How Local Businesses Can Take Advantage Of Their ‘Frenemy’ Relationship With Amazon

As large and small retailers head to the NRF’s Big Show this weekend, the question of Amazon as a friend/enemy or “frenemy” will hang over most of the discussions as the industry seeks to find a way to adjust to the e-tailer’s hegemony and influence with consumers.

Earlier this week, Amazon touted the benefits to SMBs during 2017. Among the highlights Amazon pointed to was that more than 300,000 U.S.-based small and medium-sized businesses joined the Amazon Marketplace.

The company also said that more than 140,000 SMBs selling on Amazon surpassed $100,000 in annual sales, while Amazon Lending surpassed $3 billion lent to small businesses on Amazon since the program started in 2011.

“More and more small and medium-sized businesses are choosing to join the Amazon Marketplace and sell right alongside Amazon to reach customers around the world. Entrepreneurs and small business owners are succeeding on Amazon – they sell half the products that Amazon customers buy, and more than 140,000 small and medium-sized businesses surpassed $100,000 in sales on Amazon in 2017,” said Peter Faricy, VP for Amazon Marketplace. “These businesses are reinvesting in their local communities – creating jobs and supporting local suppliers. We are proud of how the Amazon Marketplace helps empower so many small businesses, not just in the US, but around the world.”

Amazon’s Gravitational Force On Retail

The growth of e-commerce and the decline of store sales has largely been blamed on the gravitational pull Amazon exerts on the space.

And stats cited by  Bryan Eisenberg, co-founder of marketing consultancy BuyerLegends and co-author of  Be Like Amazon: Even A Lemonade Stand Can Do It, would seem to suggest that this is not a case of mass paranoia: Amazon captured 89 percent of all online holiday spending in the five-week period beginning on Thanksgiving, according to an analysis of credit- and debit-card transaction data by Earnest Research in New York.

In comparison, Walmart, which purchased Jet .com in 2016 for $3 billion, remained a distant second a 4.4 percent, Eisenberg notes.

Amazon has continued to move aggressively in expanding its promise of near-immediate delivery and physical pick-up options for its online shoppers by rapidly opening up fulfillment centers in major cities. But as Eisenberg suggests, there is a lot that local businesses can do to take advantage of Amazon rather than be crushed by it.

The Instant Pot Model

The first thing retailers need to do is come to terms with the fact that Amazon is determined to reach every city, town, and block with ease over the next few years.

“You can’t even say ‘Amazon dominates,’ because it’s beyond that when it comes to retail and retail search,” Eisenberg says. “When someone wants a product, they’re going to Amazon. It’s their choice to be there or not. I think retailers have to be there. Yes, you can keep them as a ‘frenemy.’ But keep in mind two things.”

The first is that when brands are exceptional, and they behave like Amazon, they can grow massively without having to compete with the e-tail giant.

One example Eisenberg offers is the phenomenal success of the Instant Pot.

While Amazon has been adding its own versions of many products sold on its platform, it isn’t going to compete with Instant Pot for two reasons, says Eisenberg: Instant Pot is priced fairly and has built a cult-like community around it. The latter is something Amazon would not be inclined or able to do.

As a result of all those factors, Instant Pot thrives in Amazon’s world.

Another example Eisenberg points to is Anker, which makes cell phone accessories, which has similarly built its brand through Amazon despite facing  white labeled items sold under Amazon’s banner. Amazon doesn’t slight or mind Anker because it adheres to what Eisenberg says is Amazon’s “four pillars”:

“They take care of their customers, they get the products to them quickly, they’re constantly innovating and creating new products, they price their products fairly, and they sell well,” Eisenberg says. “So if you live by Amazon’s rules, they leave you alone. But if you’re an Energizer or a Duracell that have gauged consumers on batteries, Amazon will create a private-label knock-off and price it to allow it to take over that market.”

The Amazon Advantage

That product proposition can also be applied to local stores, Eisenberg adds, though many of the benefits are still a few years off.

“The advantage to local businesses is – and I don’t think you’re going to see that today — that you will be able to get global reach,” Eisenberg says. “Amazon has out-Googled Google by becoming a better product search engine. They’re also potentially be competitive in retail services such as plumbers and contractors.”

That’s a space that Google, Yelp, and Facebook have been aiming to capture as well. And that competition from Amazon will give those local businesses a good deal of leverage, especially as the marketing battle among voice-activated assistants heats.

“We know that Amazon is betting the farm on Alexa and implanting that beyond Echo devices,” Eisenberg notes. “Alexa will be more deeply embedded on other people’s phones, it will be on watches and wearables, it will be on refrigerators, and most importantly, it will be in cars. It will have an important place in self-driving cars at some point.”

In the not-too-distant future scenario Eisenberg paints, a consumer will be traveling in their autonomous vehicle and decide they need a shirt for a conference they’re attending next week. They’ll tell Alexa to find it. Considering that Alexa knows the person’s size, where you like to shop, and has their payment info, the voice activated assistant will have the details in seconds. After scanning listings near the route, Alexa will ask if it should navigate to a selected store.

The store will get the sale and Amazon will be able to take a piece of that advertising business, while taking another piece through its payment system. And because Amazon can’t do everything itself, it will be a win-win for retailers, Eisenberg says.

“There are more things that Amazon can offer in terms of services that can’t fit into a warehouse or fulfillment center,” he says. “It’s also more cost efficient to rely on a retailer than on its fulfillment center.”

Eisenberg’s view is already borne out by at least two local retailers that shared their stories with Amazon.

“Since selling on Amazon, we’ve been able to grow our business from three to 40 employees, right here in Delray Beach, Florida,” said Michael Dudley, managing director of Salon’s Choice. “We recently launched on Amazon in the U.K., and are now shipping thousands of orders a day through Fulfillment by Amazon to customers around the world.”

“We launched on Amazon two years ago and are now operating in more than seven countries around the world,” said Phil Williams, CEO and founder of Coffee Gator. “2017 was our biggest year on Amazon, with sales growing by more than 100 percent year-over-year, and we expect 2018 to be even bigger.”

Nevertheless, for those retailers who plan to take their chances in terms of opposing Amazon’s local incursions, Euclid Analytics CEO Brent Franson presented his own battle plan that calls for updating co-op data and marketing strategies.

“Building an effective data co-op for retail is challenging – 55 percent of online shoppers start their product searches on Amazon, says BloomReach – but ultimately worth the battle,” Franson wrote on GeoMarketing this week. “More choice will force the industry’s three major players – Amazon, Facebook, and Google – to improve what they offer to marketers. If the competition is better, then the Big Three runs the very real risk of significant losses. Either way, the consumers – in this case, the marketers – win.

“The right co-op structure will yield better personalization based on actual customer needs and intent. It will earn customer trust by balancing privacy concerns with personalization; for example, the co-op should outline clear rules that ensure obfuscation of certain kinds of data (e.g. PII) before sharing with the pool. Finally, it will prioritize optimized marketing for long-term value. This is about building long-term relationships that reward both the retailer and the consumer; it’s not merely about immediate conversions. Each member of the cooperative should believe in, and be working toward, that goal.”

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Button’s Mike Jaconi On How Buzzfeed And Walmart Are Demonstrating The Complement Of Content And Commerce

Social news site Buzzfeed is expanding its existing content alliance with Walmart and the retailer’s e-commerce platform, Jet.com, via the Button Marketplace, an app engagement and partnership platform that connects mobile content and commerce brands.

The expansion involves Buzzfeed Tasty, the publisher’s food and recipes video portal, which the Button bills as a “blending of content and commerce.”

“This partnership represents a natural combination of the two on mobile in a way that is exciting for customers, serving yet another way Tasty, Walmart and Jet are evolving the shopping experience to meet customers where they are — no matter when or how they want to shop,” Button’s Natalie Gerke writes in a blog post. “With Button’s technology and expertise in app-to-app partnerships, Tasty is able to drive users directly into the respective Walmart.com and Jet.com apps to complete their transaction, known to be the highest-converting channel within today’s digital retail industry (apps performing 4x better than mobile web).”

Here’s where Button’s Marketplace comes in. The platform provides the connective tissue between complementary mobile apps and websites — such as Buzzfeed and Tasty — to promote loyalty and payment when its users seek to buy something related from a Walmart or Jet.com.

Just by way of explanation of how other ways Button creates complements between commerce and content, last May, The Weather Channel app began featuring Button Marketplace apps from Uber, Groupon, delivery.com, Caviar, and Resy.

As a result, its users would be able to hail a ride, sign up for a deal, get a food delivery, or make a reservation without leaving The Weather Channel to connect with those functions. In addition to maintaining engagement, The Weather Channel could potentially drive revenue through affiliate deals to promote those separate app functions.

As Walmart seeks to combat rival Amazon to be the primary online and offline shopping center for consumers, the extension to other apps within its own mobile base could help it prove its own greater convenience to consumers.

Michael Jaconi, founder and CEO of Button, offered his take on the intersection of commerce and content and how apps can make those connections more seamless, particularly for brick-and-mortar brands trying to enhance their omnichannel strategies.

GeoMarketing: How has the nature or state of app engagement changed since Button launched over three years ago?

Mike Jaconi: The phrase coined years ago by Apple – ‘there’s an app for that’ – still rings true today. Since starting Button in 2014, apps and consumer engagement with them has grown significantly. In fact, as Button’s recent report we released with App Annie shows – 2017 Index: The Mobile Consumer – consumers prefer apps for their convenience, whether it’s saved personal and payment credentials or because they’re easier to navigate. The growth is apparent, as the App Store and Google Play now feature a combined 5.9 million apps, and smartphone sales are expected to hit more than $330 billion by 2021, three times the forecasted $102 billion this year. For any retailer or service provider looking to acquire new users, apps will be imperative to their success when it comes to a mobile strategy.

How has Button itself evolved over the past year?

Over the past year, our growth has skyrocketed and our product has evolved to make it even easier for Publishers and Merchants to partner in mobile. We’ve welcomed a range of new partners across a variety of industries including Walmart, Buzzfeed, Target, Walgreens, The Weather Channel, and many others. The platform is now driving hundreds of millions in spending annually, and retailers of all types are coming onto the platform to diversify their mobile marketing budgets. Button is the most cost-effective acquisition channel our partners have in mobile – and with the duopoly of Google and Facebook only growing more powerful – Button is becoming an even more vital ingredient in retailers’ growth strategies.

Looking at brick-and-mortar perspective, how necessary is for stores to have an app? Is it all about promoting loyalty? Or are there other aspects stores should consider?

Mobile commerce is continuing to grow faster than any other channel of spend. Amazon, the guiding light in retail, saw more than a 50 percent YOY increase in sales on the Amazon app this past holiday season.

For brands to succeed with their most loyal audiences, they need an app to serve these consumers — and an acquisition strategy to make it succeed. With apps being retailers’ highest-converting channel, this is an essential pillar of retailers’ growth strategies in this era. Brands must also remember that apps aren’t using mobile to strictly make purchases, but also to price compare while in-store, access savings on the go, and research items they’re interested in when they don’t have time to shop. Retailers that don’t have a comprehensive mobile acquisition strategy will lose out on these valuable “moments of intent” that so frequently pop up in mobile.

Sticking with brick-and-mortars, how well are they using third parties such as Google Maps, Foursquare, Uber, OpenTable?

Creating the connective layer between digital and physical is a strategy we’ve worked to create since day one of Button. When it comes to finding a place to eat, consumers look at reviews on an app like Foursquare to find the best around them.

By creating that seamless connection between inspiration and the ultimate action, we’re making it simpler for consumers to get to the places they want. We’re also helping to make the apps themselves more useful — they go from being a place to get information to a place where you can take an action! Google Maps has also made a similar connection for consumers with the integration of Uber and Lyft.

Retail is following the natural extensions listed above, and I expect the next three years to show more progress than the past 20 when it comes to connecting online behavior to offline retail spending.

How does Button view the rise of voice-activated digital assistants like Alexa, Okay Google/Google Assistant/Google Home, Siri, Cortana, Samsung’s Bixby?

These new digital assistants are here to stay.  I’m still torn on whether commerce at scale will be possible through them without a view layer – and Amazon’s Echo Show is likely the result of Amazon coming to a similar conclusion. That said, whether a voice prompt or the “tap of a button” – the uniqueness of Button’s platform – the index of matching “actions”, “products”, and “places” will make the voice revolution an exciting part of the Button story. More to come on that in 2018.

Looking to the end of the year, what is Button focused on as it looks to position itself for 2018?

2017 was an exciting year for Button’s Marketplace, which grew with many of the world’s leading and most innovative brands turning to Button to power their mobile partnership strategy.

When companies like Walmart, Uber, eBay, The Weather Channel, Buzzfeed, and many more select Button as their partnership platform, it inspires other brands to follow suit. Our integration roadmap is full with many more leading retailers, and the publishers they’re bringing to work with us represent new verticals and new models we have never worked with before.

This was always our dream – to fix a bunch partnerships that we knew we could fix with better technology built for mobile and with the user in mind, and secondly to build the platform that the business models of the future could be built upon. That’s what’s coming – and I couldn’t be more excited about it.

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For New York Marketing Push, E-Commerce Platform Jet Takes The Subway

Jet.com, the Walmart-owned e-commerce brand, is continuing its New York City outreach with a campaign designed to appeal to urban, affluent consumers in advance of the holiday shopping season.

Part of the brand’s greater city-wide holiday season takeover will include includes billboards, bus wraps, and subway advertising. And its own branded-Metrocard.

The ads go live on 11/6. Jet will also  have custom Snapchat filters featuring its artwork geofenced to the subway stations for the first few weeks, a Jet representative tells GeoMarketing.

The campaign follows Jet’s previous New York effort in June. The company partnered with Domino Media Group, the content and commerce company focused on home décor, “to celebrate summer” by opening a 1,500 square foot popup store in Brooklyn that showcased the connection between online and offline consumer experiences.

Before that, the Hoboken, NJ-based Jet, which was acquired by Walmart for $3.3 billion in August 2016 to expand its bricks-and-clicks offerings versus rival Amazon, worked with concept store STORY on a six-week installation in Manhattan featuring a wide assortment from Jet’s fresh grocery.

As voice-activation becomes a more mainstream tool for consumers to make purchases and discover physical shopping choices, e-commerce companies have looked to include brick-and-mortar and traditional advertising as part of an omnichannel strategy.

As Jet executives told us this summer, the need for and online/offline strategy is not just for stores anymore.

“What’s interesting about e-commerce is that it’s no longer just about shopping online,” said Musab Balbale, VP/GM of health, personal care, beauty at Walmart’s e-commerce channel and for Jet. “Customers come to our site to learn more about products, to see what’s right for them. And we might be the right place for them to purchase something since we can ship it within two days for free. Or they may want to find that product in a local store to satisfy that sense of immediacy.”

Jet’s stylish Metrocards will begin appearing next week.

And that’s the underlying point of what Jet’s new campaign is meant to drive home — even while consumers are underground.

“Over 5 million commuters swipe a yellow subway card on a daily basis as they make their way around New York City,” Jet’s rep says. “Artists like Barbara Kruger and brands like Supreme have released limited edition cards making them more collectible in recent months. Jet.com is tapping into the collectible concept, launching beautiful Jet-purple and white designed subway cards on November 6.”

The limited-edition cards will be distributed randomly at vending machines at the following 10 NYC stations:

  1. 14 St-Union Sq
  2. 59 St-Columbus Circle
  3. Lexington Av/59 St
  4. East 86 St
  5. Lexington Av-53 St
  6. Fulton St
  7. 14 St/6 Av
  8. Chambers St/WTC/Park Place
  9. Canal St
  10. West 4 St-Washington Sq

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Target Adds Google Voice Assistant Shopping Nationwide

Target is the latest brick-and-mortar brand to sign on to accept requests made by owners of the Google Home through their voice-activated Google Assistant (aka “Okay, Google”) for delivery or pickup via its local online shopping marketplace Google Express.

In essence, the arrangement represents an expansion of Target’s existing use of Google Express.

Starting today, Target shoppers at most of its 1,800 stores in the United States can access items through Google Express and with the Google Assistant (except for Alaska and Hawaii). Target will offer two-day delivery, as well as free shipping for any orders over $35, Google says in a blog post.

Coming In 2018

Most of the capabilities of shopping through Google Express won’t be available until 2018. For example, after the new year, Target customers will also be able to use their Target loyalty membership through REDcard to get 5 percent off most Target purchases and free shipping when using Google Express. In addition, in 2018, Target shoppers will be able to link their Target.com and Google accounts, so the service will remember all their favorite items.

“We’re teaming up with Google to create innovative digital experiences using voice and other cutting-edge technologies to elevate Target’s strength in style areas such as home, apparel and beauty,” Target says. “Work is underway for Google and Target teams to bring this all to life.”

In August, Walmart unveiled plans to rollout a similar voice-activated shopping via Google Express and Google Home tools for its 4,700 U.S. stores and its fulfillment network “to create customer experiences that don’t currently exist within voice shopping anywhere else,” including choosing to pick up an order in store (often for a discount) or using voice shopping to purchase fresh groceries across the country.

These partnership on voice-activation comes roughly a year after Google Home debuted as a Connected Home product to augment Google Assistant.

“Shopping isn’t always as easy as it should be,” Sridhar Ramaswamy, SVP for Ads and Commerce, said in a blog post at the time of the Walmart deal’s announcement “When was the last time you needed to pick up something from the store but didn’t have the time to make the trip? Or you went to the store only to realize they didn’t have the brand you wanted? Wouldn’t it be nice if you could get what you want, however you want, from the stores where you already shop? We launched Google Express and shopping on the Google Assistant to do just that: make it faster and easier for you to shop your stores like Costco, Target and  Walmart.”

Okay, Google, Target shoppers are ready to talk.

Target’s Many Omnichannel Steps

For Target, the expanded Google partnership follows a series of steps designed to tackle one of the primary challenges facing its omnichannel strategy by rivals like Amazon. In August, for example, Target acquired transportation tech company Grand Junction to promise same-day delivery to customers to match one of key appeals of Amazon’s discount shopping subscription program, Prime.

It’s the latest salvo store brand has taken to meet consumers’ demands in the age of Amazon and e-commerce. Those demands include personalized recommendation and satisfying customers’ purchasing preferences, such as online shopping/in-store pickup.

But as Amazon has expanded its discounts and two-day shipping with its Prime membership option, and has just heralded its Instant Pickup option, retailers have turned to one advantage they still possess — at least for the moment — in relation to Amazon: proximity to their customers and known inventory, which makes it possible to offer the ultimate convenience of letting someone click “buy” and then having it brought to them within a few hours.

The Rise Of Connected Intelligence, The Knowledge Graph

In general, the adoption of voice-activation and on-demand delivery/pickup follows the wider capabilities stemming from the rise of Connected Intelligence and the Knowledge Graph, which have propelled personalized, one-to-one connections between brands and digital assistants such as Amazon’s Alexa, Apple’s Siri, Google Assistant, Microsoft’s Cortana, and Samsung’s Bixby as they enter the mainstream of consumer behavior.

While Amazon’s Alexa has assumed an early position as a leading voice-activated assistant, Google has stepped up its push into the space as its aligns its services to brick-and-mortar brands such as Panera Bread, which became one of the first national restaurant chains to begin offering voice-activated ordering and payment through Google Assistant.

The voice-activated ordering is currently available in Panera’s hometown of St. Louis and at its six locations in the Silicon Valley area. A full rollout of voice ordering is expected to come to all of Panera’s 2,000-plus U.S. locations by the end of the year, the company has said.

Other national brands that have formally aligned with Google’s voice-activated virtual assistant to accept spoken orders via the delivery marketplace Google Express, including Costco, Guitar Center, Kohl’s, L’Occitane, Payless, PetSmart, Road Runner Sports, Sur La Table, Ulta, Walgreens, and Amazon’s Whole Foods.

In the case of Target, the retailer has been aggressively — and at times, fitfully — revising its omnichannel strategy. For example, earlier this year, it decided to abandon its sub rosa e-commerce program called Goldfish, which was dubbed as the “store of the future.”

Before that, in August 2015, Target started a beacon program with Estimote to round out its in-store sales assistance. It’s unclear how vital the beacon program has been — or even whether Target has continued to use it —  since the company has not discussed those efforts publicly. Along the way, Target’s experiments with interactivity has included retail pop-ups and a showcase IoT-based connected home store in San Francisco.

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How Discount Grocer Lidl Can Build Store Traffic Following US Launch

After experiencing a favorable introduction for its first 20 U.S. grocery stores in , German discount chain Lidl has been trying to establish its footing as it continues its East Coast expansion.

According to analysis by proximity platform inMarket, the dip in foot-traffic Lidl has seen at some of its stores in North Carolina and Virginia is afflicting others in the discount grocery space as Walmart ramped up its challenge against Amazon’s Whole Foods and Target.

Finding Traction

Lidl, which runs over 10,000 stores across 28 countries, “launched with a bang” this past June 15th, inMarket’s report notes. The company’s U.S. stores drew a decent 2.6 percent Share of Visits (SOV, as inMarket abbreviates it) on its introduction to the U.S. market.

The U.S. launch by Lidl appeared to take customers from another discount retailer BI-LO, which saw a decrease in visits from May to June, inMarket says. North Carolina- based Harris Teeter, which is a subsidiary of supermarket chain Kroger, also lost SOV in June, suggesting that consumers went to compare shopping at Lidl. (We’ve reached out to Lidl’s PR department and will update accordingly.)

Lidl saw an initial burst of store visits in the US this summer, but traffic has since declined.

But rather than cannibalizing the direct competition, inMarket points to Walmart’s gravitational pull as representing the biggest problem smaller supermarkets are facing, as the retail giant attracts about 30 percent of grocery visits.

“Many of those visits [to Walmart] are likely to involve grocery purchases,” inMarket says. “It’s interesting to note that Walmart dropped from 30 percent SOV in May to 29 percent SOV in June — perhaps as its cost-conscious shoppers went to check out Lidl. Fellow mass merch chain Target remained at from May to June at 9.3 percent SOV in these markets.”

Conquesting Reconsidered

Despite Lidl’s sudden rise, and its direct rivals’ dip in visits around the time of its debut, BI-LO, Walmart and Harris Teeter have all recovered SOV as of September, inMarket notes.

“It’s still very early for the retailer, so there’s definitely potential to turn things around,” inMarket Communications VP Dave Heinzinger tells GeoMarketing. “From our perspective, we know that location-based digital ad programs can help offline retailers drive foot traffic into stores.”

One area for Lidl US to explore is managing the digital presence of its growing network of American locations. Ensuring that consumers have the right discovery tools associated with digital presence management — nearest addresses for online searches, store hours, contact details, and reviews — could quickly expand its initial customer gains.

Heinzinger is interested to see if Lidl could make an impact by targeting competitive shoppers via smart, location-based retargeting programs. (For the record, Lidl does not employ inMarket, which relied on location data from the 50 million consumers who use the company’s partner apps).

“For example, our data shows that BI-LO and Walmart had dips in SOV during Lidl’s launch in June, while Whole Foods did not,” Heinzinger adds. “A top-line recommendation might be to focus on their strongest audience — the cost-conscious shopper — by conquesting BI-LO and Walmart shoppers through online-to-offline retargeting. They might also skip wasting dollars/impressions on uninterested Whole Foods shoppers.”

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How Walmart Plans To Connect With App Content And Services Through Button Marketplace

Walmart is the latest retailer to sign on to Button Marketplace, an app engagement and payments platform that connects mobile content and commerce brands.

In addition to adding Walmart, the Button Marketplace has also added more than 30 diverse new retailers to the platform. These include fashion companies such as Gap, Express, and Under Armour; digital travel brands such as Hotwire, HomeAway, and VRBO; retail giants such as Target, QVC, Walgreens, and Sears; among many others.

The Marketplace is run by a company called Button, which provides the connective tissue between complementary mobile apps and websites to promote loyalty and payment.

Just by way of explanation, last May, The Weather Channel app began featuring Button Marketplace apps from Uber, Groupon, delivery.com, Caviar, and Resy.  As a result, its users would be able to hail a ride, sign up for a deal, get a food delivery, or make a reservation without leaving The Weather Channel to connect with those functions. In addition to maintaining engagement, The Weather Channel could potentially drive revenue through affiliate deals to promote those separate app functions.

As Walmart seeks to combat rival Amazon to be the primary online and offline shopping center for consumers, the extension to other apps within its own mobile base could help it prove its own greater convenience to consumers.

Michael Jaconi, founder and CEO of Button, was particularly ebullient in announcing what he believes the benefits are to the retail giant.

“Walmart joining Button’s Marketplace is one of the greatest accomplishments for the company to date,” said Jaconi, at his company’s Tap 2017 conference. “Enabling Walmart to expand the partnerships that matter most to them to the mobile channel is a core ingredient in their digital growth strategy. Now, with Button playing an important role in that strategy, I’m confident our platform will deliver the highest-converting channel for mobile buyers that exists.”

Jaconi backs up his claims by noting that as mobile commerce continues to grow, with smartphone sales expected to reach more than $102 billion in 2017 alone, retailers are seeking new avenues to tap into the growth of the mobile economy and acquire new users for the highest converting channels they have — their apps.

Back in February 2016, we spoke to Mike Dudas, Button’s co-founder, chief revenue officer, about the role that mobile was playing in blurring the lines between online and offline for retailers.

“We are focused on mobile commerce,” Dudas told us at the time. “But what’s really surprising is that mobile commerce is actually happening in store. For example, Walmart saw that something like 10 percent of their mobile transactions are happening in store on device.

“People want to walk in to a store and if it doesn’t have the good on the shelf, they say, ‘Guess what, I’ll buy it from you on my phone.’ You’re going to see retailers responding to this. You’re going to be able to buy anything and get it delivered at the biggest, most savvy and sophisticated retailers. There’s going to be a much bigger shift to transactions that occur on what some would call ‘remote commerce,’ but I would call “proximity commerce,” as I tap the phone and pay with a credit card.

“Then, there’s this whole class of transactions that occur with services like Uber, and other platforms where you can book anything from food to hospitality to movie tickets,” Dudas said, foreshadowing the dozens of partners Button has signed up since.

The Walmart deal follows its recent aim at Amazon by partnering with Google on voice-activated shopping.

Owners of the Google Home will be able to speak orders to their voice-activated Google Assistant (aka “Okay, Google”) for delivery or pickup via its local online shopping marketplace Google Express. The Walmart connection came on the heels previous store partnerships with Costco, Target, and Whole Foods, which, coincidentally, is being acquired by Amazon for $13.7 billion.

In addition to adding Walmart and other retailers, Button is also concentrating on publisher apps as well. It has signed up social news outlet Buzzfeed, which will be able to tap into mobile commerce apps in the same way The Weather Channel’s app is through the Button Marketplace.

“Buzzfeed is the king of merging content and commerce in the most authentic way,” said Jaconi. “Incorporating mobile shopping for consumers within their properties is an exciting opportunity, and the variety of Button Merchants combined with Buzzfeed’s content creates endless possibilities for all partners – a win, win all around.”

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Amazon To Open Its First Fulfillment Center In New York To Expand Faster Delivery

Amazon is moving aggressively to expand its promise of near-immediate delivery and physical pick-up options for its online shoppers by rapidly opening up fulfillment centers in major cities.

“We are excited to bring our first fulfillment center to New York and work alongside the state’s incredible workforce,” said Sanjay Shah, Amazon’s vice president of Customer Fulfillment, in a statement. “The support of local leaders has been instrumental in our ability to come to New York, and we are grateful for the welcome we’ve received to bring thousands of new jobs with benefits starting on day one.”

The fulfillment center comes a few months after the opening of Amazon opened its first brick-and-mortar bookstore in New York City as a showcase for its online/offline ambitions.

Amazon On The Move

Amazon employees at the 855,000-square-foot Staten Island fulfillment center will work alongside robotics to pick, pack and ship customer items such as household essentials, books and toys.

With the creation of its latest fulfillment center, which is coming to Staten Island, NY, coupled with the closing of its $13.7 billion acquisition of Whole Foods, Amazon’s pressure on established brick-and-mortar businesses’ omnichannel strategies is apt to be felt even more acutely as the holiday season approaches.

Over the summer, Amazon has expanded its discounts and two-day shipping with its Prime membership option, and has just heralded its Instant Pickup option, retailers have turned to one advantage they still possess — at least for the moment — in relation to Amazon: proximity to their customers and known inventory, which makes it possible to offer the ultimate convenience of letting someone click “buy” and then having it brought to them within a few hours.

Meanwhile, Amazon’s instant-pickup has already begun in Los Angeles, Atlanta, Berkeley, CA., Columbus, Ohio, and College Park, Md. Initially, the items available with Instant Pickup include snacks, drinks and electronics, as well as some of Amazon’s most popular devices.

Amazon’s latest offering represents an expansion of the same-day pickup service at the 22 locations it began opening in 2015. These same locations will serve as Instant Pickup depots for Amazon Prime customers.

While available for free to Prime and Prime Student members, the program strikes at the heart of what has so far remained brick-and-mortar brands’ clear advantage over e-commerce: immediacy.

Omnichannel Pressure

New York represents one of its biggest tests.

Rivals like Target have been getting ready for the challenge. For example, Target’s purchase of San Francisco-based transportation tech company Grand Junction last month is designed to better position it against Amazon’s speedy delivery.

Grand Junction’s software platform is used by retailers, distributors, and “third-party logistics providers to manage local deliveries through a network of more than 700 carriers

Target and Grand Junction have currently been working on a same-day delivery pilot program for the Target store in New York’s Tribeca neighborhood. By 2018, Target plans to roll out same-day delivery to unspecified major cities, said Arthur Valdez, Target’s executive vice president, chief supply chain and logistics officer.

Target’s move follows similar tests by Walmart. In addition, same-day, app-based grocery delivery platform Instacart has lately been racking up partnerships with Costco, Key Food, CVS, and others.

The trend towards same-day delivery is becoming a wider retail imperative not reserved for discount shopping and food service.

Earlier this month, Office Depot announced  its same-day delivery program. The initiative kicks off on August 28 in Atlanta, Georgia and Los Angeles, California; and on September 6 in Ft. Lauderdale/Miami, Florida.

“With our new same-day delivery and our omnichannel approach, we are utilizing our retail stores as assets and part of our supply chain to give our customers the best possible experience,” said Office Depot CEO Gerry Smith.

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Who Should Walmart And Amazon Acquire Next?

As Walmart and Amazon rush to build up their respective online/offline commerce strategies, it’s safe to say that key acquisitions will play a part in efforts to keep pace, if not out-pace, the other as “the ultimate retailer” in consumers’ minds.

For example,  within the last three months, Amazon made its $13.7 billion bid to acquire Whole Foods, while Walmart bought e-commerce platforms Jet and Bonobos, speculation swirled around these two retail behemoths each striving to become the ultimate shopping destination—both on and offline.

Foursquare has come up with a list of some obvious acquisition targets that would fit Walmart’s and Amazon’s intersecting and unique needs in their drive towards retail hegemony.

But by basing its selected brand targets based on its foot-traffic data covering 2.5 million Americans, Foursquare CEO Jeff Glueck makes the case for where the best complements exist for each company in a blog post.

“Amazon and Walmart would both be wise to consider Nordstrom and Warby Parker,” says Glueck. “Amazon should consider Lowe’s; Walmart should look to Ulta Beauty.”

Among the analysis of each brand’s needs according to Foursquare:

  • Amazon prefers brands that foster an even deeper relationship with its current shopping base, and investing in challenger brands that are smaller and more upscale than in-market competitors
  • Walmart is playing catch-up in e-commerce, and so is looking to broaden its consumer reach and digital footprint, and develop delivery efficiencies.
  • Both companies are interested in attacking verticals that have proved resistant to e-commerce penetration.
  • Both companies want to refine and experiment with a “showrooming” strategy. They are also both interested in the same consumer: high-net-worth GenX and Millennials.
Source: Foursquare

Target Number 1: Nordstrom

If Amazon and Walmart aren’t fighting over Nordstrom by now, perhaps they should, Glueck says.

Amazon, in particular, needs to connect with the “right shoppers” in the physical world. And considering Amazon’s instant-pickup is initially limited to the 22 locations it began opening in 2015, it needs to expand its placement to actual stores beyond its Whole Foods connection.

“Amazon’s latest acquisition, Whole Foods, and Nordstrom have an overlapping customer set: Foursquare’s data shows that Nordstrom shoppers are almost 2X more likely to shop at Whole Foods than the average consumer,” Glueck says. “So an Amazon-owned Nordstrom chain would deepen Amazon’s relationships with its expanding core base.”

For Walmart, acquisitions are intended to bring in new customers. Nordstrom and its discount subsidiary Nordstrom Rack would likely broaden Walmart’s base to more upper middle income shoppers.

“[Nordstrom] consumers aren’t frequent Walmart-goers,” Glueck says, citing Foursquare’s foot traffic data showing they are about 55 percent less likely to go to Walmart than the average American.

“What Nordstrom does have is a bona-fide track record as well as a healthy concentration of Millennials and females, a nice addition for Walmart to balance out the the purchase of Bonobos, which has a wider male reach,” he says. “Walmart has to pursue familiar verticals that have deep online footholds. And Nordstrom has seen tremendous success versus comparable retailers in developing its e-commerce presence.”

As for Nordstrom Rack, it tends to rank number two in store visits and sales after the discount category leader T.J. Maxx.

“We found that Nordstrom Rack has actually lost more than 2 percent of its visit share to competitive discount retailers in the last two years. Amazon’s ability to slash prices further could lift the competitor brand, and give Amazon a strong foothold into the brick-and-mortar discount market. Imagine if everyday was Amazon Prime day at Nordstrom Rack…”

Source: Foursquare

All Eyes On Warby Parker

Showrooming — the act of comparing prices and products on e-commerce site at the same time one is browsing in a physical store — is the scourge of all brick-and-mortar retailers. And that’s largely thanks to Amazon’s all-encompassing inventory.

Since Warby Parker started its eyeglass sales as an e-commerce platform, it has used its online-only origins to help develop a strategy to combat showrooming at its 46 boutiques. Plus, Warby Parker is currently planning to open 25 more shops, a clear indication that its clicks-to-bricks program is working.

An Amazon purchase could further enhance Warby Parker’s distribution, while reducing its shipping costs.

Plus, consider Warby Parker’s strength with Millennials — over half its shoppers (55 percent) are in that age demographic, which over-indexes at luxury brands including Bloomingdales, Williams Sonoma and Lululemon according to Foursquare data.

Moreover, Warby Parker has similar shopper profiles and significant customer overlap with Whole Foods, as Foursquare data shows that 80 percent of Warby Parker customers also shop at Whole Foods.

Walmart certainly desires those Millennials and by acquiring Warby Parker, it would continue to trajectory its been on with the purchases of Bonobos and Jet.com — two very different offerings from Walmart’s typical shoppers.

“Though we’d expect Walmart to keep Warby as a stand-alone brand, if Walmart ever needed an infusion of new shoppers and/or Millennials into its stores, one way to do so—and quickly—would be to add Warby Parker services and eyeglasses into Walmart’s existing vision centers,” Glueck says. “In addition to being more than half Millennial, Warby Parker customers are 80 percent less likely to visit a Walmart versus the average American—so they’d be fresh eyes on Walmart’s existing inventory.”

 

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Walmart Paves The Way For Grocers With Higher Paid-Search Spending

In addition to its recent acquisitions of e-commerce platforms Jet.com and Bonobos, Walmart is already fighting back against Amazon’s burgeoning challenge in brick-and-mortar grocery space, as the Bentonville retail giant led all paid search advertisers in spending over the past year, a study by marketing platform AdGooroo found.

Walmart’s search spending jumped by more than 1,500 percent from 51,000 to an estimated $858,000 on “on 124 non-branded grocery store and grocery delivery” keywords in Google search from June 2016 through May 2017, AdGooroo said. Among the terms covered in AdGooroo’s analysis were  “grocery store,” “groceries delivery,” “grocery delivery service,” ‘online grocery shopping” and “supermarket.”

The retailer’s moves seemed to coincide with other efforts to support its position as the nation’s largest grocer. In addition to its purchase of Jet.com, Walmart has struck delivery partnerships with Uber and Lyft. It’s also expanded its curbside grocery pickup service as many other retailers have, such as Target.

The sudden and significant rise in Walmart’s search spending could also be a sign of Jet.com’s influence on the retailer, which Walmart acquired in September last year, spent an additional $82,000 on the keyword group during the period, up from just $3,000 in the 12 months preceding June 2016.

Aldi Follows Walmart

Right behind Walmart in AdGooroo’s paid-search rankings among grocers was Aldi, with $441,000 spent on the keyword group.

As the German supermarket chain expands its U.S. stores from 1,600 to 2,500 by 2022, its paid-search expenditures were up from $40,000 over the 12-month period.

Interestingly, Aldi averaged just $9,000 per month in spend on the keyword group from June 2016 through February 2017. Like Walmart, the chain’s spending surge appeared to be in concert with its other strategic moves, particularly when it comes to ensuring a stronger online presence in preparation for U.S. expansion roadmap.

In general, grocery brands’ invigorated SEO shift mirrors wider market moves designed to capitalize on the importance of social media channels like Snapchat and mobile micro-moments consumers turn to when it comes to making shopping decisions.

Where’s Amazon In All This?

Overall, AdGooroo found that Walmart captured a 19.1 percent share of total clicks on the 124 non-branded grocery keywords over the 12-month period, followed by Aldi (11.6 percent click share), Kroger (7.6 percent click share), Safeway (6.7 percent click share) and Fry’s (4.2 percent click share).

“Although the same top five retailers for ad spend also ranked in the top five for click share, Kroger and Safeway swapped places, showing that Kroger had a more efficient campaign than Safeway, since it spent less and received a larger share of clicks on the non-branded grocery keywords,” AdGooroo’s report said.

As for where Amazon was in all this paid-search activity, Amazon ranked 9th in AdGooroo’s ad spend survey on the non-branded grocery keyword group with $134,000 in spending from June 2016 through May 2017. Amazon also came in 9th in terms of clicks with a 2.8 percent click share.

Its acquisition target, Whole Foods, which has struggled technologically for a while, ranked 18th in ad spend with $51,000 spent on the keyword group over the last year. That represented a decrease for Whole Foods from the $57,000 the company spent on the same keywords from June 2015-May 2016 — and dismal 19th in clicks with a 1.2 percent click share.

In a separate study of retail sales growth by the National Retail Federation and Kantar Retail, Walmart’s ramped up search focus could have played a role in keeping it in the top spot.

“At 55 years old, Walmart may be the oldest new kid on the block, but it still has the energy and mindset of a startup as it continues to successfully battle the competition,” said Stores Media Editor Susan Reda said. Stores is the official publication of the NRF.

While main tale associated with retail these days seems to be one of retrenchment and struggle, as major brands like Macy’s and JCPenney shutter dozens of outlets, the NRF/Kantar Retail study sought to shine a brighter light on an industry taking steps to address omnichannel demands from consumers.

Retailers will always be measured by sales numbers, and ranking the leaders is important,” Reda said. “But so are the stories behind the numbers — it’s those stories that bring the Top 100 to life. The nation’s largest retailers are posting strong vitals. They’re embracing creative disruption, reinventing physical stores as places for brand experiences and exploring new ways to connect with the consumer.”

Considering that 90 percent of consumer transactions happen in a physical store, and that the majority of that that 90 percent is focused on grocery purchases, the challenge for independent markets and chains will rest on how well they play the SEO game, especially as the rise of voice-activated, Connected Intelligence assistants like Siri and Alexa are poised to have a greater impact on the answers consumers receive to their spoken search queries.

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How Amazon’s $13.7 Billion Whole Foods Acquisition Will Alter The Grocery Space – And Each Other

After shaking up the retail space for the past two decades, Amazon’s $13.7 billion purchase of Whole Foods represents the e-commerce giant’s latest and biggest move to dominate the grocery space.

Over the year, Amazon has shifted significant resources designed to challenge major retailers like Walmart and Target on the grocery front.

This week, Amazon Dash, the three-year-old device for immediate delivery of consumer packaged goods, has revamped its Amazon Dash Wand barcode scanner with the voice-activated digital assistant Alexa built into the device, Techcrunch reported.

December saw the opening of the prototype brick-and-mortar grocery store, Amazon Go, in Seattle. The Amazon Go concept allows customers to avoid the checkout line by simply walking in and leaving — as long as they have an Amazon Prime account that tallies the purchases automatically.

Amazon’s Challenge

“With physical store purchases still accounting for nearly 90 percent of all retail transactions even after a decade of e-commerce growth, Amazon realizes that continuing large-scale growth over the next 10 years as a company will require capturing a big slice of the physical store purchasing market — so as long as Amazon can make do with higher margins and less overhead than traditional retail stores,” Aisle411 CEO Nathan Pettyjohn wrote in GeoMarketing at the time of Amazon Go’s launch.

The purchase of Whole Foods, shows how Amazon plans to capture the the grocery space, leaving traditional markets scrambling more than ever to attempt to match its services and prices.

“The biggest challenge for Amazon now is that they offer so much choice,” says David Berkowitz, Chief Strategy Officer at marketing tech firm Sysomos. “For instance, there’s regular shipping, Prime, Prime Now, Prime Pantry, and Amazon Fresh. The same box of Famous Amos chocolate chip cookies costs $21 via regular shipping and $15.59 via Prime Pantry; these kinds of price differences are common. As Amazon grows more complex, it will need to find ways to become more streamlined, straightforward, and simple.”

In a conversation with GeoMarketing, Berkowitz related a discussion about Amazon with his parents last weekend. He tried explaining the differences among Prime Pantry, Fresh, and regular Prime. By the time he was done, “I had confused myself and essentially convinced them to stick with going to Costco.” (As a bonus, at Costco, you get the $1.50 massive hot dogs, he notes.)

“That there are now so many ways to order these products — website, mobile site/app, Amazon Smile (web/mobile), Dash, various Alexa-powered devices — adds to the convenience for customers — but only makes it more confusing,” Berkowitz says.

“Amazon will need to proactively address this,” he says. “Instead of making me compare how many packs of cookies are in each box and how many ounces are in each cookie, just show me that this same product is available a few different ways and has a few different costs.”

The Impact On Rival Grocers

Even as this deal has Whole Foods continuing to operate its 431 locations under its 37-year-old brand name, the combination of Amazon’s technology will be felt by consumers and rival grocers quickly. (As the Washington Post reports, investors in Walmart, Costco, Kroger, and Target felt the impact immediately, as shares in those companies fell as much as 13 percent with an hour of the acquisition’s news.)

But even smaller grocers, who have been buffeted by on-demand delivery from the likes of Fresh Direct and Instacart, will need to need to rapidly sharpen their own online/offline strategies.

“The Amazon deal demonstrates the need for grocery retailers to move faster in their digital efforts,” says Jeremy Neren, CEO of GrocerKey, a Madison, WI-based provider of e-commerce and tech services for local grocers and chains. “There was already pressure to do so, given the rise in consumer demand and pressure being put on by Amazon, that pressure only increases with Amazon now having a nationwide brick-and-mortar presence to add to it’s arsenal of digital tools to reach consumers and bring them into their overall ecosystem.”

Rival chains and independents should be thinking about finding partners that not only help them implement cutting edge technology, but also help them think about how to operate in a new environment such as e-commerce, Neren adds.

Furthermore, Amazon’s dominance of the voice-activated, Connected Intelligence space with the Echo’s Alexa. As these devices go mainstream, Alexa will certainly provide a direct line to grocery purchases to Whole Foods, placing even more pressure on rival grocers to also find a way ensure Alexa connects them to customers as well.

“It requires an entirely different operational approach than they are accustomed to operating in to serve their customers in-store,” Neren says. “It’s also important to consider that strengthening your digital presence does not simply mean e-commerce, it means providing more touch points to reach consumers — e-commerce is a component of that, but you must also consider how to augment the in-store experience via digital touch points such as value added native mobile apps.”

Can Amazon Bring Efficiency – And Lower Prices – To Whole Foods?

Whole Foods Market first opened in 1980 in Austin. That was two years after its founders started a vegetarian grocery called SaferWay (a play on the general supermarket chain Safeway).

It wasn’t until the 1990s, when the idea of buying organic food caught on outside of bohemian enclaves and the company capitalized on the embrace upscale consumers were making towards buying products that were at least perceived as being eco-friendly and natural.

But after a spate of aggressive store openings and acquisitions, Whole Foods began to be a victim of two separate perceptions: one, that it was too high-priced for lower-income and mainstream grocery shoppers, and two, that it was failing to keep up technologically with its core upscale consumers’ desire for more on-demand and omnichannel shopping choices.

To address some of those issues, in 2015 the introduction of “365 By Whole Foods Market” represented an attempt to attract millennials with a combination of lower prices and app-based, in-store shopping services and loyalty discounts. But with only four outlets at this point, Whole Foods has clearly had trouble scaling that idea.

Bryan Eisenberg, co-founder of B2C marketing consultancy BuyerLegends and co-author of  Be Like Amazon: Even A Lemonade Stand Can Do It, expects the acquisition to solve Amazon’s and Whole Foods’ respective problems in the current grocery space.

“Amazon has been trying to scale its grocery business for years; it’s where so much of our retail spend is,”Eisenberg said. “Part of the problem for Amazon in that space is that to sell groceries, obviously, you need a local footprint.

“The challenge is that Whole Foods has struggled the last few years,” he added. They’re not a technology company. They’re not good at efficiency. But from a brand perspective, they’re still strong, though people do feel they’re overpriced. Amazon will be able to give those stores the technology boost that they desperately need, Eisenberg said. We have 365 By Whole Foods store near us in Austin. But they haven’t pushed that concept far enough.”

The Endless Amazon Loop

The release of the Dash Wand with Alexa, along with announcement that the Prime members who add funds from a bank account to an online gift card will get 2 percent cash back on any Amazon purchase in the form of rewards/points, which can then be used to purchase of more products sold through Amazon.

That ability to entice shoppers to stay within the Amazon shopping system, which includes streaming video and music, is based on the bottom line idea of efficiency, immediate sales fulfillment, and lower prices than any other shop.

“The merger of the two brands will be great in consumers’ mindsets,” Eisenberg said. “Whole Foods does command some brand loyalty – though many people gripe about it being Whole Paycheck – by bringing Amazon to that, the prices have gotten more competitive, but they haven’t been able to shake the idea that they’re an over-priced supermarket. Amazon was able to keep that great ‘people culture’ at Zappos. I think they’ll do the same with Whole Foods, improving the perception of both the culture and the price points.”

From books to electronics to CPG to groceries, the Amazon brand has always been  to allow a user to log-in to its site and apps and get personalized recommendations based on previous purchases. Suggestions are based on what the user searches, and what similarly profiled consumers bought when searching for those products.

“The number one thing you’ll see implemented ASAP: checking out at the register with Amazon Pay,” Eisenberg says. “That’s important because the problem with Whole Foods is that they don’t know if someone walking in is the most valuable customer or the least valuable customer. That’s the same problem Walmart’s had.

“Now, they’ll let people log into their Amazon accounts and they’ll be enabling the ‘endless shelf’ pretty quickly,” Eisenberg says. “Being able to check out and get the data on their customers will have an enormous impact on both companies.”

To realize the potential advantages of owning Whole Foods, Amazon needs to make buying groceries as easy as buying books,” says Berkowitz.

“I get that there are options with Hardcover, Paperback, Kindle, and Audible, so Amazon shows me pricing options, and delivery options too,” Berkowitz says. “Digital options arrive immediately, while physical options have their own delivery times and costs. Amazon now has to do for Famous Amos cookies what it does for John Grisham novels.”

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