Posts about retail

Transparent inventory & the rebirth/death of retail

The Times reports this morning on smart retailer Nordstrom making its inventory in warehouses and in stores transparent so a buyer who’s dying for a purse can find it nearby (for immediate gratification), or from the warehouse (for convenience), or at the last store that has it (which will ship to her).

The earlier rendition of this was BestBuy or B&N making it possible for customers to find whether an individual store had an individual item via their web sites; that’s not quite as easy as saying, “wherever it is, just get it to me,” but it was an important step in this direction.

The next rendition of this will be, I think, enabling the customer to search across multiple retailers and order. That will give us what Dave Winer tweeted this morning that he wants: “I wish there was an Amazon store in midtown Manhattan, where I could buy anything that is available for same-day delivery. I’d go there now.”

Well, if Amazon did that, it would be gigantic, expensive, capital-intensive, inventory-filled Wal-Marts peppered all across the country; it would be expensive to build and it wold lose the efficiency and profitabliy that Amazon enables.

But the virtual version of what Dave wants is possible with transparent — and open — inventory, enabling customers to ask, “Who has this item nearest me at the best price? Then I’ll go get it or get it delivered to me today.”

Ah, price. There’s the rub, of course. Such a network would make pricing transparent. It pretty much already is. We can search across individual retailers or use the likes of Froogle and get the lowest prices. There lies the downfall of retail’s margins, taking out the ability to arbitrage opacity in pricing. Now add transparent inventory and the ability to get the item at the lowest price now and the value of retail brands sinks as does its profitability — in an already tough-margin business.

I could imagine a new service — from Amazon or an entrepreneur — that says: Tell me what you want, Dave, and I will tell you where you can find it or I’ll get it to you. That’s the new value-add for those who want to touch an item or get it immediately. The other value-add is support and service (see: Best Buy’s Geek Squad). Putting boxes and shelves and waiting for people to buy them while carrying the cost? That no longer adds value; it only increases risk.

Retail is going to get ever-more efficient. Independent bookstores were killed by the more-efficient box stores. Box stores were wounded by Amazon and the internet. Amazon could be injured by a local value-added retail search-and-delivery service. All this is fine for the customer: more choice more quickly at lower prices.

But I think retail could be headed the way of newspapers: into a pool of endless pain. All over America, I see empty retail shells: the former Circuit City, the closed book box, the folded mom-and-pop. I think there’s much more of that to come.

This is what transparency — in price and inventory — can do to a market.

30 Days of WWGD? – Google shops

TechCrunch giggles wondering what the new Microsoft store will be like: “Will it be wall-to-wall Vista boxes? Will you have to sign a license agreement to get in? Will they avoid the color “BSOD blue”?”

So for today’s snippet from What Would Google Do?, here’s a snippet from the chapter on retail, starring Gary Veynerchuk.

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Most of what Vaynerchuk does—or what our dream restaurant would do—could be done in any establishment. Why not expose a store’s sales data so I could use that information when I shop? Why not expose my own sales data to me and make suggestions on that basis? Why not gather and share reviews of products so I can make the best selection for my needs and leave happy? Why haven’t local stores followed Amazon’s lead with these services? In his book The Numerati, Stephen Baker says that retailers are only just beginning to think of ways to exploit the data they have about us—like having our shopping carts make personal recommendations.

My wife and I sometimes ask our supermarket to stock a product, but that’s a rare encounter with spotty results. Shouldn’t the store have forums where customers could ask for products and managers could see when those requests reach critical mass? I know, this suggestion ignores one fundamental economic factor in grocery and other retail businesses—that brands pay fees for shelf space that contribute to stores’ bottom lines. But I have to believe that a store that sells me what I want to buy will be better off than a store that sells me what someone pays it to sell.

No local store or chain can compete with the just-in-time, inventory-light efficiency and limitless selection of an internet retailer. So I wonder how the role of the local store changes. Perhaps it becomes more of a showroom run by or for manufacturers. Rather than selling the merchandise right there, it might offer easy ordering and earn a commission. In the chapter on publishing, I looked at printing books on demand. In the chapter on manufacturing, I ask how cars should be sold post-Google. If I were a merchant—a department store, a chain, a local retailer—I’d hope to find a way to curate unique merchandise for my customers as eBay and Etsy?.com do for theirs. Maybe a store, like a newspaper, needs to become less a one-for-all clearinghouse of commodity goods and more a pathway to what I really want.

Perhaps a store, like a restaurant, can become a community built around particular needs, tastes, or passions. Look at the data that is created and shared at Netflix and Amazon through sales rankings, automated recommendations, and customers’ reviews. Now imagine starting direct conversations among these people. What could be unleashed when Vaynerchuk’s customers and fans talk with each other, asking and answering questions, sharing opinions, finding new value in their association with and around him? It’s hard to imagine such a community forming around a tire store, of course. But it’s not hard to imagine many others where communities could grow: athletic stores (my local store promotes running clubs’ events and Nike is holding its own races around the world to encourage such communities to form); food stores (where an instant community of olive-oil fans can gather around choosing which brands to order); electronics stores (if I can read ratings of TVs at Amazon, why can’t I see them when I’m in Best Buy?); garden stores (anybody know how to keep the deer at bay?); hardware stores (let’s share open-source plans for playhouses); toy stores (any advice for a grandparent buying an eight-year-old boy a video game?); and clothing stores (H&M should have a dating service: “Size 4 petite seeks 34-inch waist, 34-inch inseam, 42-long—no khakis, please”). . . .

The internet has caused me to go to stores less often. I can’t remember my last time in a department store. The mall, where I once browsed, now bores me. Wal-Mart’s size scares me. I still enjoy Apple stores but that’s often for the education and the free wi-fi and sometimes for the opportunity to ask a fellow cult member for advice. Stores have become dull. Their merchandise is the same and they have less selection than I find online. They are stocking fewer items and running out more often. They charge higher prices than I can find searching the internet. Sales clerks give me less information about products than I can get from Google and fellow customers. And I have to drive to stores, using ever-more-expensive gas and time.

The store’s salvation is its customers. Rather than treating the internet as a competitor, retailers should follow Vaynerchuk and use it as a platform. Enable your customers to help you stand out from the crowd. Why should I go to your sneaker store, car dealership, or wine store to buy the exact same merchandise I can find in a thousand stores and sites just like yours? Price will no longer get me there; I can find the best prices by Googling, not driving. Good service? That should be assumed. Information? I’ll trust it more if it comes from the community of shoppers. How can you connect with that community? How—to follow Zuckerberg’s law—can you help them organize? How—to follow Vaynerchuk’s law—can you build a ball field where they want to play? Turn the store inside out and build it around people more than products. Your customers are your brand. Your company is the company it keeps.

Googlicious

I twittered that I was having fun writing the chapter in my book about what a restaurant run on Googlethink might look like (besides being decorated in gaudy primary colors). Andy Carvin responded saying it might look like this: the Wiki Wiki Teriyaki restaurant in Austin. He said:

Rather than having a set menu, they just have a bunch of ingredients and invite you to bring your own. The diners, who call themselves “recipedians,” get to put together their own recipes and have them cooked. Other diners can then build on each other’s recipes and discuss them, creating a seemingly limitless array of recipes. Soon they’ll add ratings and tags to make it easier for diners to parse their options.

I got so excited that I stopped reading and immediately Googled the place. Odd, I thought, all they brag about is their sauce, not this bravely innovative way to open-source a restaurant.

Then I went back to Andy’s post and read the rest of it:

Actually, none of that is true. It’s just a restaurant with the word “wiki” in it. Twice. But how cool would that be?

Cool indeed. Andy got me without even trying.

Anyway, I have lots of ideas about an open and transparent restaurant operation, experience, and community. If you have any ideas you’d like to share, please join in. Then maybe we can pull a McDonald’s and buy the Wiki Wiki and franchise it.

Guardian column: Gary Vaynerchuk

My Guardian column this week about wine wizard Gary Vaynerchuk:

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Before you read this, do me a favour and go to WineLibraryTV.com Be prepared for a jet engine in your face. That blast of personality is Gary Vaynerchuk, a 32-year-old merchant who has made more than 450 daily wine-tasting shows online – just him, his glass and a spit bucket.

The show, with its audience of 80,000 a day, has transformed Vaynerchuk into a cultural phenomenon. He has appeared on two of the biggest TV talk shows in the US and in the Wall Street Journal and Time. His book, Gary Vaynerchuk’s 101 Wines, comes out next week and the day he announced this on his internet show, his fans immediately pushed it to No 36 on Amazon’s bestseller list. He has a Hollywood agent. He makes motivational speeches. And he has only just begun. Gary Vaynerchuk is on his way to becoming the online Oprah.

This isn’t as simple as using online video to sell wine, though the family store is now a $60m-a-year enterprise. Vaynerchuk is also transforming retail and making it social. He has realised that a store should be a community and so he uses every tool available online – a social wine rating site called Corkd.com, his videos, his appearances on other popular online shows such as Diggnation, his ubiquitous presence on Facebook, and answering countless emails every day – to make and connect with as many fans as possible.

One day, a few weeks ago, Vaynerchuk announced on his online show that he’d throw an event for his video friends at his store in New Jersey. More than 300 people showed up. He calls himself “the social media sommelier”. “Social business,” he says, “is the future of our society.”

Vaynerchuk is on a mission. “I want to change the way that people think about wine and change the way that people do business … This is how I will be remembered.” His secret is generosity and passion. Now that may sound like a line. But I’ve witnessed Vaynerchuk in action. I’ve bought my wine at his store for a few years and watched his sales people eager to help customers find a better, cheaper bottle. I watched him at the South by Southwest conference, where he gathered instant parties via Twitter, having strangers – now friends – sample from the seven cases of wine he had shipped down. I do think this guy’s for real. Authenticity, Vaynerchuk argues, is a necessity in the transparent, social, web 2.0 world. “You’re not going to be able to have multiple personalities,” he says. “Your personal brand is now completely exposed to the world, 24/7. Everyone is media now.” This leads him to a grand conclusion: “So now good is going to win.”

See, he does sound like Oprah. And he acts like her as he constructs his empire. He says he is building – as he calls it – “brand Gary Vaynerchuk”. Online, he issues opinions, not only about wine but about life, like this: “I’d rather have a million friends right now than a million dollars. Your social equity is far greater than your financial equity.”

He even has an inspiring personal story: he came to the US from Russia at age three, a young entrepreneur who made a $1,000 a week selling baseball cards at the mall. When he had to work in the family store as a kid, cleaning shelves, he hated it until he realised that wine was as collectable as baseball cards. And now he has used his expertise, passion and personality – and the power that online gives anyone to speak to the world and make friends anywhere – to turn himself into a star.

As I left the office where he tapes his show, he handed me a copy of his book. Then he went to a “meet and greet” with a fan who just wanted to be near force Vaynerchuk. All this is possible with just a dream and a webcam.

Thunderstruck

The amazing Gary Veynerchuk, the most digitally savvy retailer anywhere, has now parleyed his wine vlog into a wine book.

: LATER: Further testimony to the power of Gary’s vlog: The book is ranked 101 (yes, that’s kismet) on Amazon.

Reinventing Sears

Newsday’s Ellis Hennican writes today about a notion for reviving the still-and-forever-flagging Sears: turn it into an annuity membership with which you get a lifetime string of and repair of updated TVs, lawnmowers, whatever. This is not unlike Interface Inc.’s program of leasing carpeting. In essence, this is the cable-box model the old telephone model: they own the device and rent it to us. — and that’s the problem with it, since those programs were and are ripoffs. But in this case, there’s no monopoly. So the real question is, do we trust Sears to survive.

I like this discussion of reinventing companies and industries in the digital age. Here’s my proposal for the social airline. I’ll write one soon about retail.

Netflix of life

I just got the pitch from Staples for their new ink replacement program: You mail in your empty cartridge and they mail a new one back; you pay what you’d pay if you went to the store. It’s Netflix for ink. It’s a small step to having your printer tell Staples through the internet that you just ran out of juice. And that’s not a big step from RFID tags on other merchandise sending in an order. Not to take this too far (as if I haven’t already), but there’s another reason not to go to stores. I’ve been saying for years that retail will become, more and more, a showroom and not always the point of purchase. Oh, of course, most retail will remain mostly instant gratification. But here we talked about looking at books in a store but then ordering them online (that’s what I do already). I wish I could go to a car showroom and not be accosted by the guy who’s going to make the commission (and the only reason the automakers don’t sell direct is regulation). Retailers might take less inventory risk but will also need to be compensated differently: manufacturers pay them for display space, perhaps. OK, I went too far. But we’ll keep seeing these small changes in retail that add up.