Category Archives: Shopping

ShopTalk: Google and PostMates Make the Case for SMB Deliveries

Fast and Free (or cheap) delivery is being positioned to retailers and restaurants by a growing group of companies as a key strategic asset that helps them compete with Amazon. Google has entered the marketplace with Google Express. It competes against such companies as Postmates, InstaCart, DoorDash, Deliv and Uber.

There are doubters out there – especially about same day/same hour delivery. Bonobos CEO Andy Dunn, for instance, estimates that just 5 percent of his men’s wear sales would be impacted by fast delivery. The economics and logistics of the business also put off observers like ShopRunner CEO Scott Thomson, who thinks that it will be impossible to compete against Amazon for same day delivery, much less one hour delivery. “Amazon is building warehouses in every city,” he emphasizes.

But others are taking a more strategic outlook, emphasizing how delivery will aid store loyalty, and can ultimately be supported via multiple revenue models, including annual membership programs paid by consumers, akin to Amazon Prime/Amazon Now.

At the ShopTalk show in Las Vegas May 16-18, Google Express GM Brian Elliot said it’s all about sharing delivery resources across lots of local merchants. “We can build an app that lets you shop across multiple retailers and connect locally,” he said, suggesting it is like being an anchor tenant at a mall. “We can build an awesome network infrastructure of stores,” added Elliot. “We are delivering loyalty.” He also suggested that it “removes friction” from merchants since payments are processed by Google.

Elliot is also bullish on the impact of deliveries on merchants. “Studies are showing they’ve seen more volume coming through. Consumers are shopping more often,” he said. Merchants that add their inventory into the system are also more likely to be shopped by consumers searching for products. “It’s not just about delivery. The more we can leverage inventory, the more we can drive foot traffic,” he said.

The economics of a delivery network, however, depend on shared resources and working with a relatively low volume. “Staging (delivery) of 200,000 units from the back of a store….Uber is not prepared to do that,” says Elliot.

PostMates CEO Bastian Lehmann, also at ShopTalk, said that delivery is a retailer’s best friend. “It gives you something that larger companies can’t compete with” and “new customers,” he said. Since deliveries are made for one price and aren’t distance sensitive, many stores are seeing new customers coming from locations more than two miles away.

Postmates actually delivers for a combination of SMBs and multi-location stores, including Apple Store, Starbucks, Chipotle, 7-11, McDonalds and WalGreens. A consumer can search among 1.5 Million SKUs, and 50,000 stores. It also touches 50,000 merchants a month.

Lehmann notes that the company’s business model relies on a combination of merchant fees, consumer fees and/or unlimited delivery club fees. Its ability to deliver goods from any merchant drives a local “long tail.” says Lehmann. The economics, however, vary based on whether the store is in or out of network. Forty percent of its delivered orders come from out of network.

ShopTalk: The Sharing Economy’s Next Phase


Enjoy CEO Ron Johnson

When it comes to retailers, the impact of the gig economy, or sharing economy, is largely a matter of human resources. Workers are heavily oriented (68%) towards Millenials. But they are very fluid in how many hours they work It is split roughly 50/50 between those who want to spend 25 hours or more a week, and those who want to spend less than 25 hours. They are also highly fluid where they choose to work.

At the ShopTalk conference in Las Vegas, Former Apple Stores head and JC Penney President Ron Johnson, who is now CEO and Founder of Enjoy, said 20 percent of Apple Store employees who quit two years ago now drive for Uber. Johnson hopes to enlist sharing economy workers to hand deliver and set up goods, such as cell phones and beds. It is BestBuy’s “Geek Squad,” but the brands pay for the delivery.

Now in 10 cities, Enjoy represents a new wave of “personal commerce,” said Johnson. “We don’t build stores, we just hire people. We create an experience to make you fall in love with the product. You pick the time and place for a delivery appointment, just like Uber.

Also at ShopTalk, Priceline EVP of Global Operations Malle Gavet said the company’s travel and reservation reviews and booking products (Kayak, Booking.com, OpenTable, Priceline) are also geared around delivering quality experiences. “Providing Sharing and quality at the same time is the next phase of the sharing economy,” she said.

ShopTalk: ‘Digitally Native Vertical Brands’ Anchor


Bonobos CEO Andy Dunn (On Right)

The next generation of retail brands will win if they pursue a “digitally native vertical brand” (DNVB) path. So says Bonobos CEO Andy Dunn.

“Vertical brands were a huge part of the last era of retail (Zara, Ikea, Gap), aka the offline one, and now they become the driving story in the future of digital retail,” said Dunn in a Medium post.

Speaking May 18 at ShopTalk in Las Vegas, Dunn says there are 65 digitally vertical brands. Besides Bonobos, a high-end men’s fashion brand, others include Warby Parker, Dollar Shave Club, BirchBox and Jack Threads. We’re just in the “first inning,” he says.

Dunn’s definition of a DNVB is a brand that is customer-centric and highly personalized, while most ecommerce-only companies provide anonymized service with superficial, broad personalization. Nordstrom, which owns 5 percent of Bonobos, is an obvious cohort. But so is Tesla in automotive.

The digitally native approach differs from pure-play ecommerce, “where we have seen a lot of failures,” says Dunn. It is also far removed from legacy retailers and offline brands. Aside from leaders such as Nike and UnderArmour, most are unprepared to disrupt themselves and they also tend to lack their founder’s conviction.

Like Warby Parker, BirchBox (and Amazon), Bonobos is now taking its approach from online to offline. Stores are “amazingly profitable. Productivity is so great on that box,” he says, noting that the average Bonobos location is 800 square feet.

They also allow Bonobos to “sell with the highest possible customer service,” while “pulling back on marketing and technology.” Bonobos currently has 21 stores, and will open 11 more this year. But these aren’t “software companies,” says Dunn. “This is retail. It takes a long time to build. And ultimately, profits and cash-flow matter.”

Westfield’s CEO at ShopTalk: Goodbye Gap And Abercombie, Hello Ford, Events and Gyms

Mall giant Westfield, which receives 400 million visits a year, has refocused on its mission as a people driver for retailers. The 56-year-old company is ditching a horde of its “me too” suburban malls and reinvesting the proceeds in major fashion, tech and financial centers where technology aids and new partnerships with entertainment and lifestyle companies will drive its next generation.

Speaking May 16 at ShopTalk in Las Vegas, Co-CEO Steven Lowy said everything the company is doing is designed to “create move commerce. We are in the business of connecting consumers with retailers. It’s that simple,” he says “Amazon can’t do the things we can do.”

“We are building a digital platform on top of our physical platform,” adds Lowy. “We’ve gone from being a real estate company to a PropTech (Property Technology) company.”

Westfield Labs, a 50 person group, is a major player in the company’s revamp. It has developed a comprehensive grouping of mobile-oriented shopper aids and enhancements. These are being tested this year and then will be rapidly rolled out. Key features include a “searchable” mall that highlights services and specials; loyalty and payment provider programs; and delivery services.

Lowy notes that the company’s premier centers such as The World Trade Center and Century City are the new Westfield prototypes, tying together lifestyle elements for consumers. Movie theaters, event spaces for major brands such as Ford and American Express, beautiful restaurants, coffee shops and top-of-the-line health clubs like Equinox will keep high-end consumers coming to its stores, he says.

Westfield will also get rid of some brands that haven’t kept up with a true, omnichannel approach. “You may not see The Gap and Abercombie (& Fitch),” says Lowy. “The business has shifted.”

Westfields Co-CEO Steven Lowy

Westfields Co-CEO Steven Lowry at ShopTalk16 in Las Vegas

Groupon Gets $250 M from Comcast Fund: Synergies with Instacart, Next Door, Closely?

A Comcast-supported fund has plowed $250 million into Groupon, possibly leading to a broader role for the Cable and TV network giant, which could seek to leverage its enormous national and local reach from NBC/Universal and Comcast cable franchises to really make Groupon’s transition to a local marketplaces service work.

There are also possibilities to develop Groupon in the Hispanic market with the Univision Network – the mobile-driven ecommerce Hispanic martketplace is poised to take off. Several options also lend themselves via Comcast Ventures, which holds portfolio investments in Closely (loyalty services), Next Door (hyperlocal neighborhoods) and Instacart (delivery). The latter could play off Groupon’s recent focus on restaurant delivery services.

The investment comes from Arairos, which is headed by former Comcast CFO Michael Angelakis. Comcast funded the effort with $4 billion last year.

if there were any doubt that Comcast was contemplating a hands-on role, the companies said in a statement they would be working together to “identify and implement potential strategic partnership opportunities.”

Comcast is not exactly a newcomer to local marketplaces. In addition to selling advertising, typically at the large SMB level, it has sought to develop several local media properties, from local city guides to Daily Candy, a women’s consumer newsletter that ceased operations in 2013. NBC also has a history with the city guide-and-deals marketplace.

LSA16: Beacons as ‘A Platform Multiplier’

Belly’s John Mazur and Yext’s Raj Nijjer at LSA16. (Photo, LSA Insider)

Wireless in-store Beacons – which can identify registered users and match them to transactions, redemptions etc.– are a key part of loyalty programs run by Belly and First Data’s Perka, among others.

Speaking at LSA16 this week in San Francisco, Belly EVP John Mazur said that the loyalty company now has 12,000 SMB and franchise clients. These include a high percentage of 7-11 outlets. Customers are provided with iPad Minis, which include beacons (although not all of them are installed at this point).

While the beacon efforts are still in their initial stages, Mazur notes that Beacons have resulted in a 30 percent boost in check-ins, as Beacons capture registered members who are browsing in stores and nearby – not just those signing in when they make transactions via card or App. The beacons not only recognize Belly’s seven million registered consumers, but others as well.

“Beacons are a multiplier” for the marketing platform, and support and inform marketing budgets, adds Mazur. “They make things more seamless and reduce friction. “Loyalty, payments and beacons efforts are all converging” to provide better feedback to SMB and to complement marketing solutions, he notes.

Speaking on the same LSA session, Yext‘s Raj Nijjer said Beacons are a key asset to the new geolocation economy, and noted estimates that Beacons will generate $44 Billion in new commerce revenues. “They are truly an online to offline solution,” he said, noting that Yext has deployed beacons to “a lot of SMBs.”

In deploying Beacons, most SMBs initially focus on the retargeting piece — “take 20 percent off for having been in the store.” Messages can be sent to them via email or Facebook five or ten days later. Over the course of several months, Nijjer said that a good Beacon program enables the development of custom audiences and better analytics.

The Failure of ‘Gimmick Commerce’ Brands

Graphic from Recode

“Gimmick Commerce” is one way to look at the sites that entice people to buy things online via promotions, flash sales and subscriptions. Mostly, it represents things that people don’t need.
But it has almost totally failed, per Recode’s Jason Del Rey in a provocative piece this week. In the deals space, Groupon has pivoted to a marketplace focus (i.e. normal shopping) and is trading at just $3 a share. Living Social is publicly struggling and experimenting with new models, like card linked offers.

The other deal sites are gone or totally pivoted. Just yesterday, Nimble Commerce, the last of the major independent deal aggregators, announced it was selling out to BlackHawk Network, a leading gift card company.

Other “gimmick commerce” models have also failed to gain traction. The flash sales space is basically gone, with Fab, Gilt, Ziulily bowing out at fire sale prices, and One Kings Lane positioning itself to do the same. Del Rey concludes that none of these companies have been able to cut into the Amazon behemoth, which accounted for 50 percent of all ecommerce growth last year (although Amazon surely engages in its own Gimmick Commerce).

The only companies that are growing and safe from Amazon are the specialty subscription services. With the exception of some of the high loyalty food delivery companies (Blue Apron) and subscription razor companies (Dollar Shave) most of these probably aren’t keeping their customers.

It’s a big, brave thesis. Rey points to the difficulty of building new brands and creating consumer habits from scratch – and the never receding desire to buy everything from a single source. But it is kind of broad — I don’t know that all these companies should be lumped together. And it shouldn’t be inferred that the new technologies and features like big data analytics, buy buttons, card linking and targeted offers that act as a foundation for these sites are being rejected. They remain transformative and will probably account for a big percentage of the next generation of impulse buying, if not shopping altogether.