Dan Khabie, CEO, Mirum
Recently, I was fortunate enough to get the opportunity to spend some time with two companies behind the massive changes happening in retail: Amazon and Alibaba.
Visiting with both of these amazing organizations and getting an in-depth look at their immense scale, made me think about global and local retail and the different ways technology and innovation will impact the future of how we buy.
In the new paradigm, mass markets and micro markets will eventually dominate global retail. With everyone trying to get a better understanding of the consumer, whether B2B, B2C, or end-to-end, and everyone exposed to the same technology, it appears that everyone behaves similarly: They want simplicity, convenience, and the best deal possible.
“Retail is undergoing a much needed transformation spurred on by innovative players like Amazon and Alibaba,” says Wanda Cadigan, vice president of commerce at Sitecore. “Smart retailers are focusing on overall customer experience, rather than trying to out-Amazon Amazon. They recognize the opportunity to leverage their global brand while becoming hyper- sensitive to key markets by building local experiences.”
Many of you are familiar with the famous Four P’s of marketing: Price, Product, Promotion, Place, the cornerstones of every marketing and sales organization playbook. Perhaps you’re aware of the new version of the Four P’s: Personalized Experience, Precise Connection, Prescriptive Conversion, Possible Exchange. But now, my colleague Bryan Gildenberg from Kantar has posed the Four S’s: Search, Scroll, Subscribe, Say: a way to buy where you Search for products, Scroll through the items, Subscribe to their services, and use voice, or the “Say” mechanism, as another point of dialogue.
For an experiment, I overlaid the Four S’s with new data from my meetings with Amazon and Alibaba, and decided to do a little investigation to see if, in fact, the Four P’s are now the Four S’s in how we buy.
Search & Scroll
In the U.S., 55% of product searches now start on Amazon. Statista anticipates that worldwide e-commerce sales will jump to $4.48 trillion in 2021, up from $1.86 trillion in 2016. Therefore, you can imagine how critical it is to be able to have an effective Search and Scroll strategy. Any barriers you put up that make it harder for your customers to find what they’re looking for will force them to look elsewhere. It’s all about getting closer to the consumer.
For instance, on Amazon you might search for new baseball cleats, hat and a bat. At a local store, those might cost about $190. On Amazon, it’s $180 with free shipping for being an Amazon Prime member. But Jet.com gives you further options, as it allows for more retailers to jump in and say, “Hey, I’ll give you a better price, and throw in X, Y, Z.” Next thing you know, the $190 baseball package is $170. That’s data personalization and AI helping us through buying decisions.
Subscribe
In 1976, Sol Price opened the first Price Club warehouse, located in San Diego, which eventually merged into Costco, and was the first company to grow to $3 billion in sales. Today, that member-based vision has transformed retail—and become digital. It’s a much more diverse offering, and it’s being led by Amazon. How so? As of June 2017, there were approximately 80 million Amazon Prime members in the U.S., making Amazon Prime bigger than all the combined households in Germany. And companies like Dollar Shave Club show how it’s done, with direct-to-consumer subscription boxes. It doesn’t end with Amazon—household brands such as Netflix, Apple, Twitch and Spotify also have very strong subscription plays. Once you are locked into any of these virtual environments, it creates an opportunity for commerce.
Say
The penetration of Amazon’s Alexa has been remarkable, and Amazon has done an amazing job at being a “first mover” and integrating Alexa as a key driver for both entertainment and commerce. Alexa now has over 25,000 skills, and is prevalent in households across the U.S. As Alexa is integrated into cars, TVs and apps, brands need to think hard about their voice strategy. Google, Apple and many others are also in the “Say” business, which has become critical to any brand’s success.
What’s Next
In China, WeChat has created an entirely new retail ecosystem, a messaging app with shopping features and integrated payments. That’s much different from siloed platforms like Amazon, Google, YouTube, Facebook and Snap, where the social and transactional parts aren’t integrated—yet. The next move is going to be the bigger brands here in the U.S. trying to figure that out.
Yes, Amazon acts as the big-box retailer, but won’t replace it. On the flip side, you have hyper-localization happening, with others like Google and Facebook rushing to the middle, trying to figure out a transactional element. With voice playing a bigger role, it’s an interesting time right now, because growth markets are happening in very bifurcated areas: the need to be highly local, but also global; from a marketer’s perspective, the world is becoming global through vehicles like Alibaba and Amazon, and hyper-local because of growth happening in local markets that haven’t become technologically advanced yet.
In the future of how we buy, the most interesting thing for me is how brands will create experiences that lock in consumers and keep them coming back.
“If I just bought a BBQ, smart brands don’t treat that as a one-and-done transaction,” says Sitecore’s Wanda Cadigan. “They’re sending you recipes, doing cross-promotions for the hottest niche brand of BBQ sauce in your region, inviting you to a community BBQ seminar at the local supermarket, with experts on hand to teach you how to grill like a master. It’s about more than a product. It’s about helping you drive value from that product and building long-term relationships with customers.”
Well said.
I’m not saying the Four P’s are no longer relevant, and I don’t think retail is dead. But the speed of change is so rapid that the Four S’s could very well become the new norm for how we buy moving forward.
Mirum is a global digital agency based in California and part of J. Walter Thompson London.
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