Digital Shopping Trend: The Leader / Laggard Gap
“Right now heads of ecommerce are funded to drive growth in digital shopping – they aren’t funded to innovate. There is hesitancy to do anything that won’t yield a hard return.” – Neil Patil, President, Software Products Group @ Fluid
In our interview, Neil identifies a digital shopping divide that is getting wider. He smartly observes why this is happening, who’s leading and why it’s time for retailers to shake things up.
His digital shopping trend: The Leader / Laggard Gap
[Amy] What’s your standout digital shopping trend for 2014?
[Neil] There are a few things on my mind. Amazon will remain an issue for retailers. Executing on data on it in a meaningful way is largely not happening yet. And product differentiation is getting harder – commoditization of the market is well underway.
The main trend I see though? The acceleration in the gap between the leaders and the laggards in digital shopping. A lot of agencies and technology vendors exist on the cutting edge, doing interesting things, talking to the leaders in the industry – this isn’t where most retailers are today.
[Amy] Where are most retailers today?
[Neil] They are caught between the Silicon Valley mindset of rapid execution and the reality of their existing infrastructure. They want to get on board with innovation but they can’t execute on it. There are a few companies doing it really well, the rest are falling behind. There is a digital gap in digital shopping.
Amazon is doing thought leadership campaigns to say here’s new shopping and here’s old shopping. Amazon and others recognize that they can turn their marketing and logistics into products for other retailers to use.
[Amy] What do you do if you’re a laggard?
[Neil] Think in bite size chucks. If a retailer is worried about getting started, Fluid’s focused on getting them started. Every step could be a win on the board. This is hard for agencies – we all like big price tags and predicting our long-term revenue. But this is how the laggards catch up.
It’s also important to look at internal barriers. Right now heads of ecommerce are funded to drive growth in digital shopping – they aren’t funded to innovate. There is hesitancy to do anything that won’t yield a hard return.
[Amy] What’s a concrete example of this?
[Neil] Customization and TV-Commerce. Retailers don’t know how to get other parties internally to say yes. It’s easy for customers to say yes but who owns it internally? If something feels too big to execute the tendency is to stick with the basics and pass on innovation.
[Amy] Talk a bit about the leaders.
[Neil] The definition is key. To me, a leader is using new technology in way in which differentiates them digitally from the pack. They want people to take notice – notice that turns into engagement and sales.
It’s about a big win and about small chunks. Leaders are willing to invest in things that can’t show up in an excel spreadsheet. They fuel a culture of innovation that accepts that not everything is going to work out.
The leaders hedge their bets and incent on innovation. They understand there will be some winners and some losers. And they don’t create an ROI model for months.
[Amy] What does this mean for the laggards? Is this the end for them?
[Neil] It is not the end for them. There are lots of signs that it’s getting easier to compete with big brands – not harder. Warby Parker. Dollar Shave Club. Lots of small companies are picking a niche, growing fast, distributing via ecommerce and benefitting from community and word of mouth. They are nimble and have access to manufacturing accessibility.
If I’m Gilette do these brands matter? Gilette may be thinking that’s cute, but I’ve a better product, better marketing and I can drop my price any day. The start-ups though have none of the costs, no one driving prices down, like Wal-Mart, and no need to massively move the bottom line.
[Amy] Can these smaller companies win?
[Neil] Yes. You just can’t sit in the middle of the road. As a start-up you don’t need to take the whole market – you just need to take a part of it. There’s a lot of money in a part of it. These start-ups have the advantage of fewer barriers to execution. A $10M brand can compete with big brands and laugh all the way to the bank.
We’ve seen it happen in cloud computing. Cloud computing has been broken into chunks and there are a lot of owners. They are offshoring their development, marketing predominantly online and not getting stuck with things like huge CRM systems.
[Amy] Do the challenger brands have to differentiate their products in order to stand out?
[Neil] We’re seeing evidence that product customization is helping set brands apart. We’re also seeing Millennials trade brand loyalty for something new or unique. Great products yield word of mouth and word of mouth trumps most advertising that happens through normal channels.
[Amy] Talk a bit more about “non-traditional” marketing that is working?
[Neil] Everything is getting shorter. The .gif is the new video. There’s been a shift from verbal to visual. How do you communicate in a world where everyone is ADD and attention is fleeting? We can capture attention but the real challenge is sustaining it. With SnapChat it’s here and then gone.
Marketing is now about the moments of real-life. We’re looking at short content that drives long engagement.
[Amy] What else is exciting you about 2014?
[Neil] It is green field for start-ups right now. There is new accessibility based on the cloud, untapped crowd-sourcing… I’m amazed at the potential. One idea is yielding multiple companies. So much innovation is being driven by start-ups right now.
[Amy] What should retailers and brands do in this current landscape?
[Neil] It’s time to shake it up. The key question: When is it too late to act on something? Simply keeping the lights on takes a lot of work. At some point it’s too late for some innovations. There may be better things to do. I think Fluid can be a strong advisor in this arena. Someone’s got to guide these brands and retailers.
[Amy] What advice do you have for brands and retailers?
[Neil] Think like you’re a micro-economy, or multiple micro-economies. We’re seeing mass products being sourced locally, demand for personalization… delivering on this has positive ramifications for the economy.
Actually most importantly, get things done. Even small things. Use small teams that have accountability. Agree on your key initiatives and allocate small teams to execute on them.
And make sure your consumer is comfortable with what you develop. Going around the consumer is always a bad idea in the long run. They need to feel like they are participating.