Tag Archives: High Street

What Fotopedia’s closure means to everybody

You better hope users stored their photos elsewhere once Fotopedia closed down
You better hope users stored their photos elsewhere once Fotopedia closed down

This week, the website Fotopedia closed down, and this heralded a key stage in the Internet’s maturity.

We’ve seen various Google products shutdown in the past, sometimes with more publicity than they attracted while the product was ‘live’, such as Google Video and Wave. However Fotopedia signals the dangers that lurk behind relying upon consumer-focussed cloud services.

Continue reading What Fotopedia’s closure means to everybody

Why the UK is still a nation of small shopkeepers, even on the web

The 10 most visited UK shopping sites ending August 24, 2013 according to Retail Week magazine who use Hitwise, is shown below. As the table indicates, the market share is stable.

10 most visited UK shopping sites week ending August 24, 2013
10 most visited UK shopping sites week ending August 24, 2013

This table only shows half a story though, because the top 10 make up just under 40% of the total shopping web sites. The following pie chart shows those top 10 as a pie chart along with the missing 60%.

Pie chart for 10 most visited UK shopping sites week ending August 24, 2013
Pie chart for 10 most visited UK shopping sites week ending August 24, 2013

Even this pie chart doesn’t show the full story though, because Hitwise should really aggregate the sites together – i.e. all the Amazon and eBay sites. Gumtree are owned by eBay so if we aggregate this with eBay, we get the following chart.

Consolidated 10 most visited UK shopping sites week ending August 24, 2013
Consolidated 10 most visited UK shopping sites week ending August 24, 2013

More than a third of shopping web site traffic in the UK goes to these two US companies, and are then followed by Argos who have less than 2% of traffic. Perhaps this goes to show the UK is still a nation of small shopkeepers.

Buying a car in the disruptive digital world

At work at the moment we have a number of clients for whom digital is presenting some turbulent, disruptive challenges. Many of these clients are forced to face the challenges head on. One industry which has faced digital disruption head on is the retail car industry.

A couple of weeks ago, we needed to replace Mrs H’s car. Our Hyundai Trajet has been the family car for eight years, and with four young kids, there aren’t many durable alternatives open to us.

Like most people we went to AutoTrader and looked for options. AutoTrader is the leader in the car industry (more on that later); it’s easy to use and enables users to filter exactly what’s needed. For us it’s at least 6 seats, automatic (Mrs H’s requirement) and we only wanted to see results within 20 miles of where we live because we’d be schlepping the kids around with us to look for cars.

Some of the results were from Car Giant – which is advertised as a car supermarket with over 1,500 cars available for viewing (apparently there’s another 3,500 ‘in the back’). It’s reasonably close to our house so we went for a visit.

I’ll skip the details of the visit, other than to say that the entire experience is ruthlessly efficient, for both customers and Car Giant. Within 2 hours of opening on the Sunday they’d already sold 200 cars. You need to be efficient to cope with that much stock and customers.

Back to the digital elements… After we’d taken a car for a test drive we thought about speaking to them about financial options. They gave us the headlines and some time to think about it. So I got out my phone and within a few minutes I’d arranged an improved offer with my bank using their standard banking app. And despite being a Sunday, the money was in my account immediately (can someone remind me why cheques take time to clear…?).

When we ordered the car, they asked the standard questions like “Where did you hear about Car Giant?”. I answered AutoTrader and the sales guy said that virtually everyone answers the same. AutoTrader is the ubiquitous car search engine. He asked what car magazines we’d used for research and I answered that we hadn’t read any magazines, just online websites and he said that he hadn’t had a single customer in the last month that had answered with a magazine title.

Clearly people buy car magazines such as Top Gear and the top selling Auto Express but I suspect their readers either buy brand new cars (which Car Giant doesn’t sell) or want to hear news and stories about cars rather than buying advice.

Three days later we came to collect the car. Full credit to whoever designed the internal IT systems at Car Giant because the process was silky smooth and again, ruthlessly efficient. The advisor went through all the steps on the screen with us (checking paperwork and so on), and just like visiting an Apple store, by the time you leave the place, they’d emailed all the necessary paperwork.

Many companies are experiencing more disruption than any previous period. I congratulate Car Giant for embracing the disruption and transforming their business into the efficient operation which attracts customers on AutoTrader, through to the collection process.

I just wonder what the industry will look like in another 8 years’ time.

Five Key Internet Megatrends: 3. Knowing customers

Credit: http://www.youtube.com/watch?v=kAG39jKi0lI
Knowing customers well
Credit: http://www.youtube.com/watch?v=kAG39jKi0lI

Key points:

  • Big Data could be the digital equivalent of the friendly shopkeeper who has a good idea of what you want, as soon as you enter the shop
  • But probably isn’t.

My family is quite traditional. We shop at a greengrocer for vegetables, a local butcher for meat, a local baker for bread and a local wine merchant. We use supermarkets mainly just for tinned products.

The greengrocer, butcher and wine merchant know the products that my family want to buy as well as my wife or I do.

A few years ago, Big Data was the IT industry’s silver bullet to provide online stores with the same knowledge as my local greengrocer, butcher and wine merchant.  Surely, Tesco thinks, if I buy nappies, I want to buy some baby food as well.

So Tesco began promoting baby food on all my receipts and offers in the post. However the only food we buy from Tesco is vegetarian. They can see that from all our shopping history. So there really isn’t any point promoting the latest chicken or beef baby food varieties.

And I think everyone who has bought Christmas presents for a young child through Amazon has been through the process of wondering why they receive endless children’s toys promotions afterwards.

My bank is another example. By definition my bank can see where I shop, how much my wife and I earn and how much we spend. My online banking website lists our current accounts, savings account and credit card all in one place.

I know through my work at Endava how much the bank spends on Big Data annually. So why does my bank promote the same savings account every time I log on? There are probably a gazillion more appropriate products they could be selling me than the same savings product every time. In the end I did take up the (poor) savings account just to stop the splash screen promotion.

I should note, one of my colleagues pointed out the first time I told this story “So the bank won. They promoted a product and you applied after a few placements.” He’s right of course, and I’d made it worse for all the other customers!

Big Data will help Internet websites get to a point where they mimic the traditional shopkeeper. However it’s in danger of becoming too scientific and will need to become much more customer focussed.

Five Key Internet Megatrends: 2. Real money

Credit:
When will the advertising bubble burst?
Credit: http://www.turquoisebranding.com/2011/blogs/06/01/mad-magazine-billboard-advert/

Key points:

  • The marketing super bubble will burst
  • Look at Asia for real money
  • But we still need advertising for the discovering new products

The advertising industry has developed from a simple promotional industry, to the main business model for some of the biggest Internet companies.

In 2010, spending on advertising was estimated at $142.5 billion in the United States and $467 billion worldwide.

In the first quarter of 2013, Google advertising revenue was $11.9 bn. Advertising revenue was 92% of Google’s revenues for the quarter.

For the fourth quarter 2012, Facebook’s revenue from advertising was $1.33 billion, representing 84% of total revenue.

Google & Facebook earn advertising revenue by selling clicks on adverts, called CPC (Cost Per Click). CPC is a fantastic business model because advertisers bid for the keyword using two variables – the maximum they’re willing to pay for a user to click through to their website, and the maximum budget they’re willing to spend per day.

CPC is a great business model because companies will keep coming along and outbidding their competitors. Industry magazines contain articles asking their members to stop outbidding their competitors because it is out-pricing everyone in their market and increasing advertising costs for them all.

There’s a deeper problem with advertising though. Users don’t go to Facebook or blogs to shop.

I’ll even question whether people go to Google to shop. For instance, I’m writing this post on a Friday afternoon. According to Google, the top searches in the US today are:

  • George Jones
  • Nfl.com
  • Jarvis Jones
  • NFL Draft

Here in the UK there’s only one item in the top trend – Sarin. (To provide some context, there’s some evidence Sarin has been used in Syria).

Here’s another interesting fact. If you look at the top searches on Google, try looking for any searches you can actually buy. I’ve tried combinations of time periods and locations, and the majority of the searches are for specific websites – facebook, youtube, hotmail, and so on.

We are beyond the tipping point of advertising products to users.

We’re already inside a huge industry bubble, with too many businesses reliant on pure advertising.

There is a requirement to continue advertising though – for product discovery.

Like thousands of other homes across the country, we do our grocery shopping online. And the typical grocery shopping website is awful. It’s completely single-product focussed, based on Amazon ten years ago. A single page contains a single product for sale, and perhaps some small thumbnails along the side or the bottom of the page for recommendations.

Customers need to know what to search for to find this product - what about other varieties?
Customers need to know what to search for to find this product – what about other varieties?
Credit: http://www.flickr.com/photos/45501032@N00/3726589535/in/photostream/
Heinz soup varieties
Credit: http:[email protected]/3726589535/in/photostream/

Look at the image opposite, a tin of soup from Tesco supermarket. Compare this with the soup shelf in my local Tesco supermarket. The shelf contains many varieties of soup, so when I go to the shop and I’m looking for a specific flavour of soup, in my peripheral vision I’ll notice a number of other flavours.

This analogy can work in two ways. First, it can help Heinz sell more varieties of soup, and secondly it can help me to discover flavours of soup I might not have previously considered.

Another analogy of discovery is music. I use Spotify, which contains all my favourite music tracks, and listen to the car radio to discover music I might not have discovered on Spotify. If I hadn’t listened to the radio, my playlist on Spotify wouldn’t have changed since I started the service.

We need advertising to help us discover products and services outside of what we search for. The Internet, as great a tool as it may be, is still based on users searching for what they already know.

The ubiquitous mobile shopping experience

I was out and about this weekend when Mrs H called me to ask me to buy something for her. She said she’d already asked our brother-in-law to buy it, but the shop he was in at the time was out of stock.

I was near a large Tesco supermarket so I drove there and went inside. Unfortunately they had sold out as well. I had visions of driving around endlessly, so while I was in Tesco I looked up the product on Argos’s website.

There was one remaining from a branch five minutes away. I clicked the reserve & buy button and received a confirmation text message that as long as I went to the Argos shop in the next 48 hours, the product was mine.

My afternoon was saved.

And it seems my use case is not uncommon. This is [the excellent] Erik Qualman’s latest video Mobilenomics.

How high street retailers can wake up

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With the news of Blockbusters closing, hot on the heels of HMV and last year Comet, I was asked my view of the British High Street this week.

Firstly, I feel extremely sorry for the staff at any retailers being closed down. I’ve been through redundancy processes myself and they are really unpleasant, turning the most confident people into nervous wrecks overnight. I recommend any staff direct their anger at their senior management for lack of foresight, even when it was incredibly obvious how business models were changing due to the Internet becoming more ubiquitous.

It’s easy to forget that Internet sites employ people to. Amazon employs over 2,000 people in the UK. My brother-in-law’s Internet business employs half a dozen people including warehouse staff. I doubt his business would have employed more people if they owned a retail shop.

The Internet is now its own standard way of shopping. During the 2012 festive season we bought almost every present online. My wife does all of our shopping over the Internet, including a local greengrocer who she emails orders to and they deliver, for free. The only time I ever go into a branch of my bank is to deposit cheques.

Internet shopping is a mature industry. It’s now a default way of shopping.

For some, there is the shopping ‘experience’ of going to a huge shopping centre, or somewhere like Harrods. Personally I don’t enjoy the experience of shopping on a weekend. The thought of going to Lakeside, Brent Cross, Westfield, etc. makes me instantly start thinking of what else I could be doing with that time.

High Street retailers cannot sit still expecting consumers to feel sorry for them. They need to adapt their business models, whether its superior customer service – so good that you will buy from them, and ensure they are competitively priced at the same time. 

Research online, purchase offline – the stats

This is a great whitepaper from Google which describes some consumer research about users who investigate products online, and then purchase offline.

We’ve all been through the Google search, competitive search, price match, then walked into a shop – this report shows how this process is actually more valuable for retailers, because users who do this usually end up spending more.

Retail and brand convergence

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The line between brands and retailers is now greyer than ever. Fifteen years ago customer bought products almost exclusively through retailers. Then the Internet changed that model, and brands started going direct to customers. Facebook further changed the model, enabling customers to interact with brands even more easily.

Let’s take an example of airline tickets. Fifteen years ago everyone booked flights through a travel agent – basically a retailer. Nowadays most people book flights direct with the airline (the brand). On average, 200,000 people ‘Like’ Virgin Atlantic, British Airways, RyanAir and easyJet on Facebook.

We’re already seeing electronics manufacturers setting up their own High Street shops – Sony, Panasonic and Apple are good examples. Except for the last brand, I imagine most people who go into the shop are there to browse and try products, which then go on to purchase online.

One key advantage of brands, (or manufacturers – most of the time they are the same thing), going direct to the consumer and having an interaction with them, is that they can better understand the market, and improve their product or service. A lot has been made of consumer insight and its value to marketing department; however I think the value of consumer insight can and should be to the whole organisation.

The future will enable more customers to buy directly from brands up to a point – I can’t imagine a time where I’ll stop using a supermarket and start buying soup from Heinz, drinks directly from Coke, frozen vegetables from Birds Eye and crisps from Walkers.

Photo courtesy of Laurent Dechoux on Flickr

Personalised advertising is good for users

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Personalised advertising is getting a bit of a bashing in the news recently. The whole question over privacy is being questioned; that it’s an advantage purely for advertisers and no one else.

The critics have got it all wrong. It’s the public, whether they are a mobile, web or TV viewers, are the real beneficiaries.

Firstly, let’s take a look at what personalised advertising really means. When a person buys a car magazine, do they want to see adverts inside of:

  1. Nappies
  2. Washing powder
  3. Cars

That’s an example of personalisation based on personas, or group of people. No one, that I’m aware of, would argue that nappy or washing powder manufacturers would want to advertise in a car magazine. I don’t understand why it’s any different on a website.

Now let’s move forward to personalised network advertising. This technology is based on how users move around a number of websites, who all use the same servers for their large adverts. Say a user visits a football club website regularly, and then they go to another website such as a news portal. They then see some adverts for their favourite team’s new home kit. 

This is still based on personas because it assumes some trends indicate certain behaviour (in this example, a user visits a football club website regularly so they probably support that team). This is an advantage for both the advertiser (no point spending marketing money on loads of advertising banners aimed at everybody and anybody) and also the consumer – they see relevant ads.

The next step is individually targeted, truly personalised content. It’s what many supermarkets do, based on your commonly purchased items. It’s takes into account some trends, but mainly the specific individual. 

Take the car example above. A user sees an advert on a website for a car. They end up buying the car (probably not based purely on the advert!) Personalisation will then stop the user from seeing worthless, same ads for the car and may replace them with insurance companies that specialise in that car market, and maybe even the demographics of the user.

This is an advantage of personalised advertising. It’s what shop keepers have been doing for centuries – understanding customers who walk into the shop (browse their website) and make targeted recommendations.

Car ad courtesy of Georg Schwalbach (GS1311) on Flickr