March 9, 2016

5 key takeaways on data & innovation from Etail West

Retail’s most innovative brands, technology solutions and agencies met in Palm Desert for the Etail West Conference in February. With three full days of talks and events featuring some of brightest minds in ecommerce, it was clear the space is evolving faster than ever, driven by data and a renewed focus on customer experiences. Here are a few highlights from the conference.

“Data is the most important product our company owns.” – Angel Doran, Sephora

Sephora is known as a digital disruptor. In Angel Doran’s session, “Retail’s Future Vision: Using Data To Innovate The Customer Experience,” the director of product analytics and optimization explained how the information they have gathered online, in apps and in stores drives their product strategy.

“Data is kind of a currency to us,” said Doran. “Data allows us to know, align and respond better to our clients”

For example, 23% of their shoppers now compare prices on mobile before purchasing in a store. That trend has prompted Sephora to focus on new ways to connect their digital and physical experiences.

“Our shoppers are evolving,” said Doran. “We know they don’t just go into the store or go on the app and buy something. They have a journey, not a linear path.”

Sephora also continue to invest in segmentation for shoppers in their loyalty programs, which comprises 20% of their customer base. Like many retailers, the holy grail is creating completely individualized experiences. Data from the VIB program as well as real-time inputs from social is helping them get there.

“We are meshing really great innovative ideas with all the great data we have on our clients,” Doran said. “We don’t build for innovation, we build because our clients want it and want to use it.”

“It is important to look at your customer data, see what problems you need to solve and invest first in those areas.” – Andrea Grant, Cabela’s

Thursday’s keynote panel on optimizing customer experience for mobile shoppers highlighted the growing and diverse role of apps as well as mobile browsing in retail. The panelists also shared insights that are applicable to all ecommerce experiences, including desktop and in-store technologies.

“We track and measure everything, using data insights to make decisions,” said Andrea Grant, Cabela’s director of digital marketing. “If our customer base doesn’t want it, we won’t bother developing it.”

Cabela’s defines mobile as any customer experience that transcends time and space. This philosophical views includes connected devices in addition to smartphone activity. Grant strives to create experiences that go across devices, but acknowledges that different channels influence different KPIs.

“Today our app is commerce driven, however for the future we are a building an app that is much more engagement driven,” she said. Cabela’s has found their smartphone apps are particularly good at driving repeat engagement with loyal shoppers. Based on that data, they are betting that a new content-focused app will pay off with increased revenue down the line.

David Katz, SVP of product management and design at Fanatics, also sees distinct differences between channels. Mobile web sees huge traffic spikes during sporting events — after the Broncos won the Super Bowl, 66% of their global traffic came from mobile. Their apps, on the other hand, drives more consistent engagement. But both channels are judged by their ability to generate revenue.

“We measure mobile the way we measure everything else at this point,” said Katz. “It is such a huge part of the business now that mobile has to pay its way.”

“We’ve evolved our testing philosophy — we’re going for bigger tests, swinging for a big impact.” – Shilo Jones, Destination Lighting

Several panels in the Optimization & Testing track focused on practical ways to improve retail testing programs. A major themes was increasing efficiency while also increasing revenue.

“Ecommerce is hard work, and testing is hard work too,” said Shilo Jones, director of ecommerce at Destination Lighting. He recently refocused his testing philosophy to make that process as efficient as possible while driving the best business results. Jones and his team adopted a matrix to decide what to test, comparing difficulty to implement, possible impact and other key components.   

When it comes to developing solutions, Jones said, “We’re putting ourselves into our customer’s shoes, backing up and looking for ways to make a big impact.”  

Evo’s Nathan Decker added that they take a similar approach to ensure testing drives ROI. “We aim for big changes that are really changing the customer experience in a significant way — a way that we believe could have a big impact on conversion.”

Jinzhou Huang from Home Depot has taken a slightly different approach, increasingly leveraging segmentation and personalization.

“About 80% of our tests come out being flat,” she said. “Your customers’ attributes decide what they like, and those preferences will affect how they respond to your tests.”

She said this modeling process, while more complex than standard A/B or multivariate testing, has made a big impact. It was also a natural next step as Home Depot’s optimization program continued to grow. “There is no way to separate testing and personalization,” she concluded.

“You need to disrupt yourself.” – David Weissman, Beauty by Design

On Tuesday, US Auto Parts CEO Shane Evangelist and Beauty by Design CEO David Weissman shared their views in “Framing The Retail Organization Of The Future.” The panel opened with moderator James Green pointing out that 38% of American households now subscribe to Amazon Prime, and asking what retailers can do to compete with the ecommerce giant.

“Four years ago, 70% of our sales were branded products,” said Evangelist. “When Amazon entered our space, we knew branded margins would drop. Now 70% of our transactions are private label, driven by 50,000 private label SKUs. The only way we can compete with Amazon is to say we have product that they don’t have.”

Weissman agreed, pointing out that competing against Amazon on price alone is a losing proposition. “If you have the ability to go deep, be extremely differentiated and excel in service, you can win.”

For the biggest retailers, Weissman thinks innovation is key. He encouraged them to hire young technologists and give them budget for skunkworks projects. For boutique brands, he recommended going extremely niche to gain an advantage.

“Embrace retail in a way that is different and use technology to enhance it,” concluded Weissman. “You can open up a whole new relationship with consumers, whether it is online or offline.”

US Auto Parts is also highly focused on providing a new experiences for their customers. Evangelist announced they were launching an on-demand service to pick up your car, service it and return it within the same day.

“Convenience will be a huge trend going forward,” he said. “Anything you buy can be wrapped around a service, you just need to be a little imaginative.”

“What almost killed Bonobos was trying to be a tech company.” – Sarah Lacy, PandoMedia

As retailers embrace the latest digital innovations, they still need to stay focused on their strengths and values. Sarah Lacy, founder of PandoMedia, offered a break from retail strategy with keynote on the future of ecommerce. Her session studied the evolution of ecommerce through the lens of venture capital. She noted that while venture capital is pouring back into ecommerce, those topline numbers are misleading — true etail is getting passed over for trends like on-demand mobile commerce.  

However, one trend that has resonated with Silicon Valley is category killers. Lacy pointed to recent successes like Warby Parker, Casper, Honest Company and Bonobos. But she noted that these companies have done well because, despite leveraging venture capital, they don’t behave like technology companies. “Early hires of category killers are rarely techies,” said Lacy. “Birchbox, Warby and Bonobos were all started by MBAs.”

What is their secret? Vertically integrated supply chains, a deep investment in brand and an obsession with reaching customers through every available channel. What doesn’t work is trying to force a tech mission onto retail, a mistake highlighted by Bonobos failed attempt to build their own software in Palo Alto.

Lacy noted that Bonobos isn’t so much an ecommerce company as a retailer that happens to sell online, as well as in concept stores, Nordstroms and via catalogs. Embracing the pillars of traditional retail, like impeccable customer service, is vitally important. Lacy quoted her recent interview with CEO Andy Dunn where he said, “Bonobos won’t win because of ecommerce, but in spite of being ecommerce.”

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