JASON GOLDBERG: There are big client demands right now. We tend to talk more about multi-device than mobile because even the word ‘mobile’ has become super problematic. ComScore has got a lot of great data that half of all mobile use occurs on the couch at home. So when I’m shopping on a website from a mobile device on my couch, is that mobile? But when I visit a website in my car on my tablet, that’s not mobile.
We all spend millions of dollars building our desktop experience and in most cases, we paid some third party to create a mobile copy of our desktop experience and now, the big buzzword… is responsive design. In particular, doing web-based or optimizing for multiple contexts is a lot of work and it’s challenging and a significant investment and that’s why most Razorfish [commerce] clients that come to us with the multi-device challenge are in the early stages of planning or executing [ways to avoid] doing another generation of a mobile site. Instead, they’re thinking about how to do a commerce site that is optimized for every device and every context.
What about the mobile implications of paid media, as opposed to just user experience?
For better or worse, people are trying to move to responsive and there’s no such thing as a responsive ad format, yet. And so that breaks all kinds of old paradigms. Then, going back to the measurement side – a huge part of paid media is attribution and measurement of the effectiveness of those ads. Again, when the whole world is seeing your ad on the mobile device, a smartphone, but then fulfilling the purchase on a laptop at home, you need a way to do attribution across those devices or you’ll grossly misunderstand the ROI of your performance-marketing initiatives.
That’s an eye opener for a retailer who divided their budget into six chunks and they had an SEO budget and a pay-per-click budget and a remarketing budget… and then they turn on the capability to do multi-touch attribution. So they determined how effective those activities were based on how many sales each one immediately generated. Once they got more sophisticated analytics, then they could see, ‘Oh my gosh – the same customer visited my site via SEO and later got remarketed to and ultimately clicked on a pay-per-click ad and purchased.’ Then it’s, ‘Oh, shoot, the ROI for each of those six initiatives is totally different than what I thought it was.’
It’s a game-changer whenever the marketing department moves in to multi-touch attribution [because they have to] reorganize roles, responsibilities and reporting structures.
What are the challenges for an online pure-play that started in ecommerce and is dabbling in brick and mortar? Does having the physical “backbone” mean more data richness?
I do think it’s easier to be agile when you’re an online-only retailer. Fab.com has pivoted a couple of times and it feels like they’re about to pivot again and I don’t say that as a negative thing. I think those guys are trying stuff fast and they’re adjusting and listening to their customers who are voting with their wallets and I think they’ve evolved some appealing elements that lots of other retailers are starting to mimic, and that’s very hard to do when your money is tied up in cash registers and physical walls.
That said, the volume of customers Amazon has, if you break down their revenue and take out Marketplaces, they’re maybe a $20 to $25 billion dollar ecommerce site in the US. And so, even if you look at the biggest ecommerce juggernaut of all, Amazon, and you look at the customer behavior they see and data they have access to, it’s dramatically smaller than the customer insight Walmart [which did $466 billion in sales last year, according to Fortune] potentially has access to.
So, I do think to a certain extent, there’s room for everybody. I think the online guys can be faster, more agile, but I do think the big brick and mortar guys have done some innovation of their own, like @WalmartLabs and some of the things they’ve brought to the party. I think Target is getting more agile. I think Nordstrom is leading edge in a lot of ways. They’re easily able to be fast followers, so when Fab.com invents something great, or Threadless invents something great…there are all these little guys inventing cool new shopping experiences.
A [beauty subscription service] like Wantable that has a clever idea for gifting… [when they partner with] Nordstrom, Nordstrom can blow it up. I think we’re seeing a lot of those things – digital native companies innovate new things and then partner with these customers that own the customers and brick and mortar relationships – to scale.
When you look at the data in ecommerce, everyone’s talking about how online retailers are growing faster than brick and mortar retailers, but until you pull Amazon out of the equation, omnichannel retailers are growing much faster than pure-play online retailers and I think it’s because of their supply chain advantages and just the volume of customer relationships they own.
You mentioned @WalmartLabs, which is building and acquiring tech of its own. Is this indicative of a broader trend?
Most ecommerce clients today are buying the same tools from the same vendors –IBM, Oracle and this whole complement of vendors that sell the same customer experience to everyone. And Walmart is saying, ‘We’re the largest retailer in America and we have to replace a lot of this off-the-shelf stuff with custom versions we design just for our unique shoppers.’ One of the first things they did [when they developed Labs] was, they turned off their off-the-shelf search engine and wrote their own search engines, which is a big piece of functionality. It’s a core part of the ecommerce experience. What it’s enabled them to do is have search be much more sensitive to what they know about their customers.
Their onsite search is sensitive to how their customers interact on social networks, so the products that show up are much more likely to be relevant and they claim something like a 10-15% higher conversion rate using their own, in-house search. They were the first ones I ever heard of to try out shop online and pay in-cash. That sounds crazy, but I think they said something like 5% of their $10 billion in online sales this year are going to be buy-online, pay in-cash. I think that’s the model we’ll see more of, especially, larger retailers at the top of the ecosystem – [this move to] stop leveraging [only] out-of-the-box functionality from big vendors and try to invent their own, unique custom experiences.