Amazon not only sold $2.5 billion worth of goods, it introduced Prime members to new services. How should rivals compete in 2017?
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It's not just retailers recognizing the power of the mobile device in reaching always-connected consumers. The American Red Cross first saw the mobile impact in a big way when devastating earthquakes hit Haiti in January 2010. A campaign that solicited $10 donations to Haitian relief via text message raised $32 million, Craig Oldham, vice president of digital engagement for the nonprofit organization, explained in another featured address at IRCE. This spring, he said, mobile devices accounted for 50% of the traffic to RedCross.org during the tornado outbreak in Oklahoma.
The Red Cross relaunched its web site last fall, with e-commerce technology from Oracle Corp. In retrospect, Oldham said, the design should have given higher priority to mobile devices because Red Cross volunteers are so often on the go—not just during disasters, but also staffing mobile blood banks and teaching health safety courses. This also extends to people seeking Red Cross emergency services. "Every part of our mission is mobile," he said. The organization launched a mobile version of RedCross.org this year and is developing mobile apps.
Meanwhile, just three weeks after the new web site's launch, its e-commerce functionality stood up to a huge test when powerhouse storm Sandy hit the Northeast last fall, causing traffic to spike. During a fundraising telethon, the site handled 296,000 concurrent visits, while raising $23 million in a few hours.
Other IRCE speakers reported on their experiments with ways to reach mobile consumers. Among them was Leeann Fecho, manager of emerging media and loyalty marketing at Follett Higher Education Group, which operates bookstores and e-commerce sites for some 900 colleges and universities.
"Mobile presents unique opportunities to connect and consolidate the customer experience," Fecho said. That's particularly true for college students, Follett's core customers, as two-thirds of them carry smartphones.
Aiming to drive students into its bookstores during a slow sales period this year, Follett sent text messages to a group of students for whom it had mobile phone numbers, offering them a discount good only in their college's bookstore. 60% viewed the offer and about 9% redeemed it, while only 1% asked not to receive further messages from the retailer.
"We got to see with our own eyes whether we could drive people into the store," Fecho said. She said Follett is working with vendor Copia Mobile on new technology that will let shoppers simply wave their phones past in-store terminals to redeem offers.
Like Follett, many retailers that operate bricks-and-mortar stores are working to blend those physical locations with their web and mobile assets, and the term "omnichannel" was tossed about freely at IRCE. That let-the-customer-shop-from-anywhere strategy has been central to the philosophy of C. Wonder since the women's apparel and accessories retail chain launched in late 2011, Katherine Bahamonde, the retailer's executive vice president of global e-commerce operations, said in a session at IRCE.
"When you come in the door as a new employee we beat you over the head with the omnichannel concept," Bahamonde said. Employees' introductory video is titled "Omnichannel" and emphasizes the importance of letting consumers shop any way they like, why it's crucial to obtain e-mail addresses from store shoppers and the role of social media. The company's mantra, "We are one," reminds employees that stores and e-commerce must work together; e-commerce staffers take shifts in physical stores, and a web executive sits in on weekly calls with store managers to emphasize the cross-channel connection, Bahamonde says. "It's an ongoing education," she said. C. Wonder is part of Burch Creative Capital, an investment firm that also owns retailers Monika Chiang and Poppin.
One way a growing number of retail chains are leveraging their physical locations is by using store inventory to fulfill web orders. Jason Merrick, director of e-commerce at Peter Glenn Ski & Sports, made clear in his IRCE presentation that this isn't easy to do—there are three to five times more problems with orders shipped from the retailer's two dozen stores than from its e-commerce distribution center. As he put it, there's always a risk that a store customer who tries on a ski jacket will leave gummy bears in the jacket's pocket. Because the warehouse is more efficient at shipping orders, the retailer, which once shipped about two-thirds of its orders from stores, now ships only 20% from stores.
Still, this strategy has paid off for Peter Glenn's stores, Merrick said. Store managers can allocate some payroll to the e-commerce unit in return for shipping web orders, he said, and they get to hold more inventory because some products may be sent to online shoppers. A running store the chain opened last year had four times as much inventory as it would otherwise have stocked because of the online fulfillment policy, he said. The key is to make it easy for store managers to receive, pack and ship web orders.
Fast fulfillment is on the minds of many e-retailers as Amazon approaches 50 U.S. warehouses, giving it a big edge by being so close to many consumers, and such companies as Amazon, eBay and Wal-Mart Stores Inc. test same-day delivery. The competition to deliver quickly also is making it tougher to find personnel with fulfillment experience. "There's a demand for operational talent like we've never seen before, and the cost is high," Jon Barker, chief operating officer at e-retailer Hayneedle Inc., said at an IRCE session.
The publicity around these same-day delivery tests has e-retailers like Shane Evangelist, CEO of web-only retailer U.S. Auto Parts Network Inc., wondering if they should offer same-day delivery, and if consumers would pay more for it. Evangelist couldn't wait weeks for his information technology staff to set up a survey on his e-commerce site. "To gain a competitive advantage, we needed answers quickly."
Evangelist turned to a new application, OnCue, which Usability Sciences Corp. formally introduced at IRCE, that let him post a six-question survey in one day. The survey launched on the site on a Friday and by Monday Evangelist had his answer: Some consumers would pay more to get items fast. U.S. Auto Parts subsequently launched same-day delivery in Los Angeles earlier this year.