Absolunet released its list of the top 10 ecommerce trends that will impact North American retailers in 2017. They include the replacement of Black Friday and Cyber Monday with Cyber November, increased use of Artificial Intelligence (AI), increased acceptance of AI by consumers, the use of Predictive Analysis by merchants to accurately predict their customers’ next purchase and the merging of commerce and ecommerce.
SMART HOME DEVICES OFFER WAYS TO ADVERTISE
Digital Voice Assistants like Amazon’s Alexa, Google Home and Apple’s Siri will account for about $890 million in revenue for 2016, according to research firm Futuresource Consulting. About 6.3 million voice assistants were shipped in 2016. Brands are anxious to take advantage of this new way to reach consumers. Notable brands are creating their own “skills,” which let users ask questions. For example, Tide gives consumers detailed information on how to remove stains. Johnnie Walker helps people find nearby liquor stores that sell their brand, and then recommends cocktail recipes. The possibilities are almost endless as long as brands offer relevant content. Microsoft is reportedly working on something called “Home Hub” that will be built into Windows 10.
AMAZON AND WAREHOUSE CLUBS FULFILL DIFFERENT NEEDS
Amazon.com and warehouse clubs like Costco are not mutually exclusive, according to a recent study by Morgan Stanley. Of the 23% of respondents surveyed who are Costco members, 45% of them are also Amazon Prime members. Of the 33% surveyed who are Prime members, 32% are also Costco members. Only 8% of people shopping at both Amazon and Costco plan to shift dollars away from Costco. A very high 94% of Prime members and 95% of Costco members intend to renew their memberships, which points to low turnover and high lifetime value. A full 85% of those surveyed attributed “Retailer I trust” to both Amazon and Costco. Amazon scored notably higher than Costco in perceived prices, selection, convenience, quality of checkout and ease of navigation. The average Costco member is 49 years old vs. 44.5 for the average Amazon Prime member; that age difference could have implications concerning the appeal of warehouse clubs to millennials.
WHAT MILLENNIALS WANT FROM HOLIDAY SHOPPING
Consumers below the age of 35 played a key role in the record-breaking surge that made Black Friday the first day ever to rack up more than $1 billion in mobile sales. There are now about 75 million millennials, which means they now outnumber baby boomers. Their holiday buying power was projected at $85 billion, nearly 10% of the $1 trillion forecast to be spent overall. Understanding
millennials is proving to be challenging; there are parts of shopping in a physical store they really like, such as looking at and touching merchandise, and talking with sales people, and parts they really dislike, such as waiting in long lines. They are entertainment-oriented, and appreciate a holiday experience that’s worthy of becoming an Instagram or SnapChat moment. Nike offered a variety of immersive digital experiences in their Nike Soho store in New York, including the ability to try on basketball sneakers and try them out in a virtual game of hoops at Brooklyn Bridge park, take a virtual jog through Central Park or connect with various apps via touch-screens. Nike says the
response to their digital experiences is very strong. Millennials also appreciate uniqueness, enjoy giving business to local, independent retailers, and prefer one of a kind items. PwC’s holiday report found that 43% of millennials are very or extremely likely to purchase handmade items compared to 35% of Gen Xers and 28% of baby boomers. They are also charitably focused, with an eBay survey finding that 67% are more likely to choose a holiday gift from a company that donates some of the proceeds to charity. Lastly, they are research-focused, spending time online to evaluate a product’s quality, compare prices and read reviews. They are much more heavily influenced by social media and word of mouth, compared to retailer driven promotions and advertising.
MARKETING TECH BUDGETS RISING
Half of U.S. marketers polled by Walker Sands Communications expect to slightly increase their investment in marketing technology in 2016; one in five expect to greatly increase their investment. The study found that most marketers devote less than 25% of their marketing budget to marketing technology tools and/or vendors. Roughly one-third allocate between 1% and 10% and 36% allocate between 11% and 25%. Only 9% allocate more than half of their budgets to marketing tech tools and/or vendors.
SCAN AND GO TECHNOLOGY
Amazon is testing a grocery store model in Seattle without checkout lines. At Amazon Go, shoppers scan their Amazon app when they enter the store. Sensors register items that shoppers pick up and automatically charge them to the Amazon app. If the shopper returns the item to the shelf, it’s automatically deleted. When you’re done shopping, you just leave. The store offers ready-to-eat meals, staples like bread and milk and meal-making kits. The store is being tested with Amazon employees now, and is expected to open to the public in early 2017. Amazon has been working at carving out a share of the $795 billion food and beverage market. Analysts report that Amazon is also testing at least two other grocery store concepts with the potential for more than 2,000 physical locations. Amazon denies that they have plans to open 2,000 physical locations “for anything” and says they are still in the early learning phase.
Analysts see the launch of the “Just Walkout Store” as an industry catalyst that will likely stir up competition to deploy technology in brick-and-mortar spaces and ramp up ecommerce. In addition, it’s seen as having major implications for Amazon, including the fact that more consumer data will lead to better shopping recommendations and an ever-improving customer experience. People shop differently for convenience purchases and food than they do online, so Amazon will be able to gather new and different kinds of data. The technology powering Amazon Go will likely become more widespread, and Amazon can choose to offer it to other retailers as a complement to Amazon Web Services.
Costco reported that they tried a version of scan-and-go literally 20 years ago. Customers got an RF scanning gun when they came in, and scanned their own items as they shopped. They then handed the scanner to a cashier who printed out a receipt. Costco says of course it could be a lot more efficient today, and they are currently looking at the technology again, but have no plans to introduce it or test it in the immediate future. They have done self checkout for a while, but have eliminated it at their higher volume stores because they can efficiently get people checked out without it. Sam’s Club started offering a smartphone app last October called Scan & Go that lets customers scan items as they shop and pay on their phone, skipping a physical checkout entirely.
THE FUTURE OF WORK
General Electric recently hosted a Minds + Machines conference that showed various ways technology can help workers do their jobs better and more safely. The mission of GE Digital is to integrate the worker and the digital world. One of the prototypes they showed was a suit for an electrical utility worker that has sensors sewn in that automatically cut the flow of electricity to panels, eliminating the risk of electrocution. They talked about the IIoT, the Industrial Internet of Things, which leverages internet connectivity and cloud-based data crunching to streamline the worker experience, drive efficiencies into manufacturing logistics and optimize energy resources. GE currently is known for making big-ticket hardware such as MRI machines and jet engines; they are heavily investing now in software and IIoT. GE’s open-source Predix operating system will account for $7 billion in revenue in 2016, and the company expects to hit $15 billion by 2020. Some 20,000 industrial app designers are developing for Predix. GE software researchers see a future where you would not need to be a computer whiz to use technology to solve a problem. For example, a worker who has an idea on how to solve a problem can use speech interface to dictate a request to the computer, which can then write the code that is needed to solve the problem.
AUTOMATION ADDING JOBS
Many argue that automation kills jobs, but at Amazon’s newest and most high-tech warehouse, they need a higher head count than at a traditional warehouse, because the large staff of robots works so quickly they can process many more orders, which requires humans. Orange, pallet-sized robots that move faster than people can carry shelves full of merchandise to stations where workers can reach them. Screens show the workers what the desired item looks like and where it is placed so they can get it off the shelf quickly and accurately. Amazon has built 26 new warehouses this year, and says that the new technologies they are employing allow them to train workers in as few as two days compared to the six weeks it generally takes to train someone for a traditional warehouse job. In today’s competitive labor market, shorter training means Amazon could offer higher wages and will have less down time when people quit. Walmart has added 10 new ecommerce hubs over the past two years, along with 80 stores that ship directly to consumers. UPS has introduced color-coded scanning technology in some locations which eliminates the need for workers to memorize more than 120 ZIP codes.
MOBILE PRICE COMPARISONS
Nearly half of U.S. mobile device users ages 14 and older will use their mobile device to research a competitor’s prices when they are in a store shopping, according to a survey conducted in September 2016 by Opera Mediaworks. One-third said they looked up product reviews, and 30% would use their device to sign up for in-store promotions. However, just 12% of retail marketers told BDO USA in October that they planned to use flash sales and daily deals as a mobile marketing tactic during the holidays and just 8% planned to use mobile coupons. Some 80% of U.S. adults had either a smartphone or a home broadband subscription in 2015, according to Pew Research. However, 80% of consumers still want to go to stores and browse and shop.
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