Getting Your Ass Kicked by a Vending Machine

The Kip Disclaimer: a good friend of mine just gave me some feedback on this piece. I take a little trip down memory lane at the beginning - but bear with me, it will all come together and make sense. Your patience slogging through this first section will be rewarded :)

THE TRAIN WRECK

In early 2007, I was recruited by and ultimately decided to take a position at Blockbuster – the former behemoth of video rentals. Technically, I joined Blockbuster.com which at the time was operated separately from Blockbuster retail. I knew the retail side of the company was struggling and in danger, and there were several red flags, but I rationalized that Blockbuster.com was doing some great things – and I would be distanced a bit from the struggling store business. The ‘Blockbuster by Mail’ offering had really taken off – one of the first true Omnichannel offerings. In fact, the month before I started there were huge membership gains in the Blockbuster by Mail program, but more importantly, it was the first month ever that Netflix experienced negative member growth due to Blockbuster’s competitive pressure. Things were really looking up for Blockbuster by Mail and there was a lot of excitement and energy on the .com team. 

One week prior to my start at Blockbuster, a brand new CEO (from 7-11 stores) had taken over. Two weeks after I started, and three weeks into the new CEO’s tenure, he reorganized Blockbuster – laying off half the company, dissolving Blockbuster.com as a separate entity and rolling the remaining employees into Blockbuster retail. For unknown reasons, I was not laid off – I must have been too new to make any cut lists. So two weeks into my new job, my boss was gone. My boss’ boss was gone (head of .com). And all HR people I knew – anyone who had a hand in bringing me to Blockbuster – were gone. Two weeks in, I was now in Blockbuster retail – working on the marketing team – with a new title and new role. 

Shortly after the big layoff, our CEO held a large town hall meeting. We all walked a couple blocks down the street from our Dallas office to a large auditorium at El Centro College. Our CEO presented to the remaining employees his plan to turn Blockbuster around. It revolved around renovating the retail video stores. Despite obvious, well-established signs in the market indicating a shift in consumer behavior to both DVD’s by mail (Netflix – and even our own early success in Blockbuster by Mail) and DVD’s by vending machine (Redbox), our CEO pushed all his chips in on remodeling the video stores. The remodel, by the way, amounted to some fresh paint, the addition of a couple chairs with a gaming system customers could play, and a soda fountain. As I was sitting in this El Centro auditorium, absorbing his plan to turn the company around, I was left scratching my head again. In this big auditorium, there were several microphones setup in the main aisle, and after our CEO finished his presentation, he opened it up for questions. 

Feeling like I had nothing to lose (because actually, I really didn’t), I made my way to a microphone and asked a question. “Mr. CEO… what happens if store renovations don’t work? What’s your Plan B?” Our CEO paused for a moment before he responded that there was no plan B – there was no need for a plan B – the store renovation was guaranteed to work. I don’t know how many people actually bought his pitch, but I wasn’t one of them. As a consumer of DVD rentals, I had already changed my behavior. I had changed how and where I rented movies – there were more convenient options available to me than driving to a stand-alone store and browsing a selection – hoping that what I wanted was still in stock. I was also a first-hand witness to millions of other consumers changing their behavior. I knew that no amount of store renovations would change this consumer behavior. I left the town hall shaking my head in disbelief. 

I’ve worked in some interesting situations over my career. My Blockbuster experience ranks at the top of the list. Regardless of the situation – and in Blockbuster’s case, total collapse and dysfunction going on all around me – there’s always some positive you can take from the experience. As I look back on it, some people might even pay for a front-row view to a train wreck like that. I got paid to see it all. And like I said, I learned from it as well. 

Ultimately, Blockbuster didn’t get their ass kicked by a vending machine or by DVD’s by mail. They simply failed to respond to a change in consumer behavior. A change they failed to recognize in a timely manner. A change they failed to embrace. A change that ultimately ruined them. 

In the short time since the fall of Blockbuster in 2008, there has already been another shift in consumer behavior with regards to media consumption. DVD’s by mail are long gone. Redbox is still around, but no longer thriving. Both of these have been replaced by streaming media. 

WHAT THE HELL HAPPENED IN 2007?

Last fall I attended the IBM “World of Watson” conference. A lot of the sessions spoke to the influence and momentum of artificial intelligence (or “augmented intelligence” as IBM describes it). One of the keynote speakers at the conference was Thomas Friedman – a well-known New York Times columnist who was promoting his new book Thank You for Being Late. Tom gave a great presentation and helped connect several dots for me – all which tie back to 2007. He described a couple forces that are experiencing hockey-stick acceleration – forces that are literally reshaping the world we live in. So what happened in 2007? Here’s a few key events: the iPhone launched, the “cloud” is invented, Hadoop was invented, new social media platforms accelerate rapidly with Facebook and Twitter leading the charge, and Intel manufactured chips on a different material other than silicon for the first time. 

"The only thing the microprocessor ever did is make things go faster" -Andy Grove, former Intel CEO

I had specific interest in this last event listed above. During graduate school, I did a summer residency with Intel in Silicon Valley – I worked in the marketing department for the semiconductor products group (SPG). While there, I also learned a bit about microprocessors – and the chip manufacturing process. It was at Intel where I first learned of “Moore’s Law” (Gordon Moore being one of the founders of Intel). Moore’s Law basically states that the number of transistors in an integrated circuit will double every two years – loosely translated, that means the processing power and speed will also double every two years. Tied to Moore’s Law is the the cost of data speed, which is on an inverse trajectory down – it basically halves every two years. 

Moore’s Law has essentially held true since 1975. There have been a lot of advancements and innovation that enables Moore’s Law to continue to hold true today. At it’s core though, this ever increasing processing speed and capacity – coupled with lower costs – drives the technology curve acceleration.

Flash forward from my Intel residency in 1996 to the summer of 2007 when I’m standing in line at the AT&T store for the very first iPhone (not long after I started at Blockbuster) - only 10 years ago. My world and the world in general began to change. How I interacted with the world began to change. Think back on your own experiences, what behaviors have you changed since 2007 and the introduction of the iPhone (and smart phones in general)? Every single industry has been affected by this relatively rapid shift to mobile. That cool gadget in 2007 has changed the world we live in. And it’s all powered by these tiny microprocessors that continue to get smaller, cheaper and more powerful. 

CHANGING BEHAVIOR

The shift in consumer behavior that started in the mid-90’s with the introduction of the Internet and Ecommerce – enabled by technology – has continued to gain momentum every year since. Online shopping is now very ordinary – it’s largely a part of everyone’s life. While this shift in behavior continues, there is yet another shift in consumer behavior that is gaining even more momentum and moving even faster than the original Ecommerce shift in behavior – it’s the shift to mobile. Again, nothing new here – this all started in 2007 – but the rate of change has accelerated. 

In his book Thank You for Being Late, Tom Friedman recounts an interview with Eric “Astro” Teller, CEO of Google X, regarding the acceleration in technology. This acceleration is shrinking the time window to the point that it’s “on the order of five to seven years from the time something is introduced to being ubiquitous and the world being uncomfortably changed.”

Raise your hand if you’re an Amazon Prime member. Odds are pretty good that you are. In fact, in 2018, it is projected that a majority (51%) of the US will be. 

Even before Prime though, Amazon began training all of us how to shop online, and creating new expectations of service to expect. They have made free, 2-day shipping a standard, not a luxury. The training that Amazon has done has pushed other retailers to keep up with new consumer expectations.  I have been an Amazon customer dating back to 2001 when I placed my first book order. But it wasn’t until 2014 that I finally became an Amazon Prime member. I had put it off largely due to the reluctance to shop at a competitor so to speak, but their offering became so compelling, I finally took the plunge. And as you can see by the chart above, my shopping behavior has started to change drastically as well. I’m now averaging more than an order per week with Amazon. They have captured a much larger share of my wallet than I ever thought they would. But I’m not complaining – I’m a happy customer and have been well served by Amazon. I absolutely love the convenience and time savings I gain by shopping with Amazon. What needs to be noted however, is the impact the above chart has had on other businesses I shop. My total wallet hasn’t really grown, so if Amazon’s getting a larger share, other retailers are not. Now multiply this by 51% of the US population and you can see the impact of my change in behavior on a much larger scale. 

CHANGING MORE THAN RETAIL

As noted above with my Blockbuster experience, it’s not just shopping behavior that has changed. Media consumption has changed drastically – and tied to that, the way people consume marketing messaging has changed too. Yet so many companies continue the same product-led marketing operations that they’ve been following for the past 75 years. Some innovative companies are fundamentally changing their approach to marketing by creating value for customers through the use of owned media and content. In a few cases, progressive marketing departments have transformed themselves to media companies and have created new revenue streams. Marketing departments that actually pay for themselves – a truly crazy concept! 

This change in media consumption – and consumers’ access to information – is critical for companies to acknowledge and even cater to. Continuing to do the same activities that traditional marketing departments have always done will show decreasing returns now and will continue to be less and less effective as consumer behavior continues to shift. I could write an entirely separate paper on this topic alone, but I’ll leave that for another day. 

THE NEXT SHIFT

Me: Alexa, order Titleist Pro V1 golf balls

Alexa: I found some Titleist Pro V1 golf balls white, one dozen. It’s $50.99 including tax. Would you like to buy it now?

Me: Yes 

Alexa: Ok, order placed. Your order will be delivered by Wednesday, September 27. (ordered on Monday, September 25) 

Wow! That was crazy easy. Crazy scary if you’re a traditional retailer dependent on driving foot traffic into physical stores. 

The range of virtual assistants, such as Siri, Cortana, Amazon Alexa, and Google Home, are collectively training people to search using their voices and to become more “conversational” with search and mobile devices. It’s been reported by Google that 25% of mobile searches are voice searches. That statistic was reported a year ago, and it’s guaranteed that number has grown since then – and just like mobile overtook desktop traffic, voice search will overtake text search even more rapidly. Will this AI – augmented intelligence or artificial intelligence – become the new ‘mobile’? There is still work to be done on the AI front to have an interface that is truly conversational – one that understands my intent – but things are moving rapidly in this space, and it is easy to see the what the future holds here. 

THE RISK OF STANDING STILL

 One of the lessons I learned at Blockbuster was the enormous risk in standing still. There were many reasons Blockbuster failed to adapt to changing consumer behavior. But all of these reasons tie back to one thing – they flat out failed to adapt and change. They failed to innovate. They failed to acknowledge the impact of technology on consumer behavior – and failed to leverage technology to change their business.

Take a look around you now. We are in the middle of another major shift in consumer behavior. The number of storied, ‘traditional’ retail brands that are struggling and even declaring bankruptcy is alarming. This year alone we’ve witnessed the struggles of Toys R Us, Payless, The Limited, Vitamin World, Gymboree, Rue21… the list goes on. 

The common thread between Blockbuster’s failure and today’s “Fill-in-the-Blank-Major-Retail-Brand” failure is a change in consumer behavior. But what’s causing this change in behavior? Sears has been around for 124 years for crying out loud. Why is it now that they are all failing? One simple answer: acceleration in technology

Companies in this era of rapidly accelerating technology basically have two choices. They can push back against technology advances (which often looks like sitting on the sidelines doing nothing), or they can acknowledge that we all have a new challenge: we must remake our legacy organizations to enable us to keep pace. As Eric Teller describes, “the first option – trying to slow technology – may seem like the easiest solution to our discomfort with change… but burying our heads in the sand won’t end well.” 

One thing is certain. This new world we live in is constantly changing, which means there is a need for companies to continuously change – continuously innovate. Those organizations that bury their heads in the sand and fail to innovate will ultimately fail entirely.

What about my world – retail? Is ‘traditional’ retail dead? Not yet, but it’s dying. Is ‘physical’ retail dead? Definitely not!

From Doug McMillon, CEO of WalMart: “The Supercenter remains the best retail format in the world, and going forward, we will continue to leverage these unique assets even more with initiatives like online grocery, in-store pickup and others. Rapid advances in technology mean we need to become more of a digital enterprise—and that’s what we’re doing.” (Internet Retailer, 2/21/17)

"Value in the marketplace never disappears - it just moves to another place." -Greg Satell, HBR, September 2017

I too believe that physical stores will not go away. Even Amazon confirms that with their recent ventures into brick & mortar – including their acquisition of Whole Foods. But how customers engage with physical stores will change. The winners will be those who create a seamless end-to-end digital experience that enhances and improves the in-store experience.

As I witnessed at Blockbuster, the answer to disruption is not to double-down on a failing business model. Trying to get better at something that people care less about is a losing proposition. The answer is to shift your organization’s focus, resources and efforts to those things consumers want more. The dollars are still in the marketplace, it just takes a different approach to capture them. In Blockbuster’s example, people didn’t stop watching movies – they just changed how they watch movies. In retail, people aren’t buying less – they’re just changing how they shop. 

When is the last time you used your phone to call and place an order for pizza delivery? Sure, some of you may still do this, but the majority are now using other channels to place their order. Again, people aren’t consuming less pizza, but they are changing how they order pizza. Domino’s Pizza is an organization that recognized this several years ago – they’re a great example of a company that realized this shift in value, and chose to remake their organization to keep pace with changing technology and shifting consumer behavior. 

Domino’s has adopted a Silicon Valley-style – a fail-fast approach to rolling out new products ever since it famously admitted in 2009 that their pizza sucked. Things are looking much better now, and their innovation and use of technology gets a lot of credit. 

"Innovation, coming up with the ideas is one side of the challenge. But then you actually have to be able to deliver [the technology]," says Kelly Garcia, Domino's SVP of development and technical products. "This technology is difficult. It takes a lot of money, and it's complicated to put together, and so it just becomes a major differentiator for us when we look across the landscape of our competitors in quick-service restaurants." (Domino’s Becomes a Tech Company that Happens to Make Pizzas, NPR, 2014)

It’s also interesting to note a comment made by Domino’s CEO. Of the 800 employees at their corporate headquarters, half are in software and analytics. It would appear they have changed their culture to a tech company.

"The first rule of innovation is simple: innovation and ongoing operations are always and inevitably in conflict" -The Other Side of Innovation

What Domino’s had to overcome, along with all other traditional businesses that have successfully re-invented themselves, is the fact that they are not built for innovation; they are built for efficiency. Traditional businesses are expected to deliver EBITDA results – there are day-to-day pressures to deliver – and efficiency is key to doing this. Combining a discipline of efficiency with a discipline of innovation is fundamentally at odds – and extremely hard if not impossible to pull off. 

While many organizations recognize the need to change and the need to adapt, their business model limits what they can accomplish. The limits to innovation in large organizations have nothing to do with creativity and nothing to do with technology. As Thomas Edison observed over a century ago, “Genius is 1 percent inspiration and 99 percent perspiration”. But large organizations are not structured to allow the 99 percent perspiration because often times, it is not efficient work. Ultimately the initiatives get pulled back into the machine of ongoing operations. Simply put, large organizations are not designed for innovation. They are designed for ongoing operations. 

In their book The Other Side of Innovation, the authors Govindarajan and Trimble refer to ongoing operations as the “Performance Engine” in large organizations. The "Performance Engine strives to make every task, every process, and every activity as repeatable and predictable as possible. It is hard to understate the power of repeatable and predictable. … The problem is however, innovation is neither repeatable nor predictable. It’s exactly the opposite – non-routine and uncertain.” 

They continue to argue that in a large organization – or Performance Engine – to be able to innovate, you need a special kind of team and a special kind of plan. “You can’t ask the group that is in charge of today to also be in charge of tomorrow, because the urgent always squeezes out the important.” 

Furthermore, large organizations typically only have an appetite for innovation as long as they’re hitting EBITDA targets. As soon as they start missing plans, budgets get tightened or pulled, special projects are shelved, and innovation is put on hold until the next budget cycle. Meanwhile, those other startups out there – that are valued on completely different metrics (not EBITDA) – step in to fill in the voids that changing consumer behavior are creating that traditional businesses aren’t able to fulfill.  

DATA: FUEL FOR TECHNOLOGY

For many traditional companies trying to figure out how to compete and win in this rapidly changing world, they first need to understand the link that brings it all together. The fuel that powers technology: DATA. If companies want to win in this new environment, they must also become experts in collecting and using data – they must become data companies.

A couple of weeks ago I made a trip up to Dallas with a few of my colleagues to meet with a startup company in the sports team and league management space. I had already written this section on data, but a comment the CEO of this startup made caught my attention. He mentioned that they are trying to know every aspect about their customers – both parents and athletes, including images and video. They weren’t entirely sure how they would use all the data yet, they were just focused on capturing as much of it as they could. Capture it first and “we’ll figure out what to do with it later.” Honestly, the cost to store data these days is so cheap, why wouldn’t you capture as much as possible – even if you’re not quite sure how you’ll use it yet. 

I contrast this with many traditional businesses that struggle to see the value in collecting data let alone using it. In my space, retail companies who have been around for 50+ years have never needed it – at least they didn’t think they did. But the world has changed. Availability of information has led consumers to seek it – about everything! They can check product specs, customer reviews, pricing from endless sources, inventory and availability all within minutes – from whatever location they’re standing in at the moment. If your business is not providing this information, you’re no longer a consideration. What about the customer themselves? What do you know about them that can improve how you interact with them? There’s this little trend call ‘personalization’ – you’ve probably heard about it. Well, that too is driven by data. The more you have, the more personalized an experience you can create for your customers. What colors do they like? What brands do they like? What are their hobbies? What size is their foot? What fishing baits do they use? Collecting and using this data is second nature to companies that were raised in the internet era. But for older, traditional businesses, this can be a foreign language. Even for those traditional businesses with a web presence, data collection and usage seems limited to the web silo that captured it. This has to change if a company aspires to be more than a bankrupt video rental store. 

Where is your inventory? Your customers are demanding to know. And it’s no longer good enough to say “it’s in the DC” or it’s in the store.” They want to know exactly how many are on the shelf, how many are in back-stock, how many are in the DC and when they’re expected to arrive in the store, and what specific location – shelf and bin location – in the store. They want to know real-time accuracy of inventory. If someone just purchased one at the register a second ago, you’d better not show them it’s still in stock when they arrive at the store. Oh, and a map to that location would be nice too, which is powered by more data – store planograms and aisle, bay, shelf, bin and peg locations. Or if they order that item online, they want to know the status of their order every hour of every day. It’s no longer good enough to say “order received” and “order shipped.” Where there used to be 2-3 order statuses, there now needs to be 10-12. Domino’s took it a step further – they no longer have ‘order status’. They created a real-time “Domino’s Tracker” that shows you (or proactively messages you) the progress of your pizza at whatever moment you check on it – down to the time your pizza walks out the door, along with the name of the driver who has it. Customers want and are increasingly expecting total transparency and perfect communication – or should I say, perfect data. And those companies, like Domino’s, who are providing it are winning. 

Due to the accessibility of data, customers are increasingly becoming more self-sufficient. Want to reduce your store labor expense? Have the data available that allows customers to locate, research and purchase products on their own. Give them access to perfect information and they become as smart as any of your sales associates. 

I briefly touched on the next shift to voice search and AI – again, all powered by data. This topic is too big to expand on here, but suffice it to say, the more data you have that can be digested by cognitive engines, the smarter your AI programs will be in predicting and delivering information relevant to your customer’s intent. Data is critical to your business’ future. Is your organization putting the appropriate emphasis on data that is required?

It’s becoming commonplace to see “Chief Data Officers” in all types of organizations – in fact two thirds of large organizations already have this role. Many have realized the importance of data and the need for an organization that manages it. This effort should not be limited to customer data. What about product data? Organization and operational data? Don’t limit yourself. Your future technology and applications will depend on the data you start collecting now. 

ENTER RFID 

RFID technology has it’s roots all the way back in the 1940’s. And it was 14 years ago that Wal-Mart announced they would begin requiring suppliers to use it – the point is, it’s not new technology. But, as we’ve seen with Moore’s Law, the technology behind RFID gets smaller, faster and cheaper. Wide adoption of RFID still has not taken hold – after all these years, we’re still on the front side of the adoption curve. 

Sucharita Mulpuru, formerly of Forrester Research, made the comment earlier this year that “the adoption of RFID tagging hasn't really hit its inflection point yet. It’s gotta happen sometime in the net few years. … It’s so essential for one of the biggest gaps: Retailers don’t know 100% of what’s in their store. They know what’s supposed to be in their store. Or if something sells. But that whole in-between process, they don’t know. RFID should solve that and does for some companies."

This past January, I had the opportunity to tour one of the Lululemon stores in NYC. Being on the web-side of business for the bulk of my career, this was an eye-opening experience for me. Some of the things I learned:

• They do a complete physical inventory of their store once per week. Takes 2 people 30 minutes to complete
• Sensors automatically prompt replenishment items from back of house to the sales floor
• When they went live with RFID-driven replenishment, they saw an immediate 500 bps increase in comp store sales - simply by moving existing store inventory to a sellable location

I also talked with the Lululemon store managers about other topics near and dear to my heart, things like “ship from store” fulfillment of web orders. RFID has decreased the time it takes to find and pull inventory on the floor – and increased the number of orders they can pack and ship every hour. Perfect data leads to efficiency. 

How often do your customers walk into your store looking for something in particular that you should have, only to learn that its out of stock, or was never carried in the first place. It’s a painful experience – friction for the customer – that can be eliminated with real-time, precise stock location DATA. It is how physical stores gain website transparency.

It’s also this same technology that Amazon is testing in their Amazon Go stores that enables a seamless, frictionless shopping experience – just take the item off the shelf and RFID triggers payment for you. And since you have to have their app that powers all this, they gain even more information about your physical purchases, preferences and behaviors. They now have even more data about you – data they’ll use to provide additional digital personalization, and likely physical personalization down the road. 

SO WHAT’S NEXT? A FEW RECOMMENDATIONS

This is where I tell you how not to get your ass kicked by a vending machine. 

I strongly urge all organizations – especially retailers – to disrupt themselves before they are disrupted and destroyed from the outside in. This cannot wait till tomorrow or the next day. It must start now. 

Recommendation #1: First and foremost, just pay an ounce of attention. Look up from your desk, look outside your company’s ongoing operations. Don’t get caught trying to get better at things your customers care less about.

Recommendation #2: Put the customer at the center. Orchestrate the perfect experience that is a blend of digital and physical touch points. Call it UX or CX – it’s not an ‘Ecom’ function. It MUST be an enterprise function that is involved at every touch point. Changes in customer behavior often display as friction in your customer journey. 

What your customers care about is changing, know what it is. Then try to at least keep pace with the change if not predict where what it will be. 

Recommendation #3: Change your culture. Easy to say, extremely difficult to do. Fact is, if you want to become a technology company, you must change your culture. Like Rich Zannino, CEO of Dow Jones, once said "If you want to change the culture, change the people." Which leads to…

Recommendation #4: Structure to win. Setup both technology and data organizations within your company. This goes to the top – the functions within your organization need full support at the executive level – and seats at the executive round table (likely with a C in front of the titles). Related to technology and data, your organization needs to carve out the ability to innovate. Remember, the first rule of innovation is simple: Innovation and ongoing operations are always and inevitably in conflict. You have to create an environment (likely including a structure change) to foster innovation with a team that is not tied to ongoing daily operations. 

Separate from the data and technology structure additions, there is a need to break the structure of the Ecom and Omnichannel silos. The functions currently performed in these silos need to become enterprise knowledge and expertise. Again, there is a single customer who engages with your company through several touch points. All departments and organizations within your company need to become experts in digital commerce and digital engagement. If the goal is to remake your entire organization into a technology company, everyone needs to become a digital expert, not just a select few in a silo. Another roadmap and transition plan is needed here. Obviously you can’t flip a switch and remove a silo. But it needs to happen. Distributing digital roles and functions throughout your organization will also help with your culture change.

Recommendation #5: Make the necessary investments in data and technology. Create roadmaps and plans for both areas. Leverage technology to create that seamless digital experience for your customers. Then leverage technology to improve operational efficiency. Become a complete digital technology organization. Invest in data acquisition, storage and analysis. Start collecting data. Lots of it. All of it. If you’re already collecting data, seek out new sources of data. Storage is cheap. You’ll figure out how to use it soon enough. Prioritize all projects in your organization that involve data capture and collection. Remember, you have no fuel for technology without data.

This is not a cheap journey, or a path for the faint of heart. It’s interesting to note that Target stores, who too have been suffering comp sales declines of late, announced they will be investing over $7 billion to remodel stores over the next couple years – adding features and functionality that cater to the changes they see in consumer behavior (CNBC, March 2017). 

Recommendation #6: Change what you measure. Eliminate the ‘Ecom’ and ‘Omni’ P&L. It drives the wrong behavior, and only measures a piece of the larger enterprise it impacts.

“Consumers want us to pull the swim lanes out altogether. To them, it’s all the same pool. People will shop the way they want. Our job is to be agile, offer rich experiences and let customers own it on their own terms. If we don’t, someone else will.” - Target CEO Brian Cornell

It doesn’t matter where the customer purchases - in store or online. It only matters that they’re engaging with you however they choose. Ecommerce is just a piece of how all business is done today. There is a single customer and a single enterprise. There are no channels. This point was driven home for me personally last holiday season. I got out of the office and went to one of our local stores to help with our ship from store program. I was amazed at how many packages – web orders – were shipping to local addresses within 10 miles of the store I was standing in. I have no doubt these same customers frequent the physical store, but for whatever reason – convenience, inventory or otherwise – they chose to order online in that particular case. It is truly a single customer. They do not see channels. 

One parting shot on measurement. The age-old Ecommerce barometer of conversion rate is the wrong KPI – unless you’re a pure-play Ecommerce business. Organizations with both physical and digital presence need to focus on and measure ‘digital engagement.’ 

Much of what I’ve written here reflects on my own experience and current situation where I continue to push to keep up with consumers and their changing behavior. My hope is that you all (with the exception of my competitors ;) are well down the path of digital transformation within your own organizations. Just remember, keep one eye focused on your customers, and the other on the lookout for those pesky vending machines.