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eCommerce, The Retail Apocalypse and The third industrial Revolution.
Context: I wrote this in Feb 2019. Have things changed that much? I will be sharing the DTC landscape next week for those who dont pick it up daily.
We urgently need to reframe how we think about #ecommerce. There is enough fear now to suggest that the stationary will react. It has never been more abundantly evident to me that we need to view the function of ecommerce as a utility, in the same way electricity was adopted used to power the second industrial revolution. Colin Lewis taught me about a think or two about research, though I never admit it. And weirdly, interviews I watched over 15 years ago with Pharrel Williams, Kobe Bryant, Tiger Woods and many more lead us to understand that a healthy respect for our past, helps us to understand our future - or at least gives us lessons. Listening to them and how they talked about those who marched before them was, to me, what set them apart. If you listen to Hans Zimmer talk about Leonard Bernstein and what he learned about the craft, the mindset and the clues left behind for others to follow, it opens your mind to the possibility that maybe history has eschwed some lessons on us.
There are some parallels and inverse parallels to the industrial revolution and it is in this context that I now view the world of commerce. Lets look loosely a the linear or parallel lines:
Up to the 1870's in Great Britain, electrical generators were starting to be used, usually by the early adopters, those who benefited economically and those who could afford it. It took 40 years almost before the economies of scale arrived and in 1910, the first "powering" of a residential area was delivered using only a single power station.
When we think about the importance of broadband rollout for countries in order to achieve the full true power of the internet and how it can serve a fundamental purposeful use for society.
The use of the word society is not misplaced. The origins of the internet, and its utopian place is ultimate freedom, access and transparency. If you unclear on this I suggest you read the Cluetrain Manifesto, (thanks Chris Byrne )its updates and digest - couple this read with Thank you for being late by Thomas Friedman and you can start getting a sense of where this is going. With history we learn that revolutions take time - the early adopters absorb the wealth, power and control early and then as govts figure out how best to harness the power of the revolution, then the power is put into the hands of the people.
Cluetrain Manifesto - Just a snapshot of the theses
The Internet is enabling conversations among human beings that were simply not possible in the era of mass media.
As a result, markets are getting smarter, more informed, more organized. Participation in a networked market changes people fundamentally.
In just a few more years, the current homogenized "voice" of business — the sound of mission statements and brochures —will seem as contrived and artificial as the language of the 18th century French court.
Companies can now communicate with their markets directly. If they blow it, it could be their last chance.
Companies that do not belong to a community of discourse will die.
These were penned in 1999. Bear that in mind.
What has been most startling about this revolution, is that the power is already in the hands of the many. We have to closely watch Moore's law to see just how quickly our revolution is happening.
What does this have to do with ecommerce? The IoT is what. While we scramble to figure out how to set up our Shopify/BigCommerce stores or understand which social channel has the best engagement rate (thanks Rand Fishkin for sharing yesterday 27.20.19) the IoT folks are looking beyond the here and now.
eCommerce is going to blend into our surroundings and become a passive part of our lives in the same way electricity did - moving from generators to mini solar panels in our homes. This is already happening.
The inverse relationship we have with the industrial revolution is migratory patterns In the mid-18th century, about 15 per cent of the English population lived in urban areas; by 1900 this figure had increased to a whopping 85 per cent. Today we have virtual teams, remote teams and a desire for the "where" not to be as important as the actual output. The outputs themselves are largely intangible and therefore require no person present, if not only to receive the service, benefit for which they signed up to. Interesting shifts in just 200 years.
The Retail apocalypse - that old chestnut (if we talk about it enough, it might just happen in that exact way)
It has very little to do with ecommerce - there, I said it. Let's look loosely at the real reasons for it:
Outdated business models
Too many outlets - group profits kept many doors open, when they should have been shut. I would suggest looking to Schuh as a retailer who has got alot right. Investment early in ecommerce technologies - note my language and made service impeccable. Does sound like any other retail giant? And they also made a conscious decision not to appear on every UK high st, instead opted to use their tech to access new geographies and markets. They also turned loss into profits or cash recovery using marketplaces. Hardly groundbreaking, but just darn smart. Bravo Schuy.
Poor governance -- Corporate governance 101 - have the board members largely not just shifted left at the table like a bad version of speed dating. There have been the equivalents of oligarchs in retail whose views on the world had not really changed for decades. It is not surprising to see the removal of these teams now and replacement with new blood - who fail in their early tenure while they unravel decades of ravelling. Is the same not happening in the old Ad game too ?
Poor adoption of retail technologies and over investment in stock. Rather than solve customer problems and present options, they have allowed payments companies, delivery companies and social media to force their investment strategies. They have not roadmapped this themselves yet. This is most evident in the #Amazon competitor - Walmart. They don't have that clear roadmap themselves instead they are buying and acquiring in the hope they cobble this together right - in the same way one writes a dissertation or thesis these days - they are generally the best combination of articles you can find, edit and replace with your own words without being caught plagiarizing.
I don't know why I left the best until last. Marketing and advertising have been bastardised and amalgamated into this industry we call digital marketing. I have thought alot about this over the last number of months. Why do we get this so wrong. Always.
Marketing should be the combination of people who frame a brand proposition relative to a customer desire/need/connection. If this goes wrong, there is no point in embarking on the rest. This insight (from data, not gut) should inform the channels within which your customers are playing. Quick hospital pass to the advertising team now - Media buyers, Adwords specialists, content writers and so on. Connect the dots in the most profitable way you possibly can and if you find you are not, you talk to your marketing team and figure out where this is going wrong, amend, move on and remeasure. Now back to marketing - what it is the next plan.
We have got to address the team structures to get this right. We have got to invest in training internally to empower people with product knowledge and commercial knowledge to make decisions and take actions where they can influence control, debate insight and share knowledge in a constructive environment. The comes the creativity, the fun, the funFear. However...
Creativity needs a muse - for the true genius creatives, I am at a loss to understand what that may be, but for poets like Kavanagh and Yeats and the likes, it came from the banal, the every day and the things that midered them. In retail and ecommerce it comes from panic, mistakes, fear or a place of complete control, knowing the bases are covered. It rarely occurs when we are coasting along, in fact it never does.
Retail is not dead, the business model needs to change. The retailers need to work more closely with brands, manufacturers and customers to figure out what consumers really want. Maringalising those less powerful on the supply chain, in today's world, is an opportunity missed. Retail is a wonderful industry in a world full of consumers, the hedonistic mantra, of bigger, faster, more has never been more feverish. Our capacity to process information is greater than it has ever been and our inability to pay attention and take time make the challenges even greater. For those, not yet engaging in adoption of #ecommerce in whatever guise you need, maybe look differently at your business or market. Map it backwards to 25 years, look to the competitive forces who Porter did not account for (disruptors) and plan for how you want to engage them. Then, breathe, move forward and repeat this process of reflection forever.