Published on: May 3, 2012Notes and comment from the Content Guy...
DALLAS -- Here are six things that I learned at the session I did yesterday at FMI, entitled “From Amazon to Zipcar: Innovations from the E-Revolution,” featuring Tom Furphy, formerly of Amazon.com (where he developed the CPG business and Amazon Fresh) and currently CEO of Consumer Equity Partners.
• One of the things that Amazon is able to do, and that other retailers must do in order to be competitive, is take advantage of what is called “Big Data.” This means that instead of just tracking transactions, marketers can now - using internet technology - track all of the drivers that lead up to a transaction. Just tracking sales is not enough.
Thing of this another way. It used to be said that only 50 percent of marketing is effective, but the problem is that nobody knows which 50 percent. These days, you can actually figure it out.
• There is no inherent reason why retailers cannot develop subscription/automatic replenishment services along the lines of Amazon’s Subscribe and Save. One does not have to have the tens of thousands of items in the system that Amazon does, but one can look at transaction data and figure out what best customers are buying and then offer a way to provide on a scheduled basis the products they buy regularly. (Think 40 pound bags of dog food, laundry detergent, paper towels, toilet paper, etc...) It is a way of locking them into your store, rewarding their loyalty, and showing loyalty to them.
• People should stop worrying about “showrooming.” (Easier said than done. See our story below about how Target has decided to stop selling the Kindle because of people coming in, looking at the Kindle and then ordering it from Amazon.) But if people who come into a store are more interested in looking at their mobile devices to check for competitive prices online than they are in looking around the store, then it means the retailer has not done a very good job of creating a compelling shopping environment. “Showrooming” is a fact of life ... you have to deal with it.
• While Walmart’s new “Pay By Cash” initiative - allowing people to order products online, go to the physical store to pay with cash, and then have the items shipped to their homes - got a lot of attention recently because it seemed aimed at people without banking relationships (and credit/debit cards), the reality is that Amazon has been offering this service in Japan for seven years, with people able to pay by cash at convenience stores nationwide. So, if Amazon wanted to do it here, all it would need is a partner...and it already has a relationship with 7-Eleven, testing pickup lockers.
• If the trends launched by Amazon continue, and more center store sales migrate to the internet, then this means that the so-called “big stock up trip” could be a thing of the past. Which means that retailers that count on these trips for much of their volume are going to have to find another way to generate sales and profits.
Retailers who think that the collection of state sales taxes will bring Amazon down to earth are mistaken. The fact is, in states where Amazon already is collecting sales taxes, there seems to be little evidence that it has a negative impact on sales.
- KC's View:
- This just scratches the surface of the conversation that Tom Furphy and I had yesterday. (It is hard to take notes and simultaneously hold a discussion and field audience questions via email.) So here’s the good news...
You can hear the entire session by ordering the audio from FMI. Or, as soon as we can pull it together, we’ll be offering a kind of “best of” series of video clips from the session here on MNB, sponsored by MyWebGrocer. So stay tuned...