social commerce

Convergence Is REAL. It Is NOW.

by Lora Cecere on June 23, 2012 · 2 comments

This morning I am sitting at my kitchen table, sipping coffee, writing a report. The coffee is good, the sunflowers are blooming on the deck and the words are flowing from my fingers.  The results of the Supply Chain Insights retail mobility study are compiled, and I am excited to report on the data.  I think that it is compelling.

Tomorrow, I will roll my suitcase onto yet another airplane to present the findings at the RetailConnections Mobile Impact Summit in Dallas (check out the PowerPoint presentation on SlideShare). For me, it is the last conference before I can take some time off for the summer.  I badly need a break.  Starting a new company, writing a book, and keeping up a frenetic pace on the road with clients has been grueling.

Marc Millstein’s events (@retailconnect on twitter) are always good ones.  At the event, I look forward to sharing the insights from the study with some of my favorite retailers. (Look for my tweets from the event using hashtag #RSSummit.) Here, in this blog post, I share my current thoughts on the study and the key points of my upcoming presentation:

Convergence.  The focus for retailers from the study is clearly convergence.  Mobility is important to retailers, but it is not mobility for the sake of mobility.  Instead, the focus is convergence of e-Commerce, mobility and social.  And despite the doomsayers on the concepts of social commerce, the study results show that the greatest increase in the intended use of mobile is to fuel efforts in social commerce. When I use the term social commerce, I am not speaking of slapping an e-Commerce presence on Facebook.  For me, and I hope for my readers, it is much more than the “F-WORD.”  Social commerce is the use of social technologies to drive commerce through brand engagement and improvement of the path to purchase.  Retailers have 1/3 more sites on Facebook than e-Commerce and they now have a strong presence on Twitter. The focus on mobile applications and mobility throughout the supply chain is a means to an end of serving customers better and driving brand differentiation.

In the study, the average retail company has 1.6 mobile applications, they have been working on a mobile strategy for a little over a year, and their biggest challenge is getting the right talent. It is a fundamental shift from a two years ago when the primary focus was mobile for the sake of mobile.  We are slowly starting to see the shift from social marketing to social business. For me this is EXCITING! I look forward to sharing my thoughts from the conference on this topic on twitter and on the blog.

My advice:  35% of retailers have a dedicated team focused on mobility.  Make sure that it is cross-functional.  Use this as an opportunity to be market-driven not marketing-driven.  Use it as an opportunity to redefine the organization outside-in from the shopper back.

Fundamental Shift.  So, you might be asking why an old supply chain gal like the Shaman is writing about mobility and social in retail. The answer is simple. I believe that these technologies offer the opportunity for us to build the extended supply chain from the customer’s customer to the supplier’s supplier for all industries. I also believe that the increased use of mobility in consumer interactions will change the fundamental rhythms and cycles of the supply chain.  The pace will change.  It will be quicker.  We will have new data sources, new forms of demand insights and increased expectations from consumers.  We will be forced to redefine old paradigms, and that is the stuff that gets the Shaman’s blood going!

I think that it is a new opportunity for ALL parties in the consumer value chain to drive differentiation.  I am currently working with several companies that are forging exciting new frontiers on the Digital Path to Purchase (Follow the action at #DP2P on twitter.)  Slowly, consumer products and retail leaders are redefining four moments of truth in the shopping experience –the list, the basket, the purchase, and usage–through digital insights. The list is becoming more automated, the basket is becoming the focus for retail/consumer products collaboration, and social technologies are allowing us to gain new insights about usage.

The shift from near real-time to real-time data is not trivial.  Downstream data and demand signal repositories will be the foundation and big data techniques will eclipse our traditional transactional thinking.  The building of outside-in processes will become increasingly important.  It is my hope that the supply chain will become less about US and more about the shopper.

My advice:  Take a piece of butcher paper and paste it on the wall. Using the principles of mobile, social and e-commerce convergence, facilitate a cross-functional group of leaders to map what an outside-in process could look like for your company.

Disintermediation.  This shift offers new horizons for the consumer value chain.  Let me explain.  Last week, as I flew back from a client, I placed an order from Amazon on my mobile application on an airplane somewhere over Ohio for delivery of pantry items to my apartment in Baltimore.  It was one click away. The package was waiting for me when I got home.  Whoever thought that we would be ordering flour, sugar and paper towels from Amazon?  And that the landed price would be less than Wal-Mart?

Retail grocers are under attack.  Amazon wants to own “the center of the store.”  This is happening at a time when retail grocers are struggling with store profitability and attempting to squeeze suppliers for every dollar.  Year-over-year consumer products companies have talked about “collaboration with retailers,” but the reality is that we have steadily moved costs backwards in the supply chain from the retailer to the supplier to the supplier’s supplier.  This is an opportunity to change the equation.  The power is shifting to the shopper. The traditional retailer is losing power.

This is the time to think about disintermediation.  Is Amazon the new Wal-Mart?  Does the store become a place for excitement and fresh items? And, as such, is there an opportunity to move traditional trade funds into digital programs to improve the shopper’s experience?  Is there an opportunity to drive new types of purchase through third-party applications (e.g. like recipe sites for food manufacturers) in social commerce? I believe that consumer products companies have a new opportunity to move trade funds into digital demand shaping programs with Amazon and change grocery retailing forever. I also believe that Digital Path to Purchase programs are a form of the convergence that will permeate and permanently transform the supply chain.

As channels change, the supply chains behind them morph.  Bricks matter.  Behind every pretty application on a handheld device is a manufacturing plant, a distribution center and a truck.  They will all feel this impact.

Let’s face it.  Why do shoppers need to go to the traditional grocery store for a pantry-loading trip when they can order items through their mobile device and have free shipping?  Why do shoppers need a piece of paper anymore–or paper coupons –when they can go to a recipe site, plan their meals for the week, pull a digital list and place it on Amazon for delivery? Or, alternatively, cross-shop it digitally across retailers, combining mobile offers, for the best price?

So, in summary, I believe the time for convergence is now.  Few are ready, but all should be.  Slowly, day-by-day, power is shifting to the shopper.  The paradigm of what is a retailer and what is a supplier is changing.  New business models are opening up, but they will only be captured by those that are truly market driven.  It will not be seized by those that rely on marketing-driven initiatives.   I look forward to sharing more when I get back from the conference.  Please let me know your thoughts.

Supply Chain Insights Update

Lot’s happening at my new company.  I have five hard-working employees. We are busy working on research, serving clients and designing a community.  We feel that we are making progress on our goal to drive new and compelling research on supply chain management into the industry.  This week, we pulled the “Big Data” survey from the field.  Finishing it has been a struggle. The concepts are new ones for the industry.  After two months, we were able to get 50 completes.  Only one in four respondents was able to complete the survey.  As one participant in a strategy session said last week, “This is a new language, and a new way of thinking.  How do I retool my brain?”  I think that this will be a challenge for all.  I look forward to sharing the results with you next week on the blog and I will post the entire deck on SlideShare soon.

Our focus is cranking out new research on new topics. We will continue to publish research reports in front of the firewall to help all supply chain teams. We want to be known for leading edge research.  To this end, we placed a survey on packaging design for consumer products and the role of Product Lifecycle Management (PLM) into the field, and we have four new surveys going into the field this month.  The list includes: downstream data; trade promotion management; supply chain business process outsourcing; healthcare reform and transportation management. (The link for the packaging artwork study is http://tinyurl.com/7s4ecm7.)

If you would like to be a part of one of these new surveys, just let us know.  We will be sharing the final reports of all the studies in a monthly newsletter.  Please let us know your feedback.  We want to redefine the analyst model to be a more caring, insightful and useful business model. With your help, we feel we will be successful. Have a great weekend.  I am going to go get another cup of coffee. I have more writing to do…  The Shaman’s day is just starting.

March of the Penguins

by Lora Cecere on June 21, 2011 · 3 comments

They look alike.

Noisy and boisterous, they follow each other.  Mile after mile, through adverse conditions, they trudge.  It is a well-worn and familiar path.

When they come to the edge, they crowd together.  With extravagant gyrations they aggressively communicate, but each is afraid to take the next step.  The jump is a hard decision to make.

Last week, I felt like I was watching a re-run of a familiar movie. As I slipped into my seat at the Consumer Goods and Technology (CGT) Sales and Marketing event, I found myself in the balcony. I  looked down.  It was my seventh year of attending the CGT Sales and Marketing Conference. It was a great time to reflect back.   The event had a lot of “sameness.” It had the same themes, same people, same level of attendance, and same names of vendor  sponsors crowding the conference room foyer.  The audience looked alike –similar demographics, backgrounds and experiences–to previous years.  I value my time there and I give thanks for all the great work that CGT does for the industry, but in many ways it resembled one of the scenes in my favorite movie, “The March of the Penguins.”  Anthropomorphism in action….  <Try playing this word in scrabble.>

How so?  During the mating season, penguins gather on the ice flow and look down.  They are afraid to jump into the water due to the presence of the leopard seal. To protect themselves, they huddle together.  It is a dilemma; for, they must jump to feed and survive.  It is dangerous.  As a result, they wait for the first Penguin to jump.  They watch to see if the first into the water survives and then they all jump in mass.  Sometimes, when I am at conferences like CGT, I feel like I am watching a re-run of this movie.  These professionals know that they need to jump.  Traditional software approaches have not served them well; yet, they are afraid.  Their jobs are on the line.  They huddle to look to see who jumps.  They wait to see if the new approach works, and then they jump in mass.

Anthropomorphism in Action

Changing a ritual takes time.  The Consumer Packaged Goods (CPG) industry moves slowly.  The millions of dollars that companies have spent on multi-year projects for Enterprise Resource Planning (ERP) system Customer Relationship Management (CRM) is a painful and expensive trudge.  After studying the industry for over five years, there is no easy answer for trade promotion management, sales accounting and demand insights from these packaged solutions.  Bottomline, companies cannot build market-sensing approaches from these traditional technologies; yet, companies will not take the leap of faith to try different approaches.

I wish that the program and discussion at CGT had not been one of sameness.  The pace of change in the industry is SLOW…. Why? Product margins are high, there has been no compelling event to change, and with sales and marketing job security high, why should they take the plunge?  Why should they put their job on the line and try a new approach?  The answer is simple.  The traditional approach does not work.

Technology applications for sales and marketing are fraught with issues.  They are expensive.  As Oracle and SAP engage in hand-hand combat for trade promotion deals, the 20-40 million dollar price tag for license application deployments leaves many teams with sticker shock. The projects have a high failure rate. Based on over five years of research for CGT, three out of five TPM projects fail to meet expectations. The road to success is paved with many speed bumps that can derail even the well-intended project.

The needs of sales and marketing are also more complex.  The evolution of sales account teams and sales purchase of retail-specific applications has led to disparate applications. In interviews, even the smallest companies, have at least forty different systems distributed across the sales teams requiring maintenance, evolution and integration. The traditional Customer Relationship Management(CRM) data models are not a good fit for CPG.  As a result, Siebel (now Oracle) is a force fit and Salesforce.com has never been a player.   SAP, on its third generation, of CRM for Trade Promotion Management(TPM) is struggling to deliver a successful project.  Accrual accounting continues to be the Achilles heel.  As a result, many grassroots efforts have spawned solutions for downstream data, deduction management, retail execution, and syndicated data.  The names of the software companies are many, the companies are small, and all are competing for attention in the  hallway outside of the CGT conference.

What should we Do?

The times they are a changing….  The manufacturer’s product margins are smaller now. Commodity’s are scarce.  Retailers have stronger brands.  They are better at analytics.  Power is shifting to the shopper.   The IT’s organizational stronghold on the organization to buy only from a standard vendor has lessened.  Software as a Service (SaaS) is a more viable alternative.  Managed services are emerging.  New approaches through social technologies now allow companies to be more customer-centric.  Yet, the scene at the CGT conference has not changed much.  The topics are the same, the people are the same, the approaches are the same, and the It is the SAMENESS that harkens the visions of the penguins standing on the iceberg flapping their wings.  I want to SAY, “JUMP Damn it!”  Spread your wings, consider new approaches.  Let’s move this STALE agenda forward.  The threat of the leopard seal in the water is far less than the market risks that are gathering on the horizon. I think that these are the new paths that we should be trudging:

How do we Sense?  Test and Learn?  Build processes from the outside-in? Last week, I had the chance to catch-up with Jim Manzi, Applied Predictive Technologies to discuss how the building of test and learn scenarios. <He is such a smart guy!> APT applies deep statistics to help companies know the true difference between correlation and causality. I feel that we would be well served to view go-to-market approaches as experiments to be tested, with rapid test and learn approaches. Recognized leaders include Family Dollar, Meijer, and WaWa.   There are also many retailers that will remain nameless–mum is the word– especially in the hills of Arkansas.  This is a major shift.  How do we build value networks to test and learn?  Today, we just respond.  Companies have fixed plans.  As markets change, they do not.  How do we use social networks like Twitter to listen better to the customer in many to many customer service networks.  I feel that this is a new path to trudge with great promise.

How do we become customer-centric?  To listen?  To Learn? To Engage in a Meaningful Dialogue, to drive Continuous Improvement? Now is the time for sentiment analysis and the use of social networks for direct dialogue with the shopper through social networks.  These approaches allow us to reduce latency on decisions, to better sense true customer sentiment and make rapid market changes.  I also think that it is time for us to directly couple downstream data with demand orchestration processes to build a horizontal platform that connects buy-side decisions (which commodities to buy when) with sell-side decisions (what to promote and how to price when) through a combination of applications like Sentiment Analysis + Price Optimization+ Downstream Data + Pattern Recognition+Risk Management to orchestrate demand.  I was excited to have my beliefs confirmed this week in the discussion with IBM Consumer Products team.  They are currently working with Relational Solutions and Signal Demand on a Software as a Service (SaaS) solution.  There will be more strategic vendors added to this road map in the future.  I believe that these are winning combinations to leapfrog the current dilemma. I also believe that there will be more SaaS combinations and managed services to emerge that combine vendor solutions that are built to help scale the current problem.d

How do we best manage global markets?  Where is the right balance of power between central planning and regional decision making? CPG companies are becoming more global.  Retailers will remain regional  Consumer products companies can now use Social Commerce platforms to disintermediate the channel.  How do companies trudge this new path and build new processes? I feel that this would have been a great discussion. For example,  Infosys has a new solution to help companies build effective demand networks with distributors in emerging economies. In my opinion, this would have been a great audience to share techniques on sharing data with distributors in emerging economies.

New ways to reach the consumer.  Tags.  Mobile applications? Exploring new channels. New technologies for retail execution.  What are the strategies for big-data value networks? Direct communication in the buying moment directly with the consumer is the new reality.  What are the strategies and how do we design these big data value networks? How do we unleash the power of mobile applications, tags, social couponing, and visualization to change the shopping experience in the store?   These are all new concepts, but do not have pat answers in the form of standard license software. Instead it requires leadership to build the path for the future.  How are others doing it?  What is the path of the future?  How are companies funding these new approaches to know the shopper?  What do the cross-functional teams look like?

Power of Reviews. Technologies that aggregate and federate review information–Bazzarvoice and PowerReviews are examples–deserve mention.  How about video reviews like Expo TV? Too few CPG companies are discussing the power of customer reviews and the strategies to federate review information with retailers to improve purchasing decisions.  Increasingly, shoppers want to hear from voices like theirs. They are tired of brands yelling the same messages.  How do we best use these new technologies to reach the new consumer.

OK.  I know it.  I have been in the industry a long time.  I am tired of standing on the ice flows talking about yesterday’s solutions.  Please, can we jump?  Can we talk about new approaches?

What do you think? Are there new approaches to solving sales and marketing problems that you think are worth mentioning?  Are you ready to jump? Please share.  Until then, I will continue to trudge–begrudgingly–with the penguins.