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Lessons from the Power Retail USA Learning Tour
- 29th June
- Grant Arnott 209
With our first US Plugged In Learning Tour group, we enjoyed five days of learning in Las Vegas and California, touring Zappos and attending IRCE in San Diego. Here are some of the things I learnt.
The Power Retail USA Learning Tour team at Zappos, Las Vegas
From Monday 13 June to Friday 17 June, our first ever international learning tour group, comprising a mix of retailers and solution providers, visited Las Vegas and San Diego in the US in search of online retailing excellence. Here’s a snapshot of what I discovered, not in any particular order:
1. We talk often about how far ahead US retailers are compared with Australian retailers, but in reality the long tail of US retail is grappling with the same fundamentals many retailers here do. It is indeed frightening how far ahead the top tier of retailers are, but the reality is we have some excellent e-commerce and multichannel businesses in this country poised to do well. The bulk of merchants in the US still lag behind when it comes to best practice.
2. In the Australian market, having a solid e-commerce platform is a competitive advantage. In the US, that’s generally a given, and the competitive advantage comes from marketing, merchandising, personalisation, cross-channel integration, conversion optimisation and other factors focused on improving performance.
3. The abundance of technology and solutions available to the US market is mind-blowing. Too many to list now, but I will endeavour to profile in deeper detail more technologies in the coming weeks to give you a taste of what’s in store for this region as e-commerce businesses mature. However, the most talked about technology of the conference was the Kiva warehouse robots, controlled by QR code and programmed to optimise large scale pick and pack fulfilment operations. Check out the video:
4. eBay is incapable of delivering a presentation that is anything other than a thinly veiled sales pitch. There’s another 45 minutes of my life I won’t be getting back.
5. But Magento, now wholly owned by eBay, is the runaway favourite e-commerce platform of the moment, bringing a mix of open-source flexibility and enterprise-level robustness that continues to be a hit with merchants, agencies and developers. Magento now forms part of a three-tier e-commerce platform offering for eBay to be known as X.Commerce, starting with the high-end GSI Commerce solution for high volume, large-scale retail requirements, Magento Commerce for the middle market and eBay for the entry level seller/merchant.
6. To say Amazon is a giant is a gross understatement. The world’s largest online retailer now accounts for 11.3% of ALL e-commerce revenue in the US, through sales of its own product lines as well as via its colossal marketplace. And Amazon could be bringing its firepower to Australia as early as December this year. Stay tuned.
The cubicle of Tony Hsieh, CEO of Zappos
7. Speaking of Amazon, we visited the Amazon-owned Zappos headquarters in Las Vegas, the world’s largest online shoe retailer. The story of Zappos will be covered in-depth at a later date, but our ‘Culture Fireball’, AKA Tour Guide Renea Witherspoon, gave some good insight during a guided tour of a facility more kindergarten than corporate. CEO Tony Hsieh sits in the jungle zone (see pic) in an off-the-wall office environment that wholeheartedly reflects Zappos’ culture of ‘Delivering Happiness’. What was interesting more than the crazy decor was the weight of the customer service department and the level of personalised attention each customer receives. Every employee is trained in customer service, and when the heat is on (Zappos’ biggest day ever was December 13, 2010, with a $12 million plus sales day) resources are pulled to chip in and cope with customer service. There is no compromise.
All Zappos merchandise is fulfilled out of a single distribution centre in Kentucky (20 minutes away from a UPS hub) – no drop shipping. Product shots and videos are all created at the DC in a dedicated studio, putting the creative merchandising (a hallmark of Zappos’ success) where the merchandise is to save time and money.
8. Private sale businesses are BOOMING! The fastest-growing business in the Internet Retailer Top 500 Guide is Beyond The Rack, a Canadian-based private sale apparel site that has grown to more than 2.5 million members in two years, with 2010 revenues of $76 million (up 1150% year-on-year!). Gilt Groupe, another exclusive private sale business, was the next fastest growing at 150% year-on-year, with revenues of $425 million. Keynote speaker Doug Mack of home decor private sale site One Kings Lane showed that private sales have climbed from virtually nil to in excess of $3 billion in the US in the past three years (see graph), and that trend is set to continue.
9. Mobile and social are the big buzzwords in US retailing, but still relatively few are fully leveraging the channels. One thing is certain beyond a doubt – the customers’ depth of understanding in using mobile and social as tools of empowerment far outstrips the retailers’ general understanding of how to market these channels effectively. ‘Curation’ was one of the key terms used throughout the conference – the notion of curating content and empowering the customer to make positive choices rather than seeking to control customer behaviour.
10. Pureplay retailers still have the advantage of agility and speed, and web-only merchants continue to outstrip chain retailers for e-commerce growth. Web-only merchants in the Internet Retailer Top 500 grew 31% in 2010 versus chain stores growing e-commerce sales by 11%.
The strongest message I took away for Australian retailers is that, pureplay or multichannel, the window of opportunity is wide open, and investment in quality solutions, content and most importantly, GOOD ADVICE, is going to pay dividends. Our group came away charged and inspired to drive their businesses to new heights. There’s a buzz around this industry the likes of which I’ve never seen in this or any other industry (I was but a baby during the dotcom hype, but the difference is there are real profits being realised now), and every day spent pondering is a lost opportunity.
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3 Comments
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Great article Grant, the video really is mind blowing, although I imagine a significant investment is needed. For me convincing decision makers to make online and digital investments is key to moving the industry forward here. I think more case studies with insight into the return retailers can expect will certainly help so I look forward to further installments.
Amazon coming to Australia will bring competition that can only drive the industry forward. It will be interesting to see how the domestic competition reacts to this.
Hi Grant
Thankyou for an interesting article. I seriously wonder if Australian retailers (and business in general) realise just how fast things move overseas. I hope we have (as a nation) enough entrepreneurs with the IT and business skills able to actually set up channels that can compete with foreign juggernauts – but I don’t know if we can move fast enough to avoid getting swamped in many industries.
Grant’ sounds like an awesome trip. What the conferences don’t show, what drives the businesses is not just the technology but the least mentioned and most important thing, and this is great people, strong agile teams, and excellent cross company communication. It’s the old rules of traditional business that apply here too! Get those right and you will be able to do anything!