Real-Time Inventory Exposure Is a Key to Competing with Amazon
April 3, 2018 | Contributed by: Greg Sterling
In last week’s webinar with InMarket, CMO Cameron Peebles talked about how the now bankrupt Toys R Us created an expensive in-store augmented reality experience as a way to lure and engage kids and their parents. It was a costly error on multiple levels but it illustrates the way that companies can be seduced by new technologies and novelty but fail at fundamentals.
There is no “silver bullet” or single solution to get customers to come into stores. There are multiple tactics that must be pursued, including better use of data and content in stores, mobile payments, line-skipping and improved service among others. Putting product inventory online is another.
According to recent survey data, the top three reasons consumers shop in stores are:
- Needed something “right away”
- Prefer to shop in store
- Wanted to see item before buying
- (Not in the survey but also important is the ability to return products locally)
Amazon has been working to address these “disadvantages” with a number of innovations including Prime Now, Amazon Lockers and various return centers. But one of the major psychological advantages Amazon now has is that it has conditioned users to expect to find products on the site. By comparison, people don’t have similar confidence in offline retailers. And while I probably won’t buy most clothes or furniture on Amazon, the categories of products that people will buy on the site is very broad.
Getting in-store inventory online is a key to competing with the e-commerce giant. Most traditional retailers have done nothing or resisted getting inventory online for years because of:
- Lack of back-end systems and necessary infrastructure
- Perceived indifference of consumers
- Desire not to be compared on price for the same items with competitors
But it’s now becoming necessary to give consumers confidence that if they make the trip into the store the desired item will be there.
Google has seen an opportunity and has embarked on a program in which the company works with major retailers to list products in Google search, Google Express, the Google Assistant and, ultimately, Google Home. When they appear in search the results are marked as “sponsored.”
But these aren’t ads exactly. The business model involves Google collecting a transaction fee on a sale, which Reuters characterized as a “piece of each purchase.” This is a model that Google can bring to virtual assistant-enabled shopping, where traditional ads are not going to work well for many reasons.
Google Express is a local delivery service and shopping portal whose tag line is “all your stores in one place.” And the company’s alliance with traditional retailers is a bid by both to fend off Amazon. (Google and Walmart have a partnership using Google Home and Google Express, which is a potential model for other retailers.)
Retailers need to experiment, partner and invest in new technologies. However, new technology for its own sake or as a novelty marketing ploy (e.g., Toys R Us) won’t succeed. Genuinely understanding customers and mapping investments to their needs and interests is a better approach and the key competing more effectively.