Google Eyes Convergence Around Web Commerce
Speaking last week at Web 2.0 Expo, Osama Bedier, vice president
of payments at Google, said the convergence of three trends affecting the
web — mobile, local and personal — is leading to an “inflection point” that
promises to bring about a “great leap forward” across commerce.
He
said the overall web experience for shopping hasn’t changed much since its
arrival in the mid-90s. For example, 75 percent of e-commerce buyers often
get ads for something they already bought. At the same time, the web’s potential
to more fully connect with consumers is underscored by stats indicating consumers
are 20 times more likely to buy something a friend has recommended.
But Mr.
Bedier said the convergence of three forces — mobility, locality and personalization
— around smartphones “is bridging the gap between online
and offline in a really big way. It has the promise to bring the best of both
worlds. Online, you get unlimited inventory and the best pricing. Offline,
you get to touch and feel the product and you get to take it home immediately
with you.”
Already tapping this opportunity is Dominos in the U.K., which
gets a third of its delivery orders online. Another is Tesco with a popular
app that allows consumers to scan grocery items in the store and put it in
an online grocery cart for an immediate one-click checkout.
But Mr. Bedier
said real progress will only come after three challenges are solved:Â
- Payments need to be completely digital: Accessible payment methods
everywhere.Â
- Inventory needs to live in the cloud: Consumers should be able to
find any item in any store, online or offline.Â
- Identity needs to be interoperable: Signing up for store credit
cards to gain personalization needs to be a thing of the past. Said Mr. Bedier, “Identity
in this day and age — where you have so many profiles all over the
place — needs to work seamlessly across sites, across merchants, across
use cases.”
If achieved, commerce may return to the experience of shopping at a local corner
store, where the owner knows customers’ names and, often, desires, he states.
As an example, if he’s shared his identity and location, Mr. Bedier is greeted
by name and offered suggestions catered to him. A shopping list has been created
for items he’s out of and may also include ingredients on recipes he likes
on epicurous.com. He adds, “And that shopping list transforms into an
in-store map where I navigate in the most efficient way possible.”
If an item is
out of stock, he scans the barcode to have it delivered to his house or to
find out where else he can buy it. When checking out, he avoids the cash register
by paying through the phone.
Still, the technology needs to converge.
“This is not about any app or
any one site. It’s not about any one company,” said
Mr. Bedier. “It’s about us working together to overcome these challenges,
to pull these technologies together and bring commerce — not just e-commerce
or m-commerce- – to the fold.”
Discussion Questions
Discussion Questions: What do you think of Osama Bedier’s vision for the future convergence of commerce? Which of the three web forces mentioned — mobile, local and personal — will likely prove to be the biggest stumbling block in reaching his vision?
He is right and that’s the scary part. “It’s not about one company … it’s about working together.” The problem is…major vendors haven’t shown us they were willing to work for the greater good. Amazon, Apple, and yes Google, are each trying to get ahead of the competition with their own, sometimes vaguely “open” standards. I am a big believer in free markets but can’t help wondering if there isn’t a place for a government-backed body to legislate and bring some much needed standardization and “greater good” thinking into this problem. If we don’t, we could very well end up with a heavily fragmented market and lower overall adoption rates by customers.
It’s an interesting question, actually. My partner Nikki Baird and I are just finishing our annual pricing benchmark study, and what we’re finding is that mobile is wreaking havoc with local, or zone pricing. After years of struggling to implement technology to support localized pricing, along comes price transparency, to let you know how and where to find the lowest price.
I read a stunning consumer review of RedLaser, where the reviewer says he stood in a Best Buy and saw an item priced at $200. He checked with RedLaser and…wait for it….the BEST BUY online price was $139. So he placed the order on his phone, waited around for 20 minutes and got his in-store pick-up for $139.
Effective pricing has to be personal not geographic or channel specific. The world has changed.
As a web developer, we research everything possible. If the numbers can be trusted, 18-20% of all mobile devices are online in some capacity. How much of that percentage is teenagers accessing social networks or texting is still in question. When we analyze our web traffic, we are lucky to see 10% of the total traffic coming from mobile devices. (Google Analytics)
In our humble opinion, we are not rushing out to convert all web sites to cell phones at this time. Why? The numbers do not support the effort and slow connection speeds for mobile devices are a huge limiting factor.
Additionally, the many operating systems that exist in mobile devices today is problematic. In Asia, the Nokia phones are the most popular. They use Opera Mini, the OS of choice for Nokia Phones. Here in the US, we must develop mobile apps/sites for numerous phone types.
Then there are the Flash developers who contend we do not have to support mobile devices since the percentages of people who use mobile browsers for transactions is still relatively low. That may be a skewed statistic in my opinion.
So, against all that, I would offer that mobile retail has deeper challenges to overcome other than those suggested in the article.
Mr. Bedier isn’t the first one to say this. Walmart CEO Mike Duke said last January that “retailing looks like it will see a technological inflection point this year.”
During this past Christmas season, Walmart noticed “a more dramatic involvement” of new technology in spending habits, whether through the use of mobile devices to make purchases or online buying. “More and more the customer is shopping with a cell phone to check prices,” for example, he said. The use of “site to store,” is growing, too.
“There might be an inflection point this year” in the use of various technological modes of buying, with the uptake curve accelerating, he said. Price transparency will increase across numerous retail channels as a result, he added.” (Barrons, January 27, 2011)
Technology will drive an earthshaking change in retail. It will provide great resources for the consumer and great flexibility for the retailer (if the retailer can lose the brick & mortar mind set) and use their real estate to support the technology at the consumer’s hands rather than try to use the technology to support their brick and mortar business model.
RSR is right: the world is changing. Retailers must do some soul-searching to come up with a strategy to address the new customer-to-business world. They’ll want to compete on service and relationships. We could all make predictions about which retailers will have the vision to survive this revolution.
Google is on the money here. Other commentators have already provided most of the details but sooner than many people think, being “online” will become a routine part of your life that travels with you everywhere you go, and retailers and brands that first realize this and capitalize on it will have a huge competitive advantage.
This topic is what I’d call target-rich for comment! In an attempt to limit myself, I’ll comment on just two parts (at least for now!):
Regarding: Working Together
Mr. Bedier clearly says “This is not about any app or any one site. It’s not about any one company. It’s about us working together to overcome these challenges…”
Several years ago, a powerful group of retailers asked for an industry standard interface to the plethora of shopping engines. Google was invited to be and was in the room for the dialog that resulted in NRF’s publication of an ARTS-XML standard for Consumer Shopping Engines (CSE). Google subsequently decided that their (fka Froogle) data interfaces were just fine. Roughly translated this means “my interface IS the standard.” Will we be treated to the same with regard to NFC?
Regarding: Inventory Needs to be Live in the Cloud
Ultimately I agree but the way this has been pursued historically (major e players asking B&M players to openly publish) isn’t going to get us there. Think snowballs in a hot place. That data is jealously guarded by retailers. I’d like to suggest that live inventory status needs to be available to trusted consumers in the cloud, but not publicly available. And yes (in case you said duh!), that’s not simple.
Lots of fun to come. Sadly I think we have a bit of an inherent battle between e-players who believe that empowerment of the shopper is the only master and others who generally agree but want and deserve to capitalize upon their brand and shopper relationships. The great solutions will come when we build an eco-system that empowers the shoppers but also gives retailers the platform on which to earn their business on all aspects of their offering, not just price.
I for one am interested in a race to efficiency, not a race to the bottom and I believe I am not alone.
If I’ve been unclear…I absolutely crave and will pay for single identity and ubiquitous digital payment. But I won’t be holding my breath. Maybe Google and Apple and other power players will prove me wrong. I’d love it!
I’m not surprised that Google is fully aware of the growing Convergence of Online, Mobile and Bricks-and-Mortar (COMB) retailing. The single app that will successfully marry the three could dominate retailing for the future, just as Microsoft has dominated desktop software, Google has dominated search and Facebook is dominating social media.
Since retailing is all about getting people together with the products and services they need (and transferring payments) there is a tendency to focus on those three components: products, people, money. But the reality is that the PROCESS is tremendously important, and online (particularly Amazon) are much better at matching products and people than bricks-and-mortar retailers are, since Amazon aggressively uses technology to create as near to an instant match of person with product as possible–and payment can be one click. Bricks-and-mortar on the other hand, rely on simply having the products “in the store” and rely on the shopper to find them.
The process of relying on shoppers to find what they want is what is killing bricks-and-mortar retailing (by a thousand cuts) because the PROCESS is complex, and very poorly understood by the retailers. Moving online selling skills onto mobile devices can accelerating sales in a store by an order of magnitude. This is HUGE! But a retailer who has a century of expertise in figuring out what products to sell, and warehousing them for the shopper to sell themselves, just doesn’t have the DNA to get the job done efficiently–and for the most part don’t even understand “what the job,” is.
It isn’t clear yet how competent online and mobile will be in the bricks-and-mortar world, primarily because their own PROCESS is simple and nearly trivial in comparison to what the bricks-and-mortar folks face. In my opinion, the most serious advances will come from understanding and leveraging the bricks-and-mortar PROCESS. The potential is clear. Whether newcomers to the bricks-and-mortar space will blunder into significant success (very likely) or whether they will actually master the PROCESS is not clear. The difference will likely be the difference between double digit increases in sales, and triple digit increases in sales.
I, along with thousands of others, just had one of my email addresses stolen from the Chase bank database. I’m sure I’m joined by many of them in my skepticism about creating a unified profile for each of us in the Cloud. A single location for our data, and just one place from which to steal it.
The shopping Nirvana envisioned by Bedier is just retreaded notions from long ago. Automatically-generated shopping lists based on electronic home inventory data, and electronically-generated instore maps to guide you to your preferred items in the most efficient way (patented by Deaton in 1997, by the way). Old non-news. And the comment that Bedier’s prediction would be best managed by a new government agency is preposterous. Just what we need, another bunch of bureaucrats. (Are you familiar with the latest statistics that government employees outnumber manufacturing employees two-to-one in the U.S.?)
Sure, Walmart CEO Mike Duke can say “more and more the customer is shopping with a cell phone to check prices.” But even Charlie Sheen would give that a big “Duh!” What else could it be, Mr. Duke, “less and less” or “just the same number?” That quote supports nothing.
The fractured nature of all electronic communication will, I believe, prevent anything even remotely resembling Bedier’s vision. But, it’s a pretty dream attracts attention for a while.
I have to agree with the directional view in the article. As some of the comments have pointed out, there are some major obstacles to overcome before this can become a reality at a market scale. These will be overcome, or rather, the businesses that succeed will work out how to overcome these barriers.
However, I’m not sure that all businesses need to cooperate to make this happen. Maybe some do. It seems to me that digital devices and solutions will open up access to shopping, media and even the data in a way that goes beyond today’s real or virtual walls of a business. Ultimately customers will still have to choose: which device, which app, which network, which product, which bank, which ad, which offer and so on.
Maybe brands of the future extend a lot further across these customer choices than they do today? Either way, the brands that succeed will have understood the customer need and responded best to it. These key ingredients of customer understanding and business responsiveness will continue to be vital for businesses approaching these changes and into the future.
In a talk at the Global Retailing Conference here in Tucson yesterday, Raul Vasquez, EVP of Global eCommerce at Walmart, identified four “O”s affecting the future of retailing. Then an audience member proposed adding a fifth trend. The final list is worth repeating here:
– sOcial
– mObile
– lOcal
– persOnal
– glObal
All these factors overlap, of course, so picking just one as the key influencer may constitute a false choice. I tend to believe that persOnal will prove ultimately to be the most challenging of the bunch, due mainly to the minefield of risks and considerations around data privacy and security.
Doc Banks’ comment, “Old non-news,” resonates with me. In fact, many may be shocked that something closely related to the Google vision was written in 1982: “And with interactive (2-way) cable the customer can not only peruse the advertising, but make an immediate selection; with payment through electronic funds transfer. In fact, repetitive purchases can be programmed by the customer to occur automatically at convenient intervals.” (The Foodlines, “Counting to One.”)