ecommerce

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There’s a new class of company out there which uses ecommerce to provide higher value products at lower prices.  The entrepreneurs behind this phenomenon believe by producing products in China and distributing them directly via the web, they remove the middle man/middle men from the equation, thereby charging less and making greater margin.  The problem is, they are also responsible for developing their own brands. (Another middleman cost.) And as we’ve seen with tech companies, where the brand building is often left to the chief technology officer or VC partner, it’s done poorly. For every Facebook, there are sixty Zudes.

Another problem with this DTC (direct to consumer) start-up brand approach is that they ascribe part of brand value to cost – one of the key benefits of the new model. We get it.  A no middle man, ecomm product ordered from the web is cheaper (plus delivery). But price, as a brand cornerstone is not a great long-term play. It’s a promotional play. And while this landscape is developing they are parity plays.

The web has changed retail forever. And its brilliant. Eight years ago I blogged about how a good business to be in would be the secure oversized mail box business.  Members of this new class of ecomm businesses needs to spend a couple two tree dollars on their brand plan.  Even before the go to China. Peace!

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Who are experts in ecommerce?  Those people involved in “social CRM” or “big data,” two topics covered in Charlene Li’s thoughtful post this morning? Sure.  But who else?  Who else sees how ecommerce is meted out across the country every day?  Who are tested for their memories and see patterns like few others?  Who are in touch with grass roots buyers and sellers every day – not retail goods…ecommerce goods? FedEx, UPS  and US ostal carriers, that’s who. 

Massifying insights is important for brand planners, but so are one-on-one insights.  And in for ecommerce, I’d absolutely love to study letter and package carriers for a while to see what they know about ecommerce.  Not just on deliveries from Amazon but from all online sellers. The people who deliver the fruits of ecommerce, the fruit pickers as it were, process a wealth of information about this growing marketing practice. If you are worried about privacy, don’t worry about Facebook, it’s your letter and package carriers you need to care about. Hee hee.

So marketeers, if you are involved in ecomm, get your focus group hats on. Stop, interviewing house-husbands and start feeding M&Ms to the UPS guy and the FedEx girl. Puh-eace!  

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Look, I’m no genius.  When I predict things like the trivestiture of Google (gonna happen) or that Best Buy will suffer at the hands of its current CMO  — predicted at the pinnacle of his celebrity – it was just simple brand and marketing logic. Larry Downes’ article in Forbes, on the other hand, is a little bit of a genius. Entitled “Why Best Buy is going out of business…gradually” it is beautifully organized, a story well-told, and emotionally charged. It’s hard to read it without being convinced.  (That said, I don’t agree Best Buy is going down, but the case is compelling.)

What I found striking in Mr. Downes’ article was a not-so-new Web phenomenon that occurred after Thanksgiving when Best Buy could not fulfill some online orders. A situation. Here’s the missive they sent to customers:  

 “Due to overwhelming demand of hot product offerings on BestBuy.com during the November and December time period, we have encountered a situation that has affected redemption of some of our customers’ online orders.”

I was at a start-up not too long ago with some under-cooked technology that fried the night of Beta release.  We were a media darling at the time. The response of our CTO was “Due to extraordinary demand, the servers went down and…”  Turning negatives in to positives might have worked in 2007 but not in 2011.

No doubt ecommerce has reshuffled the 4Ps. Some might argue Ps have been removed. Others might suggest Ps have been added. I’m sticking with 4. Get them all right — you will still encounter situations but you’ll be prepared to deal. Peace!

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Everybody in the world of marketing wants to go viral. Ea-sy money.  “More video upload contests.  More Fothcbook  programs. More Twitter followers.”  Well, as web marketing gets more social, people are finding out big hits are not so easy. My first big viral memory was of the guys in white coats putting aspirin into hundreds of Diet Coke bottles and watching them spew in syncopation.  That type of magnetic content, though, is few and far between.  That’s viral marketing. Virus marketing is different and it can be found today in many SEO programs.

It started with black hat cheating and has migrated to white hat bleating. Either way the SEO practitioners doing the dirty deed promise they can get you in the top 5 search results on Google for as little as $5-10,000 a month.

And they can do it.

How?  By ghost writing content and using off site partners to link to that content.  Scores and scores of them. Some call it link baiting.  I call it a virus. Welcome to the machine. It doesn’t sound that onerous to some…everybody’s doing it.  But to a brand nerd, it’s disastrous.  Rampant content writing and serving — on behalf of your brand — handled by onshore, off-shore, unsure? People who don’t know the brand culture, the brand idiom, the brand plan? If this isn’t a brand virus, what is?  It will take years to clean up this mess. Plus, as Google gets wiser to the practice and makes algo changes (as they did recently), baiters will lose key word rankings and ecomm revenue can tank in an instant.  This practice will spawn a new industry of SEO companies called “no hat search.” Peace.

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There’s a cool story in today’s New York Times about single-food restaurants. It stands to reason that enterprises of this type can only thrive if the food is excellent and the stores located in highly populated areas.  In NYC you can take out and, in some cases, eat in at a Mac and Cheese store or a meatball store. There are places that sell only mussels, only rice pudding, and only fried chicken. It’s a growing phenomenon. Specialization suggests focus; a focus on quality, ingredients, product and knowledge.

In mid-town Manhattan, where there are probably a half million lunches served within walking distance of any high-rise, there are lots of options. So why not go to the best option; the place that specializes? The place that eats, breathe and sleeps its specialty. Forget me not that this type of store can scale well and have a supply chain with amazingly fat margin opportunities. That’s gravy at the gravy store.

This is a key chapter in the story of the Web — and where the web is going.

I’ve written before about “worldwide pricing” and the ability to search the world for the best prices.  Well, how about searching the world for the best quality? The ability to do so is a web app. And specialization and focus are the tools of that trade.

We are bound by product and service mediocrity because of geographic and time limitations. And because of supply and demand.  Well, say buh-bye to these barriers.  Ima stop there and let you entrepreneurs ponder that for a while. Ponder, Ponder.  Peace!

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“I love free shipping” was my wife’s response when I mentioned Wal-Mart’s newest offer on all website purchases this holiday season. 

eCommerce is propping up the shipping business (US Postal Service, UPS and FedEx) and dinging the oil business.  Some economics student should plot U.S. online sales increases growth to barrels of oil consumed as a thesis topic.  When a consumer says “I love __________ (fill in the blank)” you need to pay attention. The wifus loves free shipping and she loves free returns – especially so, when the return label is already in the box. 

This is how the return thing works: Outside in the garage is a second refrigerator.  On top of the fridge, spilling off in all directions, are boxes. The boxes are a few steps closer to the kitchen than the car.  To return a product, she walks to the garage, grabs a box and some Amazon bubble bags or newspaper, then returns to the kitchen where she assembles the box, labels it, grabs the packing tape out of the cupboard in the butler’s pantry – zip, zip and to the front door.  If it’s UPS or FedEx she may have to dial a telephone number or click-to-pick. Could that be any easier?  Easier than say, driving to a store, standing in line and doing the whole credit card thing?  

This “I love free shipping” behavior, even as a trial at Wal-Mart may, as The New York Times declares, deliver a “knock-out punch.”  Not to Amazon, but to a number of smaller retailers with inelastic margins who can’t play this game.  Oh, it’s here to stay. So watch out.

eCommerce makes every day Christmas day (insert your holiday here).  In store shopping, for its many positives, has more than its share of negatives; especially around the holidays. Wal-Mart is paying attention. What a marketing juggernaut. Peace!

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Steve Rubel is a “beyond the dashboard” digital commentator.  That’s what I love about him. He doesn’t spend his day looking through the rearview mirror, he looks ahead.  Check out this Paste from his stream today:

 “I believe business web sites will become less important over time. They will be primarily transactional and/or for utility. Brands will shift more of their dollars and resources to creating robust presence where people already are and figure out how to activate employees en masse in a way that builds relationships and drives traffic back to their sites to complete transactions. Media companies will do the same – they will be “headless.”  Google and search will remain important for years to come. However, what we’re seeing is the beginning of big changes where social networking and Facebook will further disrupt advertising, media, one-to-one and one-to-many communications, not to mention search.”

Beyond the Dasboard

I like to look forward too — beyond the car dashboard as the metaphor goes.  And a car metaphor is appropriate when talking about Facebook, Google and social media.  Content is still king in my book. Mr  Rubel’s very believable notion that corporate websites will diminish in importance, save for transactions, is accurate. Today.  But I see Facebook, right now, as the highway.  The road that takes you somewhere.  It’s a highway filled with signs, and people and so much traffic that you can learn lots by being there, yet it’s still just a highway. Corporate websites are losing relevance because they have no pulse. They tend to be static. The action, the pulse, is on the highway. Google is the map and the directory and it’s fighting with the signs and the traffic.  (Check out Mr. Rubel’s post for some comparative traffic numbers showing Facebook overtaking Google by some measures.) 

Content Still King

As we settle down and as companies being to truly invest in bringing their brands and value proposition to life through their web presences, corporate websites will come back in importance.  All this talk about the conversation is great. But at some point the conversation has to stop so commerce can start. Corporate marketers will learn this soon enough.  That’s the future Yo.

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There was an interesting article in the NY Times Business Section over the weekend about Amazon and eBay. It suggested Amazon is winning because they do better long-term planning and are willing to fail for a while so they can win.

 

Both companies have made some missteps, but both should thrive.  Even with its problems, eBay is still the leader in online auction.  Amazon is the 800 lb. gorilla in online retailing, and since ecommerce is only 7% of all commerce, there’s certainly room for both.

 

Some advice for eBay: Keep the auction business discrete. Any playing around with fixed price, VOIP, online payment, etc. should be either spun off or handled by unique management. Smart decisions are harder to make when considering the impact on other “family” businesses. As for Amazon: Stop with all the “trust” value prop talk. Make your business about “price.” Trust is earned and requisite, it’s not a branding idea.  Peace!

 

 

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