Here Are the Takeaways From the Mary Meeker 2017 Internet Report

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

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

Here are some of our takeaways:

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

Amazon Goes Low (Income)

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

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

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

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

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

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

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

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

 

Fulfillment and Retail Are Converging

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

Dive Brief:

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

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

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

Dive Insight:

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

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

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

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

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

E-Commerce Trends and Predictions for 2017

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

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

 

Social media will continue to earn its place in Ecommerce

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

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


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

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

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

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

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

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

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

 

 Omnichannel will be everywhere

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

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

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

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

 

November will be the ultimate shopping month

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

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

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

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

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

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

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

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

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

 

Is Facebook Good for Retailers?

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

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

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

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

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

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

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

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

9 Trends in Last Mile Delivery

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

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

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

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

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

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

1. Faster fulfillment

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

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

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

2. Gig economy/crowdsourcing apps

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

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

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

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

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

3. Focus on visibility

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

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

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

4. Postal service evolves

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

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

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

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

5. Insourcing deliveries

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

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

6. City warehouses

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

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

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

7. Carrier becomes salesman

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

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

8. Smart technology and sensors

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

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

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

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

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

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

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

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

What Caused the Retail Apocalypse?

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Amazon Posts $7.2 Billion Shipping Loss

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

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

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

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

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

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

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

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

Books as an Art Form

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“What do you think?” Steidl asked.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Later,” Steidl said.

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

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

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

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

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

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

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

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

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

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

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

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

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

“Is that your mother?” Steidl asked.

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

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

These Are the Leading Credit Card Processing Companies

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

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

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

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

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

As Department Stores Close, Stitch Fix Expands

(This article was originally written by Michael J. de la Merced and Katie Benner for The New York Times).

SAN FRANCISCO — The retail landscape is littered with the casualties of changing consumer behavior. Shoppers are bargain hunting online, department stores are struggling, and once-mainstay brands are closing out permanently.

Then there is Stitch Fix, a mail-order clothing service that offers customers little choice in what garments they receive, and shies away from discounts for brand name dresses, pants and accessories.

Despite a business model that seems to defy conventional wisdom, Stitch Fix continues to grow.

For the fiscal year that ended last July, the company recorded sales of $730 million. It has been profitable since 2014 and has raised just $42 million from outside investors, a relatively modest sum for a high-flying Silicon Valley start-up.

And while Stitch Fix executives say they have no specific plans to go public, the company is well positioned to file for an initial public offering as soon as this year.

Should Stitch Fix go public, it would be the biggest retail offering since Etsy two years ago. Perhaps more important, it would be a Silicon Valley rarity: a profitable company that did not raise money at a sky-high valuation, and one that could potentially tap the public markets at a price many times greater than its current value.

Stitch Fix is not the first company to try this business model. Similar start-ups, from clothing rival Trunk Club to the cosmetics specialist Birchbox, have found a market mailing consumers a grab bag of items and offering free returns for anything unwanted.

But many such start-ups have had trouble keeping costs down, and customers around. Nordstrom, which bought Trunk Club in 2014 for a reported $350 million, wrote down nearly $200 million from the business’ value last year.

“Those businesses have mostly struggled to grow and remain profitable over a long period of time,” said Mark Cohen, a professor at Columbia Business School who previously served as chief executive of Sears Canada. “Will a loyalist want to receive this every month? Is anyone interested in consuming this much apparel and accessories?”

So far, Stitch Fix has found success where other online clothing start-ups have struggled. To the company’s founder, Katrina Lake, success comes down to delivering what consumers want: making it easier to shop.

“There’s been a lot of innovation around being the cheapest or fastest,” she said in an interview at one of the company’s warehouses south of San Francisco. In her view, what was important was helping customers find clothing they liked without taking lengthy shopping trips and returning dozens of items.

Stitch Fix was founded in 2011 and was initially run out of Ms. Lake’s apartment in Cambridge, Mass. At first the company catered only to women, but has since expanded to offer men’s clothing, plus sizes and maternity wear.

Each box contains a handful of selections from trendy brands like Citizens of Humanity, Scotch & Soda and Barbour. Up next is a “luxe” offering featuring clothes from higher-end labels like Theory, with price tags going from $150 to about $500 per item.

Expansion plans like that drive home the diverging fortunes of struggling traditional retailers and fast-growing online rivals.

Online retailers who sell luxury products for less are undercutting sales at high-end department stores like Neiman Marcus. Nordstrom recently announced layoffs and told investors it plans to focus on e-commerce, despite its Trunk Club write-down. And J. Crew, which has hundreds of stores around the country, has suffered three straight years of losses and is deeply in debt.

Stitch Fix sends out five items in a package. Anything a customer does not want can be returned free of charge.CreditChristie Hemm Klok for The New York Times

While early e-commerce start-ups like One Kings Lane, Gilt Groupe and Fab were failures for investors, the category has picked up steam in the past few years as traditional retailers have looked to start-ups to lift their businesses. Jet sold itself to Walmart for $3 billion. Last year the subscription razor service Dollar Shave Club sold to Unilever for $1 billion. And the online pet store Chewy.com was acquired by PetSmart, reportedly for more than $3 billion. Some start-ups have also moved away from models that compete for customers on price or rely on fads, like flash sales, for traction.

Stitch Fix’s pitch is straightforward enough: Trust the company to pick out your tops, bottoms, shoes or accessories for you.

When customers sign up, they fill out an extensive form detailing style preferences, clothing needs and price points. The start-up’s algorithms then churn out a set of potential choices, which one of its 3,400 stylists — most of them part time — then tailors to the individual customer before sending out five items in a package. Anything a customer does not want can be returned free of charge, and customers receive a 25 percent discount when they buy everything in the box.

At the company’s warehouse, Eric Colson, formerly a top data scientist at Netflix, spoke to the role that data science — once the province of high-tech giants — plays in nearly every aspect of the Stitch Fix business.

Mr. Colson excitedly illustrated on whiteboards how the company’s systems can narrow down a broad range of women’s pants to a relative few that each individual customer is statistically likely to keep.

“Customers say, ‘This thing you picked out for me, I would never have picked it out for myself,’” he said.

Algorithms have even cut the number of steps needed for workers to pick out clothes for individual clients.

Jackets hanging in a Stitch Fix warehouse. The company’s founder attributes success to making it easy for customers to receive clothes they want. CreditChristie Hemm Klok for The New York Times

“Some people call this the ‘Moneyball’ of fashion,” said Bill Gurley of the venture capital firm Benchmark, who sits on Stitch Fix’s board. “The level of data science done at this company compared to the incumbent set is incomparable.”

But that data-driven approach has also been yoked to Ms. Lake’s insistence on running a financially healthy company. Given her early troubles raising money from outside investors, Ms. Lake worked toward becoming profitable early.

“We had a ‘lean plan’ and a ‘lean-lean plan,’” Ms. Lake said of the business model.

Stitch Fix declined to say what percentage of items are returned.

Running so cheaply meant not taking out ads during Stitch Fix’s early days. But word of mouth helped the company grow — and eventually drew investors like Mr. Gurley, whose interest was piqued by the number of assistants at his firm who swore by the service.

Yet the question remains whether customers who are initially thrilled by receiving a customized box of clothing will remain customers for months or even years.

Lauren Rivellino, an optometrist in Charlotte, Va., was a Stitch Fix enthusiast when she subscribed in 2015. She loved trying clothes on at home rather than a poorly lit dressing room, and most items were flattering and reflected her style.

But a year later, Ms. Rivellino stopped using the service. “I really have nothing bad to say about them,” she said in a recent email. “I just don’t shop a lot.”

Stitch Fix executives declined to share their retention statistics, but claim that they are above industry averages. Ms. Lake and Mr. Colson acknowledged that clients stop using the service for a variety of reasons, from dissatisfaction to their closets simply filling up.

But the two argued that the company can analyze scores of data points to figure out ways to coax these customers back to the fold.

FedEx and UPS Compete With the USPS for Last-Mile Delivery

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

  • UPS and FedEx will soon offer a Zone 1 option for packages that have previously been diverted to the U.S. Postal Service for last mile delivery, DC Velocity reported last week.
  • The move is driven by the increasing flow of e-commerce goods, which the big two delivery services formerly believed demanded more in travel costs than they were worth. 
  • Both companies have since recalibrated their service offerings to include Zone 1, or local delivery, intending to recoup revenue formerly shared with USPS. In turn, the parcel carriers are investing more heavily in urban and automated distribution hubs.

Last-mile delivery is an ongoing logistics puzzle as delivery companies continue to struggle with how best to manage the growing e-commerce-fueled market. 

That UPS and FedEx are moving to fully handle their own e-commerce deliveries rather than rely on USPS' network shows they expect revenues from high volumes to finally outpace costs. In large part, that's because more than before, consumers appear to be willing to pay for convenience. A recent survey by McKinsey found that while 70% of the e-ecommerce market is satisfied with the cheapest form of delivery, 23% are willing to pay extra for same-day delivery and another 5% would pay more for a guaranteed time of delivery.

Yet, many of the costs associated with last-mile delivery come from missed deliveries, inefficient routes, and the challenge of meeting high consumer expectations. USPS' need to run local routes meant such challenges were but marginal costs for the carrier. To compete, UPS and FedEx have sought to improve efficiency at sorting facilities, explore cheaper last-mile delivery options (such as bikes), or create in-store pickup programs to ensure package safety and reduce missed deliveries. 

Overall, addressing this final challenge appears to be within the wheelhouse of both UPS and FedEx, and is an important step to the carriers' transition to boost profits from e-commerce.

Why Shoppers Visit Stores and Then Buy Online

(This article was originally written by Sandy Skrovan for Retail Dive).

he shopper journey continues to evolve as the path to purchase increasingly crosses between physical and digital worlds — and as consumers today bounce between stores, desktops and mobile devices, retailers are working to devise seamless omnichannel experiences to best serve these changing behaviors. 

In the first installment of the Retail Dive Consumer Survey, we determined that the ability to see, touch and feel products ranks highest among the reasons consumers choose to shop in stores versus online. For our latest and fourth installment, we explore the connection between digital and physical browsing and buying habits, asking 1,248 consumers how often they visit brick-and-mortar stores to see, touch and feel products before ordering them online.

According to our results, the notion of “see in store, buy online” has been confirmed. More than half of surveyed consumers said they visit a store — at least occasionally — to see, touch and feel products before ordering them online.

Even though shoppers have so many paths to purchase these days, many still want to “kick the tires” before buying. This suggests that there’s some room for improvement across e-commerce sites, including the way items are displayed, product descriptions and even customer service interaction. Advances in 3D imaging and virtual reality could be possible gamechangers down the line, however, attracting more shoppers to buy online without seeing products first-hand in a physical store.

Visiting stores to see items before buying them online tends to correlate with age, too. The older the shopper, the more likely they are to visit stores first to see products. A much higher percentage of younger shoppers are more comfortable buying items online sight unseen.

See in store, buy online

It’s not unusual these days for the path-to-purchase to have multiple touchpoints crossing between the physical and digital worlds.

Our latest survey findings show that 56% of shoppers say they visit stores — at least occasionally — to first see, touch and feel products before buying them online. What’s more, roughly a third make this practice habit, reporting that they always or frequently go to stores to see or try out items before buying on the web. One in 10 shoppers say they always visit a store to see items they then buy online.

Because a majority of shoppers are still visiting stores before buying products online, it remains critical for retailers to provide a high-touch in-store experience. Turning physical retail space into showrooms — where customers can try and test products and generally get to know the product better before making the final purchase online — may be the logical next step for retailing. The concept has long been common practice in the furniture and home furnishings space, and now more apparel showrooms are starting to emerge.

Older shoppers depend on the store

A strong correlation exists between age and shoppers who say they want to try-before-they-buy online.

The older the consumer, the more likely they are to shop the “old-fashioned” way by visiting stores to first see, touch and feel items before ordering online. In fact, 70% of consumers in the 65+ age segment first visit a store — at least occasionally — to see products before buying online, and 41% of these oldest shoppers say they always or frequently do so.

Conversely, younger shoppers are more trusting when it comes to ordering online without first seeing the items in a physical store. More than half (56%) of 18-24 year-old shoppers say they buy products online sight unseen.

Not remembering a world without the web, many of these young tech-savvy consumers use information at their fingertips to conduct pre-purchase research and read online reviews, which makes online buying less circumspect. In fact, 70% of millennials trust consumer opinions posted online, the highest of any generational cohort, according to Nielsen’s 2015 Global Trust in Advertising study.   

Our findings back up the notion that digital natives, for the most part, aren't dependent on the physical store: Just 21% of shoppers age 18-24 say they always or frequently go to a store to check out products before buying them online. Another 23% say they do so occasionally.

Young men feel the need to see

Male shoppers have a higher propensity than females to first visit stores to see, touch and feel products before placing orders online: 60% of men, versus 52% of women, say they at least occasionally, if not more often, visit a store to see or try out items before buying them online.

As it turns out, it’s younger men that are driving this phenomenon: 59% of males in the 18-34 age range, versus a significantly lower 41% of 18-34 year-old females, say they visit stores to see, touch and feel products prior to ordering them online. What’s more, 28% of these young men say they always or frequently do so, compared with 20% of young women.

Big-ticket electronic purchases could be playing a role here. Young male shoppers are a prime target for electronics and likely want to try-before-they-buy and talk with store employees before dishing out big bucks online.

Product interaction is critical

The fact that so many shoppers still want to physically see, feel or try products before buying online speaks volumes about how the shopper journey is evolving. Whether online or offline, retailers and brands must be on their game, providing a compelling experience for shoppers to interact with products.

In the physical world, this translates to stores with high-touch and informative product displays. Having experienced and knowledgeable store associates capable of addressing shopper questions, or equipping staff with technology to help them, is equally as important as brick-and-mortar retailers take steps to stanch sales seemingly ready to slip away to online competitors like Amazon. This means retailers need to be proactive about things like matching prices, offering free home delivery for large, bulky items and having a seamless omnichannel process in place to help win the final sale regardless of channel.

In the digital realm, retailers must continually apply new and increasingly sophisticated technology to improve their websites and mobile apps, showcasing products in such a way that makes shoppers comfortable buying products sight unseen. Retailers should consider, for example, adding augmented and virtual reality or 3D photos with 360° and zoom capabilities. VR, in particular, holds promise for retailers and marketers to demonstrate their wares in profound new ways — both online and in stores.

 

Walmart Takes on Amazon DAsh

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

  • Wal-Mart Stores Inc. is apparently developing a technology in a challenge to Amazon’s Dash button consumer goods replenishment program, according to a patent application unearthed by CB Insights.

  • The application was first filed last October and describes an Internet of Things (IoT) platform that tracks consumer products used in homes — including how often, when and where an item is used — and automatically orders when products are depleted or need replacement, according to the report.

  • While similar to Dash, the system removes friction even further with its automation, which does not require pushing a button, according to CB Insights.

Amazon’s Dash replenishment effort does allow device manufacturer partners to integrate Dash technology into their products to enable automatic supply reordering. For example, GE Appliances' WiFi-connected dishwasher measures how many pods are used by counting wash cycles, and when the supply runs low, it automatically reorders more.

But the program is mostly a collection of buttons (physical and virtual) that shoppers tap when they want to order more of a product, including, as of last month, apparel. Amazon first launched the Dash automated commerce program in March 2015, prompting speculation that it was an April Fool's joke. Though it had a slow start, it now seems clear that Amazon's innovation has tapped into a consumer need: Fortune estimates that Dash brings in some 5,760 orders each day. 

Last year, Amazon said that orders surged 75% in the first quarter, though such high percentages are expected when still in the early stages. In July last year, the program saw a 650% increase in the number of orders year over year, according to data from Slice Intelligence. Amazon said earlier this year that success is what prompted the development of the virtual version, adding that it was not related to the pending expiration of Amazon’s patent for one-click purchases.

One key to Dash’s growth — and one of the biggest keys to Amazon's entire corporate success story — is volume. Adding more products and more brands to give customers choice is one of the cornerstones of growth for any retailer.

Then there's convenience, another pillar of retail success. Thanks to the digital versions, Dash buttons are no longer limited to customers who ask for them (and go through the process of deciding to try them, ponying up the refundable $5 and actually using them). To make it even easier to access and manage, Amazon is providing an “Add to your Dash buttons” notice on the page of any eligible product.

Wal-Mart appears to be going after similar ground, though it's unclear how much consumers would appreciate the major incursion into their homes or the platform's emphasis on automatic orders described by CB Insights. Wal-Mart has been gunning for Amazon of late, bulking up its assortment through deals with vendors and the acquisition of several online retailers, including women’s apparel company Modclothoutdoor retailer Moosejaw, footwear site Shoebuy and soon reportedly menswear site Bonobos, not to mention last year's $3.3 billion acquisition of upstart e-commerce site Jet.com

Still, Wal-Mart has far to go in that catch-up game, Jet founder and new Wal-Mart U.S. e-commerce chief Marc Lore said at the Bloomberg Breakaway Summit this week.

E-Commerce In-Home Delivery

(This article was originally written by Daniel Terdiman for Fast Company).

Would you allow UPS to drop off a package inside your home when you’re not there?

That question is at the heart of a three-month pilot program that smart lock maker August tried out last winter with 76 of its users in an attempt to see if the company could help jump start the e-commerce industry.

Sitting in a conference room in August’s San Francisco headquarters last month, CEO and founder Jason Johnson explained that lofty ambition: It turns out, he said, that one of the biggest barriers to people shopping online is that they worry about what happens if their package arrives when they’re not home. It could get stolen or rained on, they fear, or be sent back to the shipper if there are too many unanswered reminders. Maybe they’ll have to drive to a store to sign for it.

“That cognitive load causes people to think twice before ordering online,” Johnson argued. “People have to go through machinations to facilitate [their package delivery]. These issues are the number one thing restricting e-commerce shopping.”

But what if consumers didn’t worry about the fate of their precious package? That would make buying online as easy as going to the store, Johnson said. That’s why numerous retailers and delivery service providers are thinking about ways to solve the problem.

And that’s what led to the August pilot program.

The company emailed a bunch of its customers and asked if they would participate in a test. They already know the benefits of their smart lock–which can auto-unlock when they approach, and which lets them give one-time, specific-time, or anytime access to anyone they like. But would they be willing to let delivery companies come inside to drop off those packages when they’re not at home if they had a camera and could watch the whole process, either live or later on?

APPREHENSION

A lot of people would be resistant to trying such a thing. There’s all kinds of potential problems. Theft. Pets escaping. Damage. Heck, what if the delivery guy saw a picture of your wife or daughter and decided to stalk her?

“It’s appropriate to use an analogy like Uber,” Johnson said, “where if I told you eight years ago that you’d have some 19-year-old in a Corolla pick you up, with no training, no skills, etc., and drive you to the airport. You’d say ‘No, thank you.’ I think there’s plenty of people who would say no way.”

Delivery companies and retailers would likely have their qualms as well, especially around their liability for any of those issues listed above, for example.

But August still thought it was worth finding out if in-home delivery was possible. So it gave 76 of their lock owners a Nestcam and a keypad that lets someone punch in a code that opens the lock and asked them to start allowing such deliveries. All August wanted in return was to get the videos of the deliveries and some feedback.

SIMPLE GUIDELINES

The guidelines were simple: During the three months of the pilot, participants were asked to place between 5 and 10 orders from the vendors of their choice, each time giving the delivery provider instructions for dropping off the package inside–in other words, give them a code for the August keypad, anything they needed to know about pets, and that was it. And then point the camera at their entryway. 

Over the course of the experiment, participants got a total of 250 deliveries.

One of the keys to the trial was that August didn’t ask delivery companies to train anyone on how to handle in-home situations. It was important that those making the deliveries had to figure out what to do on their own–such as reading the instructions the customers had left for them.

Turns out, that wasn’t such a big ask. Many delivery companies have been dropping packages off this way–albeit without being enabled with technology like August’s–for years. Many locks have analog pin codes, and delivery companies often have access to the codes, or are even given keys to people’s homes, Johnson said.

August’s users were super happy with the results of the pilot, Johnson said. “The overwhelming response was ‘This is great,’” he said. “People were a little nervous, but overwhelmingly, they said, ‘This is how I want everything delivered to my house.”

Before the trial, an August survey found that participants had an extremely negative view of the idea of “unsecured” deliveries, a -42 Net Promoter Score, to be exact. Afterward, that score improved to +16. Further, 90% of the participants said they would continue to accept in-house deliveries from merchants–if it was available.

Kristin McGee, a teacher who lives in rural, coastal California, is on board.

Although she was initially adamant that she’d never let a delivery person in her empty house–“I was like, ‘Not happening,'” she said. “I don’t want to let some stranger into my house when I’m not there.”–she’s now a convert.

“I feel like I am one of those millennials who’s finding ways to get out of all her chores,” she said, sheepishly, adding that she now orders groceries to be delivered when she’s not home from two to three times a week. And the combination of the camera and the keypad is what won her over.

“My primary initial fear was that there would be someone in the home when I got home,” she said. “But with video, it kind of eliminated that fear. I would know that someone was gone before I even got home….Then I ended up loving it. It was super safe. I felt it was a secure system.”

WHAT ABOUT THE VENDORS?

Getting customers on board is obviously a big step forward. But what about delivery companies and other vendors?

At the same time that August was running its pilot program with customers, it also had a separate trial going on with Sears Home Services, one of the largest appliance dealers and home service providers in the country. The idea was the same: Make it possible for Sears technicians to be able to easily get inside customers’ homes to make deliveries, service appliances, or even respond to emergency plumbing problems, all when no one is around.

Access to people’s homes is vital for the company’s business said Ryan Ciovacco, president of connected living for Sears Holdings. “We need to have someone there. More often than not, that’s causing someone to take a day off from work, or plan their [weekend] around it. We wanted to test how receptive people would be to allowing a technician in their home” when they’re not there.

Sears selected 20 homes and ran the experiment for two to three weeks. “It was a really successful pilot for us,” he said. “Every customer who participated said that they would pick Sears Home Services over a competitor because of this flexibility, the benefit of being able to give keyless entry to the home.”

Ciovacco said that customers are always going to have some concerns about something like deliveries when no one’s home, but added that he thinks those concerns can be allayed when the vendor is a trusted company or brand. Plus, he said, “it’s a tradeoff. They think the value outweighs that very, very rare chance that something bad could happen.”

For Sears, expanding from the pilot program and making such service calls and deliveries available nationwide isn’t something that can happen overnight. It would have to integrate access to August’s locks directly into its own apps and devices. “But once we figure that out,” Ciovacco said, “we’ll probably do something” larger.

Although August isn’t revealing who else it’s talking to besides Sears, Johnson said the company is now in active discussions with numerous retailers and delivery providers about how they could provide home delivery services when no one’s around. “It’s a question of working with those providers to make this something that’s commercialized, with training,” Johnson said. “We’ve already completed trials with some, and some are moving toward commercialization plans.

The trick will be to get people to the point where they take such things for granted, much as we all do now with things like taking rides with Uber or Lyft, or staying in people’s homes via Airbnb.

That day is coming. “I think so,” said Ciovacco. “There are always going to be some sorts of issue, and that’s going to happen across the board with every new service and technology, and I think we just have to all work together to remove as many of those [issues] as we can.”

McGee, who used to live in a city and regularly grappled with packages being stolen from outside her house, agreed.

“For big city life, I think it’s a must,” McGee said. “I think it changes everything for deliveries.”

E-Commerce Website Must-Have Features

(This article was originally written by Matt Mikaelson for Business 2 Community).

The success of any e-commerce store not only depends on the quality of your products but various other factors also play an important role to attract your buyers. Though there are hundreds of tips and tricks out there, we have outlined some basic yet must have things in this article that you should implement before selling online.

1. Shopping cart and Create account Facility

The shopping cart and create an account options are usually found together on the upper right corner of the website. We can’t imagine an e-commerce website without having a shopping cart function. You can use a simple basket as an icon for the shopping cart, however, it’s up to you if you want to change it and make something that reflects your business model.

Create an account option allows your customers to sign up with their own login and password and make the checkout process easy without entering their information again and again when they shop on your website. Some users may find it difficult to create an account and remember their username and password, so placing checkout as a guest will only require enter their information and go ahead with the order.

2. Proper Navigation

Placing your products into categories helps your customers find the product with ease. If you have an apparel e-commerce website, you can create categories like women, men, kids etc. Avoid over categorization and make sure that they are easy to navigate so your customers can find their desired product quickly and hassle free. You can make further subcategories that can help a user/visitor find the product easily without going through all the products listed on the website.

Always highlight your top selling or most popular products on your main page to let your buyers know in the first place about the items they might be interested in. Don’t restrict your customers only to the product they search for, always show the related products to give them several options to choose from. You must have a page for each product with detailed description of the product, price, inclusive or exclusive of tax, shipping cost or any information you think helps a customer decide to place an order on your website.

It is extremely essential for any e-commerce website to organize and manage its category structure and placement on its landing page in a way that is clear, brief but comprehensive and making a proper sense to a user/visitor. Although it depends on the business model, however the ideal placements for category and sub-category should be located on the left side of website’s landing page where other useful tabs should be located just below the header with a search tool bar facilitation that can help visitor/user acquire information quite promptly.

While searching for a desired information/product, website’s URL plays an additional assistance in navigation if a URL is properly structured, reflecting and adhering to the visitor’s journey on the website like: domain.com/category, doman.com/category/subcategory/ etc. This practice enormously promotes good internal linking and make’s your website links search engine friendly and easily accessible by search engine crawlers eventually making optimization more hassle free.

3. Live chat Integration

Customers expect businesses to offer 24/7 customer support and the best way to fulfill this need is to start the live chat service on your website. Live chat agents can help customers find a product quickly so your customers don’t have to go through all the categories to find the product they are looking for. Your customers can get all the information about a specific product including detailed description, pricing structure refund policy etc. in that one chat box without the hassle of going through the details themselves.

Your customers might close your website without knowing about the special promotions on your website, so live agents are the ones who always make sure to update them about the latest promos. Now the question is, which company you should choose for the live chat? Well, that depends on your needs and requirements, however, the live chat service is one of the best on this planet. They have clients in the US, Dubai, Ghana and in some Asian countries and provide 24/7 service.

4. Payment options and ensure safe payment

Which payment method should you choose for your e-commerce store? Well, there are dozens of payment gateways to choose from apart from accepting credit cards like Paypal, Google Wallet, Square etc. Some payment methods are geographic specific, so you need to research before deciding which payment option to add.

Give your customers a safe e-commerce platform, they tend to leave the website immediately if they find any website vulnerable to security threats. So always set up a secure connectivity by using SSL certificate, establish two factor authentication and do mention your privacy policy in the footer of your website.

5. FAQ section

Your customer may have several questions before they shop on your website. So how would you know what the questions are? Think like a buyer, ask yourself those questions, list them on a piece of paper, answer them and add on your website in the FAQ (Frequently Asked Question) section. It’s like a self-help area to answer some common questions most of your customers might have. Combine your FAQ section with the contact us form, this will help your customers to ask that is not answered in your FAQ section.

6. Call to Action

Call to action on an e-commerce website tells your buyers what to do after they have decided to buy a product. The most common and important CTA on an e-commerce website is to put a “Buy Now” button on every page of your product. However, you can add some other call to actions depending on your business goals like filling out contact us form for more information and placing banners or pop ups to tell buyers about discounts or other special offers. .

7. User Generated Reviews

If you think your products are better than your competitors, let your existing customers tell the same to your prospect buyers. User generated reviews help a potential customers find the negatives/positives and give a true picture of your product. Advertising through your customers is the best method to promote your products and building trust in your brand. Encourage your buyers to leave a review after they buy a product from your website.

Every single product that is indexed on your website store should have a review section/tab and a rating option placed in the product’s decryption that can be viewed by the prospects. However, “write a review” option should only be accessible to registered users/clients only.

8. Writing Blogs

Blogs, no doubt is an essential part of any e-commerce website. You can use blogs to give more information about the products you have to offer. They help you in a number of ways like generating traffic to your website, keep your customers informed about the latest promotions and building your brand image. You can write blogs on various topics like revealing secrets of the industry you are in, your business history, providing solution to a problem your customer is facing or anything you know would be good to engage your audience. Make sure every blog you publish will contribute towards branding of your store and reflect your product’s awareness which eventually will increase your sales.

Engaging traffic these days needs a tact full approach and further its proper execution carries an essential weight age. Stats proved that adopting to modern blog’s engaging traffic strategies and techniques have dramatically improved the communication process with target audience, hence gagging a good number of traffic to your account. Few of the techniques involved are targeting your content that your audience would mostly like share, participating in the forums and communities where audience is already in abundance, making your blog’s content SEO friendly.

Using Twitter, Facebook and Google plus to share your posts and making new connections, installation of analytics and paying more attention to results, using info-graphic techniques in your blogs, conducting a keyword research when writing your blog, referring to your posts or others in your blogs consistently, guest blog can also make a huge difference, incorporating a state of the art design into your website, interaction on other blogs and leaving reference to your own, enabling subscription vie email + feed and track them, using your email connections and signatures to promote your posts and your blog overall, surveying your readers and adding a value to any popular topic/conversation etc.

 

Improving Mobile Conversion Rates

(This article was originally written by Jack Ford for SalesCycle).

Mobile’s share of web traffic continues to soar and has recently overtaken desktop, but retailers still face challenges in converting mobile users.

Mobile conversion rates are still lagging way behind desktop. In fact, desktop shoppers are three times more likely to convert than mobile ones.

E-commerce stats from Christmas 2016 illustrate this point. Mobile retail traffic was very close to that of desktop – equal if you include tablets – but sales on desktop are much higher.

It seems that in some cases mobile does all the leg-work before shoppers turn to desktop to make their purchase.

Research from Adobe highlights the top three reasons for this:

  • Ease of navigation
  • Bigger product images
  • Entering payment details

To find out how brands can change this behavior and close this conversion gap, we asked three digital marketing and e-commerce experts for their top tips.

Tommy Walker | Editor-in-Chief, Shopify Plus

Understand context. The environment around a mobile user is inherently busier. Lunch breaks end, Uber rides finish, texts, Facebook notifications, calendar reminders, both the real world and digital environments are conspiring against the mobile user to get anything done.

This is why making things simple, and as “One touch” as possible is paramount. QZ does a great job of targeting “one touch subscribe” for their mobile readers.

This is also why Apple Wallet, Paypal, and other mobile wallets in the checkout are so important; to make it smoother. My message to brands is: help me buy products faster.

But also, ‘mobile users’ don’t live in a vacuum, they’re likely also desktop users, but do you know who’s who? If you did, you might be able to run a retargeting campaign that is delivered via SMS.

If you’re targeting items with multiple visits and sending those to phone numbers – then by making it easier to buy and checkout via one touch options, you’re far more likely to see a lift in mobile buying.

 

Dave Chaffey | CEO, SmartInsights.com

I recommend three research UX techniques retailers should use to improve conversion on smartphone shoppers.

  1. Isolate smartphone visitors in analytics by creating smartphone segments to see whether there are specific pain points on the journey which mean they are more likely exit than desktop. Test improvements against a control using an AB testing tool like Convert.com.
  2. Use tools like Usertesting.com or Whatusersdo.com to run dedicated smartphone UX sessions to identify challenges that smartphone users have.
  3. For individual pages in the journey like product, category or checkout pages serve tailored questionnaires asking for feedback.

By using these low cost methods you balance analytic and direct customer feedback to address the problems that are killing your smartphone conversion rates.

 

Ben Davis | Senior Writer, Econsultancy

  1. Product page imagery has to fill the screen and every page has to load quickly (get your images optimised, your CDN sorted, and use server side caching).  
  2. If you’re a multichannel retailer, make it easy for mobile users to find stock in a nearby store, or to click and collect.
  3. Give a guest checkout option, and use chunky fields with as few checkout pages as possible.
  4. Do the little things well, such as asking for the user’s postcode and then autofill the address field.

 

The message coming through loud and clear from our interviews and round up of research is the importance of usability. People want to shop on mobile, and retailers need to make the journey as smooth as possible.

It’s interesting to see that a lack of trust isn’t specifically called out by any of the experts or the Adobe survey, and hints at the shift in consumer attitudes from research that reported trust issues as the number one barrier to mobile shopping in 2014.

If brands are now focusing (or should be) on improving the usability of their mobile stores and checkouts, I wonder what the next shift in consumer behavior will be for retailers to keep an eye on?

Amazon's Free Shipping Policy Forces Everyone to Compete

(This article was originally written by Brian Baskin for The Wall Street Journal).

Shipping companies, ranging from startups to the biggest package handlers, are vying to help small retailers compete with Amazon.com Inc.’s rapid expansion of free shipping.

Logistics companies say demand for fulfillment services has ballooned in the past year, as Amazon casts a bigger shadow across the retail world and the shipping market. Retailers are rushing to offer faster, cheaper delivery to keep customers from flocking to Amazon Prime, which promises two-day shipping on millions of items. Shipping companies fear the e-tailer will starve their networks by handling more of its own orders.

They see a lifeline in going after smaller customers, ranging from retail startups to midsize national chains that can’t afford to match the billions of dollars Amazon, Wal-Mart Stores Inc. and other major retailers are spending to speed delivery.

It is a shift in strategy for companies like FedEx Corp. , which until recently tailored their e-commerce services mainly to giant retailers needing to quickly process thousands of shipments a day. Now, they are betting even tiny online storefronts will pay for access to nationwide networks of warehouses, trucks and planes that can whisk online orders to customers’ doorsteps in less than 48 hours—even if Amazon’s growing same-day delivery service remains out of reach for most.

“There is no universe where you can beat Amazon’s shipping prices,” said Stefan Weitz, chief product and strategy officer at Radial, which handles online orders from about two-dozen warehouses and clients’ stores. “I don’t have to beat Amazon. I have to get close enough to provide a service level to my customers.”

Sterling Partners, a private-equity firm, formed Radial about a year ago by acquiring eBay Inc.’s e-commerce solutions unit and merging it with another online shopping services provider. The company works with national chains, including Dick’s Sporting Goods Inc. and PetSmart Inc. Radial uses sales and other data to determine where to keep inventory, so it is the warehouse in Jacksonville, rather than Minneapolis, that has plenty of sandals to ship to shoppers in Miami. The company is one of the largest shippers using United Parcel Service Inc.’s ground service, allowing it to offer lower rates to retailers, a spokeswoman said.

In February, FedEx said it had started a new service managing fulfillment for smaller retailers. The company can pack merchandise from up to 400 sellers in a distribution center in Indianapolis and, soon, a second facility in southern California, said Ryan Kelly, a senior vice president at FedEx Supply Chain. A technology platform will distribute inventory across different locations, allowing customers to reach 98% of Americans via two-day ground shipping. FedEx previously offered that level of service mainly to department stores and other big customers that needed multiple warehouses for themselves, Mr. Kelly said.

Newer entrants include startups like ShipBob, which runs fulfillment centers in Los Angeles, Chicago and Brooklyn, and Red Stag Fulfillment, operating out of three facilities in Tennessee and Utah. These companies pool orders from hundreds of customers to negotiate lower shipping rates than the retailers could get on their own.

Just north of Brooklyn’s Sunset Park neighborhood, ShipBob, which opened its first warehouse less than two years ago, stores merchandise from over 300 retailers in rows of neatly stacked white plastic bins. Workers walk the aisles, plucking out jars of artisanal mustard and organic conditioner, which they hand off to packers who prep the items for shipping.

ShipBob in February more than doubled the size of its Brooklyn warehouse and plans to open a fourth facility in May as some of its customers’ sales take off.

“We help them to grow, and they help us to grow,” said Kieran O’Leary, director of operations at the Brooklyn warehouse.

Amazon pioneered many of the tactics these companies are using. Fulfillment by Amazon, started in 2006, today ships items for third-party sellers of all sizes out of all of the company’s 149 fulfillment centers world-wide, including 75 in North America, a spokesman said.

“Amazon is rewriting the book on fulfillment,” said Satish Jindel, president of research firm SJ Consulting Group Inc. “They do it from A to Z—they get you the visibility, make sure the product is available and take care of the order.”

LOGISTICS REPORT

Get the latest news and analysis on logistics and supply-chain issues via a daily newsletter, at WSJ.com/Logistics.

Many sellers are wary of handing over fulfillment to Amazon, which is selling more products under its own brand.ChannelAdvisor says Amazon handles less than 3% of client orders not placed on the site. Radial, ShipBob and others promise in marketing materials to help smaller retailers meet the higher expectations for shipping set by Amazon.

Peter Wong said he hired Red Stag to level the playing field with bigger sellers online. Mr. Wong is chief operating officer at SwimSpray, which makes a spray that removes chlorine from skin and hair. He said negotiating directly with big delivery companies was “embarrassing” because SwimSpray didn’t have the order volumes to secure steep discounts. Companies that didn’t specialize in fulfillment couldn’t ship orders out reliably.

“Ultimately, what [Red Stag] allowed us to do is focus more on selling rather than focus on how do we get something from point A to point B,” Mr. Wong said.

Sustainable E-Commerce Packaging

(This article was originally written by Lisa McTigue Pierce for Packaging Digest).

With a win-win-win strategy that includes partnerships throughout the supply chain, the world’s largest online retailer is collaborating with the industry to optimize packaging design for ecommerce.

In an exclusive interview, Brent Nelson, senior manager, worldwide packaging, Customer Packaging Experience (CPEX), tells Packaging Digest about the company’s business model, the Amazon Packaging Certification Guidelines and how teamwork will solve many of today’s packaging challenges for ecommerce marketing.

Nelson will be speaking at the upcoming SustPack 2017 conference (Apr. 24-26; Scottsdale, AZ), along with his colleague Kim Houchens, Ph.D., director of worldwide packaging (CPEX) for sustainability. On Tues., Apr. 25, at 4:15 p.m., Nelson and Houchens will co-present “Digital Moment of Truth: Designing Packaging for e-Commerce,” in which they’ll talk about the company’s successes with right-sized and frustration-free packaging, and share their packaging design tips for optimized shipments.

Nelson previews some of what conference attendees will hear, and comments on other key ecommerce trends such as unboxing videos and heightening the consumer’s experience.

How important is packaging sustainability to Amazon and why?

Nelson: Our number one priority is to delight customers and packaging is an important part of that. Thirty one million times a year customers give us feedback and usually tell us they love our packaging, but there’s always more room for improvement. We are working hard on initiatives to further reduce packaging waste while protecting orders for customers. One of those initiatives is our Amazon Packaging Certification program, including Frustration Free Packaging, which last year collectively eliminated nearly 83 million corrugated boxes. To date, we have more than 1.1 million items that are available in certified packaging.

What are the challenges you’re seeing in ecommerce packaging and sustainability, and why?

Nelson: We consider packaging sustainability to be a win-win-win and we are working hard to share our standards and guidelines with brand owners and the packaging industry as a whole, so we can drive those positive outcomes faster, together.

The primary challenge we see is that packaging designed for brick-and-mortar retail is in many cases not optimal for online fulfillment. Packaging designed to stand out on a retail shelf is often oversized, with expensive “romance” design aesthetics, redundant features to prevent theft and not capable of surviving the journey to the customer. In many cases, these features can lead to suboptimal packaging for online distribution.

How can these challenges be solved or overcome?

Nelson: The most important thing is that the industry works together to create packaging that’s great for customers, companies and the environment. Using our Amazon Packaging Certification Guidelines, we are working to educate the industry about the impact that sustainable packaging has on customer satisfaction, including repeat customers and cost savings.

That’s part of why we are excited for the opportunity to present at the upcoming SustPack 2017 conference and why we are actively participating in forums where brand owners and packaging industry influencers are present. Certified packaging designed for Amazon and online fulfillment is a win for customers due to right-sized packages being designed to prevent damages; it’s a win for our brand owner partners and Amazon because it’s less material volume and often much lower cost; and it’s a win for the planet—the reduced amount of packaging is less wasteful, and lower damage rates mean less transportation of goods to and from the customer.

Are the packaging design tips you’ll be sharing with the SustPack audience ones Amazon follows or are they what you expect your vendors to follow? Are the company’s packaging expectations different for its own products versus products other vendors sell on the site?

Nelson: Absolutely, our packaging guidelines are the requirements we leverage for our own Amazon private label products. Our objective is to create best-in-class certified packaging (such as Frustration Free Packaging) that customers love and serves as a model for our external brand owner partners to follow. A great example is our Amazon Basics business, which encompasses hundreds of different products that are certified as Frustration Free Packaging or Ships in Own Container.

We will be sharing the core tenants of sustainable packaging for Amazon and a few of the many case studies of certified packaging designed for customer experience and online fulfillment. One of our goals for this presentation is to educate and dialogue with brand owners, packaging suppliers and designers about what, how and why packaging designed for ecommerce works.

Nelson: The whitepaper reflects many of the key differences between packaging for ecommerce and traditional retail fairly. There are distinct challenges and opportunities in both models, with packaging and logistics as particularly distinctive management areas. What the author stated—and a key message of our presentation—is that packaging for online fulfillment requires a reimagining of packaging. Furthermore, we assert that online retail (versus traditional brick-and-mortar) is actually a powerful enabler to reduce packaging waste, as many of the fundamental design features for packaging in traditional retail are far less relevant online (for example, product not packaging on display and no size comparison across products).

The author accurately asserts that ecommerce is beginning to be viewed as an independent distribution paradigm, providing an opportunity to design packaging with sustainability and optimization in mind. This is our business model—applying a sustainability lens to packaging enables us to create a better customer experience, reduce cost and drive more efficient use of resources, which reduces the environmental impact. A win-win-win. To do so, we must collaborate as an industry and is precisely why we are members of the Sustainable Packaging Coalition.

In many product categories, brand owners have switched from rigid to flexible packaging for a variety of reasons, sustainability being one of them. Do you anticipate similar interest and activity with flexible packaging for ecommerce?

Nelson: There is always a tradeoff that must be considered in terms of the sustainability impact of packaging, such as the amount of packaging material that is used, the quantity of post-industrial or post-consumer recycled material used and, finally, the end-of-life recyclability of the packaging materials. While there is no one-size-fits-all answer, we are committed to working with the industry and internally in our own operations to drive sustainable packaging solutions.

In the small-parcel shipping environment of ecommerce, the dimensional weight cost structure is causing product manufacturers to rethink their shipments for “right-sizing.” How does dim weight enter into your suggestions for how to design packaging for ecommerce?

Nelson: Certainly there is a trend toward lighter weight and decreased shipping volumes across the industry. Our commitment is to drive adoption of right-sized, minimal packaging that protects against damage and is made from environmentally responsible materials.

Much has been said in the last couple years about the popularity of “unboxing” videos and heightening the consumer’s experience with ecommerce packaging. What does Amazon do with its packaging to elevate the consumer’s experience?

Nelson: Amazon’s mission is to focus on what is best for our customers. With the launch of Frustration Free Packaging in 2008, our goal was to guide the industry to design and certify packaging that is right sized, easy to open and made from 100% curbside recyclable materials, features that are designed to delight our customers. Great examples of FFP packaging can be found on our Innovations and Sustainability sites.

Brent, you’ll be presenting at SustPack with your colleague Kim Houchens, director of worldwide packaging sustainability. How do your two perspectives differ and why?

Nelson: Kim and I have been in the packaging industry for a long time and actually worked together in former roles. My experience prior to Amazon was leading packaging innovation and supply chain teams for global consumer packaged goods (CPG) brands. Kim came to Amazon with deep expertise leading global data and material engineering teams for suppliers and other retailers. Our collective experience has been a great match and together we have worked to drive a compelling vision for our team and Amazon in the packaging space.

What main takeaway would you like conference attendees to remember from your speech?

Nelson: The time is now to reimagine packaging to enable companies to thrive in an ecommerce business model.

Again, online retail provides distinct and powerful enablers versus traditional retail to invent packaging that delights customers, reduces waste and minimizes cost throughout the supply chain. Sustainability provides a critical catalyst for challenging norms and promoting systemic change in packaging.

Taming the E-Commerce Fulfillment Beast

(This article was originally written by Jesse Kaufman for Multichannel Merchant).

When it comes to fulfillment, every ecommerce merchant can relate to the lion tamer’s challenge.

Just as he or she must teach huge, hot-tempered animals to respond to commands without becoming their lunch, so must the ecommerce merchant get customers’ goods delivered on time and intact — all while preventing costs from skyrocketing. Needless to say, ecommerce sellers have a fine line to walk to reach top-notch fulfillment.

Jumping Through Endless Fulfillment Hoops

With all the competing factors at play, fulfillment is a tricky environment that requires skill, lightning-fast pivots and a cool head. From balancing postage and packaging costs without hiking up the customers’ price to aggregating tons of orders across different sales channels into one concise fulfillment platform, these endless obstacles can be tough to navigate.

And don’t forget the returns process, which can take an immediate bite out of your bottom line, then come back to further haunt you in the form of extra administrative costs. If your inventory isn’t sorted and catalogued correctly when those returns come back to the warehouse, you’re revisited with the pain of the bite a second time.

On top of these basic ecommerce quandaries sits heightened customer demands and expectations. Consumers want shorter processing windows; as time competes with money, this reality becomes another profit muncher.

“Ouch! The Corporate Sting of Fulfillment Challenges

By now, you know fulfillment challenges aren’t just a pain — they can truly compromise your business. 

Each time you make a fulfillment misstep, your bottom line takes a hit. You spend time that should be occupied building other parts of your business, like marketing, branding and product development. And those negative customer experiences due to order delays, mis-ships, or poor communication? You can only hope they don’t go viral in reviews.

So what’s an ecommerce merchant to do? The answer can be summed up in one word: simplify. Here’s how:

Partner with the Best

Building relationships with fulfillment partners that have strong technology backgrounds should be a priority. For the best results, find one experienced with brands and products that are similar to those you sell.

A solid fulfillment partner should know what it’s doing, while providing technical know-how and transparent pricing. Be sure to ask about “hidden” fees such as account maintenance or tech costs. And make sure any large postage discounts the fulfillment partner gets are passed on in full to customers.

Have the Right Tools in Place

It’s always about the tools. If you’re not at a stage when outsourcing fulfillment makes sense, you need those tools even more. Search for platforms that will help you track your inventory, ship products at discounted rates and provide full visibility of data across all sales channels. Try to automate as much of the day-to-day work as possible, allowing you to manage fulfillment on a high level without unnecessary distractions.

It’s simple: Just Communicate

If you don’t want angry customers blowing up your social media, keep them from getting angry in the first place by making sure they know the status of their orders. For merchants selling to the U.K., for instance, U.K. law requires ecommerce retailers to keep customers in the know with written order verification. And even where that’s not the law, it’s just good business.

Customers appreciate having up-to-date order info so give them the ability to see where their orders are through online tracking systems, including any updates on changes or delays. Even if orders are later than expected, they’ll never have to guess when their package is coming or call support to find out.

Ecommerce fulfillment is absolutely a creature requiring careful handling. But like the lion tamer, ecommerce merchants can control fulfillment. Streamlining processes in house or with a trusted partner lets you focus on bigger goals without upsetting your customers or putting your business at risk.