Feb03

Beyond Ecommerce: Disruptive Business Models for the Web 2.0 Consumer

By Jason Billingsley | Published: February 3, 2009
1 Comment | This entry was posted in Guest Blog Posts

Hung LeHong of Gartner had one overarching question to consider: Is there opportunity for retailers despite the economic adversity being faced?

Over the last couple years there have been lots of questions around Web 2.0. At first it was ‘what is Web 2.0?’ Lately it has shifted to ‘Is Web 2.0 dead?’ The reality is Web 2.0 is simply being refocused and is most powerful when refocused around a purpose. The downturn has made it more critical for consumers to find better deals and spend less. That is a purpose worthy of a retailers’ attention.

There are a few creative ways retailers are exploring including channel evolution, alternative interfaces, and different models for ownership, pricing, and customers.

CROSS CHANNEL

Retailers often have a Cadillac view of cross-channel retailing and think buy online pick up in store is the only true model to follow to achieve cross-channel bliss.

The reality is there is a wide spectrum of what can be done. UK retailer Argos has a full cross-channel set of tools including local stock checking, reservations for in-store pickup, and various mobile marketing and merchandising activities. This full suite is more expensive and resource intensive. Alternatively, Walmart simply offers a ship to store option between 7-9 days. It isn’t a Cadillac when it comes to full cross channel selling but it somewhat matches business strengths and consumer expectations. The goal here should be finding the right balance of company capabilities and customer expectations. Polarization between capabilities and expectations in either direction is risky.

A major hurdle for retailers to overcome has been inventory buffering for in store pickup. Some have tried stocking enough to cover in store purchases, and buy online pick up in store demand. It just isn’t practical or efficient. Alternatively retailers should attempt choosing one regional store for buy online pick up in store, or it can act as a regional supply hub if the lead times are sufficient. They can then optimize inventory on the regional level vs the store level.

MOBILE

A recent Gartner survey asked what consumers would like from retailers in terms of mobile enablement. Consumers rated the following very likely or likely to use:

  • 26% Want to check prices on mobile
  • 25% Check store location
  • 22% Get promotion
  • 16% Order items
  • 14% Pay using mobile

There was a clear indication consumers want to shop first and worry about payment second (it does not need to happen in the same interface, or session, discovery happened). Try not to force transactions from mobile interfaces. Again, match the expectations of your customers. Many simply want to use mobile as a means of accessing data to do comparisons.

Examples in use today:

  • Mobile reviews will increasingly become powerful and more common
  • Pushing deals via Twitter to make them more social, but reduce the shelf life of the promotion
  • Integrate messaging channels with services like SnapTell where consumers take a photo of product and a mobile app returns relevant information (reviews, promotions, etc.)
  • Notifications to drive behavior such as Meijer who sends an opt-in SMS to tell customers of an upcoming increases in the price of fuel

ALTERNATE OWNERSHIP MODELS

  • Buyback: Offer consumers the ability to sell technology back (at a discount) once newer models are available to encourage upgrades such as TechForward
  • Prepaid: Lower the barrier to entry and let a consumer accessorize or pay-as-you-go in incremental steps such as Microsoft FlexGo in emerging markets
  • Rent: Avelle (Bag Borrow or Steal) lets you pay to borrow designer bags; the Netflix of handbags!

ALTERNATE PRICING MODELS

  • Barter: Offer free products in exchange for accepting offers from partners. See TrialPay
  • Negotiate: Bundling of offers in order to reduce the cost of items being considered (i.e. a lower credit card interest rate if you purchase a mortgage product).
  • Dynamic pricing: Raidoheads’ In Rainbows album was a ‘pay what your feel’ model and was estimated to pull in over $4/album still

ALTERNATE CUSTOMER MODELS

  • Remittance customers: People who ship to other countries (both cash and products). India has a large portion of retail in this segment.
  • Group buyer: Mobile phone developers re-tooling address book functionality to accommodate for groups of people using a single phone in emerging markets.

CONCLUSIONS

  • Web 2.0 is not dead
  • It is the best year to train your customer to use mobile promotions
  • Look for emerging economies for new models
  • The Web 2.0 consumer will use use it to ultimately attempt to spend less
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One Comment

  1. EcommercePro
    Posted February 5, 2009 at 12:41 pm | Permalink

    These mobile numbers are very interesting, but not too surprising. Many people are spending more time on their mobile devices than behind a monitor. Engaging in Web 2.0 sites such as social media is an excellent way to increase brand awareness and bring in traffic. Internet marketplaces are becoming more competitive so it is necessary to research and understand how to use other web properties for your business’ benefit.

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