It's hard not to see the idea of drone delivery as a very cool use of technology. I'm just not sure it is meeting a demonstrated need. My sense is that the focus on drone delivery is more about owning the positioning of being the fastest shipper of goods -- "we even have drones!"
I do have a question about delivery distance. The article says that the drones can fly 15 miles. Is that round trip, meaning they can deliver up to 7.5 miles away? Or can they deliver to customers 15 miles away?
Either way, it seems like a similar delivery speed of within 30 minutes could be achieved through dedicated drivers or an Uber-style service with an added bonus that much larger packages can be delivered. Not high-tech, but effective.
Machine learning and algorithmic approaches are a huge benefit because they enable genuine personalization across a huge customer base.
The potential downside is that technology-based personalization often struggles to connect with and motivate consumers. In addition to getting good, reliable data, it is crucial that personalization algorithms be built based on customer insights and human behavior considerations because the objective is to affect customer behavior. The goal is not simply to modify the experience for each customer, it is optimizing the experience for each customer to make finding and purchasing what they want seem effortless.
The real magic happens when personalization connects on an emotional level with customers, and strategically designed machine learning algorithms can help achieve that objective at scale.
This is evidence that Amazon is still relentlessly investing in staying ahead of their competition.
Instead of waiting until competitors close the gap on delivery timing, they are upping the ante and raising the bar so high that others might stop trying to compete on delivery timing. In the same way that Walmart leveraged their purchasing power and efficiencies to own the low price position, Amazon is leveraging their delivery logistics to own the fast delivery position.
Importantly, this move also helps mitigate the one downside that Amazon still has in competing against brick-and-mortar stores and that's same-day pick up. A key driver of this move is likely Amazon's desire to compete more directly against Walmart and their pickup in-store options.
The fact that it requires a Harvard Business School professor to point out that it is about the customer and not technology is reflective of the problem. In response to all of the disruption that has occurred, retailers and brands now seem to chase the latest technology to avoid being left behind, but they forget about the customer.
The best disruption does not come from crazy new technology ideas, it comes from someone genuinely embracing a customer issue and figuring out a way (often using technology) to make things better for the customer.
In solving a problem for the customer, the disruptor creates an emotional connection that the old provider can't compete with. Even matching the new technology won't win back the customer's business.
Part of the problem with stopping churn is that it focuses the company's efforts on the marginal customers. As the article states, the first step is identifying at-risk customers. That creates a focus on promotional concepts to keep them from leaving.
The opposite of churn is loyalty and I think that might be a good place for subscription retail to focus. I don't mean a loyalty program, but a focus on creating ongoing value and understanding that increasingly builds a connection with the customer in such a way that they become less likely to leave over time. Exactly what that is will vary based on the product/service, but the idea is to learn how to improve your value to the customer over time based on how they use your service. The most obvious example might be Netflix, which becomes more valuable to the customer as they use it more.
I think this can make sense for Dick's, but only if they can achieve something referenced in the first paragraph: a position of competitive advantage over rival retailers. If they believe they understand their business better than the tech vendors and have identified genuinely unique solutions that they want to protect, then I think this can work.
If this is simply to develop in-house capabilities or software that is currently available or that can be developed quickly using a third party, I am less enthusiastic about this approach.
Direct mail is fundamentally different from email in that direct mail can be pushed to the consumer. Direct mail can be an effective way to trigger evaluation or consideration of a brand. The format allows the brand to wow the customer visually and encourage further investigation online.
Email doesn't have the power to 'break through the clutter' the way direct mail does because the customer is in control of which emails they receive and which they open. Email is a powerful way to nurture an existing customer relationship or help a customer along their journey by providing information of value.
As the study results showed, the best approach is to use both direct mail and email. Direct mail to introduce the brand and trigger initial consideration followed by email to keep the brand top of mind and nudge the customer along their path to purchase.
This isn't only about helping customers find what they want to buy, it's also about competing with Amazon.
Right now, 55 percent of online consumers considering a purchase start their search on Amazon.com. Amazon's extensive reviews on almost any item make them a great choice for evaluating products. Walmart is making a smart, strategic move to leapfrog Amazon on reviews and get more customers to start their search with Walmart instead of Amazon.
Consumers already know the benefits of IoT devices, but most are not yet considering the potential downside of lax security. When consumers are made aware of the vulnerability, it will likely change their perception of value.
The impact on retailers will most likely be a reduced usage of IoT devices for automatic ordering from the devices. If you can't be sure that the device is secure, do you really want it able to charge your credit card?
This idea is reflective of the tech-dominated rush to personalization that is happening in retail. Instead of seeing personalization as connecting to customers in a personal way, retailers are chasing after pure tech solutions that are built based on the capabilities of the technology and are then tested to see how customers will respond. Sounds like a backwards approach to me!
It also sounds like profiling.
Without knowing the financials of their delivery business, it's hard to comment on whether their decision is wise, but I will say that it is gutsy, and I'm guessing strategically sound.
With pretty much every retailer rushing to implement delivery and click and collect services, it is impressive that Trader Joe's is making their own business decision and not running with the herd.
Connecting with customers is an emotional concept, not a technological one. The problem for most retailers is that they think personalizing the experience means adapting to the all of the data points available. And now with Big Data we have more data points than ever. This results in customers feeling more like they are under surveillance than being helped.
The key value of good employees is that they bring the human element and opportunity for emotional connection with customers. Employees can often sense if a customer wants help or doesn't want to be bothered. The tech solution picks up a data point and starts recommending and when they fail to hit the mark, it backfires.
Technology is awesome when used to deliver a personalized experience that the customer can choose to access and that makes their lives easier. When it feels impersonal or replaces human interaction, it often fails.
I think that currently unexpected technology advances will dominate the news in 2019. We have already seen amazing developments with cashierless stores and drone deliveries that would have seemed crazy not too long ago. 2019 will likely bring more new ideas to make shopping easier and more efficient.
I also anticipate some customer backlash against the mechanical/technological approach to personalization and targeting and things like delivering offers when a customer is near a store. Customers will reject approaches that make them feel like they are being watched and then manipulated based on what they do. I envision a greater focus on emotional marketing and retailers using the data to understand and truly connect with their customers. As Shep Hyken said in his comment: Make people feel special and unique and you will earn their business.
Neither one really did it for me. While watching each one, I found myself imagining how the spot could have been better rather than celebrating how clever it was. If I had to vote, I'd go with Cost Plus only for the linkage to their store.
The cuteness of the kid in the Cost Plus ad was lost when he was "naughty" and kicked over the candy cane prop!
I like the technology to skip the lines, but the value of the system is in giving the customer control. Like a VIP pass, many customers will appreciate being able to skip the checkout lines...but I'm not sure it saves that much time overall.
What people don't realize until they actually start using this kind of system is that they are now doing the scanning work while they are shopping. Instead of tossing the item in the cart, each item needs to be held up in front of their phone. That's easy and fun to do when the tech is new, but I think when the novelty wears off, some customers will stop using it.
This really can't easily be compared to Amazon Go as this has far lower investment costs and if successful, can be rolled out to all stores fairly quickly. As far as H-E-B's likelihood of success, I wouldn't bet against them.