Insight-Driven Retailing Blog

RSR posted an excerpt of some research on Retail Wire today that got me thinking. Are retailers really pursuing social media? So I set out to find some examples and settled on Best Buy. They have a dedicated team within their e-commerce group that addresses social media. I found four examples of ways they are harnessing the power of social applications today.

Connect
Connect is a portal for conversations about Best Buy and its products. It includes blogs, videos, and tweets from employees and customers. In addition they also provide a traditional community forum.

Blue Shirt Nation/Mix
Blue Shirt Nation is a social website, similar to Facebook, for use by Best Buy employees that was started in 2006. The objective is to keep the conversations going between the various ranks of employees. The positive voices are amplified, and the best ideas rise to the top. One campaign involving 401Ks increased sign-ups by 30%! More info from Gary Koelling's blog.

Spy
Spy is an application that monitors several feeds for key words. It was created by a Best Buy employee, but is available for general use. Spy can be helpful in gauging customer sentiment about a brand. Best Buy is using this application to monitor what's being said about it. You can read more about Spy in Ben Hedrington's blog.

Remix
I mentioned Remix in a previous post. They are basically providing an API to access their product catalog in the hopes it will drive more business. This is very similar to what Amazon has successfully done with their affiliate program.

Best Buy is certainly out in front using various types of social media to enhance employee collaboration, increase customer communications, and monitor their brand's image. Like most emerging business trends, it takes a leap of faith for the initial funding. In the case of Best Buy, some of the early work was grassroots and very inexpensive. The next step is to find more formal methods to assess the impact of these efforts, so businesses can invest appropriately.

Veteran industry analyst Scott Langdoc has a new analyst gig. He has launched retailCENTRIC, a consulting and advisory firm that combines the Web 2.0 features of blogs and social networking with the fact-based market analysis of traditional analyst firms. retailCENTRIC seeks to differentiate itself from the traditional analyst firms with its lower-cost advisory and consultancy services, faster delivery of research and analysis, and free research. One of the first pieces of free research is Scott's note on Oracle Retail's new Fashion Planning Bundle titled "Oracle Puts Their R13 Focus on Fashion."

Obviously when a company like Oracle buys several best-of-breed companies, the first tasks are to standardize the technology platform and integrate the assets. After all, that's what retailers used to do themselves. With those efforts behind us for the most part, we're now focused on better enabling industry segment-specific processes. The Fashion Bundle represents the first retail segment to be addressed, with others planned for the near future.

The Fashion Bundle integrates, configures, and enables the business processes that fashion retailers require to excel, all while minimizing implementation costs and generally lowering TCO. Tying fashion planning to execution has five key attributes:

1. Plans seamlessly drive execution
2. Execution reality influences planning
3. Retail science informs and automates
4. Exception-driven, role-based workflow
5. Real-time information updates

The Fashion Bundle includes Merchandise Financial Planning, Assortment Planning, Size Profile Optimization, Item Planning, Clearance Optimization, Markdown Optimization, and Demand Forecasting, but not all are required. There are separate solutions containing subsets of the products, so the retailer can focus on a particular area such as assortment planning or markdowns.

So far the response has been great, and we plan to continue enhancing the bundle as we receive further feedback from customers.

When you have a question, how do you search for the answer? Beyond the search techniques you use on the Web, you probably mentally traverse your social network. If I have a question about camping, I'll ask Jerry. Steve knows about hunting, and Alex knows lots about game consoles. A certain section of your network is probably dedicated to co-workers, and they help answers questions like which platforms are supported, how many customers use that product, and where's the latest version of the coding standards. I'm also willing to bet your "social network for answers" is optimized based on response times, accuracy, and availability. One slow or wrong answer, and Carol moves down in the rankings.

Above is my social graph as depicted by TouchGraph via their Facebook application. Zoom for more detail.

Social Search is about leveraging your social network to help rank search results from the web. Jake has an interesting take on social search over at AppsLab. He thinks that social search has great applicability in the business environment:

In my experience, questions go to people first, over the cubicle wall, over the phone, over email, over IM, and lately over Twitter (or OraTweet). Always to a person though, not to an algorithm. Why? Because we know each other in the context of work, e.g. I’m known as a member of AppsLab, therefore I get questions about Mix and Connect and blogging and Web 2.0, etc. I’m tagged people’s minds, even before they use a social network. Before joining the ‘Lab, I was in EBS Financials. So, I had those tags. It’s human nature to associate information with people.

So why did Sears purchase Delver, a social search engine company in Israel? Delver was out of money and close to shutting down, so Sears picked up the 20 person company for what I'm assuming was a bargain. I saw this little piece of information over at RIS News in Joe Skorupa's blog:

Kasbe [CIO of Sears] is planning social networking initiatives at Sears that he believes will be amazing, but the plans are not yet ready to be made public.

While Sears may be interested in social search for the business, I think its more likely they will somehow incorporate the technology in their e-commerce site. It would be useful to know that when searching for a new network router, for example, that three of the people in my social network already purchased the Netgear DIR-655. If that's not enough to sway me, I can at least ask those people about their purchase.

I'll certainly be watching Sears closely to see how this pans out.

Mike Olson, formerly from Sleepy Cat and Oracle, has a new startup called Cloudera. Much as Sleepy Cat supported the open-source Berkeley Database, Cloudera will be supporting the open-source distributed file system Hadoop. First, what is Hadoop, then how is it relevant to retail?

How in the world does Google provide such accurate search results and provide relevant advertising all within a matter of seconds? The advertisements displayed by Google, Yahoo!, and Facebook are all determined using analytics across a distributed file system that scales very well. Google developed software called MapReduce that allows large volumes of data to be distributed as smaller chunks on low-cost servers. By breaking a problem down into smaller parts, Google was able to scale their search and analytics. Hadoop is an open-source version of MapReduce written in Java and sponsored by Apache.

Cloudera hopes to help industries like retail put Hadoop to good use. Hadoop can quickly analyze customer data, for example, in order to determine alternate offers and promotions. This very scalable approach on low-cost hardware could significantly benefit e-commerce sites, then eventually even be used in stores. One of a retailer's most important assets is its data, and making use of that data has always been a challenge. Perhaps Hadoop is one possible solution.

More details in this NYTimes article.

We've all heard of wearable computers and thought the people wearing them looked like absolute geeks. There's no way I'm walking down the street dressed like one of the Borg. What I'm waiting for is the type of interaction depicted in Minority Report or Disclosure. Well, I think MIT Labs is moving one step closer in our quest for portable, intuitive, interaction with computers.

The nine minute presentation from TED below shows a new wearable computer costing less than $350. What's unique about it is the way in which the wearer interacts with the "browser."

At the 5:10 minute mark, there's a demo of a shopper using the "Sixth Sense" to shop in a grocery store. The shopper is able to easily get relevant information about products without much effort. Today you must whip out that smartphone, find the right website, then enter the product's name, SKU, or description. That might be viable when shopping for a printer, but when shopping for 20 things at the grocery store, its much more cumbersome.

While this type of device has a long way to go, its an interesting glimpse into a possible future for shopping.

Before bed, my wife and I usually watch a movie from Netflix or TV from the DVR. But it rarely garners my full attention, so I usually have a laptop on my lap (how appropriate) and I surf. (This is where I run Windows 7 beta and IE8.) I have a long list of blogs, including retail focused ones, that I read, usually via RSS feeds into MyYahoo pages. I also do my fair share of social networking. Being fairly "plugged-in," people often ask if I use Twitter, and the answer is always a resounding "no."

Linkedin is an important part of my professional networking, and Facebook helps me keep up with friends that I don't see very often. But I just don't see the utility in Twitter...until today when I had a conversation with a friend that used to work for IBM. He joked that yesterday's IBM stood for "I've been moved" because they relocated employees often. But today IBM stands for "I'm by myself" because many employees work from home.

Then I realized that most of the "tweeters" I know work from home or are otherwise disconnected from co-workers. I occassionally work from home as well, and I know I tend to rely on instant messaging more than normal. Instead of discussing newly discovered websites, freeware, and electronics over the water cooler or in the corporate caferteria, an ever growing army of remote workers is using Twitter to stay connected.

For those that are part of the Twitter community, I found an evolving list of people that Tweet About Retail. There are some well respected retail industry professionals as well as C-level retail execs that use Twitter, so check 'em out. And in a future post, I'll share my list of favorite retail blogs.

If you believe that standards are a good thing, then are multiple standards even better? Most people recall the battle over video recording technologies. Round one was Beta vs VHS with Blu-Ray battling HD-DVD in round two. On the surface these cage matches appeared to have a clear winner, but I would argue that all of us really lost. During the battle, many people refused to choose a side, so the industry was crippled for years. Once a winner was declared, prices fell, adoption increased, and resources were put to better use looking for the next innovative technology.

On the flip side, some would say that competing standards lead to better products. Nurture both standards then let the market decide which is best. That approach works fine when there's a clear difference, but when we're talking about shoe sizes, for example, there really isn't additional value from one standard to the next. (I took my young sons to buy shoes the other day -- what a disaster. Not only did the shoes use multiple size scales, but they weren't in a standard place on the box. Clearly I don't buy shoes often.)

Another standards battle is brewing, but this time of a technical nature. In response to the need for encryption across distributed locations (read "stores"), Arshad Noor created an open-source key management system called StrongKey. Then he submitted the underlying XML messages to OASIS and created the EKMI committee to form a standard. After two years of work with other companies on the committee such as Visa, the DoD, Red Hat, and Wells Fargo, the Symmetric Key Services Markup Language (SKSML) was finally published in January, 2009. This was a nice step forward for the industry, and was especially helpful to retail given the focus on PCI. But no notable heavyweights endorsed the standard, as described in this Information Week article.

So soon after the SKSML specification was finalized, another group of vendors created a competing standard and formed the OASIS KMIP committee. What's strange about this arrangement is that both standards exist within OASIS. Most other competing standards are between competing standards organizations. This caused Arshad to withdraw as chair, although both committees continue to exist.

I don't know the detailed differences between the EKMI and KMIP charters, but I think its safe to say that retailers aren't getting any additional clarity around enterprise key management standards, and that's not good.

Simply put, "insight-driven" refers to using information to drive execution in an intelligent manner. To accomplish this, there are three key ingredients. First, a retailer must be able to convert its vast amounts of data into actionable information and decisions. This was traditionally the domain of data warehouses, but today business intelligence is much more pervasive. Included in this area is proactive alerting through vehicles like business activity monitoring.

Second, sophisticated retailers know that science and statistics can make good decisions even even better. Once a basic plan has been defined, it can be optimzied based on forecasts and historical trends. Price, space, and replenishment optimizations are examples of processes that can squeeze out additional margin points.

Lastly there must be a seamless hand-off from planning systems to execution systems, so little time is lost. Once business processes have been properly defined, the transition between different applications fade, and users may focus on their day-to-day tasks without regard to artificial boundaries.

Starting with slide 14 in the presentation below, Paul explains Oracle's approach to enabling retailers to be more successful through insight-driven retailing.

And now you know where this blog got its name!

The CTIA Wireless conference is being held this week in Las Vegas. There should be plenty of announcements from the likes of Apple, RIM/Blackberry, and the carriers about new innovation in the mobile phone arena. This conference is interesting to me for two reasons. First, mobile phones have become ubiquitous and are therefore an ever-increasingly popular platform for retail. Uses for retail fall into four distinct categories:

1. Product search and information
Customers can use their mobile phone inside stores to get additional information about products and services. Most often this is done using an enhanced user interface optimzied for phones.

2. Payment
Mobile phones can be used for near-field payment linked to credit cards. So far this has been directed at small purchases, but will go mainstream in the near future.

3. Purchase
Software like Digby and Sears2Go can enable the entire e-commerce process on your phone. I think the market for this is limited as most people prefer a full-blown website via the PC.

4. Promotions
Phones can be used for loyalty and pushing promotions via bluetooth and SMS. I don't know of any major retailers taking advantage of this in the US, but it seems popular in Japan.

The second reason the CTIA Conference will be interesting is that the mobile carriers are also retailers themselves, operating lots of small stores and store-within-a-store concepts. For this reason, Oracle Retail is demonstrating its point-of-sale along with Siebel products that have been optimized for wireless/cellphone stores.

I'll be monitoring the press releases to see what's new.