Logistics: Value Networks

Friday, July 8, 2016

Talking with a regional retailer at FMI Connect 2016 about their search for an eCommerce and digital marketing solution, our discussion focused on where all these capabilities are headed and if the retailer should go with a solution that purports to offer an all-in-one solution or if they should they go with different solutions.

While an all-in-one solution can seem appealing at first look, it is hard to provide a solution that is best in class in multiple areas. Any solution provider has finite resources to be deployed against developing new capabilities. Will they invest in strengthening their eCommerce solution or digital marketing capabilities? In my mind these are two different things.

We agreed that in today’s world of fast-moving technology innovation that it may perhaps be better to go with a specialist in each area (a solution specializing in eCommerce and another solution specializing in digital marketing) as long as the solutions can be brought together for a seamless customer experience. Too many retailers have not stopped to think about how different customer services - eCommerce, pharmacy, store services - that may be separate apps today will need to converge tomorrow. No retailer should force their customers to download multiple apps to do business with them. Its hard enough to put your resources behind one app and drive downloads and engagement.

I also think retailers need to be careful of extending personalization and recommendations done for customers shopping online to all a retailer’s customers. I think it is far more impactful to develop strategic personalization and relevancy for the 95% of customers who are shopping in-store and extending that strategy to the minority of customers shopping online. Going at it the other way around is like the tail wagging the dog.

We also talked about the role of traditional loyalty marketing - is there still a place for it? I believe that only a minority of the retailers - large or small - that have a loyalty program today truly understand what to do with it and how to use it to create financial and strategic advantage. For too many retailers, having loyalty is another ‘me-too’ program. Done well, marketing personalization can provide many of the benefits of traditional loyalty such as growing basket size, increasing store visits, and boosting customer retention over time. What is necessary is POS capability to append some type of customer ID to the transaction and the ability to deliver customer-specific offers into the transaction in realtime.

Many retailers are grappling with these same decisions as they move to put online shopping capabilities in place and develop and grow their digital marketing capabilities. Retailers must stop to think about how the world is converging on the customer’s smartphone and choose solution provider partners that can play nicely together to enable the retailer to bring together the services needed for their customers.