mikefowler-au

[mikefowler-au]

Cart Abandonment is a Delivery Problem Ready to be Optimised

Two of the top reasons for browse, cart and checkout abandonment are delivery cost and time. Addressing these drivers can drastically improve your e-commerce funnel conversion with abandonment rates sitting between 70-90%.

According to Shopify "45% of shoppers are looking for businesses who clearly show anticipated delivery times" View Report

As e-commerce retailers, we access behavioural triggers across all stages of the customer journey. Top-of-funnel opportunities headline your free shipping threshold and available delivery options. Payment methods are now table stakes today with delivery your best customer carrot across all stages of the funnel.

Australia's Top 100 online and omni-channel retailers offer a free shipping threshold. Now averaging around $65, customers are accustomed to shipping as free, fast and flexible and in that order. Top retailers offer Standard and Express shipping options with 1/3 now utilising same day, on-demand delivery options.

Optimise performance across the e-commerce funnel by:

Sitewide: Utilising site ribbons & banners - detailing your free shipping threshold

PDP & CLP: Communicating delivery & 'order by' cutoff times

Cart & Mini-Cart: Affirming when free shipping thresholds have been met or how much more is needed

Checkout: Offering same/next day delivery options to bring choice to the customer

Fulfilment: Post-transaction - utilising logic rules to upgrade delivery to same/next day wherever commercially viable. Surprise & delight your customers!

Abandonment e-mails: Headline your abandonment journey with the primary reasons for abandonment - delivery cost & time

What consumers find most valuable searching and buying products online

Customers seek proactive notifications, regular shipping updates and delivery options that suit their needs.

According to Shopify, "35% of customers are choosing in-store pickup options like click & collect to receive their orders in time."

Offering same day delivery in click & collect SMS & e-mail notifications is becoming a game changer for multi-store and hyperlocal fulfilment. Without deep integration requirements, easily transform your customer facing communication offering to bring orders to their door - same day. Customers love this and leveraging short radius distances of 3, 5 and 10km (or more), costs are inline with parcel post.

Click & Deliver by Rendr

Rendr brings innovation to click & collect with an easy to implement solution that brings a same day delivery choice to click & collect. Turn any in-store order e.g. endless aisle or service & collect order into a same day delivery.

Leverage your browse, cart and checkout abandonment e-mails with a winning fulfilment strategy that reflects customer delivery costs & time. The value of free, fast and flexible delivery far outweighs any promotional offering.

Delivery is the e-commerce funnel carrot.

If I can help solve last mile delivery challenges, reach out. Delivery solutions are your competitive advantage - right now. There are manual, low-tech, SAAS, and traditional checkout integrations ready to bring the future forward.

[mikefowler-au]

Local Commerce in the On-Demand Economy.

This is second in a series of articles where I explore on-demand delivery. I'll look at the current landscape, emerging players and discuss the best strategies & opportunities for success.

Location, location, location. It's everything right?

Not exactly. Retail is changing right now. It's about to change 10X. In Australia, companies like DoorDash and UBER are moving fast to deliver - everything! Last mile will become first mile and it all has to do with one thing - density.

Local commerce is a radius. In that radius are your customers, merchants, and drivers. These nodes determine your unit economics and overall opportunity. The relational tightness between nodes creates efficiencies and makes you incredibly resilient. As a network, the more nodes you have, the more dense your mass. If you have a dense network of merchants, drivers and customers, you can extend dayparts (breakfast, lunch and dinner) by accessing new merchant nodes through "New Verticals". After all, it's much easier to deliver a charger cable than a hot meal or frozen dessert. But the real benefits are expanding peak hours and route density.

What is the adjacency of food?

Looking at a 5km delivery radius, density increases where there are groups of shops such as shopping centres. Now I know what you're thinking. Shopping centres are a terrible idea. Considering accessibility, parking, technological adeptness, staffing, multi-locations ... yes, I agree. Not all shopping centres are created equal. It turns out that there are ten classifications of shopping centres: City Centre (CBD); Super Regional; Major Regional; Regional; Sub Regional; Neighbourhood; Bulky Goods; Themed; Markets; and Outlets.

One attractive cohort is "Bulky Goods" or homemakers centres.

Made up of medium to large, box/factory/warehouse sized stores. While the name specifies “bulky” furniture items, the majority of tenants are non-cubic & deliverable. Opportunities exist across major consumer categories: electronics; computers; small appliances and white goods; containers & kitchenware; linen; arts & crafts; office supply; outdoor & sporting goods; food; baby & kids; and pets. They are the easiest of the ten segments to access with frontal & adjacent parking, higher staff counts and lower wait times. Unlike regional centres that see 25% of stores devoted to personal services, homemakers have 80%+ occupancy by national retailers.

According to the Shopping Centre Council of Australia, there are 129 bulky goods sites. Looking at the 129, 20 (16%) are under single asset management by Aventus Group. These large format retail centres spread across five Australian states with 92% of locations on the east coast. 592 retail stores occupy the 20 sites and 87% of stores are national retailers. Of the 20, all 20 sites are currently addressable by both UBER and DoorDash. This is 564,945m² gross lettable area (GLA) with 14,109 total parking spaces (705 avg.). Total reported population catchment of 5.8m with an average distance from a CBD of 58km.

This is suburban gold.

It is also a symbiotic push and pull opportunity.

On-demand delivery companies can deploy a fast scaling merchant acquisition strategy across national retail groups - driving massive customer retention and new acquisition. Easier and more scalable that 1:1 onboarding with fantastic halo effects. National retailers may be more sluggish on prioritisation and resourcing across their e-commerce roadmap but, they are omni-channel savvy and have ERP systems ready to push data. They also have budgets to meet and COVID-19 growth to comp.

National retail chains should be beating down the doors of white label and on-demand delivery companies like Sherpa, DoorDash and UBER to make "30-minute delivery" part of their core retail investment strategies. The next marketplace opportunities e.g. Catch, Kogan, and Amazon exist on on-demand platforms for which Australians have become increasingly comfortable with shopping on. One key takeaway from my research is Amazon and Amazon Flex.

Amazon Flex will need to rapidly expand to more than delivering packages for Amazon.com.au if it is to compete in the on-demand economy. They have a platform where people shop by product vs. brand and that is a crucial element in a sell everything model. A migration is needed from the everything store to the everything "delivered" in 30-minutes store. That is something we'll need to see DoorDash and UBER do as they currently offer a "Shop by Store" UX.

What are the "New Verticals" in the Bulky Goods sites?

Looking at the top 100 Aventus Group retailers that occupy 215 total stores and span 20+ compatible verticals. Of these “New Verticals”, the respective store counts are: Bedding (35); Electronics & Appliances (26); Sporting Goods (19); Automotive (17); Lighting (16); Food (15); Pets (15); Fabric & Crafts (9); Vacuums (8); Office Supply (7); Discount (6); Homewares (5); Kitchenware (5); Storage (5); Baby & Kids (4); Cafe (4); Hardware & DIY (4); Pharmacy (4); Apparel (3); Computers (2); Electronics (2); Grocery (2); and Toys (2).

Those stores serve 5.8m people. Additionally, as national chains exist in all 129+ bulk goods centres nationwide, the near remainder of the Australian population would also be served. Largely suburban and outside of the CBDs - a key factor in on-demand delivery success.

A group acquisition strategy could address national retailers and total store counts. Autobarn (130); Baby Bunting (53); Bed Bath ‘N’ Table (160); Bunnings (267+); Godfreys (200); Harvey Norman (195); Howards Storage World (85+); Lincraft (60); Nutrition Warehouse (80); Officeworks (168); Petbarn (156); Repco (400).

Other key national retailers are groups - Super Retail Group (590): BCF (130); Rebel Sport (160); Supercheap Auto (300). JB Hi-Fi (301): JB Hi-Fi (200); The Good Guys (101). Spotlight Retail Group (223): Spotlight (120); Anaconda (60); Harris Scarfe (43) lead the mix.

What about the other nine shopping centre segments? Opportunities exist albeit very strategically different. Superficially, major centres like Scentre Group's Westfield would be opportune to do a deal directly with white label delivery services providers (DSPs). One way to regain above-the-threshold percentage rents. It's also a massive incremental benefit to retailers leveraging their micro-warehouses aka retail stores. One thing is for certain, if you are a retailer and are not working on a local commerce "store-to-door" strategy, then you will miss out on a massive chunk of future retail.

"Overthinking is a problem. Underthinking is a bigger problem. I feel for people who get stuck in analysis paralysis. I worry about people who don’t do the analysis in the first place. It's better to embrace the discomfort of doubt than to live with the regret of overconfidence." - Adam Grant

As a merchant, strategy and operations guy I find this all incredibly fascinating. The rest of the world is so much farther along than we are in Australia. But, we have a ton of USPs in our local retail sector - one is the mix. I'll explore "The Mix" and especially anchor supermarkets that make Australian shopping centres very unique amongst global retail in my next instalment.

To borrow a Jason "Retail Geek" Goldberg catch phrase from the Jason & Scot Show ... "Happy (instant) commercing!"

[mikefowler-au]

Instant Commerce in Australia.

This is the first of a series of articles where I explore on-demand delivery. I'll look at the current landscape, emerging players and discuss the best strategies & opportunities for success.

Within days, weeks and months, Australia will be inundated with what many believe will be the future of retail. From 90-minute pickup windows to 10 minute store-to-door, convenience is about to become a lot more convenient. No longer relegated to the grocery leaders, Coles and Woolies. From click & collect to pickup, on demand delivery, and last mile. Let's unpack what is happening right now.

In the on-demand delivery space, the key players are Menulog, UBER Eats, Deliveroo, and DoorDash. They are generally restaurant and convenience aggregators. They take a digital naive business, like a local restaurant or petrol convenience store and digitise them into an app and website directory. You can then browse and shop an aggregate of restaurants (or stores) and upon your order, utilise gig-network drivers to pickup and deliver to you. Of these players, two are pushing to deliver, you guessed it - everything!

UBER and DoorDash are embarking on expanding last mile to include the rest of "local commerce". That makes a lot of sense. Once a network of customers and drivers exist, this is the most logical next step. I'll save "New Verticals" for my next article and keep the focus on food and convenience.

In the US, Canada, UK, Europe, Russia, China ... OK, pretty much everywhere out of Australia this is already happening and has been happening over the last 12 years. The real difference between then and now has been COVID-19. This has accelerated years of e-commerce growth in Australia and brought forward the value of on-demand delivery. Bringing us closer to what the rest of the world has experienced during the last decade.

In the US, DoorDash now dominates on-demand food and convenience. UBER Eats, Grubhub and Postmates are not only getting their lunch served by DoorDash, but also eaten. A lot of this follows the evolution of Amazon Prime. Prime (US) started out as a two-day subscription at reduced cost and has evolved to Prime Now with 2-hour delivery windows in US major cities. Now Amazon Flex aims to reduce the delivery time by leveraging the gig-economy model.

There are a lot more on-demand players.

For US grocery, Instacart occupies the dominant "advertising" model. In Europe, Delivery Hero. Neither are vertical as they follow 3P v. 1P models. In NYC, you now have Jokr that promises a 15-minute delivery. Relative to Australia and the US is Gorillas. They are landing in Sydney as I write this. An emerging vertical player (1P "dark supermarket") that is currently recruiting in Sydney. Here's the crazy part. Gorillas just started in May 2020 right in the heart of the COVID-19 pandemic. They originated in Germany and promise a 10-minute grocery delivery. Yes, 10-minutes. I like the idea of this. Not specifically 10-minute delivery, but micro-fulfilment and hyper local. 1P allows you to own the end-to-end customer journey. This is the secret sauce and the future of retail.

"Gorillas exists to create a world with immediate access to your needs. We are not business people building a delivery company—we are delivery people building a business." — Kağan Sümer, CEO of Gorillas

I could go on. There are literally hundreds of on-demand players coming out of Turkey, China, and Russia and largely focused on food. Incumbents in Australia need to verticalise delivery fast ... and by fast I mean yesterday. In the old days, we spoke about the customer relationship and who owns the customer. In the new world, nobody owns the customer. They are simply not as sticky as you think and when we look at millennials, Gen-Z and beyond, the smartphone isn't a game changer, it's BAU.

The good news is: There will be parallel winners of the on-demand future.

The "everything" delivered stores such as what UBER, DoorDash, Delivery Hero, and Meituan aspire to be will stand alongside niche players in grocery and convenience, like instacart and Gopuff. If you can operationalise your store network to be a micro-warehouse and move beyond the idea of remote, rural warehousing and robotic picking e.g. Ocado, you can thrive. You must offer an immediate delivery window and move beyond multi-channel thinking. There is only one channel and that is immediate, convenient and fast.

In my next article, I'll explore opportunities in Australia, as well as how the current and emerging players will need to move from a "Shop by store (restaurant)" model to a "Shop by product" marketplace if they want to sell & deliver - everything. I'll deep dive Australia's best opportunities in on-demand convenience and how to win the $8.8b GOV prize.

Will Gopuff come to Australia? An always open model is the key to owning convenience. Australia offers many unique opportunities for immediacy, convenience and speed ... and this is literally Day 1.

[mikefowler-au]

How I Created a T-Shirt Empire

"Give someone a reason why they can't not buy." - Mike Fowler

Ten years ago I founded a t-shirt empire. It's gone now, but continues to resurface with an annual interview or two from a blog or news source.

It was a reflection of the birth of cloud computing.

As soon as AWS came on the scene, I started tinkering with cloud instances and this all culminated between 2010 and 2012 when I was able to fire up 100 micro instances and create millions of pieces of t-shirt art with a couple lines in a bash script.

Before that, it was static. I had built a small t-shirt company that sold a few hundred t-shirts a day using screen-printed heat transfers. It grew to around 1000 designs and we sold these across t-shirts and hoodies. Nothing too complicated, but we started to collect quite a bit of data.

One of our designers came up with great designs that never seemed to sell greater than my own basic incarnations. The reason being that I was in touch with the data. The data told me that a t-shirt with a football icon sold X times. Adding the word "Football" sold X² and adding a name like "Fowler" sold X³. But the cubed was reflected in the long tail of small numbers across millions of combinations.

This was an early form of personalisation. I called it double-personalisation.

In 2011, I started dabbling with scaling the technique. My first effort was a football and a soccer ball series. I found a collection of icons with a strong retro feel and used the command line to size the icon, add the word Football on the bottom and name on the top. It was automatically sized, overplayed and even had a vintage distress effect that gave it a unique continuity when composited.

Then came the American Apparel tri-blend t-shirts and it was a match made in heaven. Distressed white ink design with the double-personalisation technique. I scaled it up using a couple dollars an hour worth of AWS micro instances and knew it was destined for something much larger.

In November, 2011, I had spent about two months developing all of the pieces and was ready to unleash the beast. I booked a flight from Melbourne to Boston where my t-shirt company was and unleashed the monster with a simple run command. I arrived in Boston on Black Friday and by Cyber Monday had more than 700 orders of t-shirts on Amazon.com. AND this was only on brown t-shirts! I quickly added the other American Apparel tri-blend colors ....

My team was only about five at the time, but we cleared the sales volume with long hours and gang screen-printing heat transfers for the components. We would preprint the icons and bottom names e.g Football and only had to gang-up the personalised top names e.g. Fowler. This could have been digitally printed, but DTG printing is much slower than our screen printing process. We had automatic heat presses that zapped a new shirt every 8 seconds to ship!

What got me thinking of my t-shirt empire was perusing the many AI and ML titles in peoples Linkedin profiles and after getting knocked back from dozens of e-commerce applications for L'Oreal. I've spent my entire career in the apparel and fashion sides of e-commerce and pioneered many techniques used to drive online sales today. L'Oreal is a pretty tech savvy company and not once have I gotten to the table to discuss how I could help them. I wondered why.

An algorithm.

They use machine scanning and can't seem to find Fast-Moving Consumer Goods (FMCG), makeup, cosmetics or any number of keywords in my extensive CV. So they automatically knock me back within a few hours (even on a Saturday night) and never get to hear my next idea to change the world. It's an odd paradigm.

Anyway, back to Linkedin.

Artificial intelligence and machine learning are really words that describe scaled up attribution or advanced search. Nothing revolutionary at that level. At least for the masses. What passes for AI/ML is really just a simple form of tagging of attributes. In the same manner that my t-shirt empire was made of an algorithm. I just wrote a one line script that used command line driven unix code to generate and manipulate text e.g. ImageMagick that was driven by a simple text file of names in character-length order. No magic there. But the magic was in using 100 micro-cloud instances and $6000 worth of bandwidth to create, compose and overlay shading of a t-shirt design on a t-shirt that created an emotional attraction to the customer and generated millions of dollars.

It isn't machine learning. It's just recommended products or services based on an attribute. That's why most retargeting is flawed. It doesn't actually "think" anything. Recently, I scripted a couple t-shirts on RedBubble ...

Now everywhere I go online, I see RedBubble ads with my skull allover print and bootlegged Journey t-shirts that I found while looking for 80s rock tees on there. It's annoying to see poor retargeting efforts. It's more annoying to look at something and be followed around in perpetuity. It's impersonal. The opposite of personalisation and certainly doesn't remotely achieve the levels of double-personalisation that motivates an emotional purchase.

To be more effective, you need to put some parameters and logic around the process. I realised in 2011 that it wasn't "Give someone a million reasons to buys something". It is more like "Give someone a reason why they can't not buy."

It's an emotional decision that drives the reduction of ambivalence.

My work has since been understanding what I call the "ambivalence factor". A low scoring ambivalence factor means greater emotional connectivity and turns wants into needs. You can either show someone what they want at the right time or toggle emotional purse strings to unleash the favourite aunt or unique gift giver. Both of these are basic data mining based on sales data and profile connecting.

Now that it's been a few years, it might be time to unleash another beast.

- Mike / mikefowler.com.au

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The Afterpay Effect

Instant gratification takes too long. — Carrie Fisher

Buy now, pay later. In a single swoop, lay-by or layaway as it is known in the U.S. was no more. We now Afterpay or Zip Pay away our fortnightly pay packets. But, is that a good thing?

Personally, I’ve used it a handful of times. Bought a watch on The Iconic, an iPod at Officeworks and even a pair of jeans at Just Jeans (in person). But most recently, I had an extensive visit to the dentist and the beauty of B-N-P-L was easily demonstrated. It cost me nothing to “pay it in 4” payments.

So how does Afterpay make money?

A financial advisor discredited my claim that Afterpay was indeed free for the consumer. “It can’t be free.” he snarled. He called it a predatory payment method the likes of payday loans or cash advances. But it’s really nothing like that with both consumers and businesses loving it. Or certainly not hating it.

Here’s how it works. I went to the dentist and had a few years of neglected dental work done. When I paid, I simply generated a barcode on the Afterpayapp that was scanned and charged me $194 on my debit card. It will then charge me $194 each fortnight three more times. No fees or extra charges.

So who pays for the buy now, pay later service?

The business. Traditional discount rates or merchant fees range between 1–4%. Afterpay charges an average 6% to everyday retailers and service providers. While that is steep in cost, it’s also solving one of a handful of retail problems.

As a retail and e-commerce executive, it’s my mission to drive user growth, both new and recurring, increase conversion rates, and expand shopping bag sizes. Afterpay ticks all four of these boxes.

How so?

It makes a large purchase much more attractive. Like a dentist or car mechanic. It’s a positive driver to get the necessary done. It allows you to break up the cost into 4 payments at no interest or fee to you. Miss a payment, like any other payment method, and there are fees. But I am more than happy to pay $194 a fortnight for a couple hours of dental work than $776.

If you are a Scott Pape follower, Afterpay allows you to use your blow (splurge) money vs. tapping into savings. That seems prudent. Personally, I’ve never paid Afterpay any late fees …

With my sons iPod, I chose to shop at Officeworks because it accepted Afterpay. Amazon doesn’t accept Afterpay and most likely never will, as the commissions and non-proprietary nature would be killed on third party sellers conversions. Catch does. Catch is growing much more than AmazonAustralia and this is one of the reasons.

People will shop where Afterpay is accepted. They will spend more than they would if they were paying for the entire transaction e.g. 2 teeth repaired vs. 4. The jeans and the shoes vs. just the jeans. So as an e-commerce gun, it’s a payment method that works to attract new customers, increase engagement of existing customer, and increase the cart and bag size for both clicks and bricks shopping.

It isn’t going away. Consumers like it. With consumption declining due to housing prices and economic sentiment, economists like it as it’s one diamond in the rough for consumer spending.

Should Afterpay and B-N-P-L schemes be regulated?

Certainly. But as any payment method and consumer protection is. You can’t claim predatory practice when the big 4 banks are allowed to charge $35 for a failed direct debit while Afterpay charges $10. Both the banks and credit card companies are much more predatory. Afterpay is merely disrupting the status quo the likes of Paypal, Square or Stripe.

Afterpay is winning - and for prudent consumers, it’s a great way to pay for things. Online and offline businesses win, as it ticks the boxes in competitive times. As a retailer, I wouldn’t like paying 6 points to Afterpay. But, I’d dislike paying 15–17.5% commission to sell on Amazon even more. Payment tools have democratised selling and it’s never been a better time to be in e-commerce and retail for the nimble.

Mike Fowler / mikefowler.com.au

[mikefowler-au]

In the heyday of Dov Charney’s American Apparel.

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Encapsulating Content

“I don’t design clothes, I design dreams.” - Ralph Lauren

Marketing strategy in a digital world for the apparel sector is a tough ask. Brands drop new collections every 2 to 10 weeks and often use high-low price structures. That means that product content is here today and gone tomorrow. Nothing is evergreen - or always relevant. Creating relevancy is the ultimate goal of marketing. So how do we get there with apparel?

Start with acquisition

A healthy e-commerce site has a combination of search traffic made up of organic keyword search and direct entry. Direct traffic is made up of e-mail & eDM campaigns along with its own web address. A healthy ratio would be an approximate 60:30 percentile (search to direct) that represents a strong new customer acquisition funnel often delivered through a well implemented content strategy. At least organically. The remainder, often made up of social and influencer traffic and some paid traffic. We refer to this digital marketing model as PESO or paid-earned-shared-owned.

If the direct traffic percentage is too high or in some cases greater than organic search, we see rising, but diminishing growth across time with engagement relying heavily on a fixed, slow growing user base. Accelerated growth requires new acquisition.

Google isn’t easily gamed

SEO and keyword honing strategies are a start for any website whether you are Kmart or the corner milk bar. Adding meta data to product pages and ensuring competitive keywords are in play throughout is certainly helpful, but authenticity reigns. Google relies on authentication methods to ensure its search results are accurately displayed with a maximum advertising threshold to maintain its worth. This authentication formula was generally based on backlinks or links back to a web page as a form of validation.

Today, the only sustainable recipe for success is legitimacy. Something that a twist of an algorithm can’t wipe off the planet.

Birdsnest executes this extremely well for a nearly pure play 25m+ AUD gross revenue generator and I credit their rise to a well thought out content strategy. Like many online retailers, they use Hotjar heat maps and Vision6 for UX improvements and e-mail marketing respectively. I have analysed their organic search across the last two years with the majority being apparel capsules and outfit themes.

Women are much more likely to social share in Pinterest, Instagram and Facebook if its style vs. product related. The Birdsnest girls do capsules in a plethora of different ways like open-ended themes, events and occasions. A winning formula that takes seasonality and adds some ever-green.

- Mike Fowler / mikefowler.com.au

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Who will win the apparel wars?

“Department stores, the traditional cornerstone of the apparel industry, are losing ground. Analysts say Amazon is on track to overtake Walmart and become the leading US apparel retailer in 2018.” - Kiri Masters, Forbes contributor (link)

The reality is most certainly grim for apparel retailers.

Amazon is using their extensive data collection to dominate the holes and grow more than 127 private label brands, with apparel, grossly outweighing the closest growth area. Apparel is where it is at.

Most recently, J. Crew’s Mercantile brand pulled out of a just-started relationship with Amazon after only 16 days. Things aren’t good at J.Crew, but they aren’t good at a lot of other clothing brands and retailers either.

Apparel isn’t like other categories with the rise of pure play apparel sellers taking top spots and dominating current internet growth patterns. The truth is, apparel is extremely attractive to data analytics with large style, colour and size ways - there are simply a lot of SKUs. SKUs are analytical gold.

This is a longtail far out-reaching books and socio-demographics and Amazon knows it.

Amazon has the luxury of every luxury.

If you are married to a high-low price model, you will lose. If you are married to everyday low pricing, you are just as pigeonholed. Amazon has the ability to exploit each and every nook and cranny. They may not have the capacity (or desire) to compete with a $3 jersey-knit t-shirt, but they are garnering 17.5% commission on the majority of Gildan, Anvil, Russell or near-all private label offerings of every retailer on earth. And that’s from the bottom to the top.

How can you beat the everything to everyone model?

The simple answer is that you can’t or at least I’d rather be on the right side of history to make that assumption. You cannot beat a model that can exploit every possible opportunity with zero risk of ROI from the best analytical data set known to humans. It gets much worse. From small corner stores that require no manual payment processing to 1-2 hour major city product delivery … 

Food is one of many secret sauces to grow a delivery network that wipes department stores and smaller retailers off the planet with 1 hour delivery across all categories.

In Australia, retailers are playing catch up.

Everyone knows they have to be online which is a start. Facts are that it was only three years ago that Australia’s largest retailer, Kmart, had only 14 apparel items on their website.

In a retail department store world, Kmart has nailed it in homewares, but time and the flattery of cloning is eating away at that win and homewares sales are at a plateau. Mid-level general merchandise and hard goods do not translate well to online and there aren’t many low-hanging fruit opportunities.

Combine that with the fact that everyday low pricing has rarely worked across women’s apparel which you must be successful in.

First and foremost, Kmart needs agility and autonomy. The online division is merely that, a division. With shared resources that are not autonomously driven. There maintains little or no dedicated marketing or content resources to the apparel category. Sign up for their newsletter and be inundated with mediocre toy and licensed childrens product eDM’s whether you have kids or not.

Kmarts “& Co.” brands have been migrated to an ANKO single brand concept that means nothing to anyone. Apparel brands are a representation of style and apparel as a category is entirely entrenched in style. Capsules, outfits, storytelling is how we sell collections, brands and clothing concepts.

The winners in apparel have strong digital engagement strategies and even stronger e-mail and eDM campaigns that hyper-segment and personalise.

Apparel branding is customer journeying in its purest form. Some retailers, like Birdsnest, get this and their evergreen engagement stats are off the charts on pinterest and social media, especially for outfitting and capsulisation.

Amazon knows all of this and they have the data to prove it. 

Success will be rewarded to the retailer who understands what and why Amazon is doing what they are doing. A retailer that is willing to put forth ownership to the apparel category with a dedicated marketing and design team. A commitment to building brand relationships and developing trustworthy style concepts across every silo.

There is no longer a quantity over quality win. Apparel requires personalisation and engagement and you simply cannot sell a Superman t-shirt as a “Superhero Tee” or Metallica licensed tee as simply a “Printed Tee”.

ALDI doesn’t sell ALDI labelled product. They offer a multitude of private label brands allowing them to reach across every targeted category and they do it at an everyday low price. Both Costco and IKEA are moving online for the landscape of online acceptance has changed from never to maybe to must do. ALDI will certainly get there eventually - it’s an inevitability.

In apparel, brands are a representation of style and allow market tiers and segmentation. They don’t cannibalise each other. Style is the heart and soul of apparel.

The secret sauce.

It’s easy to see how Kmart can win the apparel wars in Australia. It’s bricks and clicks combined with an apparel strategy that includes private labels, digital content and autonomy that complete the recipe.

Since Kmart still charge a service fee to get you into their stores and pick up a purchase ($3 packing fee / order under $25), they clearly don’t get any of those things or the value of their own customers.

So whoever is willing to actually do what they are saying will win the apparel wars. Everybody is talking.

- Mike Fowler / mikefowler.com.au