Monday Apr 07, 2014

Amazon Dash

Just to once again prove that Amazon is a technology company that happens to do commerce, the Seattle giant has released Amazon Dash, a new tool for shoppers.  Chances are you heard about their recent set-top box, Fire TV, but the Dash didn't get much hoopla.  That's because it complements their Fresh program, which is only available in Seattle, San Francisco, and Los Angeles.

Think of Dash as a remote control for your shopping list that you leave in the kitchen.  When you pour the last of the milk in your coffee, grab dash and scan the carton's barcode.  Or better yet, just say "milk" into Dash's microphone.  Items are added to your online shopping list, then when you're ready to order, you make a few adjustments and checkout.  Amazon Fresh delivers your items the next day.

In a similar vein, I introduced Grocery IQ, a mobile app, to my family to manage our grocery list.  Its nice because we can all add to a centralized shopping list.  When my wife does the shopping (in a physical grocery store), she checks the items off the list as she goes.  We can actually monitor the list in real-time.  (Warning: that also means the kids can add items as you're shopping so the list never shrinks -- real funny kids.)

Amazon has made this process even easier by providing a dedicated device instead of (actually, in addition to) a smartphone.  And of course its hardwired to Amazon's shopping cart.  Brilliant, as usual.

Thursday Jan 30, 2014

Cookies in the Store

Online retailing has many advantages, which companies like Amazon have magnified with great success.  Since the early 1990s, technology has enabled great leaps forward for e-commerce sites while the brick-and-mortar world has remained relatively stagnant.  Yes, there are pockets of in-store innovation that have certainly  improved the customer experience inside stores, but by-and-large the Web world retains a big advantage. 

Tax legislation is finally being passed (on a state-by-state basis for now), which helps level the playing field a bit.  And by the same token, next-day delivery detracts from offline's allure of instant gratification.  Both physical and digital stores continue to up the ante, and consumers are the big beneficiaries.

One huge advantage of e-commerce sites is context awareness -- knowing who's browsing products, along what path, for how long, from what geography, etc.  The nature of the Web allows online retailers to "watch and learn" how customers shop and even to influence their behaviors along the way.  But this notion of context isn't strictly limited to the Web, at least not anymore.  Mobile phones are acting like Web cookies in the physical world, opening up possibilities that retailers only imagined were possible online.

The table below shows some online capabilities alongside some similar offline capabilities.

 Online  Offline
 Cookies  Mobile Phones
 Login  Geo-fence / Check-in
 Visitors Metric
 People counters
 Pageviews Metric
 Heatmaps
 Product info
 QR Codes
 Recommendations  Assisted Selling
 Personalization
 Opt-in + Beacons
 Promo Codes
 Digital Coupons

Assuming the right hardware is installed in the store and the customer has opted-into being tracked via the retailer's mobile app, a world of opportunities are suddenly accessible. We can follow customers on their journey through the store, noting where they dwell and which items they touch.  These data points yield improved store layouts, better assortments, and more localization.  Furthermore, we can make intelligent recommendations, offer personalized offers, and award/redeem digital coupons as they shop, enhancing the overall customer experience.

So much of the same context the online retailers take for granted is now available to brick-and-mortar stores for both analytics as well as real-time engagement.  None of these in-store capabilities are really that new, but the idea of combining them to provide a holistic view is where we're going.  And when you track events across both stores and e-commerce, you have contextual shopping at its best.

Sunday Dec 01, 2013

Amazon Octocopters

Now I've seen it all.  Its already amazing that Amazon expects 300 items per second to be ordered from them on Cyber Monday, many of which will be delivered to Prime customers in two days via their 96 strategically placed fulfillment centers.  But now they are experimenting with 30 minute delivery.  You can't drive across town in 30 minutes let alone pick and pack and order, so how do they plan to do it?  They hope that within a few years, they will be able to deliver small packages via flying drones, more specifically, octocopters.

Jeff Bezos always maintained that Amazon is more a technology company than a retailer.  He takes great pride in pushing technology for the benefit of customers, with examples such as product recommendations, Amazon Web Services, and the Kindle reader.  Their Lab126 (comes from "A to Z"), famous for the Kindle e-reader, is a hotbed of innovation in the valley.

So I wasn't too surprised when Bezos said they were hoping to deliver packages using drones, but I was floored by the maturity of their demonstration.  Small packages go down conveyer belts to awaiting drones that whisk the items away to GPS coordinates.  Now there are tons of reasons this won't work today, no the least of which is FAA doesn't allow it, but the prototype shows the technology is only a few years away.


Each of the seven generations of fulfillment centers continues to improve, making it really hard for any competition to catch up.  This need to always be investing in the next thing is why Amazon isn't profitable.  They continue to take the long view, looking to build competitive moats now in exchange for future profits.  And their diversification into book publishing, Web Services, video streaming (including original content), grocery, fashion, tablets, etc. allows them to constantly expand their customer base.

I wonder what's next.

If you'd like to see more, checkout the CBS 60 Minutes Overtime video.

Wednesday Feb 27, 2013

Amazon Winning the Race

Amazon has been at the forefront of innovation in e-commerce, and that's because they are constantly looking for new ways, not to sell, but to satisfy customers.  That's a key point.  Instead of advertising products, they provide information and advice to customers either directly or via other customers.  This helps people make better decisions about their purchases.  Looking back, we can see Amazon has been a leader in many areas:

  • 1995 - customer reviews
  • 1997 - recommendations & bundles
  • 1997 - 1-click ordering
  • 2001 - look inside the book
  • 2001 - where's my stuff?
  • 2002 - free super saver shipping

The latest feature I've seen is the Customer Questions & Answers. On certain product pages, you can click on "Questions" and pose a question to other customers that have purchased the product.  Apparently Amazon send the question via email to past customers that purchased the product and they are encouraged to reply with an answer.  Shoppers can browse past questions and answers as well.

This emulates the physical world quite nicely.  You see a product, like a digital camera, and want to know how many pictures it can take without a memory card.  A current owner responds with an answer, and you are better positioned to make a decision.  Its just like asking your co-workers and friends, except Amazon knows who already owns the product so they do the "matchmaking."  Amazon claims 96% of the questions get answered, and 40% within two hours.

So what should retailer's take away from this?  Focus less on traditional advertising and selling, and shift to satisfying your customers' needs.  The selling part will eventually follow.

Check out this fantastic presentation on Amazon to learn more:

Wednesday Feb 20, 2013

Shipping Wars

I messed up.  My son wanted Borderlands 2 for his XBox so I ordered it from Amazon, but its taking 8 days to arrive.  That's a long time for a kid.  I'm saving him $15 by using the Free Super Saving Shipping, but he really wants it now.  (I've since discovered that Amazon Prime can be shared with family members, so my brother added me to his account and now I get free 2-day shipping!)  I think he's typical of many shoppers, which is why there's renewed focus on next day shipping.

I'm trying ShopRunner, which is a club that offers free 2-day shipping for several retailers, including one of my favorites, Newegg. It's well integrated with the Newegg site so its very easy to use.  Of course its 2-day shipping from when the order is picked, so it can end up being 3 days.  Several retailers have created their own free-shipping clubs because free shipping is very important to web shoppers, and fast shipping delights.  In fact, shipping charges and shipping time account for 76% of cart abandonment.

Now that Amazon has agreed to charge sales tax in Texas (where I live), they are opening three new fulfillment centers in Texas.  This should make it more cost effective to offer cheaper, faster shipping.  With enough scattered fulfillment centers, they could conceivably offer next day shipping to most major population centers.

Not to be outdone, eBay is testing same-day delivery in limited markets via its eBay Now product.  Basically it tracks inventory at nearby stores, sends a courier to buy the item, then delivers it to your door for a fee.  There are several similar services being tested in limited markets.

This is an area where brick-and-mortar stores might just have an advantage over online, especially if the Marketplace Fairness Act goes through and levels the tax playing field.  Being able to ship items from a local store can be cheaper and faster than fulfilling from some warehouse on the opposite coast.  Retailers that have already mastered "buy online, pickup in the store" need only change the pickup to delivery.  Grocery seems to be focused on this, with Fresh Direct leading the way in New York and AmazonFresh in Seattle, not to mention the many successful offerings in the UK which are projected to double in five years.

I think the lesson here is that fast delivery is becoming a differentiator in some markets, so retailers would be wise to make sure the basics are ready.  Make sure perpetual inventory is accurate and visible, labor scheduling is efficient, and shipping/delivery partners in place.

Thursday Dec 13, 2012

2013 Predictions for Retail

Its that time of year to roll out the predictions for next year.  I can't say I've really nailed it in the past, but feel free to look back at my 2012, 2011, and 2010 predictions.  I'm not expecting anything earth-shattering this year; just continued maturation of several technologies that are finally taking hold.

1. Next day delivery -- Amazon finally decided it wasn't worth fighting state taxes and instead decided to place distribution centers everywhere so they can potentially offer next-day deliveries.  Not to be outdone, Walmart is looking to leverage its huge physical presence to offer the same.  Clubs like ShopRunner are pushing delivery barriers as well, so the norm is shifting to free shipping in a few days or relatively cheap shipping overnight.  Retailers need be thinking about how to ship from physical stores.

2. Bring your own device -- Earlier this year Intuit bought AisleBuyer, a mobile self-checkout start-up, at least somewhat validating the BYOD approach.  Grocery stores, especially in Europe, have been supporting in-aisle self-scanning for a while and I'm betting it will find a home in certain verticals in the US too.  There's also the BYOD concept for employees.  Some retailers are considering issuing mobile devices at hiring along side the shirt and name-tag.  Employees become responsible for the hardware until they leave.

3. TV shopping -- Will Apple finally release a TV product in 2013?  Who knows?  But the industry isn't standing still. Companies like QVC and HSN are already successfully combining the TV and online experiences for shopping.  Comcast is partnering with Tivo to allow viewers to interact with ads with Paypal handing payment.  This will be a slow maturation, but expect TVs to get smarter and eventually become a new selling channel (pun intended) for retailers.

4. Privacy backlash -- It only takes one big incident to stir the public, and I'm betting we have one in 2013.  Facebook, Google, or Apple will test the boundaries of what the public is willing to accept.  It could involve a retailer using geo-location technology, or possibly video analytics.  And as is always the case, the offender will apologize, temporarily remove the technology, and wait 2-3 years for it to be generally accepted.  Privacy is a moving target.

5. More NFC -- I've come to the conclusion that adoption of any banking technology is going to be slow.  It was slow for credit cards, ATMs, and online billpay so why should it be any different for NFC?  Maybe, just maybe the iPhone 5S will have an NFC chip, but we're not going to see mainstream uptake for years.  Next year we'll continue to see incremental improvements from Isis, Google, and Paypal and a plethora of new startups, but don't toss your magstripe cards just yet.

6. In-store location -- The technologies for tracking people inside stores is really improving.  Retailers can track people using video cameras, infrared, and by the WiFi radios in mobile phones.  We're getting closer to the point where accuracy could be a shelf-facing, which will help retailers understand how people shop, where they spend time, and what displays attract them.  Expect CPG companies to get involved and partner with retailers, since the data benefits both parties.  Consumers will benefit by being directed right to the products they seek.  (In 2013 ARTS is forming a workteam to develop new standards in this area.)

7. M&A -- Looking back at 2012 there were some really big deals involving IBM, Oracle, JDA, and NCR and I expect that trend will likely continue as vendors add assets to bolster their portfolios.  Many retailers are due for an IT transformation to support anywhere, anytime shoppers, and one-stop-vendors can minimize complexity and costs.

Predictions from other sources:

Wednesday Aug 01, 2012

Amazon is Amazing

Regular readers know I'm a big fan of Bezos at Amazon.  In fact, I commented on Amazon over at RetailWire just today.  Well now Amazon has taken the next step, and launched Amazon Yesterday Shipping.  Take a look at the video below:

Thursday Jul 12, 2012

Three Ways Retailers Are Impacting My Household

July 1st was a dark day at my house because that's when Amazon started charging sales tax to Texas residents.  Now instead of automatically knowing that the Amazon price was likely lower, I have to consider tax in my comparisons.  I'm not hitting that "add to cart" button quite so fast.  Why would Amazon surrender in its well publicized battle with states to collect tax?  Farhad Manjoo over at Slate wrote an article that provides a logical explanation.

It seems that Amazon gave in on taxes in order to build more warehouses closer to their customers.  They may lose their tax advantage, but they will gain the ability to offer next day shipping.  I'm often impressed how fast Netflix delivers DVDs using local warehouses, so I guess Amazon is planning the same strategy, complete with Kiva robots to keep the warehouses efficient.  The big advantage for physical stores has always been instant gratification, but that may be changing.

The second change at my house stems from my wife.  A few months back I gave her a subscription to BirchBox and she loves it.  For $10 a month, they ship her a monthly sample of high-end beauty products.  The cost basically covers shipping and she gets lots of free samples.  This morning my usual soap was replaced by a delicious smelling orange sphere which I assume was soap since it was in the soap dish.  By itself that's fine, but the problem is she really likes some of the items, and of course she orders more.  Well played, BirchBox.

Lastly, the HEB grocery store down the street decided to remodel.  That meant that everything was a mess and my wife couldn't find the things she usually buys.  As punishment for complaining about the lack of ice cream in the house, I got to accompany her to a HEB Plus (think warehouse) to finish her list.  Not being the shopper in the family, I was quite overwhelmed.  To help ensure this form of torture would not be repeated, I pointed out all the marketing tricks throughout the store.  My wife could care less why flowers are at the entrance, why certain brands are on endcaps, and why the milk is always at the back of the store.  Mission accomplished.

Have your own tales of retail?  Share stories in the comments.

Monday Feb 06, 2012

Reinventing Retail

Just like physicists are fond of saying matter is neither created nor destroyed it simply changes form, so goes retailing.  The industry has morphed from small independent stores, to chains, to big-box, to online, to mobile.  Consumers' tastes, habits, and preferences change over time, thus retailers must always stay in-tune.  Unfortunately, many don't.

The most recent whipping-boy of the industry seems to be Brian Dunn, the CEO of Best Buy, who's company was attacked in a recent Forbes article.  (A follow-up to that article, which includes an indirect rebuttal from Brian Dunn, is here.)  While not calling out Best Buy by name, Marc Andreessen also predicted Best Buy's forthcoming demise.  I just finished watching the show Best Buy: The Big Box Fights Back on CNBC, and was struck by the pessimistic future painted there as well.  But in my experience, Best Buy is one of the most innovative retailers in the industry.  Unfortunately, I think their problems are more a reflection of the products they sell rather than a lack of willingness to change.

So are all retailers in trouble?  Ron Johnson, who is credited with Apple Stores' success, recently said retail isn't broken, store are.  Now he needs to prove it as CEO of department store chain JCPenney.  His recently announced transformation plan includes "fair and square" pricing, but Apple was able to avoid discounting because of a lack of viable competition.  JCP doesn't have such an advantage, so it remains to be seen if that strategy will work.

Barnes & Noble did a nice job moving into digital books, unlike competitor Borders, but B&N is still in a fight for its life.  Now they are considering spinning the Nook business off.  While that might unlock additional value in the Nook business, any decoupling from B&N makes their stores less relevant, a step in the wrong direction.

And while physical stores are doing more to be connected to consumers online, there's a rumor that Amazon might just open its first physical store in Seattle, ironically in a former Borders location.

I hate to use this overused phrased, but I will... retail is at an inflection point.  Chains need to lighten the burdensome cost of physical stores, find a way to offer more value to in-store shoppers, or preferably do both.  It starts by building Your Experience Platform to support a strategy for empowering employees to delight your customers.  That includes making better product, placement, pricing, and promotion decisions on the backend, and delivering a unique shopping experience across all selling channels.


We're running fast toward the future of shopping, but only those willing to change will finish the race.

Tuesday Jan 03, 2012

Best Buy in a Downward Spiral?

Larry Downes seems to have struck a nerve with his popular Forbes article Why Best Buy is going out of Business...Gradually.  As of this writing, he's already had over 550,000 views for the five-page, somewhat long-winded diatribe that was posted yesterday.  Larry basically lays out his reasoning for Best Buy's demise based on poor customer service while refuting the excuse that cheaper online retailers like Amazon have an unfair advantage.  He cites the recent cancellation of orders by Best Buy just before Christmas as the ultimate failure to serve customers.

As a former Circuit City employee, I can feel Best Buy's pain.  Electronics is a tough market. The products become obsolete quickly, installation and configuration can be customer service nightmares, and the Web has made competition more fierce than ever.

I haven't shopped at Best Buy in quite a while, so I don't have any good or bad recent experiences to relay.  But I did have three good customer experiences recently, so I thought I'd share:

1. We decided to do some remodeling in the kitchen so I ordered a faucet, cooktop, and range hood from Lowes.com.  They were available to be delivered from the local store in two weeks, but since we'd be on vacation I put a specific date in the comments.  Within an hour of submitting the order, my local Lowes called to verify exactly when I wanted the items delivered.  Everything arrived as planned.

2. I ordered a MicroSD card from Amazon, but the wrong type of card was delivered.  My order was accidentally switched with another Austin resident who got my product.  I called Amazon and they immediately shipped my original product via 2-day delivery with no questions asked.  I understand mistakes happen and just want them rectified quickly.

3. Lastly, I bought an expensive blender from Costco which went on sale the next week.  I called and they happily refunded the difference.  By the way, I chose to buy the blender from Costco not because they were cheapest but because they have an excellent return policy.

All three situations had a few things in common.  First, the employees I spoke with had good attitudes.  I felt they enjoyed their jobs, and it made the conversation that much better.  Second, all three retailers had the necessary systems to enable my purchase and handle post-purchase issues.  Third, the people I talked to were empowered to make me happy.  There was no runaround at all.

In this blog I focus lots on the technology that powers retailers, but in the end its the human touch that makes it work.  Perhaps Best Buy needs to get back to its customer service roots.

Tuesday Dec 06, 2011

2012 Predictions for Retail - Part 2

I think the first four predictions are pretty likely, so let's look at some things that are a bit of a stretch.  These next four predictions are based on emerging technologies making inroads but not widespread adoption.  Let me know if you agree or disagree in the comments.


5. Usable Augmented Reality

The first usable augmented reality app I used was Yelp when they had a semi-secret backdoor to access Monocle.  The concept has been accessible to us since Apple combined the camera, GPS, and accelerometer in the iPhone, but I haven't seen anything I would use on a regular basis.  Amazon's Flow is certainly a step in the right direction as is Tesco's subway store, and I think we'll see some more useful applications of AR next year.

And AR isn't limited to consumers.  It can be helpful for store managers to be able to get information about sales and inventory as they walk the store.  If a manager wants to know how many transaction per hour a checkout associate is doing, she need only point her camera.

6. Accurate Indoor Location

GPS has saved my marriage in several situations, and I can't live without it anymore.  Its perfect for driving, but its not accurate enough to help me navigate my local Lowes and Home Depot.  That's because GPS doesn't work well indoors.  Smartphones typically use a combination of GPS satellites and WiFi access points to triangulate your position.  The WiFi part is getting more accurate, and some systems leverage closed-loop security cameras to help.  This year will be first rollout of accurate in-store directions for a big-box retailer.  Not sure which one will be first, but I think the home improvement chains have the most to gain. 

Imagine standing in an aisle and pressing a "help me" button on your phone, and a clerk walks right to you for assistance.  Or getting turn-by-turn directions to find the garage door openers, for example.  Accurate indoor location also helps with geo-fencing that I mentioned earlier.  You might receive location-specific offers and product information as you walk.

7. Shopping with Siri

Apple's Siri is bringing to light the augmented humanity concept, the collaboration of humans and machines in transparent ways that enhance our everyday lives.  A subset of the concept is using natural user interfaces that are easy to manipulate.  In the case of Siri, voice response systems that understand questions and provide useful answers in context.

As smartphone adoption continues to grow in 2012, so will our dependence on them for providing information.  New mobile application that take advantage of voice response, computer vision, and even eye-tracking (remember, while you're using your iPhone, there's a camera pointed at your face) will begin to emerge.

This means it will be even easier for consumers to get any and all information about products and brands.  Look for Google and Apple to take the technology lead, and Amazon to capitalize on the advancements.

8. Behavior Profiling

When I shop, there are certain things that persuade me to buy: free shipping, good reviews, great price, perceived quality, easy returns, etc.  But those things vary by person and situation.  What if a retailer had a shopping profile on each of its customers and knew how to efficiently market to that customer?  While I don't that we'll get to that point in 2012, I do think significant progress in that direction will occur.

Take myLowes for example.  Lowes is collecting valuable information about each of its customers and will be better able to tailor offers that are more likely to be of interest.  Lowes will sell more, and its customers will have a better experience.

Look for retailers to offer more differentiated loyalty programs and then develop sophisticated marketing plans at more granular levels using all that psychographic big data.


2010 was the year when mobile went mainstream in the retail industry.  2011 marked widespread adoption of Facebook to drive sales and engage consumers.  I think 2012 will be the year that cloud computing gets serious. Look for lots of acquisition in this space, and more retailers to dip their toes in the water.

Monday Dec 05, 2011

2012 Predictions for Retail - Part 1

2012 is less than a month away, so this is the time of year we start seeing annual predictions.Susan Reda at Stores just published her take and I know IDC and Gartner have also released theirs.  Many of last year's predictions could easily move forward to this year's:  we'll continue to see lots of new alternative payment types, more engineered systems, better social analytics, more 2-D barcodes, greater adoption of cloud, and improved f-commerce.

In past years we've seen the rise of Apple, Google, Facebook, and Amazon but 2012 will mark a year of war between these juggernauts on the retail battlefield.  They will fight over NFC, tablets, digital content, and most importantly, trust from consumers.  Retailers must keep a close eye on all four companies.


1. Mobile Loyalty

Often, loyalty cards are just a way for retailers to give away margin in the hopes that consumers will select them as their preferred store.  But strong programs involve a trade-off: consumers get discounts, and in return retailers get to learn more about their customers (and serve them better), and have the opportunity to influence their behavior.  The loyalty card was a blunt instrument that worked well for the consumer, but didn't deliver for most retailers.

The concept of geo-fencing has been around a while, but there are few retailers that have really adopted it. The smartphone, with geo-fencing enabled, needs to become the consumer's loyalty card where retailers can incent, learn from, and communicate with customers.  In 2012, geo-fencing will take off and deliver value for both consumers and retailers.  Look for new loyalty programs built around smartphones.

2. Facebook Levels Off, Google+ Stalls, Groupon Withers, Amazon on Fire

To put Facebook's 800 million users in perspective, that the same number of people that were using the internet in 2004 worldwide, which incidentally is when Facebook got its start.  Only India and China have bigger populations. That kind of growth just can't continue, nor do I think engagement can increase. The novelty is wearing off, so while there are lots of users, I believe the engagement of those users will wane.

Some of those users will feel more at home with Google+, but I seriously doubt many will close their Facebook accounts and make a permanent move.  Google+ may continue to grow is user base, but users will spend more time on Facebook.  Google will continue to dip its toes in retail with more small stores, a possible free-shipping program (similar to Amazon Prime), and of course Google Wallet and Google Offers.  Other than Wallet, these efforts will go nowhere.

The potency of Groupon offers will dilute with all the "me-toos" that pop up, and retailers will learn that their exchange of profits for new, disloyal customers isn't sustainable.  Not taking $5.75 billion from Google will down in history as a huge mistake.

Amazon's success with the Kindle will translate into more Prime customers and greater loyalty.  The trend for shoppers to skip Google searches and go directly to amazon.com will continue, and Amazon will get more aggressive with books, movies, and music. Look for Amazon to acquire in the digital content area.  Also, expect Amazon to have another AWS hiccup that gives retailers pause about using the cloud, but overall AWS usage continues to grow.

3. Apple Payments

With all the news about alternate payments, this isn't a stretch at all.  Apple will finally release the iPhone 5 with NFC support and start to leverage their iTunes customer base for payments in non-Apple stores. I don't see how this will be financially viable with both Apple and credit cards taking a cut of each sale, so look for Apple to push customers toward ACH (debit/checking) as PayPal does.  Look for Apple to start a loyalty program to incent consumers to use the new payment vehicle.

While we're on the subject of Apple, I'm betting they will release a new Apple TV product in 2012.  Retailers should care because it will eventually allow viewers to "click on commercials" to get more details on products and sales.

4. Mobile Self-Checkout

Self-checkout, especially at grocery stores, has been around for a while.  Some love it, and some don't.  Smartphones now make it possible to simulate an e-commerce experience in the physical store.  As you add items to your physical cart, you can scan them into your transaction, then pay and walk out the store.  No need to stand in line at all.

Retailers are already putting mobile POS in the hands of its associates, so its not a huge step to expose that functionality directory to customers.  As Apple leads the way, look for grocery chains to quickly add the capability followed by home improvement stores.



More predictions in my next post.

Wednesday Nov 23, 2011

Reviewing Retail Predictions for 2011

I've been busy thinking about what 2012 and beyond will look like for retail, and I have some interesting predictions to share.  But before I go there, let’s first review this year’s predictions before making new ones for 2012.

1. Alternate Payments
We've seen several alternate payment schemes emerge over the last two years, and 2011 may be the year one of them takes hold. Any competition that can drive down fees will be good for everyone. I'm betting that Apple will add NFC chips to their next version of the iPhone, then enable payments in stores using iTunes accounts on the backend. Paypal will continue to make inroads, and Isis will announce a pilot.

The iPhone 4S did not contain an NFC chip, so we’ll have to continuing waiting for the iPhone 5. PayPal announced its moving into in-store payments, and Google launched its wallet in selected cities.  Overall I think the payment scene is heating up and that trend will continue.

2. Engineered Systems
The industry is moving toward purpose-built appliances that are optimized across the entire stack. Oracle calls these "engineered systems" and the first two examples are Exadata and Exalogic, but there are other examples from other vendors. These are particularly important to the retail industry because of the volume of data that must be processed. There should be continued adoption in 2011.

Oracle reports that Exadata is its fasting growing product, and at the recent OpenWorld it announced the SuperCluster and Exalytics products, both continuing the engineered systems trend. SAP’s HANA continues to receive attention, and IBM also seems to be moving in this direction.

3. Social Analytics
There are lots of tools that provide insight into how a brand is perceived across popular internet sites, but as far as I know, these tools are not industry specific. The next step needs to mine the data and determine how it should influence retail operations. The data needs to help retailers determine how they create promotions, which products to stock, and how to keep consumers engaged. Social data alone does not provide the answers, but its one more data point that will help retailers make better decisions. Look for some vendor consolidation to help make this happen.

In March, Salesforce.com acquired leading social monitoring vendor Radian6 and followed up with acquisitions of Heroku and Model Metrics. The notion of Social CRM seems to be going more mainstream now.

4. 2-D Barcodes
Look for more QRCodes on shelf-tags, in newspaper circulars, and on billboards. It's a great portal from the physical world into the digital one that buys us time until augmented reality matures further. Nobody wants to type "www", backslash, and ".com" on their phones.

QRCodes are everywhere. ‘Nuff said.

5. In the words of Microsoft, "To the Cloud!"
My favorite "cloud application" is Evernote. If you take notes on your work laptop, you will inevitably need those notes on your home PC. And if you manage to solve that problem, you'll need to access them from your mobile phone. Evernote stores your notes in the cloud and provides easy ways to access them. Being able to access a service from anywhere and not having to worry about backups, upgrades, etc. is great. Retailers will start to rely on cloud services, both public and private, in the coming year.

There were no shortage of announcements in this area: Amazon’s cloud-based Kindle Fire, Apple’s iCloud, Oracle’s Public Cloud, etc. I saw an interesting presentation showing how BevMo moved their systems to the cloud.  Seems like retailers are starting to consider the cloud for specific uses.

6. F-CommerceTop of Form

Move over "E" and "M" so we can introduce "F-Commerce," which should go mainstream in 2011. Already several retailers have created small stores on Facebook, and it won't be long before Facebook becomes a full-fledged channel in the omni-channel world of retail. The battle between Facebook and Google will heat up over retail, where both stand to make lots of money.

JCPenney and ASOS both put their entire catalogs on Facebook, and lots of other retailers have connected Facebook to their e-commerce site. I still think selling from the newsfeed is the best approach, and several retailers are trying that approach as well. I just don’t see Google+ as a threat to Facebook, so I think that battle is over.  I called 2011 The Year of F-Commerce, and that was probably accurate.

Its good to look back at predictions, but we also have to think about what was missed.  I didn't see Amazon entering the tablet business with such a splash, although in hindsight it was obvious. Nor did I think HP would fall so far so fast.  Look for my 2012 predictions coming soon.

Thursday Nov 10, 2011

Transparent Technology from Amazon

Amazon has been making some interesting moves again, this time in the augmented humanity area.  Augmented humanity is about helping humans overcome their shortcomings using technology.  Putting a powerful smartphone in your pocket helps you in many ways like navigating streets, communicating with far off friends, and accessing information.  But the interface for smartphones is somewhat limiting and unnatural, so companies have been looking for ways to make the technology more transparent and therefore easier to use.

When Apple helped us drop the stylus, we took a giant leap forward in simplicity.  Using touchscreens with intuitive gestures was part of the iPhone's original appeal.  People don't want to know that technology is there -- they just want the benefits.  So what's the next leap beyond the touchscreen to make smartphones even easier to use?

Two natural ways we interact with the world around us is by using sight and voice.  Google and Apple have been using both in their mobile platforms for limited uses cases.  Nobody actually wants to type a text message, so why not just speak it?  Any if you want more information about a book, why not just snap a picture of the cover?  That's much more accurate than trying to key the title and/or author.

So what's Amazon been doing?  First, Amazon released a new iPhone app called Flow that allows iPhone users to see information about products in context.  Yes, its an augmented reality app that uses the phone's camera to view products, and overlays data about the products on the screen.  For the most part it requires the barcode to be visible to correctly identify the product, but I believe it can also recognize certain logos as well.  Download the app and try it out but don't expect perfection.  Its good enough to demonstrate the concept, but its far from accurate enough.  (MobileBeat did a pretty good review.)  Extrapolate to the future and we might just have a heads-up display in our eyeglasses.

The second interesting area is voice response, for which Siri is getting lots of attention.  Amazon may have purchased a voice recognition company called Yap, although the deal is not confirmed.  But it would make perfect sense, especially with the Kindle Fire in Amazon's lineup.

I believe over the next 3-5 years the way in which we interact with smartphones will mature, and they will become more transparent yet more important to our daily lives.  This will, of course, impact the way we shop, making information more readily accessible than it already is.  Amazon seems to be positioning itself to be at the forefront of this trend, so we should be watching them carefully.

Wednesday Oct 26, 2011

Amazon Is Doing it Right

Wall Street is broken.  Yesterday Amazon announced it barely missed top line estimates, but fell far below expectations for the bottom line.  Although revenue was up, net income was down 73% from last year.  This caused investors to dump the stock, sending it down from $240 to $200 as of this writing.  But nothing is wrong at Amazon.  They have simply increased their investments in technology and people in order to position the company for the long-term.

As I pointed out in this post back in April, Amazon has consistently made "investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations."  To that end, they have hired 8,100 people this past quarter at a time when many businesses are sitting on large sums of cash riding out the storm.  They will be well positioned for Christmas this year.

Amazon makes "bold rather than timid investment decisions" like challenging Apple in the tablet market.  Their new Kindle Fire sells for $200 but reportedly costs around $205 to produce.  This is the old Gillette trick of giving the razors away to sell the blades.  They will extend their leadership selling e-book but also break into other media as well.  I have already pre-ordered my Kindle Fire, which will get plenty of use in my house along with my iPad2 and regular Kindle.

Amazon continues to "focus on growth with emphasis on long-term profitability" by doing things like securing media content from the likes of CBS, FOX, PBS, NBC Universal, Sony, and Warner Bros for the Amazon streaming service, which is free to Amazon Prime members.  Customers that pay $79 a year get free 2-day shipping plus all-you-can-eat access to its growing media library.  On average, Amazon Prime members spent $400 the previous year before joining, and $900 after.  Pure genius.

I wish more retailers would open their pocketbooks and make more long-term investments in technology.  Yes, there's risk involved, but there's also reward when its done with passion and conviction.  As I pointed out in this post, the big technology companies are changing the retail industry forever, so its time to get on board.  If you don't have a research/innovation team, get one -- this month.

By the way, Jeff Bezos lost about $2.2 billion in stock value this week and he's probably happier than a tick on a fat dog.  (This Texas living is rubbing off on me.)

About


David Dorf, Sr Director Technology Strategy for Oracle Retail, shares news and ideas about the retail industry with a focus on innovation and emerging technologies.


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