Online leaders of the pack: Lessons from Amazon, Nordstrom and Walmart

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By FIONA SWERDLOW, HEAD OF RESEARCH, SHOP.ORG | Published: JANUARY 15, 2013

Be the first to comment | This entry was posted in Events, Merchandising, Mobile, Retail Companies

Few can rival the experience and e-commerce “chops” of Fiona Dias, who offered her perspective on “Lessons from the Leaders of the Pack” at Retail’s BIG Show. Currently Chief Strategy Officer with ShopRunner, Dias has been involved in and observing our industry’s evolution from senior leadership vantage points ranging from her current gig to GSI Commerce and Circuit City. The hallmarks of e-commerce pack leaders? Dias boiled down pack leader strategies to just four: leadership, perseverance, product and customer experience.

Leadership matters. “Excellent leadership in animals is not that different from excellent leadership in humans,” Dias observed, describing how a mother elephant uses all of her experience to lead, protect and feed her family everyday (to the tune of 300 to 500 lbs of vegetation per elephant!). Outstanding e-commerce leaders whom Dias pointed to include Jeff Bezos and Jamie Nordstrom – the former a founder, the latter a fourth generation family member whose name is on the company door. Contrast that with Walmart, who until recently “struggled mightily” with a “revolving door” of e-commerce leaders who “have come and gone.”

In Dias’ own experience, the head of e-commerce must not only be a top-notch digital leader, he or she must report to the CEO – who in turn has to push alignment throughout the organization “or that digital leader is doomed to fail.” The CEO also has to align the rest of the executive team around common goals. Finally, a holistic talent plan is key, incorporating a mix of internal and external hires, job rotations, plus incentives to reward and retain that talent.

Play the long game. Put another way, “plan and execute for the long term, not just the short term” (think about Jane Goodall’s 53-year, multi-generational study of chimpanzees). Dias observed that “every retail category is under threat from Amazon – or it will be.” Amazon’s distribution centers are getting closer to customers, improving the delivery time. The company’s services business includes “the electrical grid for cloud computing”, powering companies ranging from Samsung and Netflix to NASA. Companies need to ask themselves:

• How they will win over customers and beat competitors over the next three to five years?
• Do they consider omnichannel “the future” of the company (not just a project)?
• Is an effective investment process in place to ensure adequate resources are allocated to the multi-year plan. Ultimately, Dias underscored, “Are you adequately resourced to win in the long term?”

Product, product, product. As opposed to the old adage of “location, location, location”, retailers must first and foremost focus now on product (with mobile and the web, “Your customer may never make it to your store.”). “The reason you stand out among a sea of competitors is product,” Dias observed. In Amazon’s case, their vast product assortment dwarfs what other retailers offer. In the case of Nordstrom, it’s quality over quantity with beautiful, curated product.  Whichever path they choose, companies need to develop a differentiated product strategy – “otherwise, you will struggle.” The keys:

• A clearly articulated product strategy that works in an omnichannel world (for example, on the Nordstrom site, you won’t hear the in-store piano that works so well in the store –“it’s the product that will stand out… [and] I don’t feel like I’m buying a widget.”).
• Products that your customers truly desire (“Merchandising is a lost art for many retailers,” Dias mused.)
• Careful analysis of competitive barriers to the product strategy.

Customer experience = Win or die. Amazon tops the list of online retailers with the highest customer satisfaction – and keeps getting better at it. Dias pointed to a number of loyalty features that keep customers coming back again and again: AmazonPrime, the Kindle, 1-click buying, and the “Subscribe and Save” program. Retailers who want get the customer experience right need to:

• Map every step of their customer’s experience – think about how Bezos and his team are “laser focused on the customer experience.”
• Put into place customer feedback loops on how they’re doing.
• Decide who in the organization is accountable for acting on customer feedback and remove shopping friction within and across channels.

The Weight of Walmart (Infographic)

Know thy competition...

After reading your comments about the Amazon Infographic that we released two weeks ago (check it out here if you haven’t seen it), it got me thinking about just how big Walmart could be. So I started researching Walmart and found the information to be unbelievable…but, it makes sense since this Black Friday shoppers turned out to Walmart in record breaking droves. Within hours of Thanksgiving night opening, thousands uploaded videos online of the spectacular struggles over cheap TVs, waffle makers and baby clothes.

In the heat of the holiday shopping season, I’m taking a moment to consider where I spend my hard earned money. You might be familiar with the status: Walmart’s the largest grocery store in the U.S., the largest retailer in the world, the leader in global corporate revenue and the largest employer in existence. Still, these facts don’t do much to demonstrate the reach of this superpower.


Source: http://frugaldad.com

Walmart’s Black Friday Disaster: Website Crippled, Violence In Stores

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Josh Constine

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Fire sales turned into a firestorm for Walmart this morning as the company’s web servers buckled under Black Friday traffic. Shoppers from around the country waited until the middle of the night for sales only to experience broken checkout pages, emptied shopping carts, and login errors. This caused their desired items to go out of stock before they could buy them, leading to mass frustration and ill will towards the discount store chain. Meanwhile at its physical stores, 20 people were pepper sprayed by a fellow customer, and 2 people were shot outside separate locations. Walmart will need to sort out its servers in preparation for the upcoming Cybermonday blitz or it risks losing customers to Amazon.

We’ll let traditional news outlets cover the offline violence and focus on Walmart’s web fiasco. Disgruntled online shoppers flocked to the GottaDeal.com forums to voice complaints about Walmart’s website problems. It’s unclear exactly how widespread the issues were, but the forums had complaints coming in every minute at one point last from customers in Florida, Mississippi, and New York.

Many expected deals to go live at Midnight local time only to have to wait up until 3am EST. Visitors then feverishly filled shopping carts but suddenly found them empty when they went to checkout. Others were confronted with the error message “We’re having temporary difficulties arriving at the destination you requested”. Login problems also arose, with users being asked to enter their credentials when already signed in. One customer reported that they complained about the checkout disruption on Walmart’s Facebook Page but later found their post deleted.

The entire Walmart site does not appear to have crashed. By keeping the site up despite the issues, Walmart may have sought to conceal the errors and avoid press coverage of the discontent. Loyal customers said they hadn’t had such problems since 2006 when Walmart experienced a similar breakdown of its site. The company pulled in $418 billion in revenue during the 2011 fiscal year, so today’s disruption could have cost it a lot of money.

While it might be too late to save Black Friday, Walmart better be scrambling to fix its website for Cybermonday, the biggest online shopping day of the year, just 36 hours away. The corporation acquired two startups Kosmix and OneRiot this year and formed its Silicon Valley-based @WalmartLabs in an effort to improve its ecommerce offering. However, it’s competing with powerhouse Amazon, whose cloud hosting division may protect it from the outages that plagued Walmart today.

If the errors persist on Cybermonday, shoppers may seek out a more reliable ecommerce solution. When customers post “I’m so frustrated I’m going to cry” and “an hour and a half of nonsense. shame on you Walmart!”, something has to change.

The power of social data

from influx insights:

Interesting move by Walmart

September 14, 2011

Yesterday, Wal-Mart made an acquisition of a company One Riot.
It’s a purchase that could easily escape most people’s radar, since the company is tiny and focused in a very specialized area.

On paper, the company is in the mobile space and provides ad targeting technology, but if you dig deeper by simply reading their blog posts- you get a good idea of why Wal-Mart purchased the company.
Here’s an extract from one of the company’s blog posts.

“Based on publicaly available social data that we license via our friends at Gnip, we’ve generated user interest maps for just north of 75MM active Twitter users. This number gets bigger every day as we suck in more Tweets from the licensed hose. Meanwhile, our demographic coverage is 80% accurate for about 80% of the Twitter population. These stats improve with every new release (approx every 3 weeks).


How to do we determine this information? We start at two points. The first is to create language models that breakdown how users tweet. The second is to study follow-graphs that reveal who users are influenced by. By fusing these two approaches, we can find discriminating characteristics that identify a specific user as belonging to a certain demographic group or a certain interest-category group.


For example, it turns out that Hispanic 25yr old males tend to tweet “#LMAOOOO” (emphasizing the “O”) more predominantly than other groups. Meanwhile 40-something females tend to follow soppy singer @joshgroban at a statistically significant higher rate than males of any age. Niche influencers such as@CrankyOvary provide very strong signals for the interests and demographics of their followers. Meanwhile, broader-based influencers such as @barackobama offer few discriminatory clues about their followers – as many users in many demographic groups follow the US President, to the point where any signal is drowned out by noise. Our system spots literally tens of millions of similar subtle patterns. These patterns then “compete” inside an artificial intelligence system that results in an accurate rendering of “who you are” according to your Twitter activity. It’s good stuff – lots of large scale Machine Learning, Natural Language Processing, Statistical Analysis and Classification Techniques worthy of subsequent blog posts, all sat on top of a humming Hadoop cluster.”


Wal-Mart isn’t buying a team and a sophisticated database of consumer behavior that will help them to understand the dynamics of the social geography that surrounds their stores. This could help enable them to do obvious hings like reach out to local influencers, but perhaps more relevant would be re-configuring their store merchandise around local needs.
It also reminds us all what a rich source of information social media data can be- if you have the talent and bandwidth to analyze, it’s incredibly powerful source in to help us who consumers are and what they think and do.
This is an example of the big data that will fundamentally change and disrupt not just the media business, but marketing as we know it.

Inside Walmart's Super Social Shopping Agenda, Or Keeping Up With The Digital Joneses

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BY NIDHI SUBBARAMANThu Sep 8, 2011

Take a deeper look at how Walmart plans to leverage the social data and connections of its massive customer base through its @WalmartLabs.

Don’t know what to get your co-worker this Christmas? If all goes well at @WalmartLabs,Walmart may be able to suggest exactly what you and he and the neighbors and friends you both share are into. @WalmartLabs, launched recently to power the e-commerce push of one of America’s biggest retailers, is working on milking information from its own customers' social networks to reshape the future of shopping.

Customer information on networks like Twitter and Facebook offers a rich opportunity for retailers like Walmart to learn about shoppers’ interests--and those of their friends. Armed with that information, they can more reliably target deals and choices at customers--if they have the know-how to navigate that stream of data.

That's where @WalmartLabs comes in. Before it was part of Sam's Club, it was a tech startup in Silicon Valley (then called Kosmix) founded by entrepreneur-engineers Venky Harinarayan and Anand Rajaraman. The two are creating something they call the "social genome" (not unlike Mark Zuckerberg's social graph), which tracks links between people and their interests. On a scale like Walmart’s, it has the power to change the future of shopping.

At the heart of the technology powering @WalmartLabs is categorization of social media, Harinarayan explains: "How to put things in buckets, rather than looking for needles in a haystack." Kosmix's early product, TweetBeat, sifted through real-time traffic on Twitter to offer up a curated, pertinent stream of information which users could tap into to follow a live event. The company also built RightHealth, a search site for health information, powered by the same technology.

@WalmartLabs will be heading up Walmart's foray into social retail in three different ways. First, using technology similar to the kind they developed for TweetBeat, @WalmartLabs will help track the interests of people living around a Walmart store, and use that information to drive inventory. For example, people living near a Walmart store in Mountain View, CA, may tweet about biking, while people living somewhere else may be tweeting about fishing. Using their custom technology that organizes and filters social media feeds, @WalmartLabs will play a key role in advising in-store inventory, using social media as a way to predict demand.

Walmart also wants to talk to you on your social network of choice. Using their knowledge of interests and your friends networks, the store wants to be able to make gift recommendations for your friends through Facebook, Harinarayan says, like offering deals around the holiday season. The first of these are expected to be rolling out by the end of this year.

The store also wants to use social media to enhance customers' experience when they hit the store on foot. Thirty percent of Walmart's customers carry smartphones into stores, and Walmart sees an opportunity to enhance their shopping experience with that device. "With mobile, we're bringing the web to the store--one of the big components of that is the social world," Gibu Thomas, senior vice president of mobile and digital units at Walmart, tells Fast Company. Thomas says another of Walmart’s goals will be to get a combination of social media data harvesting and mobile app building to enhance a store visitor’s shopping experience. When a person is standing in front of the electronics display pondering which television they’d buy, their smartphone could tell them what brands their friends bought, and perhaps even how much they liked the product.

Walmart has been lagging in the online retail space, behind competitors like Amazon.com, and it's interesting that the retailer is not using this venture to particularly boost its activities online. By focusing instead on mobile integration, social network data mining, and enriching their customers' in-store experience, it's possible Walmart will make hefty inroads into shopping on social media, leaping ahead of its competitors while its customers keep up with each other.

Nidhi Subbaraman writes about how technology is changing our world. Follow onTwitter, Google+. 

Some interesting Wal-mart news...

Wal-Mart Using FedEx As Extension Of Its Stores

Storefront Backtalk

October 14, 2010
http://www.storefrontbacktalk.com/supply-chain/wal-mart-using-fedex-as-extension-of-its-stores/#ixzz12LnywqPd

Wal-Mart, the 8,000-pound gorilla in retail with 4,300 U.S. stores, finds itself in an awkward position in many urban areas—its stores are few, and resistance is strong. One of Wal-Mart’s more creative responses to this problem was rolled out Wednesday (Oct. 13): Give E-Commerce customers free shipping (no minimum required) and let them pick up the order at a local FedEx office, which in an urban area is probably a lot closer than a Wal-Mart store.

In Cities That Battle Wal-Mart, Target Gets a Welcome

Wall Street Journal

October 14, 2010    

http://online.wsj.com/article/SB10001424052748703960004575427143390869962.html?mod=dist_smartbrief

Wal-Mart Stores Inc. remains a pariah to U.S. labor unions and urban activists who continue to hold the world's largest retailer to a different standard than rival Target Corp. as they block its plans to expand into the nation's biggest cities.