Mobile payments is such a new concept that many in the media continue to inaccurately report what happened this week between Read Now
Authenticity and uniqueness are key, IRCE speakers say, for e-retailers seeking to engage the mobile- and web-savvy 21st-century shopper.
Barnes & Noble Inc. was toast. That was the prevailing view on Wall Street a few years ago. After all, the company operated hundreds of stores at a time when consumers were shopping more online, and sold printed volumes when Amazon.com Inc.'s Kindle was igniting demand for electronic books.
The bookseller didn't minimize the challenge. Instead it set out to reinvent itself as a company that serves readers better than anyone, whether they want to read conventional volumes or e-books, explained Barnes & Noble CEO William Lynch, in a keynote address last month at the Internet Retailer Conference & Exhibition 2012 in Chicago.
As part of its transformation, Barnes & Noble promoted Lynch, its e-commerce director, to CEO, invested heavily in creating its Nook e-book reader, and built a catalog that now offers 3 million e-books.
"We put ourselves and everything we were doing into a massive structural shift," Lynch told attendees. "We set out to transform an army of booksellers into an army of Nook sellers."
As it went through this wrenching transition, Lynch said, Barnes & Noble remained true to its roots as a company that serves readers. Faced with competing with Silicon Valley's giants for engineering talent as it built a new development facility in Palo Alto, Calif., the company focused its recruiting on engineers who themselves loved to read. Recognizing its 27,000 largely book-loving store associates had to be won over to embrace the new strategy, the retailer made 50% of their bonuses dependent on Nook sales.
Less than three years after Barnes & Noble introduced the Nook in November 2009, the retailer has captured 27% of the growing e-book market and positioned itself as a strong competitor in digital content, Lynch said. Based on his experience, he advised IRCE attendees: "Focus on your customers and on your unique strengths."
It was a theme attendees would hear repeated throughout the four-day IRCE event. At a time when many retailers are worrying about how to compete with the low prices from Amazon.com Inc. and other web retailers, many also are realizing that the way to avoid competing solely on price is to focus on what they do better than anyone else and to communicate in a personal, human way with the consumers who want what they offer.
That's why online flash-sale retailer Gilt Groupe Inc. sends 3,000 versions of its daily e-mail to its 5 million consumers and pays close attention to what they buy and search for on Gilt.com, Alexis Maybank, founder and chief strategy officer at Gilt, said in the Day Two Keynote Presentation at IRCE. Recognizing that a purchase of maternity wear means that a shopper's preferences are likely to change, Gilt adjusts its offers accordingly. That makes Gilt more than a faceless online business to consumers. "As you come through the front doors of Gilt, we want you to say, ÔWow, Gilt really knows me,'" Maybank said.
There were several thousand on hand to hear those messages from Lynch, Maybank and others among the 175 expert speakers who presented at the conference. IRCE attracted a record 8,638 attendees this year, 18.3% higher than the 7,301 who participated at IRCE 2011 in San Diego. The IRCE Exhibit Hall also set a record, with 564 companies presenting all manner of e-commerce technologies and services.
With e-commerce growing at 16.1% last year, according to the U.S. Department of Commerce, IRCE attendees were mostly upbeat about their own prospects, despite widespread concerns about the global economy. Featured speaker Fareed Zakaria, host of the CNN international affairs TV show "Global Public Square with Fareed Zakaria" and editor at large at Time magazine, addressed those broader concerns, arguing there are many reasons for optimism, including a greater global political stability than in most eras and more countries embracing free market economics. Technology, including the Internet and e-commerce, will also be part of solving today's problems as millions of innovative individuals, like those at IRCE, use their creativity to develop unanticipated solutions.
"Have faith in yourselves because you are all points of light in this global economy. The aggregation of thousands and thousands of points of light will create a mighty illumination that will lead us out of this darkness," Zakaria said in concluding his speech, prompting a standing ovation from the crowd.
An Amazon world
While Zakaria preached optimism, IRCE attendees were reminded of the challenges they face by Lauren Freedman, president of research and consulting firm The E-tailing Group Inc., who provided a detailed look at the increasingly sophisticated shopper and how she makes free use of web sites, mobile devices and social networks to make sure she gets the best deals.
Reporting on a survey of 1,033 online shoppers her firm conducted in April for Oracle Corp., Freedman noted that only 13% of respondents said they were shopping more in bricks-and-mortar stores, while many were shopping more online: 43% were shopping online more via their personal computers, 17% on tablets and 16% on smartphones.
Amazon's increasingly dominant role kept popping up in the results: 63% of those surveyed said they routinely check prices on Amazon and 29% were members of Amazon Prime, the $79-a-year program that provides members free, two-day shipping on all purchases from Amazon.
There is little doubt the web has taught today's shoppers they can get a discount—47% of respondents said they rarely pay full price. However, 42% said they would pay list price for a hard-to-find item and 36% said they would pay list price for something they really like, demonstrating that unique and compelling products can command higher prices and profit margins.
Freedman's survey especially highlighted the challenges facing retail chains at a time when half of U.S. consumers can access the web at any time via their smartphones, including when standing in a store's aisles. While in a store, 26% say they have used their smartphones to check prices at Amazon and 21% say they've gone to other e-retailers to compare prices. Freedman illustrated her results with videos of interviews with shoppers, including one woman who described how she went to a Sports Authority store to try on a pair of running shoes, then, while standing in the shoes at the store, found a better price at Amazon and bought the shoes there.