Thursday Jul 25, 2013

Crowdsourced Grocery Shopping

My wife hates grocery shopping.  She's shopped at lots of different brands, but its always the same time-consuming, uninteresting task.  For her and those like her, no investment in customer experience is going to help.  She just wants the food to show up at her front door.  That was the promise of Webvan, the famous internet failure in 2001.  Their problem was that they spent millions building warehouses and a fleet of trucks to do everything themselves. 

Peapod (owned by Ahold), FreshDirect (Morrisons has 10% stake) and AmazonFresh take a similar but more disciplined approach.  They built their warehouses and truck fleets more slowly based on demand.  They focus on metropolitan cities where its easier to compete, and they don't promise 30 minute delivery times as Webvan offered.  Those three companies are finding success because they took the time to learn the grocery business first, then figured out how to make money with home delivery.

But that approach requires slow growth with high infrastructure costs.  An alternative approach is to forgo the warehouses and trucks and leverage what's already available in every town.  Instacart takes a crowdsourcing approach to grocery home delivery.  Customers select their groceries from various nearby stores, then a personal shopper picks them up and delivers them the same day.

The 10-person company only serves San Fransisco right now, but they have 200 independent personal shoppers that get paid a fee plus tips.  (Pick better fresh produce, and you'll likely get a better tip.)  I imagine some of these people might form trusted relationships with their customers.

The secret is in the logistics.  The personal shoppers are given an app that helps them navigate to and within the stores efficiently.  The software does some optimization by combining orders so a personal shopper can more easily fulfill orders for multiple customers on the same trip.  Instacart has no warehouses or trucks, and only pays their personal shoppers when they are working.  And although grocery chains like Safeway are experimenting with their own home delivery service, in the end as long as sales are occurring they really don't care who's making those deliveries.

Seems like a pretty good plan to me.

Tuesday Jul 23, 2013

Kohl's Continuous Innovation

Technology enables the ready dissemination of information to consumers, and so their expectations for informative shopping experiences has changed.  In order to keep pace, Kohl's has had to rethink the experience they want to deliver through their website, 1,300 stores, and other touchpoints. Ratnakar Lavu, SVP of Digital Innovation at Kohl's, points out that retailers can no longer afford to plan large, time-consuming projects.  Instead, they need to find faster ways to innovate in order to deliver the experience consumers are demanding.

Kohl's is fundamentally changing the IT culture.  Instead of carefully planning big projects, Ratnakar is implementing a culture of risk-taking where rapid experimentation is encouraged.  Its ok when things don't work, as long as they fail fast and cheaply. The new way to determine which ideas are best is to let customers decide -- that's the ultimate acceptance test.  His final point was that it's better to be done than perfect.  Perfection is too costly when good-enough will suffice.

Of course all of this requires the right architecture and processes.  There's a conflict between the traditional need for stability and reliability, requiring lots of reviews, risk assessments, and testing, and the need to deliver new features quickly.  Ratnakar borrows agile programming concepts like frequent builds, automated testing, and quick deployments to deliver innovation in less time.

See for yourself what Ratnakar has to say about continuous innovation in the video below (20 June 2013):

Monday Jul 22, 2013

RetailROI Impacts Lives

RetailROI is a charity aimed at leveraging the power of the retail industry to help at-risk children across the globe.  Their premier fund-raising event is Super Saturday, an all-day conference for retail executives.  Last year the event raised nearly $300,000 to be used for several projects.  Additional funds were raised via booth programs at NRF's annual Big Show in New York and ongoing donations from individuals.  I recently returned from Honduras where I was able to witness the impact of those funds on the children of the second poorest country in Latin America.

RetailROI and Lifesong partnered to fund a new multi-purpose building for Plan Escalon, a school for orphans and at-risk kids. The building, which was named "Centro Vida" during the dedication ceremony, provides an auditorium for the 550 students to gather, play sports, and worship.  Below is Guy Henry, director of Plan Escalon, along with Greg Buzek, co-founder of RetailROI.

In addition, a new state-of-the-art kitchen was built to serve three meals a day to the students and staff.  In the picture below are the girls making corn tortillas.

But it's not just about improving the school.  The students frequently go into the mountains to distribute food and clothing to small villages in need.  The visiting team from RetailROI was invited to tag along one of these "life in action" trips where we also distributed books, shoes, toothbrushes, and toys.  You can see from the houses in the background that living conditions are less than ideal.

Our next endevour is to produce an integration standard for connecting the POS to donation processors to simplify the ability for shoppers to make charitable donations at the cash register.  The new NRF-ARTS standard will support rounding-up, donation matching, and other ways for retailers to quickly solicit at checkout.

So here are some ways you can help:

  1. Attend Super Saturday.  Its the day before NRF's Big Show, so you'll likely be in New York anyway.
  2. Take an overseas Vision Trip and see the impact of RetailROI.
  3. Sponsor a child at Plan Escalon.
  4. Join ARTS and help develop the Change4Charity standard.
  5. Donate to RetailROI.

I'm proud to be part of an industry that takes action and impacts so many lives.

Growth in Latin America

The Latin American economy continues to grow, and with it more retailers are investing in their IT.  I recently traveled to Honduras with several retail industry leaders to visit Plan Escalon, a school that receives support from Retail ROI.  I told the roughly 600 students and staff that Oracle was committed to growth in the region and already has offices in Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Peru, and Venezuela.

Retailers such as Grupo Pão de Açúcar, Mercal, OXXO, Farmatodo, Renner, Falabella, Pernambucanas, and CM continue to expand domestically, while North American retailers like Best Buy, Lowes, Walmart, and 7-11 move further into Latin America.

Unfortunately the growth is not spread evenly with much concentrated in Mexico and Brazil, and overall economic growth is predicted to slow from 4.5% to 3.75% in the coming years.  That said, Latin American growth is still substantial and retailers continue to benefit from an emerging middle class.  As employment improves and corruption lessens, the region should prove to be fertile ground for further retail expansion.

If the students I met in Honduras are any indication of the future of Latin America, then I'm not worried in the least.  The future looks bright for this region of the world.


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