Tag Archives: ecommerce

The Thin Line Between Serving or Screwing You Up

“The easier you make the refund process, the more refunds happen”
Morgan Hermand-Waiche (CEO, Adore Me)

You could sell almost anything with subscription model. The dilemma for the company is how difficult or easy you make it to opt-out. On the one hand you don´t want be regarded as a fraud by having too difficult billing scheme. On the other hand, you don´t want to make it too easy to get away from the program either.

“Any recurring billing scheme is problematic from a customer service standpoint unless you err on the side of the customer even when you may not be legally obligated to.”
-Sucharity Mulpuru (Forrester research)

The ugly truth of business is that majority of our loyalty is actually laziness. The best situation is that you truly love your subscription service and it gives a great diversity and value (e.g. Spotify, NetFlix, your gym and other entertainment services). Quite often your subscription is quite boring and if you could end your subscription right now with one-touch of button you would do it. But because there is no that button, you keep on going on because it is ok.

The perception of difficulty is sometimes more valuable than being truly difficult.

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Real Omni-Channel Customer Experience

We consumers are living in truly omni-channel environment. We live in app economy. We don´t just want things fast, we want them now. This a real user journey from this new brave world:

  1. I realize that I don´t have any food in the fridge. This might pose a problem to my survival. I am too lazy to walk to smaller store so I decide to buy online.
  2. Because I am also a cheapskate, my online store of choice is Giant Online.
  3. The experience starts by not remembering your password. After resetting your password, you are finally into system.
  4. Giant Online has a great system called Shopping list. It enables you to put items you buy frequently to “shopping list” so it would be faster to buy your items. Expect when it is not.
  5. You cannot just import your shopping list to the cart, but you have to check every single item one-by-one.
  6. After you have put those products in the really innovative product feature kicks in. The products that are not currently available will disappear. So you have to start checking what items are actually missing from your shopping list.
  7. Because I buy lots of fruits and vegetables, Giant recognizes those as individual items. So if I put Avocado from US to shopping list and they do not have those exact fruits they will disappear from my shopping cart. The system is not smart enough to recommend avocadoes from New Zealand (or vice versa). The system does not also learn in any way of my purchase history. So then again I need to spend another 10 minutes by putting the missing items manually.
  8. Because I have used this store for long I have also realized certain quirks of it (like the one above). Sometimes you don´t find products with search and you have to go to specific category to go them through. Sometimes you can find certain products only through search. The time it has took me to master this online shopping platform could have been used to learn a new language.
  9. Finally you seem to have everything on your cart so it is time to check out.
  10. Expect the system tries to sell me something totally unnecessary. This time they offer me a funky green saucepan. Great deal, expect I don´t have any need for that product. Naturally these upselling offers are totally random and not connected to what I am normally purchasing.giantpromotion
  11. I select the option that if I miss any items they would be replaced automatically if there is a substitute item and they would not call me. Usually these calls are only about that the item is missing and there is no replacement. No idea to call if there are no solutions to missing items.
  12. I check out from the store. Great, it only took 20 minutes. My nearest store is five minutes walk so I probably would have already done this faster in there. But at least I didn´t need to stand up from my computer. Wait a minute; I did it on my stand-up desk at work. So at least I burned some calories.
  13. Ok of I go or so I think.
  14. Because I selected to pay with credit card, I have to do some extra security confirmation through SMS. So I have to check a code from my phone and type it into the system.
  15. Ok, not that hard, the card is valid. I will get e-mail confirmation of my order. By this point I have already utilized desktop, mobile and received e-mail during this shopping journey. And this for the quite mundane order of cabbage and yoghurt.
  16. My earliest time slot I could get the order was two days away. So eventually I had to go to nearby store to get some emergency stuff because otherwise I would have died of hunger meanwhile. So already this process has took an hour. Smooth…
  17. Day before the shipment, they call me (although I explicitly forbid them of calling). Well they call me anyway and say that certain items are missing and there are no replacements. Thank you for the information.
  18. The big day is here; I finally get my food delivery. Expect the delivery time frame is four hours from 9AM to 1PM, so I have to stay home and wait for that delivery. Luckily NBA playoffs are on so these four hours are not total waste of time. Way to go Boston!
  19. Little bit before 1PM the delivery is there. I check the order list and naturally some additional items are missing. I call Giant and they promise to reimburse (which they always do, just an additional phone call to do)
  20. I put the stuff into fridge taking around 10 minutes.
  21. Mission accomplished. I can´t wait to do this again in couple of days.

So to conclude, making things easier and digital meant the following:

  • Over 20 steps for a very simple process: select your food, buy your food, store your food
  • 5 hours total for making, managing and waiting the order
  • Using laptop for the order, doing two phone calls, receiving one SMS and one e-mail. So truly omni-channel experience!

So why do I still subject myself to this torture?

Answer: laziness.

I cannot be bothered to walk to the store because I am lazy bastard. I cannot be bothered to change to Redmart, because I am not convinced it would be any better. I have already registered to one service and cannot be bothered with my passwords. Laziness trumps loyalty.

Quite often companies do not actually need to make things easier or cheaper, they just need to give you the illusion that they provide easier and cheaper solution.

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Why Xiaomi is The Future of Smartphone Industry?

What is the world´s fourth and China´s biggest smartphone company?
Hint: It is not Nokia.

It is actually company called Xiaomi, four-year old Chinese company, who does really affordable smartphones and has been dubbed as the Apple of China. it has taken China by storm and is now eying for world dominance. So forget the usual players for a moment and take couple of lessons from the new rising star of mobile:

1.Smartphone market will be commoditized, be cheap
Smartphone is not a status symbol anymore or anywhere in the world. The latest innovations in smartphones have majorly been in terms of size. Xiaomi´s operating margin was only 1.8 percent compared to 28.7% Apple and 18.7 Samsung. Part of it is due to their aggressive growth strategy, but other part is the commoditization. Profits will definitely shrink in smartphone category. Especially when the main source of growth will come from developing markets.

2. Copy with pride & style
One of my colleague ordered new Xiaomi phone. When I tested it out, it was quite a revelation for a devoted Apple user. Actually it was probably the first Android phone I thought of actually, so striking was the similarity with iPhone. Whereas many other copycat products I have seen, it did not feel cheap or shady at all. The package was nice and the phone felt way more premium than its price. So it would be unfair to categorize Xiaomi phones only as copycats, but it would be unfair not to mention that aspect either. It is not coincidence that Lei Jun, the founder of Xiaomi, rocks black turtlenecks and jeans in their product unveilings. Technologic innovation is expensive, so Xiaomi bypasses that one and innovates in other areas of their business.

3. Innovate the business model
Xiaomi is not technologically innovative, that is true. From business perspective, they have been really disruptive. Xiaomi keeps their phones longer in the market than other competitors (even to 18 months compared to 6 months of Samsung). Apple has to come up with new products constantly to keep up their margins. Xiaomi is more betting on component cost drop-off during those two years and prices their product initially close to the component cost. Selling phones (they also have tablets and tvs) is just one side of the coin; their main goal is to actually sell services and apps through the phone.

Next year will be important litmus test for their approach as they are rapidly expanding beyond China. They concentrate on markets with large populations, e-Commerce infrastructure and weak telecom carriers. The initial response from India was great, although now the sales have been blocked because of potential patent infringement. The focus on India, Indonesia, Brazil & Russia is wise strategy, but there might be actually some opportunities in more developed markets as well. My colleague was not the only Singaporean who has bought their new phone. During this Christmas season Xiaomi phones have been more popular lucky draw prizes than iPhones. At least for a while, the slick design and renegade attitude has certain aspirational cool factor, not normally attributed to budget versions.

4. Innovate the distribution
Xiaomi has a digital-first approach to the sales of their phones. They partner with big e-Commerce retailers (like Tmall in China and Flipkart in India), and sell their phones through them. They never sell through brick & mortar stores. By selling directly to consumers, the company can collect and administer all the feedback and built it into the next generation of their phones.
They are also well known for their flash sales, which resemble more of buying rock concert tickets than traditional mobile phone sales. In China, during Single´s day, they sold over 200k smartphones in less than 3 minutes. In India they sold out in their flash sales in 4 seconds. Flash sales work both from branding and business perspective. They create demand and buzz around the phone. Flash sales are not just solitary transactions; they are actual events. One of the main reasons why they sell limited quantity of phones each week is to keep costs down by having smaller inventory.

5. Being cheap does not mean that you do not have brand
Xiaomi phones are entry-level phones, but creating brand affinity with teens is not necessarily a bad strategy. Xiaomi is not just a cheap phone for their devoted fans. It resembles more like religious cult. Part of it is that Xiaomi is probably the first technology brand, that Chinese can really be proud of. It does help to have charismatic leader to go with it as well. Xiaomi launch events are real festivals and people even buy tickets to attend them. Over 60 million watched the livestream and some even took 15h ride to attend those launch events. The events, flash sales and the product serves as marketing. Xiaomi does not really do conventional advertising and uses only 1% to marketing. Their devoted fans and devoted leaders are the best marketers. When Lin Bin (Xiaomi co-foudner) had a “planking” competition with their management team this December, the photo was shared over 3000 times. Not necessarily something that would happen with more traditional companies.

Although you would not necessarily switch to Xiaomi phone, their disruptive business model is something to follow and watch out for in 2015.

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Who Will Be The Master of Internet Universe?

Web is dead.

That is the title of one of the greatest articles ever written about digital revolution four years ago to Wired. The main points about that brilliant piece are still valid, although speed of mobile revolution surprised many of the players for a while. The main idea of the story is that web starts to resemble more and more traditional industry with handful of players. Web is oligopoly and certain verticals almost resemble monopolies.

If you simplify the consumer-facing web business (so I am excluding infrastructure and other boring things which is where the real money is), it is about three things: products, commerce & advertising. Products enable you to connect to the Internet: smartphones, computers, watches, television sets, fridges and whatnot. Commerce is about being able to buy things from Internet and advertising is what it is: bombarding you with messages to buy more stuff.

Product category as we know it will eventually be commoditized. If you want to remain premium, you have to innovate constantly. That is the only way to remain luxury brand in this realm. Cheap smartphones will eventually beat the premium ones. In the future you are able to connect to Internet in whatever device and you do not really have to pay that much of that privilege.
Where the growth will come? Wearables can be the future winner product category, although they have not really yet taken off. The changes are rapid though. iPad was launched only four years ago, created totally new category and is currently at risk of vanishing because of the phablets. So is the life.
 
Current champions: Apple, Samsung
Challengers: Xiaomi and other cheap manufacturers
Disrupters: Luxury brands (Would connectivity enhance Rolex? I say not, but I might be wrong as well)

Commerce will become even bigger and you are able to buy pretty much everything online. Will all the physical retail vanish? Not necessarily, but the point is not about that. It is about that you are able to buy everything online, and majority of people will do exactly that, because it is more convenient and affordable.
Commerce is the biggest opportunity and a space I follow most closely. Strong brands will definitely start to create their own online retail experiences, which would enable them to bypass the more traditional retail channels. In the next decade there will be lots of turmoil in this category and many big players will fall and new challengers will arise. Biggest challenges are not that much about technology (lots of payment innovations happening), but about logistics.
Second interesting point is that idea of commerce has changed with shared economy. Both Uber and AirBnB are selling physical service, which would not be possible without digital channel. How far collaborative economy can be stretched remains to be seen. It can potentially be really big disruptor to the way we do business in general.
Last point about commerce is the ecosystem approach. Apple makes money constantly through App Store by enabling others to make money. Facebook is building app ecosystem with the acquisition of Instagram, WhatsApp and Parse. Both Amazon and Alibaba are enabling developers to build things on their platform.
 
Current Champions: Amazon, AliBaba, Ebay
Challengers: Google, Facebook, WeChat, Line, Apple (Apple Pay) 
Disrupters: Brands, FMCG brands, Collaborative economy players (Uber, Airbnb…)

Advertising will be important, because people will keep on buying stuff. Stuff makes us happy. More stuff makes us even happier. How are you able to buy that stuff if you do not know that it exists?
Will advertising become smarter in the future? Yes and no. In last decade or so, we have had one revolutionary advertising idea. That is SEM. You show people ads when they actually want to see ads. Contextual advertising and retargeting have been nice inventions, but mainly advertising is still based on interruption (some of it being more relevant like app install ads). One of the most innovative companies in the world, Facebook, makes most of its money by interrupting its users in various ways.
The advertising business is relatively simple: it is all about reach. All of the most successful advertising platforms are based on firstly to reach and then secondly the quality of those who you are reaching. That is unlikely to change. However, the biggest task is to try to narrow the gap between the interruption (advertising) and purchase (commerce). The monetary exchange is the only tangible KPI we have and less you have to travel to do it, the better.

Current Champions: Google, Facebook
Challengers: WeChat, Line, Twitter (was tempted to leave it out completely, but I give it a shot still), “Traditional media companies”(although I do not really have high hopes for their complete digital transformation, but they will remain influential on this space as well)
Disrupters: Amazon (the closer you are to the actual transaction, the less you have to interrupt), Content owners (although none of them has done any major moves and have mainly milked the status quo)

The lines are naturally blurry. The quote from Eric Schmidt summarizes the whole situation:

Many people think our main competition is Bing or Yahoo. But, really, our biggest search competitor is Amazon. People don’t think of Amazon as search, but if you are looking for something to buy, you are more often than not looking for it on Amazon.”

That is also the reason why these big companies are testing weird things and buying obscure companies. Internet has made it easier to disrupt a category and also connect categories in new way. Facebook & Google test drones, so it can bring Internet the people who don´t have it yet. Thus increasing the reach. Amazon tests drones, because shipping is the biggest bottleneck of eCommerce. When your business can start to flourish rapidly, it can also vanish rapidly. There is no time to sleep, because sleep is the cousin of death.

What do you think, who will become the master of the Internet universe?

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#AmazonCart: Innovation in Advertising (not in eCommerce)

I am somewhat skeptical about utility marketing.
Yes, brands should be useful.
But as far as the advertising goes, most of the brands are fighting with the lack of attention. They need to first crack the indifference barrier amongst consumers. For that you have to first entertain and then deliver.
To underline this point, brand apps are generally destined to fail. Over 80% of them struggle to get even 1000 downloads.
That being said this is useful marketing at its finest:

Why this approach rocks?

1. #Amazoncart taps to real behavior
People already use Amazon as a “shopping list” for their future purchases. This just makes it couple of clicks more easier. At its core, this is not really educating new behavior just a minor tweak to existing pattern. I think tapping to the shopping list behavior is the core thing and also something that many of the commentators have not fully grasped. #Amazoncart is not innovation in eCommerce it is an advertising innovation:

2. #Amazoncart is free advertising with every tweet
Besides being rooted to real behavior, every time someone tweets #AmazonCart it will be visible to followers of that person. Making #AmazonCart hashtag famous is one thing, but actually what is the most brilliant part that the amazon product link gets double exposure as you add to Amazon cart by replying. This creates more opportunities for people to see it and go buying in Amazon.
Currently it seems that the amount of #Amazoncart seems already promising (from Hashtags.org):

#Amazoncart

Naturally these are small drops in the ocean for Goliath brand like Amazon but every purchase counts. If Amazon is able to get bursts of over 8k tweets for #AmazonCart in hour constantly it definitely shows great potential for Amazon. Also after the initial development, there is not that much cost for the program (expect for the promoting it).

3. #Amazoncart is super simple
After you have connected your Twitter account to Amazon, you can reply with #AmazonCart to any tweet containing an amazon product link. This puts the item to your shopping cart and you can finish the shopping later. The beauty of this concept is that it keeps it simple enough and does not add too many steps to the progress.

Hopefully in the future we are able reply #AmazonCart to every kind of tweet beyond the Amazon links. Buying products straight from YouTube or Instagram –links anyone?

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