Thursday Jan 10, 2013

Innovation Labs

Once of the trends I noticed in 2012 was retailers creating standalone innovation labs.  The ones that seem to get the most notice are Walmart Lab and Nordstrom Lab, most likely because they have great marketing to compliment their inventions.  Two new labs that just started are the Staples Velocity Lab and the Home Depot Lab.  In most cases these labs stem from acquiring a start-up, and not wanting to crush the start-up spirit, the retailer keeps the company separate.

Having a separate lab has a few important advantages.  First, since its not part of the larger IT organization it doesn't get sucked into fire fighting, which can be a huge distraction.  Also, its not bogged down by enterprise-class software development processes that tend to slow things down.  An important part of innovation is constant tweaking that can't be documented up-front.  Having labs focused on retail-specific solutions keeps a retailer's edge.

At Oracle Retail we established the Retail Applied Research (RAR) team a couple years ago under the leadership of John Yopp.  They research emerging technology, collaborate with other labs, and convert ideas into prototypes in a nimble fashion.  Their efforts help us better assess the value of ideas and de-risk some of the technology.  This year we'll be demonstrating two of their projects in our booth at NRF.  We'll be demonstrating an Isis payment using NFC with our Mobile POS running on a Verifone sled. Additionally, we'll be showing how voice-response can speed transactions on our Mobile POS.

To foster the innovative spirit, we also have an annual Science Fair in our R&D organization.  Small teams with innovative ideas are given the week of NRF to build prototypes which are then judged based on originality, execution, and presentation.  Last year we had some pretty cool ideas using iPhones and Twitter that led to patent applications.

Technology doesn't stand still, so I'm hoping that more retailers create separate labs to incubate ideas in 2013.  Nobody can afford to stand still.

Tuesday Oct 02, 2012

Innovation for Retailers

One of my main objectives for this blog is to point out emerging technologies and how they might apply to the retail industry.  But ideas are just the beginning; retailers either have to rely on vendors or have their own lab to explore these ideas and see which ones work.  (A healthy dose of both is probably the best solution.)  The Nordstrom Innovation Lab is a fine example of dedicating resources to cultivate ideas and test prototypes.

The video below, from 2011, is a case study in which the team builds an iPad app that helps customers purchase sunglasses in the store.  Customers take pictures of themselves wearing different sunglasses, then can do side-by-side comparisons.


There are a few interesting take-aways from their process.  First, they are working in the store alongside employees and customers.  There's no concept of documenting all the requirements then building the product.  Instead, they work closely with those that will be using the app in order to fully understand what's needed.  When they find an issue, they change the software onsite and try again.  This iterative prototyping ensures their product hits the mark.  Feels like Extreme Programming if you recall that movement.

Second, they have time-boxed the project to one week.  Either it works or it doesn't, and either way they've only expended a week's worth of resources.  Innovation always entails failure, and those that succeed are often good at detecting failure quickly then adjusting.  Fail fast and fail often.

Third, its not always about technology.  I was impressed they used paper designs to walk through user stories and help understand the needs of the customer.  Pen and paper is the innovator's most powerful tool.

Our Retail Applied Research (RAR) team uses some of these concepts in our development process.  (Calling it a process is probably overkill.)  We try to give life to concepts quickly so the rest of organization can help us decide if we're heading the right direction.  It takes many failures before finding a successful product.

Monday Feb 20, 2012

F-Commerce gets an 'F'

Bloomberg is reporting that Gamestop, JCPenney, and Nordstrom have all closed their Facebook stores.  That's not the best timing with Facebook's IPO just over the horizon, but I don't think this should really be news to astute retailers.  Duplicating an e-commerce store within Facebook doesn't really offer a different experience, and Facebook users are used to punching out to the Web for all sorts of things.  By simply putting a store on Facebook, retailers have missed the point of F-commerce.

In my mind at least, F-commerce should be more about the social aspects of shopping leading up to a purchase, not the actual purchase itself.  You're not going to get much more convenient than today's Web stores, so efforts should not be focused there.  Instead, focus on ways to move the water-cooler conversations about products to Facebook where its easier to influence people into acting on those conversations.

If you've ever seen me talk about the topic, I usually show a slide depicting three approaches to F-commerce.  There's the "tab store", which is how 1-800-Flowers first approached Facebook.  Then there's the "wall store," which is best represented by JCPenney and ASOS in the UK.  And finally there's the "newsfeed store," which has been successful for stores like The Limited.  The newsfeed store highlights a couple products or promotions within the newsfeed, alongside the conversations with all your friends.  It capitalizes on the social aspects of Facebook, and doesn't try to duplicate an entire Web store.

My friend Wade Gerten, CEO of 8th Bridge, said of stores within Facebook, “it was basically just another place to shop for all the stuff already available on the retailer websites.  I give so-called F-commerce an ‘F.’”

I want to be clear that I'm not criticizing these retailers for their efforts.  They did exactly what innovative leaders should be doing: experiment, and if it doesn't work then cut the cord quickly.  Now that lessons have been learned, its time to move on and capitalize on the knowledge gained.

Retailers should continue to use Facebook to communicate with consumers and drive them to stores and e-commerce.  As always, the best results come from managing all the channels together in a unified way, leveraging the best aspects of each without needless duplication.

Thursday May 12, 2011

Gamification of E-Commerce?

Zynga makes money hand-over-fist producing simple games that are easy to learn and highly addictive (at least for some).  Other companies, like Foursquare, challenge people to earn badges and status.  Even the Amazon Gold Box appeals to a certain type of user.  Flash Sale sites like Gilt, Hautelook (now owned by Nordstrom), and MyHabit (recently launched by Amazon) attempt to add excitement and fun to shopping in their own ways.  Games, and more specifically friendly competition, can be used to inject fun while influencing behavior.

And what could be more fun than an auction?  There's competition with other bidders, the need for strategy, and a nice payoff if you win the bid at a discount.  An entire industry has grown up around eBay to support this type of retail business.  In both the eBay and Flash Sale models, the retailer brings buyers and sellers together for a transaction that benefits all three parties.

But there's a new group of retailers that have combined auctions and gaming (some might even say gambling) into a fun way to shop and possibly go broke.  I recently saw a TV commercial for Quibids where they claimed someone got an iPad for $24.74.  Yeah, right.  But after investigating, I believe it could have happened.  And while one lucky person got a great deal, many others wasted a lot of money.

The way these penny auction sites work is that you must pay for each bid you make, typically 60 cents.  Items start at one cent and each bid increments by a penny within a preset time limit. Each bid can potentially extend the time limit as well. So using the iPad example, 2474 people submitted bids netting Quibids $1484.60, which is well over 100% markup.  The last guy got an iPad for $24.74 and everyone else wasted their money.

To their credit Quibids now offers "Buy It Now" so that the money you spend on bids can be put toward the same item at list price.  So if you made 25 bids on the iPad, they credit your account $15 toward the purchase of an iPad at the list price.  Its that very feature that makes Quibids look like an e-commerce site with a gaming front end.

Their homepage reminds me of all the slot machines in casino.  Its very enticing...and profitable.

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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