5 Ways Social Media Is Transforming E-Commerce

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

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

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

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

As Catalin Zorzini says:

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

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

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

Here are 5 to think about.

#1 – Live Video

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

As Matthew Ingram notes:

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

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

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

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

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

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

 

#2 – Hyper-Targeted Advertising

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

As the Washington Post notes:

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

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

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

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

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

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

#3 – Constant Brand Monitoring

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

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

As SproutSocial says:

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

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

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

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

#4 – The Advent of Chatbots

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

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

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

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

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

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

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

#5 – In-App Purchase Options

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

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

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

Conclusion

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

 

 

 

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

 

Manufacturers Speed Up Production

(This article originally appeared on PYMNTS.com).

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

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

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

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

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

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

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

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

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

 

 

L'Oreal UK Shifting Ad Budget to Amazon

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

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

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

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

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

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

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

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

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

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

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

Online Shoppers Leave Sites Because of These Basic Problems

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

Dive Brief:

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

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

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

Dive Insight:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Project Gigaton

(This article was written by Adam Gendell for Sustainable Packaging).

For Walmart, sustainable packaging has a new mantra: everyday low carbon footprint.

This new emphasis is a touchstone for a sweeping amount of broader activity on greenhouse gas emissions, which had seemingly become a distant issue as the sustainable packaging conversation has revolved around recyclability. Walmart itself had placed recyclability front and center in its Sustainable Packaging Playbook, strongly encouraging use of the How2Recycle labeling system as a means to communicate recyclability and identify opportunities for improvement.

In April, Walmart changed the conversation by announcing packaging as one of six primary activity areas for Project Gigaton, its commitment to reduce one gigaton of greenhouse gas emissions by 2030. This summer, Walmart is putting the plan into action, giving suppliers a concrete directive for lowering the greenhouse gas emissions associated with packaging and asking them to report their progress.

Carbon footprints are back on the forefront.

A look at broader industry commitments suggests that interest in carbon footprint reductions in relation to packaging production has never waned. Research from the Sustainable Packaging Coalition on public statements and goals of brands and retailers found that the prevalence of commitments to reduce overall company carbon footprints was roughly equal to the amount of commitments to improve the recyclability of packaging. The key issue, though, is that carbon footprint commitments are always made at the corporate level, and they rarely—-almost never—-trickle down in the way of a formal commitment at the packaging level. The SPC only found one public commitment that explicitly made an imperative to reduce the carbon footprint of packaging.

This shouldn’t surprise anyone. Packaging is never the chief contributor to the overall carbon footprint of a product or a company. And when it comes time for the packaging decision-makers to set goals, they want goals that resonate with sustainability-minded consumers. Consumers like recycling, and they understand recyclability, while the concept of low-carbon packaging doesn’t give the same warm and fuzzy feelings. Brands and retailers undoubtedly have non-publicized goals to reduce the carbon footprint of packaging, but secret goals don’t send the same signal. With Walmart’s loud new imperative, that may change.

It needs to be recognized that packaging is consequential to the carbon footprint of a packaged product, and improvements to the carbon footprint of packaging can be meaningful in the context of an overarching corporate goal. That is exactly what Walmart discovered, and why packaging is a centerpiece in its new push.

The rule of thumb for a packaged food product is that packaging comprises around 10% of the overall carbon footprint. Not huge, but certainly not too small to be ignored. For some products, it’s more. In the soft drink category, for instance, packaging can comprise up to 30% of the carbon footprint. For a company like Coca-Cola, this context sheds light on the rationale behind its massive push to use lower-carbon plant-based plastics in place of fossil plastics, which just so happens to be a strategy acknowledged by Walmart.

In all, there are likely hundreds of different types of actions that can be taken to reduce the carbon footprint of packaging. Any company seeking to reduce their packaging carbon footprint needs to take the actions that make the most sense in the context of their company’s activities.

The main effect of Walmart’s new focus on carbon is the bringing of a much-needed balance to the world of sustainable packaging. The narrative on packaging sustainability has been dichotomous at times. Do we place higher value on soft characteristics like recyclability, renewable material usage and recycled content, which clearly play into a circular economy vision? Or do we place higher value on scientific measurements of the true environmental impacts of the packaging life cycle, adhering to the principles of sustainable materials management and reducing today’s measureable impacts—like greenhouse gas emissions—regardless of so-called circularity?

It’s hard to do both, but the biggest danger is pursuing one school of thought in isolation.

To achieve more sustainable packaging, we need to maintain our long-term vision of creating a circular economy while simultaneously reducing carbon footprints and other measurable impacts that affect our environment today. Walmart is striking the right tone, establishing the expectation that suppliers make simultaneous advances in increased recyclability and lowered carbon footprints, and not saying outright whether one is more valued than the other.

Companies must rise to the challenge and elevate carbon footprint commitments to the same height as recyclability commitments. In some ways, it might be a revival. Going “carbon neutral” was the original centerpiece for all things sustainability, long before “zero waste,” “closed loop,” “circular economy” or “sustainable materials management” became established ideas.

With Walmart’s new push, old school sustainability is back!

Leveling the Amazon Playing Field

(This article was written by Dr. Amir Konigsberg for Multichannel Merchant).

Headlines proclaiming that “Amazon is Eating the World” and that Amazon’s market-altering dominance – AKA the “Amazon Effect” – is causing immense concern for the retail industry as the playing field appears to be growing frighteningly imbalanced.

Amazon is a leader in customer service, customer experience, delivery and, of course, product variety and selection. With their ultimate goal of owning the entire ecommerce supply chain, Amazon’s strategy can focus on long-term domination rather than short-term profit. This allows the ecommerce behemoth, with its unmatched resources and ability to lose billions on logistics without flinching, to drive down prices while building up intense shopper loyalty and, ultimately, squash competition. Like any ungentle giant, Amazon reinvests profits to solidify its spot as the best-of-the-best, meaning that it will only get harder to compete.

This domination has left many e-tailers convinced that there is no way out. But what these online retailers really lack is an effective long-term strategy leveraging the very things Amazon doesn’t have – improving their existing advantages to beat the giant at its own game.

Size Matters

Amazon may indeed be gargantuan, but big is not always best. A restaurant that serves every type of cuisine is unlikely to cook up linguini as good as a good Italian joint. Likewise, offering everything means Amazon specializes in nothing. Smaller online retailers must leverage their expertise, positioning themselves in a way that consumers view them as experts. For example, a camera store focusing on cameras alone will be considered more knowledgeable in the field than an electronics store selling cameras, laptops, and HDTVs. Take Casper, the online mattress company. They made the experience of purchasing a bed into something sexy, memorable and even prestigious by positioning themselves as the experts in high performing mattresses.

Boast the Best Customer Experience

E-commerce does not enable the in-store pizazz or meet-and-greet from attentive staff that traditional shopping offers, so e-tailers must innovate to ensure that the process of purchasing online is exciting and smooth. Amazon may be checking boxes in customer support, but their scale can’t help but lack a personal touch – there are simply too many products to choose from being sold by too many resellers to offer any sort of tailored experience. Companies like Dollar Shave Club inspire customer loyalty through sleek design, fantastic customer service, and a clear, responsive communication style that enhances personal connections between retailer and customer. Companies can create magic by curating the right experience to showcase a brand’s identity, inspiring connection and communicating their message to shoppers.

Build a Technical Arsenal

Fortunately for e-tailers, innovative e-commerce technology is becoming more readily available and affordable. For example, though Amazon is threatening to transform its deliveries from “same-day” to “same-hour” by developing an advanced drone logistics system, nimble drone startups like Flytrex offer to provide the same service for any business. And if you’re a corner store, you‘ll be able to beat Amazon’s same-hour drone delivery from faraway fulfillment centers with same-minute delivery in the neighborhood.

AI and Machine Learning are also enabling e-commerce businesses to compete by personalizing the online experience – from the way customers search for products (significantly boosting conversion rates) to the way customer service queries are understood and handled. These differentiated experiences will resonate with customers and inspire them, going a long way to developing brand loyalty.

In short, strategic implementation of best-of technologies can be a game changer for e-tailers, helping nullify Amazon’s bottomless resources.

Think Omnichannel

Amazon knows there’s still nothing like the smell of a new leather jacket or of a ripe grapefruit to cause consumers to buy, and their recent purchase of Whole Foods illustrates that even the world’s paradigmatic e-commerce player sees something in brick-and-mortar. But as Amazon creates more boots on the ground, consumers still can’t try on a pair of headphones at the Amazon Store at the local mall. One way to take Amazon head on is by creating both a fantastic online and in-store experience, providing more than one channel for success. Cosmetics retailer Sephora does just this with its app, allowing shoppers to track their purchase history, create shopping lists or purchase from the app itself. Retailers who maintain a loyal customer-base both online and offline can build a far more secure business than those who neglect one of these channels for the other.

Giants may be intimidating, but with some confidence-boosting strategies, other players can get a place at the table. The tools for competing with Amazon are all within reach. E-tailers must utilize their individuality and size to their advantage. This means thinking out of the box, including finding new business models, discovering better delivery solutions, inventing new and compelling customer experiences, and even introducing new retail segments.

Amazon may be trying to eat the world, but biting back is not out of the question.

Small Retailers in Amazon's Crosshairs

(This article was written by Lauren Thomas for The Fiscal Times).

Amazon's "hulking shadow" just won't go away, and it's only going to grow, according to a new note from Moody's Investors Service.

"Almost every sub-segment of retail is feeling the looming shadow of Amazon's ever-increasing presence online," Charlie O'Shea, Moody's lead retail analyst and author of the report, said.

He used Prime Day as an example of how Amazon is separating itself from the rest by creating its own shopping event and leaving the so-called little guys scant room to compete.

"Virtually every sub-segment of retail, other than auto retail and pharmacy, are caught in the cross-hairs of Amazon's constantly-morphing online presence," O'Shea said.

Aside from the internet giant, Moody's also expects other "bigger competitors" — Target, Best Buy and even department stores — to continue to consolidate ahead of "smaller competitors." This will put further stress on smaller retailers — J. Crew, GNC and Abercrombie & Fitch, as examples — and elevate the risk of default, the firm has predicted.

"Competitors going up against mega-retailers such as Walmart or Amazon face a Darwinian choice: fight a price battle with these retail leaders, which they will likely lose, or find someone weaker from whom they can grab market share," O'Shea wrote.

The problem struggling retailers face is that these companies aren't "assessing who their competitors really are." Too many retailers see their competition as much "narrower" or more "predictable" than it is.

J. Crew, for example, should be looking at a Target or a department store like J.C. Penney as its competition, because they're all in the business of selling clothing. But not everyone has that mindset, Moody's pointed out.

For small retailers, the circumstances are becoming more and more "dire" in the brick-and-mortar space, O'Shea added. But there's really not much that can be done at this point.

"Distressed retailers have very little room to maneuver in a falling sales environment. Any drop in revenue could be the tipping point for those scrambling to maintain enough liquidity to meet upcoming debt maturities and, at the same time, enough money to support a competitive online capability."

In February, among Moody's rated retail and apparel issuers, 19 retailers had ratings of "Caa" or lower — implying a heavily distressed company.

That number then grew to 22 companies, or about 15 percent of the firm's retail and apparel category, Moody's reported in June. Among those 22 distressed names are Sears, Nine West, Claire's Store, David's Bridal and Charming Charlie.

"There are many bellwether retailers dropping into 'Caa' territory," Moody's said.

In the first quarter of 2017, Amazon and Wal-Mart generated a combined $5.4 billion in retail revenue growth year over year. Though this figure was considered "weak" to kick off the year, it was still more than the combined annual revenue for all of Moody's "Caa"/"Ca"-rated companies, except Sears, the firm said.

Retailers Must Focus on Mobile to Compete With Amazon

(This article was written by Brad Rosen for Retail Customer Experience).

Last month, Amazon moved one giant step closer to world domination. With the purchase of Whole Foods it is clear Amazon intends to disrupt several new industries at once — including the beverage alcohol industry. 
 
Overnight, Amazon gained more than 330 new liquor licenses across 41 U.S. states. This will undoubtedly shift the way consumers acquire and engage with beverage alcohol.
 
I met with Amazon recently at their Seattle Headquarters and it was made crystal clear to me that they are a mobile first company. Initially this gave me pause — I mean, Amazon is SO huge on the web. It's an enormous audience to transition to a mobile platform. Were they able to do it this quickly? The short answer is: yes. As it turns out, more than 72 percent of Amazon’s customers buy on mobile today. 
 
Let's consider the impact of this. Amazon accounts for 40 percent of all e-commerce. So, when Amazon says they are mobile-focused, you can be certain your competition is not just down the street, or on the web, it is in your customers' pockets.

But let's take it back to brick and mortar for a moment.

Amazon's purchase of Whole Foods also aggressively furthers its development into physical retail. Amazon is poised to redefine brick and mortar shopping, making it a seamless omnichannel experience — they have already started with Amazon Go stores in test markets, like Seattle.

And consumers want this: 77 percent of U.S. shoppers are already using their smartphones to help them shop while in a store.

Let me paint a picture for you

Imagine your local Whole Foods with products 40 percent cheaper than they are today and no lines at checkout. In fact, there is no checkout at all. You simply walk out the door with bags full of groceries and your credit card gets charged automatically. 
 
When you enter the store, you are alerted on your phone to products on special related to previous purchases, and then are directed to their location within the store. Produce is weighed, bagged and tagged, and those tags wirelessly tell the store how much to charge you. Every product has a digital price tag on the shelf with dynamically updating prices, based on demand, market conditions, sales, brand offers, etc. Coupons, rebates and affiliate points in your account are credited when you leave the store.

Alternatively, you do all of this from your home and everything comes to you in a few hours. Or, you order online and run down to the store and pick your pre-packaged groceries up at a drive-through kiosk. Regardless, you just spent 50–75 percent less time shopping for your weekly groceries at a fraction of the price. 

Convenience and low-pricing — enabled by efficiencies, economies of scale, ultra fast delivery, and personalized service: THIS is the new retailer paradigm and Amazon is taking us there, whether we want to go or not.

I've witnessed many major societal "tipping points" in my time — moments in time where technology and new thinking have caused a substantial shift in the way humans interact with the world around them. Think the PC, the internet, the web, the mobile phone, iPhone and apps, Amazon and e-commerce and Prime, Uber, Tesla, etc. With each advancement and paradigm shift we do more with our time and money, while regular tasks become easier.

What Amazon did last month will have similar, far reaching implications for generations to come in terms of convenience, spend, and how we interact with brands.

So, what does this mean for beverage alcohol?

First, let me reiterate that 330 Whole Foods across the U.S. sell wine. If one is near you (and by "you" I mean you, the owner of a liquor store), it is time to start thinking hard about how you are going to keep your customers.

For several years Amazon has been perfecting the art of local delivery with Amazon Fresh and Amazon Prime Now. The Whole Foods acquisition gives them delivery hubs nationwide to aggressively compete on grocery and alcohol delivery.

Their market saturation dwarfs even the largest same-day grocery delivery competitors like Peapod and Instacart (10 percent owned by Whole Foods, by the way), not to mention the smaller alcohol delivery players. And with 80 percent of Amazon users purchasing at least once a month, their user retention blows just about everyone out of the water. 

Even your most loyal customer can't resist the temptation of convenience at a good price.

How in the world do you compete with that? 

The short answer is: customer experience. Eighty-nine percent of executives believe that customer experience will be their primary mode of competition this year. With new competitors, new legislation and new technology quickly changing the game for liquor retail, making your customer experience the best it can be is more essential than ever. 

Consumers not only expect their shopping experience to be seamless and pleasant — they expect to be "wowed." A clean and organized store, friendly and knowledgable staff, interesting selections and attractive deals are mandates. To stand out, you have to go above and beyond.

To do this, you need to be where your customers are, which in large part is on their phones. Americans spend a whopping 90 percent of their digital time on their phones, and 87 percent of that time they are using apps.

Capturing an audience through your own mobile app, gives you a way to connect with customers outside of the store and provides valuable consumer insights that will help you stock the shelves with items that sell and target offers to consumers based on their interests. 

Having a mobile app also allows consumers to buy quickly, easily, and at their convenience, and drives incremental customer spend. We have seen Drync-powered apps increase top-line sales by 4 percent YoY — a meaningful number for most retailers.

There are several mobile opportunities out there — and there are plenty of companies that would be happy to use your store as a resource to sell wine through their app. You might want to do this, but you also need to build your own brand and your own audience on mobile.

Mobile is where your customers are. If you are not there, they will find someone else.

Sears Was the Amazon of Its Day

(This article was written by Patrick Kulp for Mashable).

A giant company crushes an outmoded and overpriced retail industry by pioneering a new mode of shopping in which people never have to leave their homes. 

Yes, that narrative applies to Amazon, but it is a trail blazed by a far older company—Sears.

The crossing of their paths this week—Amazon announced it will now sell Sears' Kenmore appliances—paints a stark picture of two transformational businesses on opposite ends of their business lives. Sears is now a life-support husk of an American industrial titan, while Amazon's on a seemingly unstoppable tear reminiscent of the 124-year-old department store's own mid-century reign.

It's easy forget that Sears was young and bold once too. Starting in the tail end of the 1800s, the company built an empire on the back of a then-revolutionary home catalog hundreds of pages thick. The tome was so influential it was nicknamed the "Consumer Bible" and often paired with the genuine article as the only two books in many American households. 

Sears became so ubiquitous that traditional rural general stores withered in its shadow as farmers ditched their spotty inventories and high prices for the ease of mail delivery. 

Like Amazon, Sears also funneled its profits into a diverse portfolio of business endeavors. By the 1980s, giants of insurance, real estate, and credit cards orbited the country's biggest retail operation. Sears ruled over all of it from the world's tallest skyscraper in the heart of the industrial Midwest. 

It even partnered with IBM and CBS to launch an internet-like computer portal in 1984 called Prodigy.

Alas, Sears did not in fact go on to invent the commercial internet. Prodigy was sold in 1996 for a fifth of the collective $1 billion Sears and IBM had sunk into it.  

By that time, Sears' business had been slipping for years as Walmart ushered in the big-box era with a fanatical focus on low costs. The catalog had ended in 1993. A sale to K-Mart in 2004 didn't staunch the bleeding.

Meanwhile, a Wall Street exec named Jeff Bezos quit his high-paying job back in 1994 to go build an online book shop out of a Seattle garage. A year after its 1995 launch, the company was already growing at a pace the New Yorker called "remarkable even by the heady standards of Seattle's software startups."  

Two years later, it began to branch out into CDs and DVDs, then toys and electronics, kicking off a now-familiar forward march that would eventually shake much of the retail industry to its core.  

Amazon passed up Sears in global revenue in 2010, number of employees in 2014, and number of stores last month when it announced its purchase of Whole Foods, according to an analysis from the Wall Street Journal.

Sears is now a zombie. Despite a spike welcoming the Amazon news this week, it's lost 85 percent of its stock value in the last half-decade, shuttered nearly a third of its stores, and racked up so much debt that its credit score is deep in junk territory.

Until Thursday, investors were just counting down the days until the company finally keeled over.

But its newfound rally shows the power of the Amazon brand these days. The company can rattle entire industries with just a feint in their direction. Now it's raising the dead.

That's an exaggeration, of course. Sears is still in deep trouble, no matter how many washers it animates with Amazon's Alexa voice assistant. 

Still, after dragging Sears further underwater for years, Amazon has given its forerunner a rare gasp of breath.

Get Ready for T-Commerce

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

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

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

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

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

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

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

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

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

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

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

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

Cities and Suburbs Losing Tax Revenue to E-Commerce

(This interviewed was aired on NPR).

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

KELLY MCEVERS, HOST:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Brand Name Retailers Closing Stores Left and Right

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

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

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

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

1. RadioShack: 1,430 stores

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

 

2. Payless ShoeSource: 800 stores

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

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

 

3. Rue21: 400 stores

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

 

4. Gymboree: 375 to 450 stores

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

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

 

5. Ascena Retail Group: 268 to 667 stores

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

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

 

6. Sears: 265 stores

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

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

 

7. The Limited: 250 stores

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

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

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

E-Commerce Starts to Embrace Brick-and-Mortar

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Why Self-Driving Trucks Aren't a Silver Bullet

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

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

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

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

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

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

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

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

Plenty of innovation aside from autonomy

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

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

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

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

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

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

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

It's a bird, it's a — SuperTruck

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

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

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

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

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

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

 

 

What to Know About USPS Informed Delivery

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

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

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

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

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

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

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

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

How It Works

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

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

What Marketers Should Think About

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

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

But Informed Delivery is more than that.

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

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

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

But I do have some recommendations.

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

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

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

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

Millennials Going Green Means Retailers Must Follow

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

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

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

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

Understanding How Millennials Think

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

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

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

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

Gives Brands the Ultimate Advantage

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

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

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

Kellogg's New Supply Chain Model

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

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

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

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

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

The human cost of a new distribution model

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

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

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

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

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

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

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

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

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

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

Why Kellogg is shifting to a warehouse model

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

 

 

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The Changing Role of Physical Stores

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

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

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

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

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

Targeting millennials

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

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

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

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

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

Amazon seeks leverage

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

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

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

It won't happen overnight

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

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

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

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