Fresh approaches to fundamental issues in retail

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By FIONA SWERDLOW, HEAD OF RESEARCH, SHOP.ORG | Published: MAY 2, 2013

1 Comment | This entry was posted in Events, Marketing, Merchandising, Mobile, Retail Companies, Social Media

Compete on something other than price? Harness word-of-mouth to increase conversion and organic search traffic? Integrate your print catalog more directly into your digital commerce strategy?  If you think there are no new answers to these digital commerce questions, just remember that innovation is a hallmark of the retail industry.

If you attended the Shop.org “Next Generation of Digital Retail Technology” First Look session at Retail’s BIG Show this year, you got the scoop on three companies that are tackling these online retail fundamentals in new ways. Moderated by retail veterans Bryon Colby of Cornerstone Brands and Kevin Ertell of Sur La Table, the ideas discussed were so thought-provoking we decided we had to share some highlights with the Shop.org community at large.

Making the print catalog digital“We’re still shipping 22 billion print catalogs in the U.S. every year, we have 100 million active catalog shoppers in the U.S, and – perhaps most importantly – 80 percent of transactions still start with print,” saidMarxent Labs CEO Beck Besecker said, citing Direct Marketing Association data. But why are U.S. consumers still flooded with print catalogs? Retailers understand that they are one of the most time-tested conduits to tell a deep story about the brand. And pulling back from a catalog – whether in the number of mailings, pages or otherwise – can lead to drops in sales. “The question becomes: If digital isn’t a replacement for print, what’s the right strategy to bridge the divide?” he asked. Retailers have certainly experimented with QR codes, but Besecker said “peppering our catalog with hundreds of QR codes isn’t really the user experience that we’re looking for.”

Marxent, a specialist in augmented reality and mobile app development, has tapped mobile image recognition as the key. The firm has developed an app for home furnishings retailer Ballard Designs whereby the userholds the app over the Ballard Designs print catalog to read product reviews, add to the cart, and shop the catalog. (Check out Moosejaw’s X-Ray Viewer if you haven’t already.). “In the next three years, we’ll expect our print catalogs to be shoppable,” Besecker pronounced. And not just catalogs – anything in print, whether a product label or tag, a movie poster, even the weekly circular. Besecker expects that image recognition technology eventually will come already built into phones, putting pressure on app developers in the future.

Besecker said mobile image recognition:

• Matches the scale and benefits of direct marketing.
• Creates immersive brand storytelling with frictionless shopping.
• Leverages e-commerce features such as favorites, sharing and shopping cart.
• Could become “the foundation for mobile wallet and loyalty programs.”
• Creates additional content without printing and postage costs.
• Creates new readership data such as pages viewed and pages touched.

Bringing inspiration to online retailMarketvine CEO Manish Mehta said retailers feel a great urgency to somehow differentiate themselves from competitors, but have boxed themselves into a world of “fulfillment driven commerce” where inspiration is lacking. Uninspired shoppers are motivated by price, thwarting any hope for retailers to set themselves apart. With no loyalty in this game, Mehta asked, “Could we differentiate [ourselves] as retailers online through inspiration, rather than the [efficiency of the] fulfillment-based supply chain, rather than price?”

What does “inspiration” look like for a retailer? In a nutshell, it’s about storytelling. Noting that successful non-profits inspire and motivate donors through great storytelling, Mehta suggested that retailers ask themselves whether they can differentiate themselves from their customers, influencers and staff. “What if you could give employees the power to curate a collection of your products on your site or even other sites, then allow people like your influencers to put those products in their blogs, across social media, through digital and/or physical displays?” Mehta asked. “That’s inspiration. That’s what will differentiate you from others in our fulfillment-based world.”

Mehta cautioned that his company is still in stealth mode and still has much to learn in this area, but that early results exceeded the company’s expectations. Thanks to early adopters, as of mid-January, Marketvine had seen an average of 40 percent lift in conversion, a 7-8 percent increase in average order value and an 80 percent improvement in on-site engagement.

Creating an engine for generating strong word-of-mouth marketingGet Satisfaction is focused on harnessing the idea of customer community to scalably improve conversion, reduce customer support costs, and increase organic traffic to one’s site. CEO Wendy Lea explained that despite significant spending on search engine marketing, conversion rates remain stuck in the single digits for most retailers.

Lea showed the example of Kiddicare, a high-profile online retailer in the U.K., as a prime example of an embedded customer retail community. “Thanks to Kiddicare, we learned the value of embedding a customer community in the purchase flow, before ratings and reviews,” Lea said. In the “Community and FAQ” section located on every product detail page, customers can see questions and comments posted over time about that product, including answers from staff and fellow customers. To get the ball rolling, Lea advised retailers to tap into and connect the customer community with other information sources such as FAQs and customer relationship management databases. As for the conversations, Lea said brands need to let customers talk to each other first – don’t jump in too fast or it will discourage more peer to peer interactions. “Consumers do like companies to be involved. They want to know that there’s someone there representing the brand or the manufacturer who can weigh in.” The voice that retailers respond with must set the right tone and cadence, avoid jargon, and be truly conversational.

Consumer demand will continue drive innovation in retail. These are just a few ways technology vendors can help retailers answer the call.