Category Archives: augmented retail

Book Review: the Impulse Economy

Korean subway mixed reality

Nevermind the hype, the ongoing explosion of mobile could either be the best or worst thing to hit ordinary retail business since the internet.

Imagine you are in the business of selling things at retail. What does it mean when you see your customers predaciously roaming the aisles armed with smartphones and suddenly better informed about the competitive quality and pricing of your goods than even the store manager. What does it mean when you see a competitor like Tesco do away with goods altogether and light-up mixed-reality virtual aisles the length of a subway station? According to Paypal, this year’s black Friday saw a 516% jump in mobile commerce. Meanwhile, savvy ecommerce vendors are using mobile apps and offers to cherry pick customers out of busy store lines. Or how to respond when you hear that apple has a new almost-magic in-store mobile experience that does away with checkout queues entirely?

Ever since the first ecommerce boom more than a decade ago, many brands out there still wrestle with tensions between direct/online and retail channels. That’s going to get a lot more complicated.

With mobile there is no separation anymore. Mobile means you can’t keep the internets in the tube. With the separation of channels eroding, physical retails are at last feeling the full brunt of online competition. As they say, bestbuy is now Amazon’s showroom. Depending which side you want to be on, there’s enormous promise and disruptive risk from mobile and the convergence of commerce.

So it’s very timely that my friend Gary Schwartz is out with a new book on m-commerce: the Impulse Economy. This is the most useful and thorough book I’ve seen yet on the current state of the nation of m-commerce, how we got here and what may lie ahead.

If you are new at mobile commerce you’ll find a good overview of all the current technologies and players from tags and texting to mobile wallets and telcos. Most useful for me were Gary’s insights into the behavioral aspects of mobile. Done right, mobile isn’t just about imposing new payment interactions or hurling coupons at consumers for the same transactions they might have consummated anyway. Impulse Economy argues that mobile done right is about dropping consumer frictions and resistances to buying.

Another takeaway, targeting and relationship value. “The physical store is limited aisle, online is limitless aisle, mobile is targeted aisle”

For consumers, mobile promises not just more convenient checkouts but also the opportunity make better informed, more confident purchase decisions.

For merchants, mobile offers new ways to reach, increase engagement and deepen relationships with customers. Mobile is a chance to provide more information, more services attached to products or tell stories and deliver digital experience that enrich the value of a brand. All of which could drive consumers to pay a premium. Especially if the payment method is easy and impulsive. Rather than just being a vector for discounting, mobile could give merchants more power to grow ticket size or better price discriminate by tailoring pricing and product offers individually to customers.

Of course there’s more to mcommerce than physical retail. There’s commerce through content, there’s turning marketing channels into actionable sales channels, there’s tablet and couch-based commerce. But I won’t give away too many spoilers.

Now, there is some irony in packaging a very emergent field onto static sheets of flattened would pulp. You best pick it up now, as any book like this will only be up to date for so long. Although the book offers a good number of relevant examples, much of the promise of this future impulse economy is still yet to be invented. I guess to help with that, the book comes bristling with all manner clever tags linking you to an official blog, which I hope he’ll be keeping up to date.

But for now, anyone grappling with the potential disruption or opportunities of the new digital commerce, the Impulse Economy is a great place to start.

LINK: The Impulse Economy Blog

Impulse Economy on Amazon

The dawn of mobile in retail

One big idea I’ve been focused on a fair bit lately is what I call “Augmented Retail”. Augmented retail is about the potentially disruptive outcome of the inevitable convergence of mobile technology, ubiquitous connectivity and retail.

Mobile technology is not necessarily good news for your average retailer.

I’m sure by now almost all of you have googled something in aisles just to get some more info on product or to see if you were really getting a good deal. When amazon first launched their barcode scanning application, pundits described it as “amazon declaring war on retailers”. By Q2 of 2010, amazon announced they had already fulfilled a billion dollars worth of commerce from their mobile app. How many of those purchases might have been white-glove Amazon delivery of fine new TV screens ordered straight from the aisles of Bestbuy?

For traditional retailers, the trouble with mobile is that it puts tremendous power in the fingertips of consumers. If they so choose, average consumers could well be better informed on the true value and best pricing of products than even the store manager. By default, smarter and better informed consumers will pressure retail margins.

But dear brands and store owners there is hope. If you are clever, Mobile also gives you chance to build deeper relationships and engagement with your customers. Tomi T Ahonen, who was recently in town for Mobile Innovation Week, has a great post recently (with many real examples!) on what retailers can do with mobile.

So this blog [post] is not about mobile banking or mobile credit cards. It is not about ‘all’ mobile commerce, ie any digital goods sold directly to a phone do not really involve (or need to involve) bricks-and-mortar type of retail. So our music, movies, videogames, airline tickets, insurance etc do not require a separate visit to a retail establishment, because the service (or proof of purchase of service) intended (music, movie, game, air ticket, insurance etc) can be delivered completely to our phone.

That is only a minority of our retail. What of the locksmith, the hairdresser, the dentist office, the florist, the clothing retailer, supermarket and drug store – the typical ‘high street’ or ‘mainstreet’ shopping experience in any small town on the planet. What of them? If you need your locks changed, that cannot be done ‘remotely’ via a mobile phone or the PC. Or your haircut? Can’t be done directly via mobile. Mobile can show you what your new haircut might look like, virtually, but the actual hair still needs to be cut with actual scissors by an actual hairdresser or barber. That can’t be fulfilled via mobile. So lets look at the real bricks-and-mortar retail establishments. What is the role of mobile to them?

Its three-fold. There is ‘marketing communication’ (ie advertising) we can deliver to our customers before they come to our store – and use mobile also to ‘drive foot-fall’ ie drive actual human visitors to our stores…. [In store]
The clever part comes to allow customers to engage with you when they are in-store. … [and After-Store] The part least understood so far, is the after-store experience.

Anyway read the whole thing, good stuff: Lets Talk About Mobile in Retail – Tomi T Ahonen.

While I love Tomi’s examples in this post, they mostly relate to using mobile to drive more business through existing retail business models. There’s even more to think about in terms of how could you change retail models entirely. Can you close sales before the customer even gets to the store? Can you use mobile speed or eliminate checkout lines? Are there premium or follow-on services that you could be delivering or billing for through mobile? Could you use mobile to deliver unique price-discriminated offers to every single customer (e.g. could you sell packaged goods the same way airlines sell airplane seats?)

What is clear is that mobile in retail will be a spectacularly large opportunity over this coming decade. So get busy.