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[9 comments]

Does X-commerce have big potential beyond pizza?

January 14, 2014

In a RetailWire poll last April, we asked how effective Pizza Hut's Xbox app would be in helping the chain connect with gamers, primarily young males. The Xbox app gives gamers the ability to place an order for pizza using their game controller, a Kinect gesture or even their voice. It appears that the majority of the poll respondents were correct: 86 percent thought the app would be effective.

According to a recent report on Polygon, Pizza Hut sold $1 million through the Xbox app in its first four months. Interestingly, 11 percent who placed an order used the app to make their very first online buy with the pizza chain.

"It's been a source of unbelievable growth for us," Doug Terfehr, director of public relations for Pizza Hut, told Polygon. "Just the explosion of people who wanted to download it, experiment with it, play with it with Kinect. As soon as we did one, everyone was contacting us to do the next [one]."

Discussion Questions:

Do you see video gaming consoles representing a significant e-commerce opportunity for companies such as Pizza Hut? What other retail or consumer brands could benefit from apps such as that developed by Pizza Hut?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How likely are other retailers to develop gaming apps with an e-commerce element in the near future?

Comments:

This is a fad that will pass quickly and forgettably. The Xbox One is a terrific device to be sure, but this example is a pure novelty effect. I'm willing to bet that the penetration of households regularly buying consumable products bought through it will be negligible for 2014 and well beyond. Let's move on....

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Peter Fader, Professor of Marketing, The Wharton School of the Univ. of Pennsylvania

The portals to the home will be rapidly changing as consumers move to "interactive" hubs, versus passive media consumption. Xbox is a prime example of moving consumers from a single function gaming device to an interactive portal.

Gaming consoles are not the only interactive portal. Apple TV and other streaming devices already have a host of apps that enable consumers to explore and purchase.

The other consumer brands that will probably benefit most are convenience items that can be quickly delivered to the home.

A very interesting test of products beyond food will occur in upcoming Super Bowl ad. It will be interesting to see if soccer star Beckham can hawk his new line of "knickers" via a click on a TV remote while the ad plays on TV.

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Chris Petersen, PhD, President, Integrated Marketing Solutions

Pizza and playing video games go hand-in-hand. And because you don't have to quit one to enjoy the other, the ability to multi-task made this a killer marketing strategy for the Hut.

However, that doesn't translate to success for all QSRs or other hard-line retailers. Those retailers who have a home delivery option will benefit the most.

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Eric Chester, Keynote Speaker, Author, Reviving Work Ethic, LLC

Classic example of listening to the customer. Pizza Hut is effectively targeting the best prospects. Using the Prosper Media Behaviors & Influence (MBI) Study of 19,000+ respondents, we looked at the effectiveness of Pizza Hut's decision to use online video gaming to reach and influence their target of the 18-34 year old male.

Comparing online video gaming with video on mobile, mobile devices (smartphones, tablets), and coupons, online video gaming was the highest media form at influencing the 18-34 year old set - 48.1% said this media was part of their world. 58.0% of males pointed to online video. The next highest media form in both cases was video on mobile devices - 44.9% of Adults 18-34 and 52.3% of males said this medium was in their wheelhouse for dining out decisions.

Equally important, among Pizza Hut consumers - adults who choose Pizza Hut MOST often as restaurant, the online video gamer is 20% more likely to shop Pizza Hut than the video on mobile crowd and 3x as likely as the general population.

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Roger Saunders, Managing Director, Prosper Business Development

While I do not see this as an immediate success amongst other companies, and I do think that Pizza Hut picked up some of its success through the novelty of this service, there is potential going forward.

If other companies can execute the delivery and fulfillment well and the customer experience does not feel intrusive, then this could be a perfect way to capitalize on reaching out to consumers when they are captive to the screen. In a sense, many Xbox users are less likely to be looking at another screen while playing then if they were to be watching TV. Some of these apps/ads could be even more effective with the right promos.

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Jesse Karp, Omnichannel Consulting Manager & Loyalty Practice Lead, Cognizant Business Consulting

Removing Xbox 360 from the discussion, new "smart TVs" have the capability to host apps that can perform the same function as the Pizza Hut ordering service.

The e-commerce opportunity will come into play when a viewer can interact with live TV to order items..which is coming soon with the smart TV technology.

Ed Dunn, Founder, (Stealth Operation)

Whoo Hoo! In Colorado, Pizza Hut should add THC brownies to the menu for gamers. Yum!

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M. Jericho Banks PhD, President, CEO, Forensic Marketing LLC

It is a great example of bringing activity and commerce together - like selling hot dogs at a ballpark. The point isn't how many other companies will create successful apps for X-Box, but rather how many companies will find ways to connect to consumers via technology in innovative and relevant ways.

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Mike Osorio, Senior VP Organizational Change Management, DFS Group

For Pizza, yes, I think this makes sense (both my kids have Xbox, one the newest version, the other 360) and I could see that as a sales channel since it's already a channel for selling content (games, music, video, movies). I've heard Gartner's CPG analyst Don Scheibenreif cite Pizza Hut as a prime example of the opportunity so it's among the most visible.

For more frequently bought items part of the grocery basket though I think a services provider that aggregates orders for multiple items is more realistic.

It's a very interesting topic (CPG e-commerce) but I find people consider it in terms of sales direct to consumers from brands, without considering the likelihood of that relative to a services company like PeaPod. It can be a mix for sure, but ultimately it's someone like Amazon who will be the direct to consumer sales channels for CPG brands in my view.

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Gib Bassett, Global Program Director for Consumer Goods, Teradata Corp.

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