WHY IT MATTERS: Digital Transformation

WHY IT MATTERS: eCommerce evolution requires the equivalent of shopping malls, to draw customers into a single location. This list of top 100 solutions is very informative.

WHY IT MATTERS: this data of store attendance will be interesting to follow as stores reopen. Note this data is for USA, not Canada.

WHY IT MATTERS: a bunch of links and data about Walmart's ecommerce efforts. 

WHY IT MATTERS: we've known this since the beginning of the covid shutdown and numbers confirm this. The chart is from a tweet from Ben Evans with more insights in his annual presentation here: https://www.ben-evans.com/presentations

WHY IT MATTERS: (in french) a summary of key conclusions and stats from a recent report on consumer behaviour regarding eCommerce during covid shutdown. Even though we've flocked to eCommerce the experience remains plagued with issues that must be addressed in the coming years.

WHY IT MATTERS: interesting article as it presents solutions that will impact physical stores - as we can expect a return to stores when covid lockdowns are over...

WHY IT MATTERS: a great new overview of the digital transformation (my words), with fact-based data-full slides. I especially like everything about eCommerce in there which will become reference for me in coming months. I extracted just one striking illustration of the wide variation of eCommerce penetration depending on industry. This chart highlights how different the digital transformation strategies must be in the toys&games industry vs the grocery industry. Love it. Many more in the full presentation.

WHY IT MATTERS: Shopify is now a leader in the field so their annual report provides important insights.

WHY IT MATTERS: the explosion of ecommerce due to covid lockdown will see impacts in years to come. This list sounds about right regarding what's coming in the foreseable future...

WHY IT MATTERS: very informative post about returns with useful stats, solutions and links to help retailers manage returns. Especially useful during Holiday shopping but true all year around. Moreover, as retailers move from bricks to clicks, they have to consider this important new aspect that eCommerce brings to the forefront.

WHY IT MATTERS: this is a great example of the way small local businesses can survive - by creating marketplaces to sell and promote their wares. This is a vertical marketplace (focus on books). You also need horizontal marketplaces (focus on all stores on a street or region). And you need amazing search engines to let you discover merchants and their products.

WHY IT MATTERS: parcel delivery has become the primary volume for postman. Why not have delivery routes - postman or milkmen - to deliver the parcels and not just the mail? Would this not be a more cost effective solution than delivering one by one?

WHY IT MATTERS: returned products are a big deal for retailers because they a financial and logistical nightmare. As reported in a previous post, some retailers don't bother restocking and send returned products to the landfill, creating a real ecological issue. But there are ways to reduce returns. This post provides some of them.

WHY IT MATTERS: the article summarizes quite well what is possible when a whole country commits to a digital transformation. Note they've been at it since 1997, almost 30 years and they've had to make hard choices (not use a free analog phone system). Can covid crisis provide us with an incentive to do the same on healthcare, retail and government?

WHY IT MATTERS: Google research shows that customers go online to plan their in-store trips as covid wave#2 is among us. The need for omnichannel strategy and execution is more important than ever.

WHY IT MATTERS: we've seen an acceleration of eCommerce adoption during covid lockdown worldwide. McKinsey says 10 years in 3 months. Shopify stock has surged, instacart orders have grown 250x, mirakl has raised 300M$ in funding, all based on this recent trend. 

But guys that have been doing retail for a long time are skeptical - like WholeFoods CEO (now Amazon). When everyone is FORCED to stay home, then of course eCommerce and home delivery will explode they. When things go back to normal, then retail will go back to normal is their belief.

Who's right? 

If you know me, you know where I stand on this. Going digital is like being an alcoholic: the first thing you must do on the road to recovery is recognize you have a problem... ;-)

WHY IT MATTERS: this is a huge step forward and a sign of the times: manufacturing automation. Fueled by digital, automation, and robots, this enables production of smaller batches economically. When this is rolled out at full scale - I assume it still requires development and lots of tweaking - we can expect retailers to shorten the time from idea to production. with eCommerce, it enables the make-to-order that was made popular by Dell computers in the late 1990s: onl;y build the computer when an order has been placed. Expand this idea to t-shirts and you can see why this new Alibaba production facility is so important...

WHY IT MATTERS: Amazon will use failing and bankrupt stores and shopping malls to build warehouses so close to consumers that 1-2hr delivery becomes possible - the last hurdle in making eCommerce viable in many product categories (grocery, food, meals, and other high volume / low margin categories come to mind first of course).

WHY IT MATTERS: No surprise, Amazon dominates eCommerce in Canada and Amazon PRIME appears to be a major reason why (if you have prime then you more inclined to spend on Amazon to recoup your investment). But online grocery is a tough nut to crack and traditional retailers lead in that category.

I predict that in the future Amazon will give traditional grocers a run for their money if they do not invest in:

1) reducing cost of pick-pack-delivery via automation and robotics,

2) becoming marketplaces to attract consumers and deliver more than food products (think dry cleaning, meals, and other low margin / high volume products) and

3) converting their store real estate to improve service over merchandise (think Apple store more than Walmart). 

To do so this may mean that their shareholders will need to support this massive investments and tolerate lower benefits and EBITDA...

WHY IT MATTERS: 5G telecom network promises to revolutionize many industries including retail. This report from Forrester presents use cases for 5G may bring but also puts those in context of what exists today and how fast the transformation will be.

WHY IT MATTERS: more insight that shows the possible long term impact of covid on the acceleration of eCommerce.

WHY IT MATTERS: this article dates back a few years but is very important to understand Amazon and why it is so disruptive to retail.

Amazon invests most of its profits into developing solutions and infrastructure (via CAPEX or capital expenditure) in order to CAPTURE FUTURE ECOMMERCE SALES as the world moves from physical retail to digital.

To compete, retailers must either 1) leverage Amazon infrastructure (via marketplace, FBA, AWS, etc.) 2) or, if they are big enough, invest massively their CAPEX to build competing infrastructure to Amazon. This is difficult because their shareholders are used to getting return on their investments (which CAPEX will reduce): that may need to change. Or get the customers to pay for it (ie. massive walmart investments in eCommerce that they have just passed over to their suppliers - effectively having customers pay for it).

To maintain economic prosperity, governments should also invest in building shared infrastructure: large automated distribution centers, parcel delivery (canada post, USPS, etc.), digital payment processing, digital IDs, etc. This new infrastructure will benefit local retailers and local manufacturers, effectively financing their eCommerce competitiveness and ensuring survival of the economic fabric of their city / region / province / country.

WHY IT MATTERS: Amazon must crack grocery shopping to grow into a Walmart competitor. And weekly grocery trips mean customer loyalty, and reasons to use Amazon as the "one stop shop". As I've said before, if you can manage to deliver weekly groceries to the home and be *profitable*, then you've solved the last remaining eCommerce hurdle: delivery costs (now accounting for 15% of Amazon costs - HUGE).

So read this story of the new Amazon store but don't get stuck on the technologies (they are great and have plenty of limitations - especially the grocery cart called DASH) and focus on the transformational impact that grocery shopping will have for Amazon AS A WHOLE. This is a small step with huge implications for eCommerce + retail in general.

WHY IT MATTERS: I thought this illustration is bang on to explain what retailers should do in their store renovations as they undergo their digital transformation and move to omni channel. Most organizations think eCommerce is all about selecting the right software: it is not. It is about reallocating space in your stores and in warehouses to reflect the new reality that orders will flow mostly from online - with customers walking in stores to "touch" products and talk to people. Not sure what I mean, go in an Apple store: entrance is a showroom, middle is service, back is troubleshooting, sides are for quick buys (like cell phone charger or laptop cover) and periodically the store transforms into a event location for product launches and classes. Inventory is in the back room but the real place to buy is online.

The original link to the slides is here: https://app.hubspot.com/documents/3788602/view/85773854?accessId=81df58

WHY IT MATTERS: great insights from StatsCan data but the analysis of Carl Boutet is spot on: retailers need to be careful and continue to learn from the shutdown to invest in digital technologies to prepare for whatever will come in the next few months (and years).