Tag Archives: Nordstrom

The Four Elements of the On-Demand Economy

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Big brands continue to transition to the $57.6 billion on-demand economy, which is characterized by the complete removal of friction from consumer purchases:

  • Jaguar and Shell recently rolled out a partnership to make it possible for people to prepay for gas from their in-car infotainment touchscreens. By using Apple Pay or Paypal configured in a Shell app, Jaguar drivers in the United Kingdom can select how much gas they want and prepay without needing to take out their wallets. The service will expand globally.
  • Walmart now allows customers to bypass lines at its in-store pharmacies. Pharmacy customers use their Walmart app on their mobile devices to order prescription refills and then use an express lane to move ahead of the customer service line and retrieve their orders. Customers can also track order status and view pricing details.

Product preordering is hardly new. As I have discussed on my blog, brands such as Starbucks and Panera Bread have been offering preorder services for a few years. But businesses such as Jaguar and Walmart help legitimize preordering, which is one of the elements of the on-demand economy. Meanwhile, many brands continue to develop services that deliver products to consumers on demand. Amazon removes friction from online (and offline) buying with Dash buttons and Amazon Go stores. Retailers such as (Walmart among them) have launched services that make it easier to either pick up products or have them delivered to your home. Uber deserves credit for being the on-demand catalyst. Now the legacy brands are learning and adapting.

The Four Elements of the On-Demand Economy

The “on-demand brands” typically adopt one or more of the following four elements of the on-demand economy:

  • Making it possible for consumers to prepay and avoid needing to reach for their debit cards or for cash, a model that fueled Uber’s rise. Prepay works especially well with high-volume products that rely on repeat purchases and low consideration, as is the case with Panera, Starbucks, and Walmart’s pharmacy. Typically customers know what they want before arriving at the store and don’t want to spend a lot of time choosing among products.
  • Delivering products to consumers on their own terms, often at their own homes, faster than ever before. For instance, Amazon has launched drone delivery in the United Kingdom to speed up product delivery and is preparing to do the same in the United States. UberRUSH partners with brands such as Nordstrom to offer product delivery, and business such as Heal in Los Angeles bring doctors to your doorstep. These types of services appeal to a variety of demographic segments, ranging from busy parents to urbanites who don’t own cars and lack time to pick up their products. But fulfilling product orders in an on-demand fashion does not need to require the brand to deliver products to the home. Walmart is experimenting with Pickup and Fuel concept stores, where customers order online and then drive to Walmart to have their groceries loaded into their cars by employees.
  • Relying on mobile devices such as phones and wearables. One cannot overstate why mobile has been integral to the rise of the on-demand economy. Mobile searches overtook desktop searches two years ago. There are almost as many mobile phone subscriptions as there are people on earth (which took only 20 years to happen). As Google noted, mobile phone users typically want things done in the moment — what Google calls micro-moments of demand. During micro-moments, people make instant decisions about where to go, what to do, and what to buy: about 76 percent of people who search on their smartphones for something nearby visit a business within a day, and there was a 2.1x increase in mobile searches for stores open now and food open now from 2015 to 2016. Those findings make intuitive sense: when you’re on the go, you don’t have a lot of time to do complex research for things to buy.
  • Using on-demand marketplaces in which people tap into a pool of available inventory to get what they want. Examples of on-demand marketplaces include Uber, Lyft, and Zipcar for either getting a ride (Uber and Lyft) or renting a car quickly. A number of on-demand marketplaces have popped up in local markets to service different industries. For instance, in Chicago, ParqEx connects people who want to rent their parking spaces with people looking for parking in the moment. Many pundits associate Airbnb with the on-demand economy. But I think Airbnb’s success has more to do with opening up a broader inventory of lodging options as opposed to making them available on-demand. Browsing Airbnb is more of an “I am traveling and want an interesting alternative to a hotel” than “I need a place to stay now.”

Voice and Self-Service

The on-demand economy is evolving rapidly in a number of ways, mostly notably through the rise of voice search. Voice search ads a layer of complexity to on-demand transactions: with our voices, we can request more complex services and products. We can ask Alexa, “Tell me where I can watch the movie Get Out this afternoon and use my Stubs discount card” or “Where can I get barbeque ribs in the west Chicago suburbs?” Businesses that want to be found during those open-ended searches need to optimize their online content and data so that they are visible for voice search. Businesses that understand how to make themselves visible for voice will capture more on-demand queries, thus being part of the on-demand journey, from awareness to consideration to purchase and service.

Another major development is the use of buy buttons such as Amazon Dash to enable self-service on-demand. The Amazon Dash button turns any object into a smart device for replenishing items such as laundry detergent. Amazon reports that the Dash buttons, available to Amazon Prime members, have taken off. According to Amazon, Dash button orders occur over twice a minute, and for many popular items, more than half of orders are done via Dash buttons. The list of brands signing up for the program include Campbell’s Soup, Cascade, Clif Bar, Mentos, and Quilted Northern, to name but a few. All told, more than 200 Dash buttons exist.

It’s easy to foresee a time when Amazon will turn the Dash button into an auto-order device that uses sensors to replenish certain products without the consumer even needing to click a button. Auto on-demand may take hold in other industries and forms for products that are ordered often. For now, brands are responding when consumers call — and faster than ever.

Image source: nextjuggernaut.com

How Uber Feeds an Appetite for Disruption

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The news about Uber rolling out self-driving cars later in August underscores the reason why Uber has become a multi-billion dollar brand within seven years: Uber’s core competence is not ride-sharing — it’s disruption.

Uber has consistently developed and modified its business model to either drive or participate in disruption. Consider these examples:

  • In 2009, Uber initially upended the auto transportation industry by launching a ride-sharing service that liberated consumers from the tyranny of taxicabs that dictated terms and pick-up schedules to passengers. The launch of Uber was the big bang, which ushered in an era of on-demand, peer-to-peer services in multiple industries.
  • Uber set its sights on home delivery with the launch of UberRUSH in 2015 and UberEATS in 2016. UberRUSH delivers goods for retailers ranging from Nordstrom to boutique florists. UberEATS focuses on food delivery for restaurants. The service is moving its way across the United States by forming relationships with dining establishments in major cities such as Philadelphia, where more than 100 restaurants partnered with UberEATS on the first day of its launch.
  • The deployment of self-driving automobiles is part of a broader disruption of the automotive industry, which has involved an interesting partnership between automakers such as Ford and Silicon Valley titans such as Google, as car manufacturers seek to change their own industry with autonomous vehicles before someone else does. Self-driving vehicles, following their initial use in Pittsburgh, will permeate both transportation and delivery, potentially outmuscling the use of drones that other businesses are adopting.

How does the company continue to ride waves of disruption, even challenging the very service it launched in 2009? Three factors play a role:

  • A knack for wedding technology with an understanding of human behavior. Uber initially succeeded not because it provided a cool app but because the company understood that people ordering taxicabs require responsiveness, ease of use, and transparency in pricing — needs that were unmet by the status quo. The Uber app filled the void by making it ridiculously easy to order a ride when you want it and where you want it. No longer was it necessary to navigate clunky phone trees to request a cab and then wait around wondering when your ride was going to show up.
  • Creation of partnerships with like-minded brands. Uber doesn’t go it alone. For ride-sharing services, Uber has created relationships with businesses such as Foursquare to make it even easier to order an Uber. The success of UberRUSH and UberEATS relies on Uber’s ability to partner with retailers and restaurants. It’s no accident that one of UberRUSH’s delivery partners is Nordstrom — a company known for its innovations in customer service. (I expect Uber will expand its relationship to go beyond delivery and offer customer service options akin to a Nordstrom town car, shuttling loyal customers around for a day of shopping and in-car entertainment as an exclusive service.) Similarly, Uber is partnering with Volvo with self-driving cars.Uber finds not just any partner, but the right fit for Uber.
  • A willingness to adapt. UberEATS initially rolled out in 2014 as a feature on the Uber ride-sharing app. But the experience was wonky. Uber realized that people are in two different frames of mind when we order rides and food: when we want a ride, we want to get from point A to point B. We don’t want to bother with ordering food delivery. So Uber decoupled the feature as a standalone app. Uber has also constantly changed its ride-sharing app, introducing greater levels of information transparency. Now Uber is revised its business model with a driverless service. Uber also recently introduced UberPOOL, which encourages passengers to share rides and split their transportation costs. UberPOOL could cut down on congestion and pollution by combining multiple rides in one car. UberPOOL has reportedly taken 7.9 million miles off the roads and 1,400 metric tons of carbon dioxide out of the air in Los Angeles within its first eight months of use.

What’s next for Uber? What industries might the company upend? Here are some candidates:

  • Entertainment. Uber can become an entertainment brand in a number of ways. Live Nation and Uber already have a basic ride service partnership for people to order rides to events, but I think Uber is capable of much more, especially by bundling entertainment with ticketing and transportation. Uber is big enough to offer the entertainment itself through partnerships with artists. Uber already hosts private concerts for customers. Uber may also capitalize on the car itself as a source of entertainment. The company already offers ad-free streaming via apps such as Pandora, which just hints at the kind of in-car entertainment options Uber could provide, ranging from music to streaming movies for longer rides. Cars provide much more than transportation. They’re already mobile content machines.
  • Healthcare, by bringing medical providers to patients (and vice versa) and by managing the delivery of pharmaceutical products. Companies such as Pager exist already to bring physicians to patients’ locations on demand. But Uber has the scale to pull off on-demand medical care nationwide. Already Uber has a relationship with Relatient to offer transportation services to patients. More to come here.

Uber could also expand payment, customer loyalty, and advertising services through partnerships with other companies, becoming an all-purpose customer acquisition and service platform based on the data the company collects on its customers.

Uber will also go beyond the app interface if it needs to do so. If the economics make sense, Uber could penetrate wearables to provide even more frictionless, on-demand services.

What do you think Uber will do next?

Email and Referral Marketing: The Workhorse and Dark Horse for Customer Acquisition

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Digital long ago established itself as a channel for brand building and direct marketing. But what are the most popular digital tools for acquiring customers? According to my newly published report for Gigaom Research, the unsexy tactic of email marketing is a digital workhorse, popular for awareness building, and customer acquisition, conversion, and retention. And referral marketing, not used as widely as other tactics, provides an especially strong payoff for its practitioners. My report suggests to marketers that acquiring customers in the digital era is like creating a mosaic: to achieve a beautiful outcome, companies need to apply the right blend of tactics. For instance, brands should consider using social media and referral marketing to complement lists created for email campaigns.

The report, Workhorses and Dark Horses: Digital Tactics for Customer Acquisition, is based on a Gigaom survey of 300 U.S. digital marketers. We wanted to understand how they are using digital marketing tactics across the marketing funnel, spanning awareness, customer acquisition, conversion, and retention. Our survey affirms that digital marketing is being used consistently across the entire customer experience.

Marketers told us that social media, already well known as an awareness-building tool, is also particularly useful for customer retention. Content marketing is especially useful for awareness and retention. And email is consistently used across the entire marketing funnel.

Digital Marketing Spend Set to Increase

Here are the key findings of our survey:

  • Nearly 60 percent of companies plan to increase their digital marketing spend in 2014.
  • Email marketing is the digital workhorse, deemed the most effective (relative to other digital tactics) for building awareness, acquisition, retention, and conversion. In fact, 56 percent of respondents identified email as being the most effective at retention, several points ahead of the second-most-effective tactic.
  • Social spending is set to increase, but we discern some buying on faith with social. More marketers plan to spend more on social media marketing than any other digital tactic. But when we asked marketers to describe their perceptions of social media marketing, more marketers agreed with the statement “It is difficult to prove ROI for social media marketing” than with any other statement.
  • Referral marketing is a digital marketing dark horse. Only 39 percent of marketers use it regularly, but 43 percent of those who do use it acquire more than 35 percent of their new customers with it. These numbers are double the percentage of marketers who report such acquisition rates using email. Brands that invest in referral can gain a competitive advantage over those investing elsewhere.

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The CMO’s Guide to Pinterest

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Pinterest is a lot more than a shiny new tool to help you decorate your home – it’s a platform for marketers to build connected brands in visually compelling ways. In a  newly published point of view, The CMO’s Guide to Pinterest, my iCrossing colleague Sarah Kuntsal discusses how brands ranging from Real Simple to Nordstrom are thriving with Pinterest.

As Kuntsal asserts, any marketing executive who cares about creating close customer relationships and driving sales needs to take a close look at Pinterest. Although Pinterest is new, the social bookmarking tool has already attracted a loyal base of subscribers. The site is especially popular with female and arts/crafts enthusiasts between the ages of 25 and 44 – and this audience is highly engaged on Pinterest, which is a reason why major brands are taking notice.

According to Kuntsal, brands using Pinterest are realizing substantial increases in referral traffic. Real Simple reports that at times, Pinterest has even bested referrals from Facebook.

The CMO’s Guide to Pinterest provides brief case studies on how Real Simple, Nordstrom, and Lands’ End Canvas have generated brand love on Pinterest. The report offers six Pinterest best practices for your own brand, such as integrating Pinterest into your content calendar.

Pinterest continues to generate no shortage of attention. Other examples related to Kuntsal’s white paper include this Quora thread about brands on Pinterest, a recent TechCrunch article, and Brands, Businesses, and Blogs on Pinterest.