Amazon’s new “Go” store might herald a new age of brick-and-mortar retail if consumers embrace the idea of connected shopping, rather than standing in a checkout line. If the concept catches on, retailers must rethink their labor, technology and inventory strategies—and marketing, too.
Amazon Go is a physical store where shoppers use an app, not a traditional point-of-sale system, to purchase goods. The app tracks what products customers pick up, where they linger and what they take home. With even frequent U.S. online shoppers still purchasing half of all products in store, and testing and reviewing many more products there, the promise of connected shopping is that it picks up where e-commerce leaves off. In the near term, Amazon Go is starting with grocery items, but that may only be the beginning if Amazon’s history is any guide.
If Amazon Go takes off, WalMart may try to improve upon Walmart Pay, perhaps by upgrading their stores to become “smart” centers, capturing information on products throughout the shopping experience, not just at checkout, and not just for groceries. Marketers should follow such moves closely to understand what consumers will be experiencing with the biggest retailers, what type of communication their shoppers will start to expect, and what data they’ll give up.
Will consumers turn their app on if they’re just browsing? Will they allow a store to automatically track them at other stores without asking first? Getting answers to these questions is key for marketers to capture the same level of data in a mall or city center store that they now get through e-commerce channels. Creating internal capabilities to act on this data is equally important to live up to rising consumer expectations.
Marketers Risk Falling Further Behind Consumers
Consumers are likely ready for app-powered in-store shopping. Transaction volume for Apple Pay was up 500% in Q4 2016 over the previous year. Last year, about half of consumers regularly used their smartphones to comparison shop while in a store. Unfortunately, most retailers and marketers are not as prepared for this new type of commerce as their customers are.
Marketers have long searched for a perfect closed loop, where consumer behavior is captured throughout the funnel, and marketing and purchase behaviors can be properly tracked and valued. The beauty of e-commerce is that the website is owned by the digital marketing team, meaning shopping cart abandonment data and similar information was readily available for relationship marketing teams trying to drive sales and retention.
Only 19% of marketers say that they have the data and technology to execute an omnichannel marketing experience. While pure-play e-commerce companies enjoy the benefits of closed-loop marketing, for other retailers, the closed loop only exists in small pockets such as loyalty programs.
Connected commerce as demonstrated by Amazon could provide at least as much insight, but only if digital marketers insert themselves in their company’s early planning stages and work to bring insights together into a universal view of the customer. Marketers must prioritize full access to consumer data from partners, improve internal data management and beef up cross-channel marketing analytics if they are to truly reap the benefits of this quantum leap in retail strategy.
Current Payment Schemes Don’t Prioritize Closed Loop Marketing
As a first step towards a truly connected shopping experience, many companies are experimenting with mobile payments at in-store checkout. These early adopters are already finding issues with their access to data. Few retailers are big enough to engineer their own payment product like Walmart Pay, and many have opted to work with a partner. For example, Apple Pay, which offers a good consumer experience, provides very little data back to retailers. Starbucks asks its own customers to use their Starbucks loyalty card or app for every purchase in order to close the data gap that comes with Apple Pay and its competitors. In practice, Starbucks data collection is limited to those customers that use its own programs, a subset of its many customers.
Some retailers tried last year to create their own mobile payment technology called CurrentC through the Merchant Customer Exchange, in order to build a closed loop payment system that offered immediate access to consumer data. Unfortunately, clunky QR technology and shaky marketing doomed the project.
While CurrentC didn’t take off, marketers should not sit on the sidelines as their merchandising and payments teams select partners to enable improved in-store shopping, but neglect to consider marketing and data requirements. Without speedy access to the quality of data they get online, retail marketers, who rely heavily on recent purchase data and contextual information, are hamstrung.
It’s Time to Push the Closed-Loop Agenda
Even if retailers can’t create their own Amazon Go-like ecosystem, marketers shouldn’t be deterred from engaging with their retail and payments teams to be part of new strategies. Experiments like in-store beacons and camera recognition software are spreading, but too often, these are one-off tests and aren’t evaluated in the broader context of omnichannel marketing.
Companies must prioritize the initiatives that deliver timely data based on creating a richer consumer experience (and consumer profile), not based on legacy priorities or the innovation buzz. And while some new technologies are really valuable, allowing retailers to see foot traffic patterns, for example, unless that information can be connected to a consumer profile, it’s not going to prove relevant for a digital marketer. Finding partner to bridge the gap must be a priority. For example, some companies that use Apple Pay have employed companies like Thanx to ingest more consumer data.
Creative ways to glean marketing insights from connected commerce could pop up in unusual places. In fact, Facebook might help some retailers with a location-tracking advertising offering they put out last year that allows advertisers to track consumers within a shop. Of course, Facebook is notorious for a walled-garden approach to data, but the concept could be reused with partners who are more forthcoming.
If marketers get their hands on the data, determining how to act on its insights is the next critical problem to address. CRM, ERP, and other large marketing platforms likely have the scale to ingest a lot of data, but many other players in a marketer’s technology ecosystem would be affected as well. Companies that offer product recommendations, dynamic creative optimization, shopper identification, retargeting, and many others would want access to information that was previously locked in the CRM silo. These platform providers will have to race to be able to accept much larger and more real time inputs from marketers. Marketers should be thinking about ways to handle a potential fire hose of new data being aimed at them if these experiments pan out.
Amazon has the enormous advantage of acting like a retailer and a technology company at the same time. The rivals that offer competing solutions to Amazon Go (other than WalMart) have largely come from the technology side, think Apple, Google and Facebook. As retailers enter this critical battleground, they must prioritize access to real-time shopper data—before third parties lay the groundwork and retailers lose control to technology companies. Really closing the loop must be the top priority now, before it becomes another unfulfilled fantasy.
Selligent provides an omnichannel engagement platform.