” said Cusson. “There is a real possibility that some of these acquisitions may disappear within five years. But with no risk comes no reward.”

The History of Digital Rights Management

(This article was written by Ernie Smith for Tedium).

Digital rights management seemingly came out of nowhere to define our relationship with technology in the modern day. Popularly, it seemed like its birth had come as a direct response to the growth of piracy in the film and music industries, but what’s interesting—and perhaps not properly contextualized—is that it existed for years prior to Napster, and had a technical component before the Digital Millennium Copyright Act gave it a legal component.

“We felt that this would be impractical and inconvenient for users and expensive for IBM. We also concluded that any single-machine locks and keys, or special time-out and self-destruct programs, would be onerous to our best customers and not effective against clever thieves. Because we could not devise practical physical security measures, we had to rely on the inherent honesty of our customers. Our hope was that legal protection and criminal prosecution would limit the piracy problem.”

— Watts S. Humphrey, an IBM employee in the late 1960s, discussing the decision by the company to move away from any effort to heavily protect its software through encryption. The issue came up for the company in 1969, after the firm decided to unbundle its software from hardware. Decades later, IBM would produce its own DRM technology called Cryptolope.

The roots of modern digital rights management came from the world of libraries

The word “middleware” isn’t sexy. Nor is the word “container.” And “encryption,” while slightly more sexy than the prior two words, just isn’t the kind of phrase that rolls off the tongue.

“DRM”? Now that’s a sexy phrase—a memorable one that sticks with people. But the terminology didn’t come about right away, and a big part of that has a lot to do with the fact that the problem of securing copyrights online was something that engineers and researchers were initially focused on.

Specifically, one company, made up of a whole lot of academically minded engineers, lined the roads on which a lot of secured content would drive down. That company was called Electronic Publishing Resources, Inc.—a firm that used the words “middleware,” “container,” and “encryption” to describe its earliest attempts at the creation of DRM.

The firm was founded by a guy named Victor Shear, who built his name in the information management sector. In the ’80s, he was the head of a Maryland company called Personal Librarian Software, which produced a database management system that could effectively manage historic information. This company, which mostly served large corporations, exposed some of the earliest roots of digital rights management, as it Shear’s company pondered ways to limit access to different kinds of information.

A 1986 patent, credited to Shear, explained the issue as one of “return on investment”, in which methods of “tamper-proof” protection, such as a self-destruct feature, were added to the software to limit how much access a user had based on their payment. A 1989 article for Online noted that the goal of the software, which was literally called ROI, was to allow for access to CD-ROM databases both within libraries and outside of them, while ensuring the creators of those databases got paid. Per the article, the method was described as such:

PLS believes that libraries, as centers for subscription-based CD-ROM usage, would “seriously undermine potential CD-ROM publishing subscription revenues by providing users with an alternative to contracting for expensive subscription licenses.” PLS believes that ROI would lessen the need for reliance on libraries and information centers “while providing a level of convenience and real-time response with which libraries can not compete.”

This model clearly wasn’t long for this world—as I noted recently, encyclopedias were very much a race to the bottom once CD-ROMs came along—but it did inspire Shear’s follow-up company, Electronic Publishing Resources, later renamed InterTrust. By the mid-1990s, InterTrust had strongly advanced the ideas around the monetization and security. And they did so with some of the most complex patents you’ve ever seen. This one, for example, is 178 pages long (in tiny type), and includes 100 separate patent illustrations.

In the paper “DigiBox: A Self-Protecting Container for Information Commerce,” three of Shear’s colleagues—Olin Sibert, David Bernstein, and David Van Wie—explain, in depth, the process of creating a secured container around a piece of information, with the goal of protecting the object’s commercial value.

“Without rules to protect the rights of content providers and other electronic community members, the electronic highway will comprise nothing more than a collection of limited, disconnected applications,” the authors argued.

The technology, called DigiBox, was perhaps the first, and most important, piece of modern digital rights management software. It would soon have many imitators—but none of them would be able to compete in quite the same way.

120+

The number of companies involved in the Secure Digital Music Initiative, a group formed in 1998 with the goal of creating an open framework for sharing encrypted music—an unusual goal when you explain it like that. The group tried to balance the interests of both the music industry and the average consumer: “SDMI’s work is based on the core principles that copyrights should be respected and that those who wish to do so should be able to use unprotected formats,” the group explained in a fact sheet. SDMI ultimately failed to give us a universal DRM standard, but its concepts did create a framework for a technology that’s still heavily used today: The Secure Digital memory card.

Big companies suddenly become interested in DRM’s potential value

In the early ’90s, idealists like Electronic Frontier Foundation founder John Perry Barlow saw the internet as an opportunity to fix the status quo of information exchange. Rather than keeping information locked away, the digital revolution, particularly online, would radically reinvent copyright.

“Everything you know about intellectual property is wrong,” Barlow explained at the beginning of one essay on the topic for Wired.

Another digital visionary, a Xerox PARC research fellow named Mark Stefik, tried his hardest to prove Barlow wrong. In a 1997 essay for the Berkeley Technology Law Journal titled “Shifting the Possible: How Trusted Systems and Digital Property Rights Challenge Us to Rethink Digital Publishing,” Stefik specifically references Barlow’s comments, then calls them short-sighted, emphasizing that copyright did have a role in the digital revolution. He then, in a lengthy, technical essay, described the ways that digital rights management could work in practice.

“With digital works, it need not be the case that transfer rights are free or universally granted,” Stefik noted in a section about the difference between copying (which Xerox, of course, is known for) and transferring information. “Publishers could charge a small fee whenever a work is transferred between repositories. The same mechanisms that prohibit copying without a right to copy could prohibit transferring without a right to transfer. The same billing mechanisms for a copyright work for a transfer right. The technology itself is neutral on this point. Trusted systems could enforce either policy.”

The work of Stefik and others at PARC eventually came to be known as ContentGuard, a technology that would grow in prominence as the interest in digital rights management grew in the industry.

Not long after Xerox PARC formulated the idea, IBM licensed its own version of it from Xerox, putting its own twist on it, calling it a cryptographic envelope, or cryptolope. (Is “cryptolope” a sexy term?) The idea was part of IBM’s efforts to create “plumbing” online—that is, they wanted to run the internet’s backend, and offering digital rights technology was a small part of it. It sold off its content businesses, but offered its cryptolope as a way to secure online distribution of both content and Java applications.

IBM’s early efforts ultimately failed in part because its technologies asked too much of ’90s computers. But the fact that IBM cared at all showed that DRM would soon become the lingua franca of big business, whether consumers liked it or not.

60KB

The size of DeCSS, the utility that infamously broke the Content Scramble System, a DRM technology that the movie industry had pushed for including in the DVD format. DeCSS, the work of two European security experts, came about in 1999, just three years after CSS was launched, and its creation set the stage for the widely successful digital film piracy industry we have today.

The earliest DRM building blocks have proven most successful in the courtroom

If you look at the InterTrust website today, they look like basically any other enterprise cloud computing player, offering up tools that are clearly designed for large businesses instead of mere mortals.

But InterTrust, as a company, wouldn’t exist today if it were not for an incredibly ballsy lawsuit against Microsoft. In 2002, the company sued over the technologies in Windows Media Player—then expanded the suit to cover every major product line Microsoft had at the time, including Windows XP, Microsoft Office, and the Xbox.

The move came in part after a lack of success selling software—including a failed effort at launching a digital music store named after its encryption technology, DigiBox.

But it also was the result of the fact that InterTrust had created patents so immaculate and well-considered that it would have been wrong not to sue—you don’t create a patent with 100 separate drawings to just put on the shelf, never to use again. And they seemed to know this going in. Of InterTrust founder Victor Shear, one former employee told Fortune: “He never let us forget that we were not ‘protecting music,’ but ‘developing the basis for a civil society in cyberspace.’”

And that civil society in cyberspace paid well. Just a few years after Microsoft agreed to a major antitrust settlement, it agreed to a major InterTrust settlement, with the DRM maker receiving a $440 million payday. The gamble worked.

Years later, InterTrust received a similar settlement from Apple, though it’s not all about litigation for the company. Earlier this year, they launched a partnership with Google called PatentShield to defend small startups against patent lawsuits.

While InterTrust’s approach has proven effective over the years, its best-known DRM competitor, ContentGuard, has had a bit less luck doing the same thing.

It was spun off from Xerox in 2000 at the behest of Microsoft, and the bones of the firm were eventually sold off to a trio of firms—Microsoft, Time Warner, and Thomson—and its technology helped lead the way for Microsoft to produce its own DRM, PlayReady. (It also helped the acquisition took place around the time MS settled with InterTrust.)

But in 2011, the company was sold to Pendrell, a firm that invests in valuable intellectual property.

ContentGuard actually makes new apps with its technology—it built a Snapchat clone in 2014, for example—but it’s better known these days for suing the pants off of companies with DRM interests, like Apple, Samsung, and Google.

Those lawsuits, taking place in the patent-lawsuit-friendly Eastern District of Texas, have not gone well, with courts often finding against ContentGuard.

It’s probably because they didn’t use as many patent drawings.

A decade ago, Apple CEO Steve Jobs famously put a puncture hole into the heart of digital rights management as a consumer platform.

In an essay titled “Thoughts on Music,” Jobs made the case against licensing his company’s FairPlay encryption software, which he noted would have to be hardened up significantly if it were sold to other vendors and made universal. He then made the case that nearly all music was already sold in a DRM-free format, using these old, outdated things called CDs.

“So if the music companies are selling over 90 percent of their music DRM-free, what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system? There appear to be none. If anything, the technical expertise and overhead required to create, operate and update a DRM system has limited the number of participants selling DRM protected music,” he wrote.

What’s fascinating about this document is that, 38 full years after IBM decided against what became DRM for its business software, Jobs made the case against it with much of the same kinds of thinking that his company’s onetime biggest competitor used: It hurts consumers who play fair far more than it hurts those who steal content; it was frustrating and inconvenient; and it required a large investment of time and money that could be better spent elsewhere.

It was a seed of an idea that proved far more effective than any software-based security system, closer in mindset to John Perry Barlow than Victor Shear.

In just a few years, Jobs’ arguments paved the way for a change in negotiating strategy, and effectively killed digital rights management for the music industry.

Of course, it only came back after Spotify became popular and killed the idea of ownership entirely.

How Shipping Can Give You a Competitive Edge

(This article was written by Devin Johnson for Total Retail).

How many times have you put items in your cart and started the checkout process only to see a $10 shipping charge and close your browser? What about when you look at the options and realize there's no overnight for the item you need right away? More than likely you shut off the computer, get in your car and try to find a feasible replacement at a nearby store.

Shipping cost and delivery options have a major impact on a consumer's decision to click that final "Submit Your Order" button. That's why it's so important to provide the most effective and reliable e-commerce shipping options to your customers.

In the end, satisfying and retaining customers is one of the most vital parts of running a business. Buyers rely on great customer service, and a big part of that is the safety, timing and price of receiving their product(s). Customers that suffer a bad experience when it comes to shipping may choose not to buy from you again. Building an effective and reliable e-commerce shipping strategy will help to set your company apart from the competition.

Give Customers Options They Can’t Refuse

If a customer reaches the payment page and is suddenly faced with a lack of shipping options or high shipping costs, they’ll look elsewhere until they find an acceptable price. It may not exist, but they'll keep looking until they find it. If they can’t, consumers will often decide to abandon that purchase for good. Being able to offer up everything from economy to expedited services both domestic and internationally will stop consumers from having to leave your site for another to find better shipping options.

Fast and Reliable Shipping Will Win Customer Loyalty  

A great goal for any e-commerce business is to continually increase customer retention rates. Meeting and exceeding expectations will win your customers over. The ability to track a package and confirm a delivery is a great way to ensure trust in those buying from you. Furthermore, if you have the ability to get the product to the customer in less time than they expected, they'll likely continue buying from you in the future.  

Finding a Sweet Spot Benefits You and Your Buyers

Shipping is all about price and transit time. The key is finding the point between acceptable transit times and pricing for your customers that still allows you to make money. As companies evolve, they're all trying to find the fastest shipping for the cheapest rate. Right now, everyone wants to compete with “free shipping,” but who can offer free shipping if it eats into their margins? This is why providing things like delivery tracking and transit options will help you to combat this issue.

It's tough for any business to determine the best shipping options for the company and its customers. Set aside time to plan the best e-commerce shipping strategy for your unique business. Research different shipping options, including technologies that can help you determine which carriers will be help you find the shipping sweet spot for you and your customers. Each business is different, and finding the most effective shipping for you will help you to gain a competitive edge in the eyes of consumers.

Retailers Are Struggling to Hire

(This article was written by Jennifer McKevitt for Supply Chain Dive).

Dive Brief:

  • As retail warehouses grow and expand, the need for workers to staff them becomes increasingly critical, Forbes reported Wednesday.
  • The number of people working in warehousing and storage tallies roughly 950,000 in the U.S., though more are needed according to data compiled by the Bureau of Labor Statistics
  •  From 2011 onward, warehouse worker growth has been dramatic, resulting in nearly 40,000 new jobs a year.

 

Dive Insight:

The ongoing battle between Amazon and other e-commerce sites and brick-and-mortar retailers is particularly contentious when it comes to employment. With consumers abandoning retail at a rapid pace, it seems that future employees aren't keen to sign on to what may be perceived as a sinking ship. 

And while Amazon's recent hiring fair in Baltimore saw 20,000applicants when it needed only 1,200, 3PLs like FedEx are also competing with retailers, offering more benefits and usually better pay than retailers. The fact that perks exist for workers who stay on past peak season in December (though hiring starts in August) also indicates that the opportunity for long-term flexible work is more likely to be found at a 3PL than at a retailer, which often requires demanding hours, especially during the holidays.

But there are exceptions: in recent years, chains like Target hired roughly 70,000 seasonal workers, while Walmart, though hiring 60,000 extra hands for the holidays, notably describes them as temporary, meaning that the chance to stay on, let alone receive benefits, is unlikely. Retailers might struggle near peak season as 3PLs snap up workers wanting full-time jobs with higher pay and benefits, unless retailers can offer something more attractive and competitive.

7 Companies to Watch in Sustainable Shipping

(This article was written by Lauren Hepler for GreenBiz).

In the realm of consumer cars, going all-electric today can be as simple as deciding which brand you prefer, how much range you need and the amount of money you want to shell out. For instance, are you shopping Tesla versus BMW or Chevy versus Ford?

The same can't be said, however, for commercial fleet operators looking to electrify their transportation supply chains. Limited range, lacking alternative fuel infrastructure, long charging times and rapid turnover in vendors offering all-electric commercial vehicles are all barriers to more aggressive action. 

"The problem is the industry is just not there yet," PepsiCo Senior Supply Chain Director Mike O'Connell told me earlier this summer. Still, he added, "I’m very optimistic about what’s coming."

That's not to say the sustainable shipping space has stagnated, though. From new types of on-demand trucking models to incremental electrification among large corporate fleets, here's a rundown of seven companies to watch in the delivery space:

1. UPS

Amazon may be out in front when it comes to electric drone delivery, but logistics giants such as UPS and DHL also already are at work on honing new alternatives to traditional gasoline- or diesel-powered trucks.

In addition to testing out designated neighborhood drop-off locations in a bid to cut emissions from driving door to door on multiple delivery attempts, UPS late last year announced an investment in 200 new hybrid electric trucks. Employing smaller vehicles with much lower emissions footprints is another ongoing effort.

2. Workhorse

When big brands such as UPS and FedEx need un-traditional delivery vehicles, truck and drone manufacturer Workhorse is one player they look to for supply.

The company, an outgrowth of a company called AMP Electric Vehicles founded in 2007, sells a range of vehicles with different delivery capabilities, from all-electric pick-up trucks to electric helicopters to bigger electric trucks with up to 120 miles of range.

3. Chanje

Los Angeles-based electric delivery vehicle startup Chanje (yes,  it's still pronounced "change") publically launched this spring with ambitions of cornering the market for electric vans with up to 100 miles of range.

Companies such as e-Tuk are experimenting with even smaller electric vehicles, particularly in dense, urban delivery environments. All told, a recent Research and Markets analysis predicts that the last-mile vehicle industry could be worth up to $792 billion by 2028.

4. Uber

Ridesharing company Uber is best known for shipping customers from location to location at the touch of a smartphone. But as the Uber Eats food delivery venture and more recent forays with Uber Freight illustrate, the company's logistics platform isn't short on potential variations.

How exactly ridesharing providers including Uber and primary rival Lyft might move to further integrate electric vehicles into their fleets is one question across the board. What that effort might look like in an on-demand freight hauling service (with or without a human driver) is another.

5. Convoy

Ironic though it may be, the Uber-for-trucking idea didn't actually start with Uber. On-demand short-haul trucking startup Cargomatic was an early leader in the space before making headlines for reportedly burning through an initial $15 million in funding. 

Now, however, a new crop of intermediary platforms aim to match companies in need of shipping with available truck space. Just look at Convoy, which raised $62 million in a Series B funding round this spring to expand offerings for customers such as Unilever and Anheuser-Busch.

6. Transfix

Also active in the category of tech-enabled trucking is Transfix, a four-year-old New York company that has raised north of $78 million for its software platform designed to connect small-scale truckers to customers in need of freight services.

Like Convoy and other customers, the pitch is that companies can save money and cut emissions by opting for on-demand services instead of maintaining their own fleets. Down the road, one prospect to watch is how Transfix and others in the space might look to integrate hybrid or electric offerings.

7. Walmart

Given the amount of merchandise the world's biggest brick-and-mortar retailer has to move, it makes sense that the company would be testing the waters with delivery alternatives. Light-weighting, aerodynamics and driver training have been priorities of late as the company looked to double fleet efficiency, Director of Logistics Sustainability Elizabeth Fretheim recently told me.

Now, however, Walmart is taking a closer look at alternative fuels and electric options as part of the company's broader efforts to wring 1 billion metric tons of greenhouse gas from its supply chain by 2030.

"To fill the gap, we're going to have to find alternatives," Fretheim said.

9 E-Commerce Companies Poised for Disruption

(This article was written by James Paine for Inc.)

Chances are that you've bought something online within the last year. For that matter, within the last few hours. E-commerce is a booming industry, and as brick and mortar retail continues to suffer, the Internet is picking up more and more of that slack.

But shopping online is more than just click and ship. Shoppers didn't spend hours in malls just because they wanted to buy, they want an experience. People want to enjoy their time shopping just as much as they enjoy opening the box when it arrives.

Luckily for consumers, the e-commerce industry is already on the case. With the endless possibilities of the Internet, there's no reason not to combine them with the daily shopping experience when we're on Amazon or eBay. Half the time, people end up buying things they weren't even looking for simply because of the utility of these sites.

This is why we developed our list of the top companies disrupting the e-commerce industry, to outline the incredible advances in online shopping that create a better experience for shoppers.

Zoey

The consumer side of e-commerce is only half of the overall picture. In fact, there can be so much tailoring to consumers, that the B2B market gets cut off entirely. That's where Zoey comes in. Zoey has created the world's first B2B and B2C hybrid e-commerce platform. Businesses around the globe have begun to take notes from B2C platforms and integrate that design into the inner workings of their B2B operations. What used to be non-intuitive, utilitarian, legacy platforms are now becoming seamless and often beautiful workflows. By having a stellar setup on the backend, companies are seeing an increase in revenue and productivity.

Blucarat

Blucarat is working to bring social interactions to e-commerce through the power of social media. They've developed a 'social bar' which can be implemented on any e-commerce website to combine the shoppers social media experience with shopping in order to feel more sociable. This is Blucarat's way of making the Internet feel more like a mall.

Wazzat Fashion

Wazzat Fashion is taking a new look at how people shop online for outfits. One of the biggest problems they've identified is trying to find an outfit you love. Wazzat fixed that by creating an image recognition platform that lets you save an outfit you like and find similar looking outfits all across the web. It's an easy way to not waste time looking for what you love and get straight to ordering it.

Wayblazer

AI seems to be powering a wide array of industries today, so why not e-commerce? Wayblazer has tapped into one of the biggest sections of e-commerce, travel and lodging. Powered by IBM's Watson, Wayblazer is able to make suggestions to travelers about transportation and lodging options to ensure they'll make the most out of their trip. It's a truly revolutionary way to revitalize the experience of travel.

Infinite Analytics

Infinite Analytics' Conversational Commerce platform, ian, is your very own AI-powered personal shopping assistant. If there is something you're shopping for online it should not be difficult or time consuming to find. That's why ian was developed. By studying shopping behavior, ian is empowering retailers to provide highly targeted recommendations based on browsing habits. When it comes to online shopping, brands are able to put the human touch back into e-commerce to make it more of a personal experience.

Honey

Remember the last time you went into a grocery store and waited in line behind a woman who kept fishing through her purse for the right coupons? Well now Honey is doing that, but instead of looking through the purse, they're looking over the entire Internet in the blink of an eye. Honey instantly finds coupon codes that can be applied to your shopping cart while you're checking out. You never have to worry about overpaying again.

Optoro

With so much thought given to delivering products, there tends to be a lack of attention to returns. Face it, without the touch and feel of in-store retail, returns are inevitable, and very frequent. Optoro is operating a reverse logistics platform that finds a place for returned goods. They're essentially a middleman between an unsatisfied customer and the company they purchased from. They then help the companies find a way to repackage, resell, or reuse their returned inventory.

Bloomreach

Bloomreach's goal is to take the guesswork out of designing the digital shopping experience. They don't feel it's necessary to guess what customers want to see when they can learn it. Bloomreach is using machine learning and deep data harvesting to create content that users will love. Customers wants and needs change on a regular basis, but predicting those can be easy as long as the right technology is in place. With Bloomreach, you'll have an ecommerce platform that adapts to your market's needs before they even know it.

2Checkout

Payments across different currencies are very difficult to handle due to conversion and poor payment platforms. 2Checkout has developed the world's leading global payment platform that allows instant acceptance of foreign payments on any device. It's truly revolutionary for companies that work in the global space, especially in such a globalized world.

Amazon Rolling Out Instant-Pickup Stations

(This article was written by Michele Debczak for Mental Floss).

Much of what you’ll find on Amazon.com can be purchased at a brick-and-mortar book shop, department store, or convenience store in your neighborhood or nearby. Part of what makes the retail site so appealing is that it gives you the option to shop online without leaving your bedroom. Now, more than two decades after its inception, Amazon has come full-circle. As Mashable reports, the tech giant is testing “Instant Pickup” stations for shoppers who can’t wait for shipping.

The new program evolved out of Amazon’s existing delivery system. The company already has lockers around the country that customers can set as their shipping address. Now Amazon Lockers near college campuses in Berkeley, California; College Park, Maryland; Columbus, Ohio; Boston, and Los Angeles are being outfitted with digital kiosks that allow visitors to pick up goods moments after they’re ordered.

To make a purchase through Instant Pickup, Prime members can browse through the products available at their closest station through the Amazon app. Inventory varies, but it typically includes most of the essentials you’d find at a convenience store like snacks, drinks, and school supplies. Tech supplies like cables and headphones are also often in stock.

After you select the item you wish to buy, a barcode will pop up in the app. Holding the barcode beneath the onsite scanner will open a locker with your purchase inside. While the transaction does require you to leave the house, it maintains one key trait of online shopping: zero human interaction. Amazon's Director of Student Programs Ripley MacDonald told Mashable that that aspect is intentional. He said, "The original concept had a desk instead of these lockers, and the feedback they [the students] gave us was 'I don't want to talk to people, I want to do it on my phone.'"

This isn’t Amazon’s first venture outside the digital sphere. In the past few years the brand has opened eight physical bookstores and plans to open five more.

Amazon shoppers who prefer the instant gratification of in-person purchases without the chit-chat at the cash register can keep an eye out for more Instant Pickup station popping up around the country. Lincoln Park, Chicago will be the experiment’s next location, followed by more throughout the year.

Amazon's Impact on Retail

(This article was written by Elyse Dupre for Direct Marketing News).

Whether retailers consider the online marketplace a friend or foe, it's hard to ignore its impact

The modern retail story is full of highs and lows.

The good news? Sales are up. According to a survey of 251 retail executives by Bluecore and NAPCO Research, 36% of respondents experienced e-commerce sales lifts of at least 10% from 2015 to 2016; 20% also experienced lifts of less than 10%.

The bad news? Brick-and-mortar stores are taking a hit. Major retailers like Sears Holding Corporation, JCPenney, and Macy's all announced store closings this year.

Then, there's Amazon — the online marketplace giant with whom retailers have a love-hate relationship.

On the one hand, Amazon is a challenger. According to the aforementioned Bluecore and NAPCO Research report, titled “A New Path for Retail: Co-Existing with the Force of Amazon”, 28.5% of retail executives surveyed consider Amazon a direct competitor. In addition, 66% of respondents say Amazon has “significantly” or “somewhat” increased its position in the marketplace since 2015.

On the other hand, Amazon can be viewed as an ally. Twenty-nine percent of respondents consider Amazon both a partner and a competitor. What's more, 9% of participants say Amazon makes up more than 50% of their e-commerce revenue; a fifth (21%) also say it makes less than half of their e-commerce revenue.

Whether they love it or hate it, retailers can't deny that Amazon has had a significant impact on the industry. Here are some of the biggest impacts the online marketplace has had based on data in the Bluecore and NAPCO Research report.

Data collection

Amazon is known for its data-driven product recommendations. In fact, 16% of survey respondents consider them one of “Amazon's most impactful consumer-facing technology initiatives.” Retailers are taking note of Amazon's data collection practices and stepping up their game.

Twenty-four percent of retail executives polled say they directly asked customers for more data points and incorporated them into their analyses during the 2015 to 2016 year; 15% also say they asked for more data but hadn't started leveraging these insights just yet.

In addition, 14% of respondents say they started tracking observational data and including it in their analyses during the 2015 to 2016 year; 13% also started collecting this information but hadn't tied it into their analyses.

Still, not everyone is taking Amazon's lead. According to the report, 29% of respondents say they didn't alter their data collection or analyses practices as a result of Amazon over this time period.

Technology spend

If retailers want to compete with Amazon, then they need to have the right tools. Some are willing to pay this price. According to the report, more than a third (35.5%) of participants have either “somewhat” or “significantly” increased their technology spend to compete with Amazon.

But again, not everyone is changing their ways. The report reveals that 53% of respondents have not changed their technology investments as a result of Amazon's industry impact.

More customer-facing capabilities

There are number of features that attract consumers to Amazon. Free shipping for Prime members (63%), expedited shipping for Prime members (44%), one-click checkout (27%), and reviews (26%) are just some of the things respondents listed as “Amazon's most impactful consumer-facing technology initiatives.”

So, it should come as no surprise that some retailers have started adopting these features, as well. According to the report, 18% of respondents say they added customer recommendations or reviews during the 2015 to 2016 year and 16% added free or expedited shipping for loyal customers or those who met a certain order size or other criteria. In addition, 13% say they created tailored website pages for customers over the course of that year, and another 13% said they added or adjusted email communication capabilities.

5 Ways Social Media Is Transforming E-Commerce

(This article was written by John Hawthorne for Business2Community).

Social media influences almost every facet of our lives. We use Twitter and Facebook to learn about the news. We chat with friends via Facebook Messenger and WhatsApp. We send silly messages to each other through Snapchat and save our favorite things on Pinterest. We broadcast ourselves live with Periscope and document our lives with Instagram.

Social media is deeply embedded in our online shopping as well.

5 years ago, it was enough for a business to simply be on social media. To have a presence. To occasionally post pictures of products as well as updates on sales. Today, things are completely different. Social media is absolutely revolutionizing eCommerce world. Businesses who don’t effectively engage in social media will find themselves left out in the cold while their competitors blow past them.

As Catalin Zorzini says:

For Web businesses, effective social marketing represents real value. Social networks offer new ways to reach first-time customers, engage and reward existing customers, and showcase the best your brand has to offer. Your social network profiles and the content you share are as important as a business’ storefront signage and displays in the 1950s.

Why? Social networks are evolving from merely places to find and distribute content; they’re becoming commerce portals. Businesses that integrate social media into their marketing strategy – from customer acquisition, to sales, to re-engagement campaigns – will benefit.

But what changes matter the most? What changes are having the biggest impact on the eCommerce world?

Here are 5 to think about.

#1 – Live Video

Live video is everywhere these days. Facebook, Snapchat, Instagram, Youtube, and Twitter have all doubled down on live video, believing it to be the future of social media. Live video is engaging, it’s visual, and it allows users to engage with each other in a real-time manner. It allows for interaction and face-to-face conversations. Above all, live video keeps users on social media platforms longer, which is why everyone is pushing it so hard.

As Matthew Ingram notes:

Facebook’s engineers have been busy tweaking the algorithm to push videos—especially news-worthy or popular ones—higher in the news feed. And all that tweaking has had the desired effect: Facebook now gets more than 8 billion video views a day. A view is defined as anything longer than three seconds, but that is still a massive amount of video being watched on the service (Snapchat is also close to this number).

As you might imagine, live video is also revolutionizing the eCommerce world in a number of ways.

Brands are relying on live video to show off products in new, unique ways. For example, Dunkin’ Donuts took viewers inside their “test kitchen” with live video to show how they create their donuts. Tough Mudder has taken viewers up close and personal with brand evangelists to show what’s required to run their events.

Live product demonstrations and Q&A’s are also becoming increasingly popular. They let brands and companies show off their new products and answer questions about them in real-time. This is a huge advantage compared to simply displaying pictures on a website or video ads.

Finally, brands are using influencers on live video to promote their products. For example, beauty companies may send products to influencers to test out and promote via live video. This gives an authentic feel to the promotions that isn’t available with standard video ads.

Video is on fire right now, and it’s only going to keep getting bigger.

 

#2 – Hyper-Targeted Advertising

It’s no secret that social media companies collect a lot of data, and that they let advertisers use that data. The granularity and specificity of that data means that, more and more, eCommerce companies are able to hyper-target audiences.

As the Washington Post notes:

Facebook keeps ads “useful and relevant” in four distinct ways. It tracks your on-site activity, such as the pages you like and the ads you click, and your device and location settings, such as the brand of phone you use and your type of Internet connection. Most users recognize these things impact ad targeting: Facebook has repeatedly said as much.

This article goes on to state that Facebook collects an astonishing 98 different points of data on each user!

The implications for business are astronomical. In the past, an outdoor gear manufacturer could generally advertise to audiences by taking out an ad in Field & Stream magazine. Now, thanks to the data available to them, they can specifically target men ages 22-50 who like the National Rifle Association, prefer Budweiser, have expressed an interest in camping, and also like to read Field & Stream.

As you can imagine, this type of specificity opens up new worlds for eCommerce companies. They no longer need to spray large amounts of money into ads, hoping they manage to hit the right audience. Now they can know they they’re on target and that their ads will resonate with the audience.

Additionally, companies can see exactly how well their ads are performing – how many clicks they’re getting, how many people have seen the ad, etc.

The advances in social media advertising are allowing companies to be much more specific in their ad spends and measure the results much more effectively.

#3 – Constant Brand Monitoring

Thanks to the search and alert functions provided by social media analytics platforms like Mention and SproutSocial, companies can now constantly monitor for mentions of their brand and engage with customers.

For example, if a customer is upset with a company and mentions them on Twitter, that company can instantly reach out and offer help. They can offer discounts to customers who are having problems and thank customers for their support.

As SproutSocial says:

With a dedicated support handle, you don’t have to worry about questions from followers getting lost in a series of brand mentions. Plus it’s easier to stay on message and maintain a consistent tone across the channel. Switching from promotional to conversational to support can be tricky to maintain, especially during busier times.

If a customer is happy with a company, the company can share that positive review on social media and invite others to leave reviews. Or if a customer leaves a negative review, the company can personally reach out and seek to fix the issue.

If a news story breaks about an eCommerce product, the brand can get out ahead of the story and shoot down false rumors or spread good news.

eCommerce companies that aren’t constantly monitoring their brands are likely to fall behind those that do. After all, everything moves ten times faster in the social media world than in real life.

#4 – The Advent of Chatbots

Artificial chatbots are also playing an increasingly important role for eCommerce companies. For example, if a customer visits a company’s Facebook page, an automatic chatbot can engage in Facebook Messenger, offering discounts, the ability to solve problems, and even personalized recommendation.

Paul Chaney writes about how the company Spring is using a Facebook Messenger bot:

A good example is mobile-first e-commerce retailer Spring, which launched Spring Bot, a personal shopping concierge powered by Messenger and Zopim live chat, reported the fashion blog Fashionista.

To start the clothes-buying process, the bot asks the customer what he/she is looking for and then presents options from which to select, including clothing, shoes, or accessories. Customers can see thumbnails with links to the products that they can purchase using their mobile device.

As more people take to messenger services rather than the social media platforms themselves, chatbots are going to become even more important. And with well over a billion people using Facebook’s standalone messenger app, it’s not surprising that Facebook is giving companies resources to develop chatbots. They know that Messenger bots are going to be big.

Additionally, chatbots are becoming more important as younger consumers steer away from older communication methods such as email and depend on instant communication methods, such as Facebook messenger and WhatsApp.

We should expect to see bots becoming more present in messenger apps in the future as companies realize their power.

#5 – In-App Purchase Options

In the past, if you saw an item on Instagram and wanted to purchase it, you had to exit the app, open your browser, find the site, and then make the purchase. That method is quickly fading away as social media platforms integrate buy buttons.

Now, it’s possible for eCommerce retailers to incorporate buy buttons directly into their advertisements within social media platforms. This reduces buyer “friction” and makes impulse buying much easier. If a person sees what they like, they can simply click the buy button and immediately purchase it.

Additionally, marketing platforms like Soldsie are letting companies instantly add items to a shopping company (assuming the customer agrees) when they make a comment under an Instagram or Facebook photo. This means that if a customer sees a t-shirt he likes, he can immediately start the purchase with something as simple as a comment. This makes it incredibly easy for customers to purchase in the moment.

Conclusion

With the incredible societal shifts caused by the internet in general and social media in particular, it’s no surprise that eCommerce is being caught up in the wave. Social media is offering new and exciting opportunities for online business, and we should only expect these to increase.

 

 

 

With platforms constantly evolving and finding new ways to personalize shopping, social media will play an even bigger role in shopping in the future. Depending on your ability to avoid impulse buys, it’s either a fantastic or terrible time to be alive.
Read more at http://www.business2community.com/ecommerce/5-astounding-ways-social-media-transforming-ecommerce-01891023#I4yxdh8DLp2zkVck.99

 

Manufacturers Speed Up Production

(This article originally appeared on PYMNTS.com).

To say direct-to-consumer retail practices have had an impact on the manufacturing industry would be an understatement. With eCommerce a major proponent of the direct-to-consumer (DTC) channel and showing no signs of slowing down, the retail industry landscape has been forever changed.

Outside of brick-and-mortar stores being on the receiving end of some crucial direct-to-consumer blows, one area that’s seen a major transformation is behind the scenes with the retail manufacturing industry. Helping to serve the entirety of the direct-to-consumer world — via eCommerce channels as well as traditional department store catalogs — manufacturers are essentially the backbone holding it all together.

Within just one year, Amazon ships 600 million packages. With all of the recent acquisitions and partnerships already announced by the eCommerce giant alone, the demand for manufactured goods will likely continue to see an uptick.

As such, the transformation that it has undergone over the last decade or so has been tremendous. Retail manufacturers have received pressure from partners to make and ship products at a much faster rate than at any time in the past. A direct result stemming from that pressure to move at a quicker pace? The movement to install robots to help expedite the process. According to research from PwC, 59 percent of manufacturers already use robots in some capacity.

Helping to push retail manufacturers to the next level is the influx of Internet of Things (IoT)-related technologies being inserted throughout operations. In addition to adding sensors to automated machines, connected aspects have been integrated to make the entire manufacturing process seamless.

Experts from Zebra Technologies’ new Manufacturing Vision Study report are predicting that by the year 2022, 64 percent of manufacturers’ factories will be fully connected and 55 percent will utilize wearable technology. Manual processes are expected to be on the way out as well, with research sharing that the current 62 percent of workers using pen and paper in manufacturing operations will drop down to 20 percent within the next four years.

Zebra Technologies’ senior vice president and CMO, Jeff Schmitz, commented on the report’s findings and what it means for the future of the industry.

“Manufacturers are entering a new era in which producing high-quality products is paramount to retaining and acquiring customers, as well as capturing significant cost savings that impact the bottom line,” said Schmitz. “The results of Zebra’s 2017 Manufacturing Vision Study prove that IoT has crossed the chasm, and savvy manufacturers are investing aggressively in technologies that will create a smarter, more connected plant floor to achieve greater operational visibility and enhance quality.”

The eCommerce world has not only spurred manufacturers to up their game for distribution via companies like Amazon and Jet.com, but has also resulted in a shift in people purchasing directly from manufacturers themselves. While companies like Warby Parker and Everlane have been at the forefront of this trend, brands like Nike and Pepsi are joining in on the DTC avenue — and it’s paying off. As PYMNTS reported earlier this month, Nike’s DTC side of its business, perhaps partly due to its decision to sell on Amazon, is predicted to see an increase from $6.6 billion in 2015 and up to $16 billion by 2020.

 

 

L'Oreal UK Shifting Ad Budget to Amazon

(This article was written by Seb Joseph for Digiday).

As brands circle Amazon's advertising business, L’Oréal is eyeing its fast-growing search business in a bid to capitalize on the online retailer’s emergence as the preferred entry for internet shopping.

Thirty-eight percent of all beauty searches start on Amazon, according to Nick Buckley, L’Oréal’s digital director in the U.K. But rather than see the shift in search queries as a way to drive sales, the cosmetics giant wants to turn the online behemoth into a richer source of inspiration, such as identifying customer trends. Consequently, the business is pouring more of its search budget in the U.K. into Amazon.

As a percentage of L’Oréal’s total search budgets in the U.K., Amazon’s share is still in the single digits. But as the volume of searches increases, L’Oréal will “also look to increase in line with this, so anticipate this spend to grow,” said Buckley. For the beauty terms and searches the cosmetics company’s makeup brands are keen on, it is “buying up all the inventory on the platform,” Buckley revealed. He added: “As we start buying keywords in other categories [skin care and luxury goods], this will naturally increase the scale.”

This is because Amazon is increasingly the starting point for many people searching for L’Oréal’s products online. But just because consumers start on the site, it doesn’t mean they ultimately buy from Amazon, said Buckley. Instead, those shoppers often research and compare products on platforms and across other retailers.

“We’re seeing people initially go to Amazon to find out information about a product before then jumping outside of that to YouTube, where they can see how to apply those products,” Buckley said. “Then, they’re moving on to Google to compare that same product with others. [Amazon is] an e-commerce platform, but we believe it’s more than that.”

Part of Amazon’s allure to L’Oréal stems from the voice searches via Amazon’s Alexa voice assistant. The cosmetics business predicts that a fifth of total search will occur vocally in the next 18 months. While no major services are planned, Buckley and his team are watching Alexa as well as the likes of Apple’s Siri closely.

“Alexa is really interesting for us because it’s a huge opportunity that will fundamentally change the whole search environment,” Buckley said. “We’re spending a lot of time at the moment in terms of how we react to that. We haven’t got all the answers yet, but we’re looking into it.”

Commerce will still play a big part in L’Oréal’s upcoming investments on Amazon even if it is now admittedly overindexing on its ads. Like other businesses such as Nike, L’Oréal’s relationship with the sell-side of the business is that of a frenemy, and as such, has made it tread carefully. The company’s trepidation showed on its earnings call last week when CEO Jean-Paul Agon declined to comment on Amazon’s rumored move into cosmetics.

L’Oréal said its e-commerce sales grew 29.5 percent in the first half of the year and now represent 7 percent of total sales. But given that it wants 20 percent of its total revenue to come from e-commerce, working so closely with a retailer that could eventually become a rival is a precarious means to an end.

However, L’Oréal would argue that setting up “shops” on Amazon would balloon its presence and therefore push it to its sales target far quicker than if it had tried to resist selling directly to shoppers on Amazon. The cosmetics business launched an online store for its Men Expert line on Amazon at the turn of the year and plans to launch others in the coming months, building on momentum gained so far in 2017.

Online Shoppers Leave Sites Because of These Basic Problems

(This article was written by Cara Salpini for Retail Dive).

Dive Brief:

  • Online shoppers are most turned off by a poorly designed menu (41.2%), followed by search capabilities that are too basic (29.8%) and products that are buried behind too much branding (26.4%), according to a new study from Corra. What’s more, the vast majority (68.9%) said that encountering one of these pet peeves would cause them to shop around.

  • The study also found that several other varied factors could make consumers think twice about an e-commerce purchase. Those include: Finding a bad review of the product (60.6%) or not finding company contacts info on the site (9.7%), as well as shopping on a site that has either an outdated website (8.8%), poor navigation features (6.9%), a lack of transparent policies (6.1%) or spelling errors (5.1%).

  • The news wasn’t all bad for e-commerce sites. When asked how they preferred to contact an e-commerce business for questions or support, many consumers (52.4%) expressed a preference for the developing virtual assistant or live chat category, while 32.8% still prefer e-mail communication and 14.5% prefer to talk over the phone.

Dive Insight:

In a retail landscape where an e-commerce strategy can make or break sales, any insight into how customers feel about the platform is valuable.

Corra’s findings suggest that there are actually a host of factors that matter to consumers when shopping online and span the length of the path to purchase. Poorly functioning website features can turn customers away to a competitor before even shopping, but — perhaps worse — the design of a company’s shopping cart can also turn customers off from making a purchase. Consumers responding to Corra’s study listed shopping cart frustrations that included everything from prices that aren’t upfront (33%) to having to create an account (26.5%) to high shipping costs (22.9%).

With e-commerce sales rising, retailers can’t afford to fall behind on their online strategy, especially considering the benefits that retailers like Walmart have seen from investments in e-commerce. The retail giant went from being a big name with a relatively small e-commerce presence to, in its first quarter, a company that saw a 63% increase in online sales, thanks in part to its acquisition of online retailer Jet. Since then, Walmart has expanded its e-commerce presence to include acquisitions of men’s clothing site Bonoboswomen’s fashion site Modcloth and outdoor apparel site Moosejaw. On the other hand, companies like Hibbett Sports, who are late to the game on e-commerce efforts, are falling behind as a result.

While many are calling for e-commerce sites to spend more time on personalizing the online customer experience, basic functionality cannot fall by the wayside. With customers willing to shop around if they experience site difficulties and 60% of Gen Z refusing to use an app or website that is slow to load, retailers should focus on making the online experience as streamlined and user-friendly as possible.

E-Commerce Returns - It's Location, Location, Location

(This article was written by Matthew Rothstein for Forbes).

E-commerce is the single  and growing, but it has a glaring inefficiency. If we get everything we need delivered to our homes, why is it so difficult to send it back?

Distribution centers are being built all over the country, many as big-box facilities that in some cases require clearance of up to 40 feet. Last-mile distribution centers, designed to be leaner to make use of tighter spaces close to major cities, are beginning to crop up — like a rumored Amazonwarehouse close to the University of Pennsylvania’s campus in West Philadelphia. Real estate is changing shape to better fit e-commerce, but only the sexy part. Returns are still a worry.

“It’s a huge issue for retailers,” High Street Realty Co. CEO Bob Chagares said. “Up to 30% of e-commerce purchases are being returned today, which is a giant amount of product going upstream that doesn’t go upstream very well.”

Most e-commerce returns are sent through the Postal Service, then dumped in a warehouse to be gradually sorted through. Once processed, according to Chagares, the products are often worth a tiny percentage of what they retailed for.

“It’s a $220B problem globally today, and for low-margin businesses, it’s a huge hit for the bottom line,” Chagares said.

Amazon has worked to improve its return service with more logical packaging and usage of FedEx mailboxes or its own Amazon lockers, but it is not the boundary-pushing efficiency that Amazon Prime and Amazon Freshlook to be. For companies with shallower pockets, Amazon-style fixes are not even feasible.

“Some retailers today are telling consumers just to keep products, and they’ll give them a credit,” Chagares said.

Industries constantly look to innovate as a way to stay ahead of competition, and such advancements can often happen at light speed in e-commerce thanks to Amazon’s war chest and everyone else’s desire to keep up. Eventually, such innovation will yield returns — but not so far.

“E-commerce companies are still trying to figure this thing out,” CBRE Vice Chairman Michael Hines said. “They don’t know what’s going on.”

Some are already attempting to tackle the issue. According to Chagares, several companies currently share a 100K SF returns center in the greater Philadelphia area that started out as a way to mitigate losses, but soon became a profit center because of the sheer number of products that could be quickly fixed or resold at a much better price.

Last-mile facilities are not getting built as quickly as demand seems to warrant because land in key locations is so difficult to come by, but return centers would take up even less space and require fewer purpose-built facilities.

“The type of space that’s necessary for this is only horizontal, rather than big cubes,” Chagares said. “So old [facilities] with 18- [to] 22-foot clearance in cities, which is where you’d want these centers, could be very viable.”

Just as some in the industry are looking at shuttered big-box stores or shopping malls as potential targets for conversion into distribution centers, others are wondering about melding retail real estate to industrial to facilitate the returns process.

“Close neighborhood retail is doing better, and utilization of those spaces for returns could do well,” Dermody Properties partner Gene Preston said.

At this point, the demand for distribution centers of all types remains strong, with cautious lending and scarcity of space and labor providing impediments to meeting it all at once. It is a healthy trend for the industry, but that does not stop anybody from looking ahead to the next slowdown, and by then, return facilities might be a better investment.

“Retailers look at it as a failed sale, but when the music slows down and the economy slows down, we think we’ll see people knocking on our doors for facilities like this,” Chagares said.