Pinterest users not only buy the products they pin, but spend more on average than their Facebook counterparts, according to new data from Shopify.
Pinterest just picked up a cool $100 million in funding led by Japanese online shopping giant Rakuten, placing its value in the region of $1.5 billion. That's huge--bigger than Instagram--but perhaps justified if the Pinteresting effect is reverberating through e-commerce sites. Here's some proof that it is: Shopify, which supplies the e-commerce back end to 25,000 online stores, asked its partners whether Pinterest users are buying anything. The results are impressive.
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A few highlights from the above Pinterest infographic:
Pinterest is now the third biggest referral source to Shopify's partner sites after Facebook, and on par with Twitter.
Pinterest users shop big--the average price tag is $80.00 or double that of a buy from a Facebook user.
Pinterest user visit have jumped 145% since January 2012.
Pinterest as a source of revenue for stores now contributes 17% of social media traffic--up from 1% in Q2 last year.
Pinterest orders generated from pins have quadrupled and then some during the last six months.
COMMENTARY: That's what I call absolutely impressive numbers. That $100 billion they just raised from that Japanese ecommerce site Rakuten probably means that Pinterest users will be seeing a whole lot of Rakuten merchandise being pinned on the social ecommerce pinning site.
Here's another interesting infographic of Pinterest that describes the sites demographics and user interests.
Click Image To Enlarge
According to AppData.com, Pinterest has been on a hot streak this year. Or should we say hype streak?
In February, comScore reported that the site had passed 10 million monthly unique users faster than any standalone site ever. Then we started to hear from sources on Sand Hill that the company has attracted interest at a $1 billion valuation. But numbers from third-party sources like Facebook app tracking service, AppData, are pinning a slightly different picture on the image and link-sharing site.
Pinterest’s monthly active users on Facebook — or the number that has connected to Facebook over the past thirty days — have dropped to 8.3 million, from around 12.2 million a month ago when the site did a major redesign. Daily Active Users are also down but not by as much: on April 21 they were 930,000, from 1.1 million on March 22.
Click Images To Enlarge
AppData tracked Pinterest's traffic numbers Between April and May 2012, and the numbers have improved. Monthly active users on May 8, 2012 increased to 10 million from 8.3 million on April 22, 2012. Daily active users on May 8, 2012 increased to 2.5 million from 930 million on April 22, 2012. Incredible turnaround, in such a short period of time.
Whether Pinterest can maintain this traffic momentum going into June remains to be seen. I like the site. It's different, and its meteroic rise is unprecedented. Sort of reminds one of foursquare. The big negative that I see is that Pinterest, which is 80% female, cannot sustain its growth without signing up more males. foursquare has a similar problem, only in the reverse. 70% of foursquare members are male, and the sites total number of registers users reached 15 million, but growing a lot slower than in it was in 2011.
I do have a feeling that Pinterest could become an acquisition candidate for Facebook, which seriously needs to find ways to increase revenues. With the viability of F-commerice brought into serious question when The Gap, Nordstroms and Penneys abruptly closed their F-commerce sites only after a few months, Facebook needs a way to make money off of ecommerce. Pinterest definitely meets that requirement.
Courtesy of an article dated May 18, 2012 appearing in Fast Company
Smartphone users are more likely to make a purchase in-store while simultaneously using their device to seek more information, according to a Wave Collapse executive at Mobile Commerce Daily’s Mcommerce Summit conference.
During the “How the Demanding Mobile Shopper is Changing the Face of Retail” session, the executive discussed how purchases from branded mobile Web sites are leading the way in terms of how consumers purchase goods from a smartphone and are outperforming mobile apps, tablet Web sites and tablet apps. However, the new breed of shoppers mostly purchase at physical retail locations while using their mobile devices to browse and seek out more information about products.
Joy Liuzzo, president of Wave Collapse, Washington said.
“The people who are using mobile in-store are shoppers. Shoppers who are the most likely to purchase something will do so at either a physical store or a mobile store, rather than those who do not use mobile. [Furthermore], that same shopping mentality is happening within a person who uses mobile in the store to scour for more information about products. These shoppers are completely different than someone who is just a store shopper and need special attention.”
Mobile is money
Recently, Wave Collapse polled 1,000 people in an online survey. All participants owned an iPhone, Android, Windows Phone or BlackBerry device.
The poll revealed that consumers using mobile while in a physical store are natural shoppers, per Ms. Liuzzo.
In fact, the in-store mobile user is more likely to browse at a physical store.
Ms. Liuzzo said.
“[A smartphone] is a tool to help these shoppers while in-store. They come in ready to go. They are doing this because they have an internal motivation to shop. They do not act on external influences such as coupons and sales.”
In-store mobile users are more than twice as likely to have their device in their hand, per Ms. Liuzzo.
The executive also discussed the shopping habits of those who used apps in a physical store versus those who do not.
In-store App Users - Of those who do use apps in-store, 93 percent bought something in the past week from a physical store, and 47 percent made a purchase from a mobile site.
Non-Instore app Users - 84 percent of people who do not use apps in-store made an in-store purchase in a physical store during in the past week and only 13 percent of these consumers made a purchase in the past week from a mobile site.
Shoppers who buy on all platforms are very rare, per Ms. Liuzzo. Here are her findings:
76 percent of smartphone users reported mostly browsing, not purchasing, on mobile sites.
58 percent of consumers who have not purchased on mobile are still looking at products. Of these users, there was less resistance towards jewelry, airline tickets, automotive, beauty, shoes, home improvement, clothing and pet items.
The most impulse purchases made on mobile included clothing, food/take-out, beauty, pet items and shoes.
In the poll results, Ms. Liuzzo saw no relationship between demographic and mobile shopping habits, but the poll did reveal that there are not many 18-24-year-olds purchasing on mobile. The age range purchasing on mobile begins at 25-years-old.
Ms. Liuzzo said.
“The bottom line is that brands must have a browsing mentality in the mobile space. A brand does not necessarily have to go down a purchasing path. Browsing is great and means that there is some kind of intent. Brands should make it easier to shop on mobile for those browsing. What we are looking at as we get more ‘shoppers’ using mobile is that browsing is only going to increase as those with the shopper mentality start to get on smartphones, which means all of these trends are going to increase.”
Room for improvement
Despite the increase of browsing on mobile devices, the study also found that users consider mobile shopping less enjoyable than tablet shopping and online shopping.
In fact, 69 percent of users polled enjoy the traditional online shopping experience followed by 54 percent who enjoy shopping on a tablet Web site.
Mobile came in last with only 45 percent of users describing mobile shopping as enjoyable.
Also, in-store mobile users are more likely to find shopping on devices and computers enjoyable.
Ms. Liuzzo said.
“People like shopping on tablets better than smartphones because it is a richer experience versus a small mobile screen. Also, some people have no clue if a site is mobile-optimized or not.”
The executive also found that mobile lagged behind in-store shopping when consumers were polled on where they purchased goods, but mobile shoppers are likely to be repeat customers.
For example, when users were asked if they bought something in the past week,
87 percent purchased an item in a physical store.
60 percent used ecommerce.
25 percent used a mobile site.
61 percent of users made multiple purchases per week via a mobile site.
Meanwhile, 69 percent of shoppers made multiple purchases per week in a physical store.
Ms. Liuzzo also studied social media habits of smartphone users and found that 53 percent of consumers polled follow a brand on a social network.
It was also discovered that more than half the people who are following brands on social media give half of their business to those that they follow.
In order to best reach consumers, brands must integrate mobile and social media channels such as Facebook and Pinterest.
Ms. Liuzzo said
“What these people follow is mainly deals and this worries me. They are not following brands because they get to interact with other users, for the potential to be called-out by the brand or to initiate a two-way conversation. As a brand is thinking about its social strategy, it should move away from deals and build a rich environment that keeps users coming back. These people are going to shop anyway, so why not gain followers by building a rich social atmosphere.”
COMMENTARY: These findings match closely the PEW study of mobile phone owners online purchasing behaviors which I reported in a blog post dated February 1, 2012.
One of the toughest decisions for a startup is how to price their product or service. The alternatives range from giving it away for free (like Twitter), to pricing based on costs, to charging what the market will bear (premium pricing). The implications of the decision you make are huge, defining your brand image, your funding requirements, and your long-term business viability.
The revenue model you select is basically the implementation of your business strategy, and the key to attaining your financial objectives. Obviously, it must be grounded by the characteristics of the market and customers you choose to serve, the pricing model of existing competitors, and a strategy you believe is consistent with your future products and direction.
So what are some of the most common revenue models being used by startups today? Here is a summary, with some of the pros and cons or special considerations for each:
Product or service is free, revenue from ads and critical mass. This is the most common model touted by Internet startups today, the so-called Facebook model a.k.a. ad-supported revenue model, where the service is free, and the revenue comes from click-through advertising. It’s great for customers, but not for startups, unless you have deep pockets. If you have real guts, try the Twitter model of no revenue, counting on the critical mass value from millions of customers. NOTE: This is incorrect. Twitter is also utilizing the ad-supported revenue model and has revenues.
Product is free, but you pay for services. In this model, the product is given away for free and the customers are charged for installation, customization, training or other services. This is a good model for getting your foot in the door, but be aware that this is basically a services business with the product as a marketing cost.
“Freemium” model. In this variation on the free model, used by LinkedIn and many other Internet offerings, the basic services are free, but premium services are available for an additional fee. This also requires a huge investment to get to critical mass, and real work to differentiate and sell premium services to users locked-in as free.
Cost-based model. In this more traditional product pricing model, the price is set at two to five times the product cost. If your product is a commodity, the margin may be as thin as ten percent. Use it when your new technology gives you a tremendous cost improvement. Skip it where there are many competitors.
Value model. If you can quantify a large value or cost savings to the customer, charge a price commensurate with the value delivered. This doesn’t work well with “nice to have” offerings, like social networks, but does work for new drugs that solve critical health problems.
Portfolio pricing. This model is relevant only if you have multiple products and services, each with a different cost and utility. Here your objective is to make money with the portfolio, some with high markups and some with low, depending on competition, lock-in, value delivered, and loyal customers. This one takes expert management to work.
Tiered or volume pricing. In certain product environments, where a given enterprise product may have one user or hundreds of thousands, a common approach is to price by user group ranges, or volume usage ranges. Keep the number of tiers small for manageability. This approach doesn’t typically apply to consumer products and services.
Competitive positioning. In heavily competitive environments, the price has to be competitive, no matter what the cost or volume. This model is often a euphemism for pricing low in certain areas to drive competitors out, and high where competition is low. Competing on price alone is a good way to kill your startup.
Feature pricing. This approach works if your product can be sold “bare-bones” for a low price, and price increments added for additional features. It can be a very competitive approach, but the product must be designed and built to provide good utility at many levels. This is a very costly development, testing, documentation, and support challenge.
Razor blade model. In this model, like cheap printers with expensive ink cartridges, the base unit is often sold below cost, with the anticipation of ongoing revenue from expensive supplies. This is another model that requires deep pockets to start, so is normally not an option for startups.
Your business model interacts closely with your marketing model, but don’t get them confused. Marketing is initially required to get visibility and access to the opportunity, but pricing defines how you will actually make money over the long term.
Overall, I’m a huge fan of the “keep it simple (KISS)” principle – customers are typically wary of complex or artificial pricing. Your challenge is to set the right price to match value perceived by the customer, with a fair return for you. It’s not a game show, so don’t guess - do your research early with real customers.
Marty Zwilling
COMMENTARY: Developing a revenue model requires a thorough understanding of competitors, your competitive strengths and weaknesses and those of your competitors, how products or services in your industry are distributed, how those products and services are priced, factors affecting product production costs, types of customers who buy the products, trends in the marketplace, and other factors.
Strategic Innovation In Developing A Pricing Model
Most companies compete on the basis of price, differentiation or product niche. I am of the opinion that you should try to compete on three fronts by striving to differentiate yourself from the competition and lowering costs simulataneously, then if possible, expand the existing market by targeting a different class or type of customer not presently being served by the marketplace. This strategy requires excellent strong leadership abilities with the ability to convince the members of your management team to pursue this three-prong strategy.
The three-prong approach described above does not necessarily mean adding more features to the product or service in order to differentiate. In fact, the reverse maybe true. Sometimes it is best to "Say no to 1,000 things" something Steve Jobs said, and reduce the number of product features, product sizes and colors. A testament to the wisdom of this strategy is what Steve Jobs did upon his return to Apple in 1996. He reduced the number of Apple products to about a dozen by drastically cutting back their numbers or totally eliminating them from the inventory. Product accessories were eliminated from production, and outsourced through third parties. Reducing the number of products reduced Apple's production costs, warehousing and inventory carrying costs. Steve also differentiated itself by redesigning products so that they were easier to use by eliminating nearly all buttons, levers and dials. Apple products also came in only one color: white. This strategy has been continued through today, with all iMacs, iPods, iPhones and iPads coming in white. Product accessories that give each product different colors and personalities are still produced by third parties.
In 1998, Steve Jobs hired Tim Cook to manage Apple's product manufacturing. One of the first things Tim did was to outsource the manufacturing of all Apple products to third-party vendors, a practice which continues to this day. This strategy allowed Apple to eliminate plant and equipment capital expenditures and maintain the highest product margins of any consumer electronics company in the World.
CEO's should not be afraid to make bold, game-changing strategic innovations that disrupt industries when the opportunity presents itself, rather than making small incremental changes. Steve Jobs did this at Apple by:
Disrupting the portable music player industry when Apple introduced the iPod.
Disrupting the digital music industry when Apple launched iTunes.
Disrupting the smartphone market when Apple introduced the iPhone.
Disrupting the computer industry when Apple introduced the iPad.
Apple is reported to be working on an Apple television set that could disrupt how we consume television content in the home.
Apple clearly implemented a three-prong strategic innovation approach when it reduced or eliminated products from its inventory, reduced product external features and produced everything in white, outsourced all product manufacturing to third party vendors, entered new markets where it had never competed in by introducing four new consumer electronics products that disruped entire industries. These changes differentiated Apple from the competition, created higher perceived value, reduced its operating costs and greatly improved profits margins. In doing so, Apple clearly adopted the Value business model. Its customers are willing to pay premium prices for its products because they believe Apple delivers greater perceived value in terms of design, engineering and performance.
The important point is to never stop innovating or take your competition for granted. The innovation strategies that made Apple into the largest and most valuable (in market capitalized value) consumer electronics company in the world, and has allowed Apple to maintain its competive lead in its markets, must not be taken for granted.
Value, Perceived Benefits, Price and Why Consumers Buy
Customers do not make their purchase decisions based solely on price. They select the best value for themselves. To increase your customers' perceived value of your product or service, either increase the benefits or decrease the price. Surround your product or service with so many benefits of such great value to your customers, that they will pay a higher price, and you will attain a greater market share profitably.
Developing Prices For Products or Services
To help you decide what to charge for your product/service you must know the following:
What are your costs to produce a service, or buy a product? (Direct and indirect)
What is the customer willing to pay? (The urgency of market demand)
What are your competitors charging? (Market research data)
What do you need to charge to make a profit. (How much do you want to make?)
These factors must be balanced.
There are a variety of pricing methods in use. One of the most common is Formula-Based Pricing.
This method is widely used by consultants.
It is vital to research the competition and have set guidelines.
Do not undercharge.
Invoice customers at the end of the month for work in progress.
Multiply salary by 3. If you want to earn $20 per hour, you charge $60 per hour. This figure covers salary, overhead and profit.
The Product Pricing Formula
(Direct Material Costs + Direct Labor Costs + Overhead Expenses) / No of Items Produced = Cost Per Item.
Let's look at each component of the Product Pricing Formula:
Direct Material Costs.
The raw material and component costs to produce a single item or unit.
OR Divide the total direct material and component costs of a batch of the same item, by the number of items produced to obtain an average direct material cost per unit.
Direct Labor Costs.
The direct labor costs to produce a single item or unit.
OR Divide the total labor costs you pay your workers to produce a batch of the same item, and divide it by the number of items produced to obtain an average direct labor cost per unit.
Indirect Costs or Overhead Expenses.
This includes expenses that are not directly incurred in the production of the product, but are never the less necessary and incurred by the business like rent, utilities, telephone, cleaning, insurance, depreciation, office supplies, postage, repairs, maintenance, research and development, warehousing and storage, delivery and freight charges, packaging and shipping supplies. TIPS: 1) If you are renting or own a building used to produce the item or items, you should allocate the indirect costs incurred on the basis of square footage allocated to production and non-production areas. 2) For accounting purposes always segregate business expenses by department (manufacturing, sales and marketing, warehousing, research and development, general administration, etc) so that you can allocate indirect costs more accurately.
In some cases, indirect costs can exceed the direct costs. This is often the case for startups because they incur very heavy initial startup capital expenditures for plant, equipment, tooling, initial research and development costs and legal costs for patents that can be tied directly or indirectly to the product.
If you are working from home calculate a portion of your total rent or mortgage payment, in proportion to your workspace, or assign a reasonable figure.
List all indirect costs or overhead expense items and total them.
Divide the total overhead figure by the number of items produced per month. This amount will be your overhead cost per item.
Profit.
Your profit will depend on whether you are selling your product direct to the consumer or selling your product through authorized resellers.
Direct-To-Consumer Prices - If you are selling your product direct to the consumer, multiply the cost per item (see the Product Pricing Formula) by 2. If you have a unique product and the competition is not offering anything similar to it, you may multiply your cost per item by 3, 4 or even 5, but don't get carried away. The prices you set will depend on market conditions, alternatives and the costs to produce the item. If you have very low production costs, a superior design, better features or game-changing technology, you may be able to charge premium prices. Whatever you do, always research your market for competing products and market trends that could affect the demand for your product.
Wholesale Prices - If you are selling your product through authorized resellers your wholesale prices should be sufficient to yield a minimum profit margin of 65%.
Let's look at each component of the Service Pricing Formula:
Hourly Rate - Your time is valuable whether you work for yourself or someone else. Decide on what you are worth taking into account your industry experience, education, training, special knowledge and contacts. Establish a reasonable hourly rate based on the above factors. Compare your hourly rate to industry averages to insure you are within the ballpark.
Hourly Overhead Expense Rate - Calculate all the costs related to operating your business from home or private office, and arrive at a total cost per month. Divide this by the average number of hours worked per month, to obtain your hourly expense.
Price Per Hour - Add your hourly rate and hourly overhead expense rate, then multiply the result by a factor of 2, to yield a Price per Hour. Your competition, market conditions and demand for your services will dictate how much you can reasonably charge per hour. The effects of the Great Recession, high unemployment rate and global economy means you may have a lot of competition from within your industry and from moonlighters and independent consultants.
Price Ranges
Prices for products and services can vary greatly based on brand recognition, geography, knowledge and expertise, economic conditions, scarcity, monopolization and other factors. The global economy means that you must compete not only locally or even nationally, but internationally as well. The internet now makes it possible to quickly compare prices, find the lowest price and obtain product reviews. The Great Recession reduced the prices of just about everything. Real estate values in many parts of the country are still down, and many homeowners are underwater, owing more than their property is worth. Due to high unemployment rates in many parts of the country, average hourly rates in many industries are down. It's a buyers market. Having said this, prices generally fall into three categories: High-end, Mid-range and Low-end. Let's look at the characteristics of each price category:
HIGH-END
Prestige and Image.
Strong brand name.
Numerous features.
Known for high quality.
Warranty.
Uniqueness.
Novelty. (price is not a major factor.)
Scarcity (valuable earth metals, diamonds, gold, real estate, etc.)
MID-RANGE
Good quality.
Features. (Value is critical. Trade off with Price)
Warranty.
Practicality.
Serviceability.
LOW-END (Caution. In a service business, people tend to think that something is wrong, if your prices are too low. They assume that the services are of inferior quality.)
Inferior or poor quality.
Less features or services provided.
No customer loyalty.
Unknown brand name.
Competitors compete almost solely on the basis of price.
Competing in the Mid-Range price range could be an advantage for some brands, especially during the Great Recession, because they can get customers from the High-End looking for a bit lower price and comparable quality and can get customers from the low-end spectrum who are looking to upgrade in quality and pay a bit more. This has actually happened a lot with packaged goods manufacturers who have produced their products in smaller sizes to appeal to thrifty consumers looking for better quality and a prestige brand. The same thing has happened in fashion apparel and accessories, with many designers producing mid-range fashion apparel and accessories to appeal to consumers looking for a prestige brand at a bit lower price point. '99 cent stores' exploded during the Great Recession to meet the needs of the low-end consumer who just wants the lowest price possible while sacrificing quality and features.
As an alternative to lowering prices, many producers have turned to discount coupons to lure customers. This tactic allows them to keep customers loyal to their brand from buying mid-range brands. This also allows mid-range consumers to upgrade to high-end brands. This is a win-win for the consumer and keeps the producer's volume high enough to keep production costs under control.
Saks Direct 500,000-sq.-ft. distribution center in Aberdeen, MD (Click Image To Enlarge)
R etailers always seem to be fighting through notoriously tight operating margins, so any competitive advantage that accrues to the bottom line is welcome.
Saks Direct, the high-flying e-commerce division of Saks and companion of the high-end Saks Fifth Avenue retail stores, is certain it has found a nice fulfillment advantage over some of its rivals for consumers’ online shopping dollars.
The humdrum world of order fulfillment and product distribution hardly matches the luxurious and legendary Saks brand. But an ambitious decision two years ago to revamp the company’s fulfillment processes allowed Saks Direct to meet equally ambitious 2011 holiday shopping season delivery opportunities.
Casting aside its fixed warehouse automation systems for moving product, Saks took a capital-intensive leap of faith and began implementing a mobile-robotic approach to picking and packing for Saks Direct at its 500,000-sq.-ft. distribution center in Aberdeen, Md. Michael Rodgers, executive vice president and CIO for Saks, says the new fulfillment system allowed Saks Direct to promise Christmas Eve delivery for customers ordering as late as the day before.It seemed to make a difference: Saks Direct reported a 21 percent increase in fourth quarter sales from the same period in 2010.
Rodgers says.
“That’s a competitive advantage. I don’t know how many of our competitors were able to do that and how many weren’t. I just know that we were, and we didn’t break a sweat doing it.”
Efficiencies created
Breaking a sweat in the Aberdeen DC isn’t for humans anymore. With the Kiva Mobile-robotic Fulfillment System, hundreds of “robots” do the grunt work, automatically moving products of different shapes and sizes on mobile, modular shelving units across the DC floor. The robotic-drive shelving units are guided to workstations where associates await — a process Kiva markets as “Goods-to-Man Order Picking.”
Peter Blair, Kiva senior director of marketing, says the system reduces cycle time through efficiencies of scale as associates can pick, pack and ship orders more quickly without having to move around the warehouse floor to locate products.
Blair says.
“Say Mrs. Smith orders a pair of shoes, a dress and some earrings. In most cases, you have two options. Either one person goes out with the cart and walks miles around the warehouse … [or you] take three people and send one over to get the dress, one over to get the shoes and one over to get the earrings.”
The heart of the Kiva Systems' mobile-robotic fulfillment are the bright orange mobile robotic units which move inventory shelves from their warehouse floor locations to the worker stations where a human picker pulls the items ordered. This eliminates warehouse people from having to walk all over the warehouse to pull inventory items off the shelves (Click Image To Enlarge)
Kiva Systems stations include a stock picker who pulls stock items, mobile inventory pods attached to shelves and mobile packaging pods which bring empty boxes for packing (Click Image To Enlarge)
Blair explains that efficiencies are created because all the robotic drives do is ferry products to workstations. Associates use hand-held barcode scanners to point to the shelf to verify the product. A light on the shelf activates indicating the location of the item, accommodating product elements like size and color. Once done, the robotic drive moves to the next workstation, leaving another pod ready in the queue to deliver product.
The scanning system leaves little to chance, while enabling associates to pick multiple orders simultaneously and completely. Blair says.
“It’s very nice for the worker because it is very accurate. They don’t have to think too much about what they are doing. It’s very clear.”
Increased space & flexibility
The Kiva system covers inventory control, forward replenishment, picking, packing, shipping sortation, finishing and quality assurance. With shipping sortation, for instance, orders can be picked depending on their destination. If the delivery is going from the East Coast to the West Coast, the order might get picked and packaged earlier in the workday to accommodate air travel schedules.
Rodgers says going to robotic fulfillment from a manual operation was a strategic decision to create leverage from expanding consumer interest in online shopping. Online spending during the 2011 holiday season (November 1 through December 31) reached $35.3 billion, according to digital research firm comScore – a 15 percent increase from 2010.
Rodgers says.
“This was a big bet Saks made ... during the throes of the recession. We asked, ‘What are some of the big bets we can make that are going to make a difference when we come out of this recession?’”
Rodgers says mobile-robotic fulfillment worked so well for Saks that the company implemented the system at Aberdeen much sooner than anticipated. Saks Direct initially converted four departments to Kiva, completing that phase by September 2010. The company waited to complete the remainder of the conversion so as to not interfere with the impending 2010 holiday shopping season, though executives already were convinced of its benefits, Rodgers says. Saks completed the makeover by June 2011, well ahead of the 30 months planned.
Rodgers says.
“It is a relatively new technology, bu5t from the day it started to today we haven’t had problem one. The biggest thing was how fast we could get the rest of it converted.”
Rodgers says two other benefits of the robotic system are space and flexibility. As online shopping is expanding rapidly among consumers, so is the need for retailers to keep more inventory in warehouses to satisfy service requirements for shipping and delivery. With dynamic shelving, Saks could create 30 percent more space at Aberdeen.
He says.
“It maximizes the issue of shelving [because] it’s a non-human environment. People don’t have to walk up and down aisles, and you can pack items in more closely.”
Rapid product delivery
As it expands its omni-channel marketing efforts, Saks is seeking to grow its distribution footprint – possibly to new facilities. Since the Kiva system is based on a mobile principle. Rogers says.
“I can pick it up and move it to other locations."
Blair says that in today’s e-commerce consumer environment, superior customer service demands super-fast product delivery.
He says.
“It used to be that [retailers] could take a week to get you something. That has changed. Everyone now expects that shipping is going to be quick and that it may even be free. Consumers also expect to have value-added services like gift wrapping and all those other things. Expectations have gone way up.”
Rodgers says the benefits from robotic fulfillment have been like a rallying cry for Saks.
He says.
“We’ve done things our competition hasn’t done. Everybody feels really happy about it. It is one of the things we hold up as a strategic investment that is paying big dividends for the company, not only from a return on investment standpoint but also from a service standpoint. That’s probably the most important thing in the dot-com arena.”
COMMENTARY: Kiva Systems delivers accuracy, productivity and flexibility across a wide range of products, processes and industries. Kiva distribution operations handle products from aspirin to audio components, books to bath towels, crutches to candles, diapers to dishes, elbow pads to earrings, fan belts to folders, golf balls to ball gowns, hair gel to hand bags…well, you get the picture. If a product is picked as eaches or cases to satisfy orders, a Kiva system will handle it more accurately, productively and cost-effectively than any traditional automation approach.
Kiva automates eCommerce and catalog direct-to-consumer fulfillment, business-to-business order fulfillment, retail store re-stocking operations, industrial MRO and parts distribution, work-in-process parts supply functions, medical and hospital restocking programs and other order processing operations across a diverse spectrum of vertical markets. Kiva Systems has implemented its mobile-robotic order fulfillment system in these markets.
eCommerce - Kiva is widely recognized as THE solution for eCommerce fulfillment. For internet retailers the fulfillment center is the store and customer satisfaction is the top priority. Kiva makes it possible to pick eaches and cases as productively as full pallets. Kiva builds accuracy into the solution and enables just-in-time order fulfillment. Light directed picking, put-away and order consolidation combined with barcode scanning and multiple methods for confirming quantity ensure that inventory and orders are 99.9% accurate. Kiva does not require batching and waving of orders so any online order can be processed in as little as 15 minutes from the time a consumer submits an order to when a picked, packed and labeled package is sitting on a delivery truck. Additionally, Internet retailing often involves large assortments and strategies for offering the 'long tail' of goods selection that's impractical in brick-and-mortar stores. This imposes both storage and productivity challenges on eCommerce fulfillment operations tasked with handling high volumes of individually slow-moving goods.
Retail - The Kiva solution allows retail distribution centers to improve service and lower inventory levels for the enterprise while improving distribution productivity. Kiva makes it possible to pick eaches and cases as productively as full pallets. Kiva delivers just-in-time store replenishment. By integrating store front-end systems with Kiva's back-end order processing system, retailers are capable of selling an item at store level and picking a replacement item in the distribution center within minutes. It is even viable to ship the store replenishment order on the same day.
Medical Devices & Supplies - The Kiva solution simultaneously delivers speed, accuracy, productivity, and flexibility while meeting the challenges imposed on distribution operations by the inherent quality concerns of the medical supply chain. With Kiva it is possible to pick eaches and cases as productively as full pallets. Kiva builds accuracy into the solution and enables just-in-time order fulfillment. Light-directed picking, put-away and order consolidation, combined with barcode scanning and multiple methods for confirming quantity, ensure that inventory and orders are 99.9% accurate. The Kiva warehouse automation system was designed to meet medical device order fulfillment challenges while delivering operational efficiency and labor savings for distribution center operators.
Apparel & Footwear - The Kiva solution enables apparel and footwear distribution centers to improve service and lower inventory levels for the enterprise while actually improving distribution productivity. Kiva makes it possible to pick eaches and cases as productively as full pallets. Kiva delivers just-in-time order processing. Kiva customers use the system to store and process single garment picks, cut-case picking, full case picking, garment-on-hanger selection, lay-flat handling, bagged goods, boxed goods and shoes of all size, shape and type. If your company is involved with distributing apparel and footwear products, Kiva has a solution that works for you.
Health & Beauty - Operations that deal with health and beauty care (HBC) products are excellent candidates for automating with a Kiva solution. Cosmetics, skin care, hair products, vitamins, supplements and similar goods are often picked in each and case quantities to replenish retail stores and salons or to ship directly to consumers. High SKU counts are normal. There are a multitude of packaging configurations to deal with - inner packs, outer packs, cases, clamshells, peg-and-hook-friendly hanging packages, tubes, vials, bottles, and boxes of various shapes and sizes. Additionally, due to formulations and color choices many different products look almost identical which makes it a challenge to pick them accurately. The average warehouse worker would be hard pressed to tell the difference between tubes of red, ruby, scarlet and passion sunset lipstick without some systematic aid in the picking process.
Other - Kiva automation solutions deliver accuracy, productivity and flexibility across a wide range of products, processes and industries. As opposed to traditional systems where many items are considered "non-conveyable," most items will work with Kiva. Kiva is flexible enough to handle just about any product that a single human can pick alone. Every new customer challenges us to handle at least one item we haven't seen before.
Kiva Systems' major customers include:
Acumen Brands - ecommerce retailer
Boston Scientific - medical device manufacturer
Crate & Barrell - Housewares retailer
Dansko - Footwear, socks and healthcare apparel manufacturer
Diapers.com - ecommerce retailer
Dillard's - Fashion apparel, cosmetics and home furnishings retailer
Drugstore.com - Drug internet retailer
Gap - Apparel, footwear and accessories retailer
Gilt Group - Designer fashions retailer
Office Depot - Office supplies and equipment retailer
Saks Fifth Avenue - Apparel, footwear and accessories retailer
Staples - Office supplies and equipment retailer
Timberland - Footwear manufacturer and retailer
Toys R Us - Toys retailer
Walgreens - Drug retailer
UPDATE: On March 19, 2012, Amazon.com announced that it has agreed to acquire Kiva Systems for about $775 million in cash. It is considered the latest bid by the online retailer to streamline its growing distribution network.
Courtesy of an article appearing in the April 2012 issue of Stores Magazine
So, what’s the best way to market your brand on Facebook? According to Peter Shankman, an entrepreneur and venture capitalist with a hearty background of marketing and consulting under his belt, the answer is actually pretty easy:
“Sharing for the sake of just hearing yourself talk is pointless.”
Yes, the key to doing more is doing it with less. With all of the changes that have been implemented among Facebook Brand Pages within the last year, from the end of Facebook Discussions and Reviews in October to the roll-out of Timeline for Brands this spring, it’s hard to keep track of what’s actually working for brands on Facebook. The most recent numbers actually indicate fan growth slowed with the Brand Timeline switch. But thinking smart transcends those changes — and never goes out of style.
Peter Shankman
Shankman explains.
“You want to engage your audience and make sure that they feel like they’re apart of something — not just being marketed to. Then they will do your PR for you.”
Shankman’s experience with brands runs deep. The former journalist and founder of Help A Reporter Out has written two books on marketing and customer service in the social media world — Customer Service: New Rules for a Social Media World and Can We Do That?! Outrageous PR Stunts That Work — and Why Your Company Needs Them. He’s also frequently globetrotting to consult and speak on PR and social media, and has worked with major companies, such as American Express and Disney. through his company, The Geek Factory.
Mashable spoke with Shankman about the inner workings of Facebook marketing and what users really want to see on your brand page.
Want to Lose Followers? Be Repetitive
It’s really true that in life, one size does not fit all. The same can be said about your social media networks, too. Shankman says that nothing bothers him more than seeing brands post repetitive content on every social platform available — including their Facebook Brand Timeline.
He says.
“If you’re pushing the same crap onto your Facebook, you deserve to get your ass kicked.”
Instead, Shankman advises to place special content onto your Timeline that can engage users in a unique way — not just spamming the same information over every platform available. That way, when fans know what kind of content to expect from your page, they will know to return to your brand site for specific engagement instead of clicking the back button.
Shankman explains.
“Let it be something your audience wants to see, that they’re excited about. When you have those kinds of things, that’s when you want to share.”
Nothing Smart to Say? Don’t Say It at All
Shankman says that the best way to produce smart content is to engage in a conversation with your fans. Asking questions about the quality of the brand or polling users about what they want to see from a service are always more engaging than just pumping out promotional material.
Shankman says.
“You have to engage and you have to respond. It can’t just be about posting ‘Hey! 10% off for the next five minutes!’”
But even a careful and thoughtful dialogue on a Brand Page won’t yield rainbows and sunshine all the time. Shankman admits that every brand will have its haters or vocal fans who have had a bad experience with a service or product. But, don’t just ignore and delete the complaints of your naysayers just because your Timeline is a finite medium. He says that mistakes are often best received by fans when they’re approached head-on — and with transparency.
He advises.
“Work with them. Be honest and say, ‘Hey! We didn’t do this right and we’re trying to make it better.’”
Keep it Simple, Stupid
So what content actually works for brands? Shankman advises that content should be tailored to your audience, not just the things that you find interesting about your own brand. He adds that it’s also unwise to attempt to treat your Brand Page simply as a satellite to your company’s blog or website.
He says.
“Facebook is an entirely different animal. You can’t just repopulate your entire website onto it.”
So if promotional material can fail and the copy you already have can fail, what do you have left? Shankman says that no two brands are alike, so there’s no panacea for every Brand Page on Facebook. In fact, the easiest way to find out what does work on your company’s Brand Page is to ask the fans that frequent it.
Shankman says.
“The best way to give information to your audience is to find out how your audience wants it. You’ll never go wrong with that.”
Conclusion
Shankman says that, in short: It’s not about you, it’s about your audience. Shankman says the biggest mistake that brands make is self-absorption — if you make your content for yourself and not for your fans, you’re going to motivate them to click the back button and maybe remove you from their feed entirely. Instead, treating Facebook like the unique medium it is can help your brand’s social media reputation in the long run — and perhaps motivate your fans to evangelize your product and influence their own circles. As Shankman says, “Give them reasons to want to be there and to want to talk to other people.”
COMMENTARY: If I were to add anything to what Peter Shankman said, it is that Facebook is the wrong platform for selling anything. If you've followed my blog posts, I have been pretty vocal about about social media platforms and their failure in generating sales, and very critical of the ad-supported revenue modelutilized by Facebook and other social networks. The viability of Facebook commerce or F-commerce is also being questioned with several large retailers closing down their Facebook stores abruptly. However, for engaging and sharing with your fans, creating brand awareness, conducting promotions, contests and sweepstakes, creating buzz and word-of-mouth, providing customer service feedback, conducting marketing research, and offering social games (Zynga has built its entire business on Facebook), then Facebook is pretty good.
Courtesy of an article dated April 26, 2012 appearing in Mashable
Sahil Lavingia, 19-year 0ld founder and CEO of Gumroad (Click Image To Enlarge)
Then, a year in, Lavingia left. Now he's starting Gumroad, a new service which he says will revolutionize social shopping and e-commerce--and maybe even alter the way people create. Here’s how it works: Say you’ve made something--a song, a blog post, an app, etc.--and you want to make a little money from it. Just upload it, price it, then Gumroad, whose slogan is, “Sell anything you can share,” provides you with a custom product URL that is easily shareable across your existing social networks. Gumroad makes money by taking a 5% cut out of each purchase.
Lavingia says.
“I was at home on a Friday night in Palo Alto and I really wanted to learn realistic icon design. So I sat down at my computer and worked on this photorealistic pencil I’d designed in Photoshop. It took me around four hours and I thought, 'Wait a sec--if I follow a bunch of designers on Twitter, a bunch of designers probably follow me, and I should try to sell this. I could just put it up for a buck, and if you buy it, I’m gonna do it again.”
Gumroad homepage (Click Image To Enlarge)
Gumroad - How It Works (Click Image To Enlarge)
The trouble was, Lavingia couldn’t find an online marketplace that fit his needs. Most services charged a monthly subscription fee, which doesn't make a lot of sense to pay if you’re only selling something for a dollar. So by the following Monday, after a marathon weekend during which Lavingia did little more than code and sleep, Gumroad was born.
Lavingia is the latest poster boy for the new young, Flux-y breed of serial entrepreneurs. He started designing iPhone apps at age 14 and dropped out of his first semester at USC to join Pinterest. He says.
“I only want to work on things that solve my own problems.”
The lessons he learned at Pinterest loom large over his work at Gumroad. Mostly important, he says, he's learned not to settle into too specific of a niche. Instead, he's casting a wide net.
Lavingia says the same principle holds true for Gumroad.
“At Pinterest, even though we approached the design and functionality of it from a shopping perspective, it could be used for all sorts of stuff. And there’s no messaging in it that says, ‘You should use this for social shopping.’ I would never say ‘Gumroad is for musicians’ or ‘Gumroad is for authors.’ I think the best products totally surprise you because users are doing things that you have no idea about.”
One of Lavingia’s favorite examples comes from a user who printed Gumroad URLs on sack lunches. Hungry customers could visit the URL, pay $5, then grab a sandwich.
It may seem counterintuitive in 2012 to launch a website with the primary purpose of making people pay for art. Many consumers today expect their music and movies to be free, either through illicit means like online piracy, or legitimate sources like Spotify or Pandora. But Lavingia says this assumption is shortsighted.
“People need a way to pay rent. It’s not, ‘Aw, I had to pay 10 bucks for this album when I could’ve gotten it for free.’ It’s, ‘I get to give this artist that I really like 10 dollars. And if enough people do it, this person might just create way more stuff for people.’ It should be win-win for everybody.”
In fact, his biggest worry isn’t that people won’t be willing to buy creative material, Lavingia says.
“I think one of the biggest challenges is that a lot of people don’t like selling stuff. They’re afraid of putting a price on the stuff they create.”
While Gumroad focuses on amateurs, Lavingia says he would love to court bigger artists in the future. In fact, it wouldn't be altogether surprising if Gumroad became the go-to platform for comedians like Louis C.K. and Aziz Ansari, who are already experimenting with alternative distribution and pricing models. But Lavingia also stresses the importance of making Gumroad's experience just as enjoyable whether you’re a platinum-selling musician or kid designing clip art in his bedroom.
“Twitter is the best example (of that). Twitter is the same product if you have one follower or 15 million followers. Lady Gaga’s font size isn’t bigger because she’s a cooler person than I am. And I really want to transfer that over to Gumroad. And I spend every day thinking about how to do that better and better and better.”
COMMENTARY: What I like about Gumroad is the overall simplicity and seamless buying experience. Gumroad handles all the hosting, delivery, and payments, so users can focus on continuously creating cool stuff to sell. Gumroad allows users talk directly with their customers and to dynamically price their creations. They also allow "pay-what-you-want pricing", so users can let their customers decide what something is worth. Once a payment has gone through, Gumroad instantly emails customers with a fast, secure download link. Gumroad's FAQ's describe its services
What can I sell? Most people use Gumroad to sell things that they've made. These include songs, albums, videos, photos, and other things. Even T-shirts! You can sell anything that you can upload or link to.
What can I price a link? You can price a link for as little as $1, and as much as $1000. We also support pricing links in £, €, and ¥.
How can people pay? We support all major credit cards. That includes Visa, MasterCard, American Express, Discover, JCB, and Diners Club cards.
I'm not in the US. Can I use Gumroad? Yes. We support deposits to accounts in over 190 countries.
What is Gumroad's cut? Simple. We take 5% + 25¢ of each transaction. For example: If you sell a digital video for $10, we get $0.75 and $9.25 is deposited into your account.
What does Gumroad charge its users? There are no setup fees, monthly fees, bandwidth fees, or withdrawal fees.
How do I get paid? A deposit to your linked account at the end of every month.
Why is this FAQ so short? We believe that with simple products come short FAQs. Please send us an email if you have a question that isn't answered here.
Sahil represents part of a growing trend of college dropouts becoming entrepreneurs at at very early age. While little data on the phenomenon exists, venture-capitalists say they are funding more chief executives under age 21 than ever before.
Marc Andreessen, co-founder of venture capital firm Andreessen Horowitz says.
“At a certain point, they can’t get much younger or we’re going to be invested in preschool.”
Andreessen and other venture-capitalists say the entrepreneurs they fund at 18 or 19 typically have been prepping for years — learning computer code, taking on ambitious freelance projects and educating themselves on the Internet. Sahil definitely fits that mold.
Some are self-consciously molding themselves in the image of Facebook founder Mark Zuckerberg, 27, who created computer games as a child and was taking a graduate-level computer course by his early teens.
Sahil Lavingia recalls a day during the summer of 2011 when he had several meetings scheduled on Sand Hill Road — home to many of the nation’s leading venture-capital firms — and no car to get there. The journey of just a few miles took hours by the time Lavingia rode a local train a couple of stops, caught a bus to Stanford University and then hopped a shuttle bus to the Stanford Linear Accelerator Center, which is on Sand Hill Road.
Another time, dreading the combination of a hot day and a sweaty walk around Palo Alto, he pulled on a pair of shorts, even though he was heading to a meeting with blue-chip VC Accel Partners. The outfit — casual even by laid-back Silicon Valley standards — didn’t stop Accel from investing. Lavingia, an alumnus of hot online bulletin-board company Pinterest, raised $1.1 million for his payments startup, Gumroad. Not bad.
In March 2012, TechCrunch's Alexia Tsotsis interviewed Sahil Lavingia.
TechCrunch's Alexia Tsotsis interviews 19-year old Sahil Lavingia, founder of Gumroad, who talks about Pinterest and Gumroad, the social media marketplace.
After listening to Sahil Lavingia, you can tell that he is not only intelligent, but a sharp, albeit young entrepreneur who just beams with confidence. He believes that Gumroad can scale into something big. The next Facebook, perhaps?
I see Gumroad as the prototype of the first social ecommerce site. If you have a large number of followers or fans within your social network, whether on Facebook, Twitter or Google+, they are more likely to trust you because you share something in common with them. Therefore, if you have something valuable to sell them, something they might value because you created it, why not sell it directly to them. If Facebook were smart, they should adopt Gumroad's business model and allow their users to sell things in the same way. Better yet, why not acquire Gumroad. That's my two bits and prediction. We will just have to wait and see if Facebook takes me up on it.
Courtesy of an article dated April 25, 2012 appearing in Fast Company
People are getting more comfortable shopping online, but they're also demanding more of retailers.
Online shopping has become a mainstream activity—fully 70 percent of all Internet users ages 14 and up bought something online last year, according to eMarketer. E-commerce accounted for 6.6 percent of all retail sales, but the researcher believes that figure could become as much as 20 percent in the next 10 years. Retailers have to up their game, though; research shows that as people increasingly shop across channels, they're expecting more from retailers. Most of all, shoppers want consistency in salespeople's knowledge of products; the ability to check availability of products in their local store before going to shop; and the ability for salespeople to check inventory at another store and have items delivered from there.
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Click Imge To Enlarge
Courtesy of an article dated April 20, 2012 appearing in AdWeek
Choosing a warehousing and fulfillment partner can be an overwhelming experience. Oftentimes, it is the last thing that a company considers before launching a product. But making this decision doesn’t have to be difficult. And with a little thought during the planning stages, companies can make the best decision for all of their warehousing and fulfillment needs.
Analyze Your Needs
In order to make the most informed decision, a company must have a thorough understanding of its warehousing and fulfillment needs.
Geographic Needs - One critical factor to consider is the geographic needs of your business. Is it important that your warehousing or fulfillment partner is located close by? Will you be shipping all throughout the country or world? Where is your manufacturer located and how does that relate to your geographic requirements?
Technological Needs - Second, a company must explore its needs related to technology. Do you have a web store in place currently? If not, what are your technology needs? Web stores range from very basic (with low monthly costs) to complicated and highly customizable (with larger up front costs). Furthermore, the reports that accompany your web store are vital to making the most informed decisions. Does the web store offer real-time reporting? Finally, if you already have a web store, does the warehousing and fulfillment company have an interface to download orders, send out tracking information and offer inventory reports?
Specific Types of Fulfillment Needs - Third, warehousing and fulfillment companies usually specialize in certain types of projects. For example, some companies are quite proficient at e-commerce fulfillment, while others focus on B2B projects. Finding out what types of verticals potential warehousing and fulfillment providers specialize in will assist you in selecting one that best suites your needs.
Compare Warehousing and Fulfillment Companies
Taking the time to search for a quality warehousing and fulfillment company is an important step in the process. WarehousingandFulfillment.com makes it easy. Simply fill out a quote request form and receive up to 5 responses from quality warehousing and fulfillment vendors.
Of course, knowing what to look for will ensure a successful choice. Use the tips below to make the best decision on a warehousing and fulfillment vendor.
Obtain a list of all warehousing and fulfillment charges
Determine how many customers the warehousing and fulfillment company has
Ask how many locations are under management and where they are located
Ask for references from existing customers
Check the vendor’s BBB rating
Obtain a tour of the facilities
Obtain a demo of all technology systems and reports
Ask for an understanding of the processes and procedures of the vendor
Ask for historical error rates of the warehousing and fulfillment company
Gain an understanding of the customer service support mechanisms of the vendor
Make the Best Decision
By taking the time to understand your needs and the capabilities of each warehousing and fulfillment prospect, you will be able to make the most informed decision. Remember, the back end storage and distribution of your product is an important part of your business that deserves adequate time and consideration.
An Amazon order fulfillment warehouse near Milton Keynes, U.K. has everything you can think of and then some (Click Image To Enlarge)
What do Fulfillment Companies Charge?
One of the most frequently asked questions about warehousing and fulfillment is “what do fulfillment companies charge”? Of course, this is somewhat of a complicated question to answer, but those new to “fulfillment” could benefit from a broad idea of the types of charges that they’ll encounter should they decide to outsource their fulfillment.
We understand that in order to decide whether you should do fulfillment in house or outsource, you have to have an idea of the costs of third party fulfillment. Before we elaborate on some of the more common charges, we wanted to give you a few words of wisdom when comparing costs. First, when comparing to the costs of doing it in house – make sure that you’re looking at all of the costs that you’ll incur to do the fulfillment in house. This means that you can’t ignore things like management time and the most commonly overlooked cost – opportunity cost (what you could have done with your time had you not been, for example, on the warehouse floor shipping packages). Second, when comparing costs among various outsourced fulfillment companies, make sure that you’re comparing apples to apples. This is a very difficult task, because for some reason many fulfillment companies like to make things extremely complicated! But beware, because what seems like good pricing at first glance may not be the best option when you look at all of the fees.
Okay, so on to the most common fulfillment charges! These are the most common types of charges that you’ll see in the fulfillment industry. If after looking at these charges you’re interested in getting “live quotes”, then just let us know and we’ll get you connected.
Receiving to count and enter your materials into inventory (each time they receive inventory)
Storage of goods per pallet per month (or square footage or cubic footage)
Processing of orders either a flat per order fee OR a per order fee combined with a per item fee
Shipping charges (usually a discount off of published rates – and most likely better than you’d be able to get on your own)
There are other fees that vary from company to company – such as account management, fees to interface with a shopping cart, returns fees, etc. Remember, keep a close look on all of the charges when comparing costs – not just between fulfillment options but also when you’re comparing against keeping it in house.
Click Image To Enlarge
Click Image To Enlarge
Is Fulfillment Right for a Start Up or Small Business?
Each month, quite a few start up and small businesses are looking to find information on whether or not it makes sense for them to use outsourced warehousing and fulfillment services. Usually, they’re looking for the costs of fulfillment services to see if they can afford to use them. There’s really a few good reasons to do the warehousing and fulfillment internally to start. And we believe there’s one good reason to outsource from the very beginning. Let’s explore the options…
There’s really two good reasons to not use outsourced warehousing and fulfillment services as a start up. First and foremost, if your core business involves distribution or if you believe that the logistics are so important and critical that you cannot outsource, then by all means keep it in house. However, most companies don’t fall into this bracket. Secondly, we totally understand that your start up may be constrained by capital, and therefore you may not have the funding to be able to use a fulfillment service. In this case, the only option is to use your own labor – which, by the way, isn’t FREE!
Which brings us to our last point – why we believe that many small businesses would be best suited by outsourcing fulfillment. If fulfillment and warehousing aren’t your core business and if you at least have enough money that outsourcing is an option, we believe that it can be the best option for you. Why? Because of that beautiful thing called “opportunity cost.” A lot of small business owners like to have control over all aspects of their business. But by keeping control of the fulfillment and therefore processing orders yourself, you lose valuable time that could be spent elsewhere – like in sales and marketing.
It is absolutely true that the biggest problem that most companies will face is a “sales problem.” And by sales problem, we mean not enough sales! Think of it, what inhibits you most in your business? Not having enough funding (or sales) to expand and do what you need to do to run the business the best way possible. By getting the warehousing and fulfillment of of your shoulders, you’re much better suited to spend time where it needs to be spent – in growing the business. And if you’re not growing as a business, you’re shrinking.
Nonetheless, if you do want to compare costs of outsourcing versus the costs of performing the warehousing and fulfillment in house, here are a few pointers to keep in mind:
Labor Costs: Be sure to total up all of the labor costs of everyone doing warehousing and shipping related work – including management time spent. Oftentimes, the president or owner doesn’t factor in the time that they spend on shipping issues. Total up all of these costs and compare them to the outsourced costs for pick and pack fees, returns fees, and customer service fees.
Storage Costs: This comparison is relatively straight forward. Compare the costs of your space (even if it’s in your garage – because there is a cost associated with this space) with the costs an outsourced company will charge for space – whether it’s square footage, per pallet, or cubic footage.
Shipping Costs: This is one of the greatest areas of potential for outsourcing. Fulfillment companies ship a lot of products, so they get great shipping rates. By working with a fulfillment company, you’ll potentially be able to receive larger shipping discounts – which can add up quickly. Ask the fulfillment company what discounts you’ll get by shipping on their account, and then compare that to your current shipping costs.
Finally, don’t underestimate the opportunity costs discussed earlier. A small business owner’s time is worth a lot of money. Spending time in other areas of the business outside of shipping may add more value long term for the business.
What’s the Best Location for a Fulfillment Company?
Many small and medium sized businesses are searching for a fulfillment company to store and ship their goods for them. But determining where the fulfillment company should be located can be a great challenge. Of course, most businesses would prefer for a fulfillment company to be located right down the street. This way, they can easily travel to them to check on stock and in case there are any issues. While this isn’t a bad strategy to employ, looking at the world this way could also lead to missed opportunities.
First and foremost, finding a fulfillment company right down the street doesn’t necessarily mean that they’re going to be the best fit for your business. There are so many other factors that mean a great deal when considering who to choose to perform your outsourced warehousing and distribution. Other things could have a big impact such as the specialty of the fulfillment company and their pricing. For example, most people wouldn’t know this because most third party fulfillment firms tell you that they can do “any” project, but the reality is that most fulfillment vendors focus on certain types of clients. Some are really good at e-commerce fulfillment, others are really good at retail fulfillment to retail stores. Furthermore, there are some really good fulfillment companies that offer great service and some of the most competitive pricing, but if you won’t consider anyone outside of your city, you might miss on these potential cost savings.
Second, a huge indicator of costs involved in any fulfillment project is shipping. If you choose a fulfillment company right by your company, it may or may not be the best decision to lower your overall shipping costs. Two factors come into play when making this determination – where your product is manufactured and where your customers are. For example, if your product is produced in China and most of your customers are in California, then it would make sense to located a company in or near a major port in California. And for many companies that ship to customers all across the US, finding a fulfillment company that is centrally located may be the best option.
As you can see, this is no easy decision. But taking into account all of the factors, instead of just looking at convenience, will lead to the best decision overall for your company.
Warehousing and Fulfillment Pricing Tips
Looking at a pricing proposal from a warehousing and fulfillment vendor is akin to browsing the statutes of a typical homeowners association. Although it may be a good solution for sleep troubles, reviewing the pricing proposals of warehousing and fulfillment companies should be done with great care and diligence. Below are some tips to help avoid some of the challenges of warehousing and fulfillment pricing.
Make sure that the warehousing and fulfillment vendor has listed ALL costs
Beware of monthly minimum charges
Ask for volume discounts that are available for higher volume order processing and storage
Determine all monthly fixed recurring charges
Ask if the handling charges can be rolled into your product costs and make sure that you are comfortable with the resulting net profit
Ask if the vendor makes margin on freight
Ask for referrals from current customers to make sure that costs don’t change after sign up
Check the vendor’s BBB rating
Make sure that everything is documented in a contract
Taking a few precautions when looking at warehousing and fulfillment proposals can help in avoiding unncecessary troubles, and can lead to a long-term agreement that works for both sides.
COMMENTARY: Excellent advice on how to determine if you should keep your order fulfillment inhouse or outsource it.
When looking for an order fulfillment center it is important to pay close attention to their cost structure. Many clients have come to us expressing frustrations with their current order fulfillment centers. Confusion about what they are actually being charged for and hidden fees are not uncommon. When looking at outsourcing your order fulfillment it is important to know what to expect. Some common costs that you may see include:
Storage fees
Order charges
Line item charges
Receiving charges
Kitting and assembly charges
Monthly minimums
Monthy minimums are particularly important especially if your business is highly seasonal (e.g. toys, seasonal apparel, pool supplies, etc.). Ask yourself whether its wise to pay for a monthly minimum when you are not warehousing any inventory during the off-peak part of the year.
It is very important that you know your direct and indirect costs of fulfilling orders inhouse versus outsourcing all order fulfillment. Some costs are fixed and will continue to be incurred by a business even if all order fulfillment is outsourced. For example, you can eliminate warehousing and storage costs, but if you were renting your warehouse space, you may still be required to pay the monthly rent on the vacant space, or may have to negotiate a costly lease buyout with the landlord. You need to factor that fixed cost into your total order fulfillment oursourcing decision.
If you own the building, the costs of the former warehouse space may continue to be incured and they should be factored into the analysis:
Monthly payments on the outstanding mortgage
Insurance
Taxes
Utilities
Maintenance
In addition, if you intend to convert the former warehouse space into usable office or retail space or other use, you may incur significant buildout costs. It is also very likely that you will have a lot of unused warehouse shelving, packaging and shipping equipment left. You will need a plan to dispose of these items and estimate the disposal costs. Factor those costs into your final order fulfillment outsourcing decision.
It is extremely important to have a clear understanding of what you are being charged for before entering into an outsource fulfillment agreement.
Pricing can look overwhelming when looking at quote sheets, but there are in fact several advantages to outsourcing your order fulfillment. In most cases, companies can save a significant amount of money even for small companies. The cost of the systems necessary to handle inventory and order fulfillment effectively can be extremely expensive. For that reason alone, many companies come to us looking for a solution. Other cost savings can be seen with freight and personnel. Since order fulfillment centers are constantly shipping, they often have negotiated rates with freight companies that give them large discounts that they can pass on to their clients.
When it comes to personnel, paying a salary for one person to handle your order fulfillment is probably costing you over $30,000 conservatively. That $30,000 can go a long way when using outsourced fulfillment services. Order fulfillment centers normally have the ability to scale up and down with temporary employees which gives your company more flexibility to focus on growing business without the worry of hiring and firing personnel. And, as noted above, don't forget opportunity costs. Your time is valuable, and you will still be responsible for supervising and overseeing the fulfillment service function.
If outsourcing order fulfillment is not a good option due to the costs or other issues, you may wish to consider drop shipping. Some suppliers will drop ship your orders for you, but will charge a shipping and handling charge. Drop shipping works best if your inventory list is very small (10 items or less), you are buying from just a few suppliers (1 to 5) and you are shipping to customers within the U.S. You will still be required to take the order, notify and pay the supplier for each order. You must also insure that the supplier is reliable, can handle the volume and has an adequate fulfillment and tracking system in place that will notify you and your customer when each order is fulfilled.
It is very important that you checkout the fulfillment companies you are interviewing carefully. Find out how long they have been in business, whose on the management team, how many employees they have, how much insurance they carry and what is covered, security systems in place, order processing and fulfillment systems used, and the size, number and locations of their fulfillment warehouses. Get references of both past and present customers and check them thoroughly If you can personally visit the fulfillment warehouses, I encourage you to do so, in order to determine their exact location, how clean and well organized they are and how well your inventory will be maintained and protected.
CompanySeek.com prepared a fairly comprehensive list of order fulfillment companies. You can find that list by clicking HERE.
If the start-up world had fairy tales, Jennifer (Jenny) Fleiss and Jennifer (Jenn) Hyman would be the main characters. Once upon a time, the Harvard Business School classmates—Fleiss from the finance world and Hyman from sales and marketing—met casually for lunch every week to brainstorm entrepreneurial ventures.
Rent The Runway co-founders Jennifer (Jenny) Fleiss and Jennifer (Jenn) Hyman
The idea that stuck came over Thanksgiving break, when Hyman’s sister, Becky, wanted something gorgeous to wear to an upcoming wedding, but didn’t want to drop an obscene amount of money on a dress she’d only wear once. From that moment on, Fleiss and Hyman had their concept: Rent the Runway, a “Netflix for dresses” that allowed women to rent designer gowns for a fraction of the retail price.
Now, just over three years later, Fleiss and Hyman oversee the rapidly growing, 125-person, multi-million dollar enterprise with a cultish following of customers who get their own Cinderella experience—a new, gorgeous dress for every special occasion.
We got to chat with the incredible duo to hear more about how they turned an “I have nothing to wear” dilemma into an opportunity that looks like it’s headed for happily ever after. Read on for the story of how they got started, and the advice they’d give to every aspiring entrepreneur.
Why was Rent the Runway the right idea—and what made you move forward with it?
Jennifer Hyman, Rent the Runway Co-Founder and CEO
JH: Actually, I never said, “oh this is a brilliant idea, this is going to be a billion dollar company, we have to do this.” My reaction was: I had an idea, I thought it was interesting, Jenny thought it was interesting, we thought it was fun, and we thought, let’s figure out if this is a great idea.
JF: When Jenn came to me with this idea, we decided to do it as a course credit. But we also decided to spend the rest of the year figuring out if this was something we could do full time, instead of getting a job. We gave ourselves a fixed deadline—by the time we graduated, we’d see if this would actually work. And if it didn’t, we had other jobs that we were going to accept.
You didn’t write a business plan—you just got started! Why?
Jennifer Fleiss, Rent the Runway Co-Founder and President
JH: I think people waste so much time strategizing about what they should do, rather than just going and doing something, making mistakes, and then pivoting. The goal of a start-up should be: Launch as many things as possible, fail as quickly as possible, and then figure out how to move forward from there.
JF: We started by purchasing dresses at retail in our own sizes—we figured if the concept didn’t work, at least we’d have a great wardrobe! We just went to different undergraduate campus and started renting dresses to women.
We went to Harvard on a weekend we knew they had an event. Then we went to Yale, and we rented the dresses, but didn’t let women try them on. For the third trial, we sent a PDF out to students that said “call us if you want to rent this dress.” So, each time we were iterating a little bit closer to what our actual concept was—an internet dress rental site—to prove that it was really going to work.
Obviously, it did work! After you saw that the customers loved it, what was the reaction you got from designers and investors?
JH: The designers were initially skeptical—this is something that’s never been done before. But honestly, I appreciated their skepticism, because it made us dig deeper and figure out what we really wanted our brand to be, and who we wanted to market to and target.
JF: It was tough to prove to the investors that this concept was really going to work. It’s really hard for the 60-year-old men we were pitching to understand the emotional connection that women have with fashion. So we would take them to the trials, or we would take videos, and we would show them the experience that women were having—and that was huge.
JH: They loved our approach of just learning by doing, and running different experiments and seeing what traction we got—could we send something through the mail? Would a girl ruin a dress if she wore it to a party? I think we were able to eliminate investor skepticism by actually going out and doing stuff.
Here's the Rent The Runway website homepage:
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The following video provides an excellent review of Rent A Runway's website, the services the company provides, designer brands, styles, sizes, colors, etc.
What’s been your biggest challenge along the way?
JF: One is technology—Jenn and I came to Rent the Runway with no technology background. The other is around the fashion industry. We started a fashion technology company with no fashion or technology experience!
What’s been most surprising about the experience of growing your company to what it is today?
JH: That we’ve been able to do it! We were two women without any experience in leading companies. I had led teams before, but nothing like this. I don’t even think I dreamed as big for myself as this company already is, in just the first few years. It’s surprising when you don’t put blockades in front of yourself, and you just allow yourself to run, how far you can go.
JF: Literally every day I walk in the office, and it’s amazing to see all of these people working towards the same mission and goal!
Also, the reception that consumers have had from the product. We get photos, and hand-written thank-you notes, and gifts sent to the office from people who say “thank you, you’ve changed my life!” People feel like they’re getting this awesome Cinderella experience. In a small way, we feel like we’re changing people’s lives in a great and really fun way.
What advice do you have for entrepreneurs who’d like to follow in your footsteps?
JF: I’d say—go for it! But I mean that in a couple of ways. One, do it—there are not as many risks as you feel like there are. People think it’s this scary thing that’s going to make or break your career, and it’s not. If it doesn’t work out, you’ll get another job, and you’ll definitely learn more than you ever would otherwise.
But also, go for it in the sense that you need to test the concept out, and you need to be brutally honest with yourself if it’s not working. Going for it means don’t just sit there with your ideas—figure out a way to see if it’s going to work.
JH: Number one is to figure out how you are going to assess whether you have a good idea or not. So, go do something, learn from it, and be able to have an unbiased view as to whether your idea works.
Also, be very aware of what your strengths and weaknesses are, not just what your skills are. How successful you’re going to be as an entrepreneur is really a story of how compelling a leader you are.
Finally—you know we had to ask. What’s your favorite Rent the Runway dress you’ve ever worn?
JF: You know, it’s not only the dress—it’s also the memory associated with the dress. I actually wore a really great Catherine Malandrino dress when I was about eight months pregnant, and it looked awesome! It’s not a maternity dress, but it just happened to work and fit and fall really well. So that’s a great example of something I needed to wear for one day, but wouldn’t necessarily want to buy.
JH: That is a ridiculously hard question! I think my favorite dress is this incredibly sophisticated Nina Ricci sheath that I wore to the most important presentation I’ve ever delivered in my life. I felt more confident wearing that dress than I’ve ever felt before, and I think that I nailed the presentation because of it—I give 100% credit to the dress!
COMMENTARY: Rent the Runway’s slogan might as well be: Friends don’t let friends wear H&M to the most important events in their lives. The company solves the perennial “closet full of clothes and yet nothing to wear” problem that most women face, by allowing them to rent designer clothes for a big event for about 10% of the price.
It’s clearly a problem women have. The question– like most rental businesses like Zipcar– is how many women want to rent clothes as the solution.
So far, there’s at least one million active users, spanning a wide demographic of women, from 15 years old to 45, says Jennifer Hyman, Rent the Runway CEO and cofounder. She says.
“That was a surprise. Initially we thought it would be only young women in their 20s.”
There’s a lot of heavy lifting behind the scenes in this business. A warehouse in New York dry cleans, repairs and re-rents thousands of designer pieces. An algorithm helps women pick age-appropriate, body-appropriate pieces. A social layer allows them get advice from a small circle of trusted friends and family.
The company had raised $16 million to date from Highland Capital and Bain Capital, bringing the total amount raised so far to more than $30 million. And, surprisingly given the costs to a business like this, the company was profitable before this round.
Hyman says the money will be used to build out its underlying technology, physical distribution hubs all over the country, a sophisticated inventory management system and the micro-social network aspect of the site. Kleiner’s Aileen Lee will join the board.
I like Rent The Runway's business concept very much, but my main concern as a renter would be renting something via the internet and making sure that the garment fits properly when I receive it. When you are renting or purchasing apparel online and on short notice, the worst thing that could happen is to receive the garment, but it doesn't fit well.
I do like that Rent The Runway is getting on the "celebrity bandwagon," by renting some of the designer dresses worn by celebrities at various events like the Academy Awards, Golden Globes, and so forth. When you are renting designer dresses to a market consisting predominantly of Millennials (18-34 year olds), connecting a particular designer dress with a celebrity is very important.
I reviewed Rent The Runway's pages on both Twitter and Facebook, and its my opinion that they need to do more in the social media area. Rent The Runway only has 25,730 followers, but only follows back 419. What the hell is that? They should be using Twitter more smartly by following back everybody, and using Twitter to get immediate feedback on events where designer dresses are worn. This could tip them off to which designers and dresses are "hot." They are doing a bit better job on Facebook where they have 88,000 fans, but if they should have ten times more fans and followers on both Facebook and Twitter.
Rent The Runway should seriously consider developing their own iPhone and Android app. Most Millennials are highly mobile and use their smartphones and tablets to log into their social networks and surf the Internet. An app will allow Rent The Runway to "glue" right into every fan or follower, and they could provide them with real-time posts of events, new designers, new dresses, promotions, polls, and so forth. App users should also be able to rent a garment right through the app, no matter where they are, 24/7, 365 days a year.
Rent The Runway claims to be profitable, but there is always the danger of copycats, especially from the designers themselves or major garmet makers eager to capitalize on a growing trend and new market opportunity. I can easily see this happening.
Courtesy of an article dated February 29, 2012 appearing in The Daily Museand an article dated May 23, 2011 appearing in TechCrunch
Last April, Gamestop Corp. (GME) opened a store on Facebook to generate sales among the 3.5 million-plus customers who’d declared themselves “fans” of the video game retailer. Six months later, the store was quietly shuttered.
Gamestop has company. Over the past year the following brands all opened and subsequently closed their Facebook ecommerce stores:
Gap Inc.
Nordstrom
J.C. Penney Co.
Nordstrom Inc.
1-800-FLOWERS
Facebook, which this month filed for an initial public offering, has sought to be a top shopping destination for its 845 million members. The stores’ quick failure shows that the Menlo Park, California-based social network doesn’t drive commerce and casts doubt on its value for retailers, said Sucharita Mulpuru, an analyst at Forrester Research in Cambridge, Massachusetts.
Mulpuru said in a telephone interview.
“There was a lot of anticipation that Facebook would turn into a new destination, a store, a place where people would shop. But, it was like trying to sell stuff to people while they’re hanging out with their friends at the bar.”
A year ago, investors hailed so-called F-commerce as the next big thing, speculating that the company had potential to threaten Amazon.com Inc. and PayPal Inc. Facebook is the most- visited website in the world. Some people thought that persuading visitors to shop would be easy, Mulpuru said.
David Fisch, Facebook’s director of business development, said in June that the site would be more appealing than competitors because it could replicate the social experience of a brick-and-mortar shopping mall.
Hanging Out
Fisch said at the Internet Retailer Conference & Exhibition in San Diego.
“This is where people are hanging out.”
Facebook planned to profit from retailers buying ads to drive traffic to their on-site stores. Business consultant Booz & Co. predicted in January 2011 that physical goods sold through social commerce would balloon to $30 billion from $5 billion by 2015, with Facebook contributing a majority of sales.
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Even as some businesses shut storefronts, many companies continue to devote advertising dollars to the social network. Facebook’s sales surged 55 percent to $1.13 billion in the fourth quarter. The company aims to use e-commerce more as a way of getting users to stay longer than as a way to boost revenue, said Krista Garcia, an analyst at EMarketer Inc. in New York.
Chris Kraeuter, a Facebook spokesman, declined to comment.
Shut Quickly
Customers had no incentive to shop at Gamestop's Facebook store rather than the company’s regular website because purchasing online is already convenient, said Ashley Sheetz, who is the Grapevine, Texas-based company’s vice president of marketing and strategy.
Sheetz said in a telephone interview.
“We just didn’t get the return on investment we needed from the Facebook market, so we shut it down pretty quickly. For us, it’s been a way we communicate with customers on deals, not a place to sell.”
Gap, which has 5.6 million Facebook fans from its namesake, Banana Republic and Old Navy pages, opened and discontinued a storefront last year, said Liz Nunan, a company spokeswoman. The San Francisco-based company also discovered customers preferred shopping on its own sites, she said.
Nunan said in an emailed statement.
“We will continue to evaluate if this is something we want to bring back in the future.”
Nordstrom tested ways to make shopping “seamless through Facebook” and decided on a broader social media focus, Colin Johnson, a spokesman, said.
J.C. Penney featured assortments in a Facebook “shop” tab beginning in 2010, and took it down in December 2011, Kate Coultas, a spokeswoman said in an emailed statement.
Cracks in Model
Wade Gerten, chief executive officer of social media developer 8thBridge, previously known as Alvenda, opened a Facebook store for the florist 1-800-FLOWERS. Minneapolis-based Gerten went on to develop commerce strategies for Delta Air Lines Inc., Diane Von Furstenberg Studio LP and denim-maker Seven for all Mankind.
Cracks in the model showed quickly, Gerten said in a telephone interview. Clients “have taken a different approach,” shutting stores or scaling back their offerings.
Gerten said.
“It was basically just another place to shop for all the stuff already available on the retailer websites. I give so-called F-commerce an ‘F.’”
COMMENTARY: If you've been following my blog posts about Facebook commerce, or F-commerce, as it is commonly referred to, you know that I have not been as optimistic about the potential for F-commerce as forecasted by Booz & Company in the above article. In fact, I have been outright negative on F-commerce in several previous posts: March 28, 2011, April 19, 2011, July 4, 2011, and July 9, 2011.
I highly recommend that you read my blog post of July 4, 2011, because I cite an article dated April 8, 2011appearing in Social Commerce Today, which makes one of the strongest cases against f-commerce I have ever read, so I present it in its entirety:
• Small Market - The market for selling on Facebook is tiny – even the most enthusiastic projections forecast a market size of only $1.8 billion or 1% of total ecommerce by the end of 2011 and a maximum of $13 billion or 4% of total ecommerce by 2015.
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• Lack of Interest - Online shoppers don’t want to buy on Facebook – the Booz & Allen report on social commerce found that 73% of online shoppers would not purchase goods on Facebook or through other social networking sites.
• Questionable eCommerce Platform - Facebook's user growth is no longer exponential, and reaching saturation in the U.S., the UK and European markets, its ad-supported revenue model is greatly flawed and reached a Critical Inflection Point.
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• Lack of Supporting Evidence - Very few major brands or retailers have provided compelling evidence that selling on Facebook unequivocally drives ROI or CLV (customer lifetime value).
• Poor Social Media ROI's - A recent WPP survey found that 23% of marketers said they were convinced that they were getting a good sales return on their social media investment, while 18% said they think their ROI is “average” and 9% described it as “poor.” (see slides below). Businesses find social networks to be the least effective new customer acquisition tool.
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• Facebook Credits Is A Non-Starter For Most Retailers - This is the “currency” that consumers can use to buy, say, potatoes on Farmville. Facebook however has little to no credibility with respect to financial services among consumers and the same retailers reluctant to implement PayPal (which so many large merchants are) will be ten times more resistant to a less-tried, less-reliable, newer payment mark.
• Facebook Fails To Drive Traffic - In terms of driving e-commerce traffic, Facebook is failing, ads are getting more expensive yet driving ever less traffic.
• F-Commerce Detracts From Original Mision - Facebook CEO and founder Mark Zuckerberg's original mission was "Giving people the power to share and make the world more open and connected." Facebook is a people focused forum, not a brand focused forum. Facebook was designed for connecting people that share similar interests. F-commerce runs counter-productive to the the original mission. The original mission was never to "bring buyers and sellers together". Brands and businesses were introduced into the social network mix only after site monetization came into being, and it seemed appropriate to have brands and businesses open pages to "connect" with their customers.
Facebook believes that the leveraging of the social web is part of a much larger technology shift in which social could become a larger driver of web traffic than search, he said. That’s because Facebook has seen several elements on its site, such as photo sharing and gaming, gain significant traction even though they were less sophisticated than the competition. Fisch said.
“We focus on people first and functions second.”
According to a Booz & Company's 2010 Survey,
"To date most companies’ social commerce activities have focused on branding and user-generated content in support of existing marketing initiatives. This is the topmost part of the marketing funnel—the level of simple awareness—and it would be hard to find a sizable B2C company anywhere in the world that isn’t doing anything at all in this area."
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"In the U.S., many companies are past the looking stage; as of the end of 2009, approximately 69 percent of U.S. retailers had social network pages, 54 percent used microblogging sites such as Twitter, and 58 percent published customer ratings and reviews. Most of this early activity, however, has been decentralized and uncoordinated, making it impossible for companies to accurately assess their ROI from these efforts."
"At least for the moment, awareness seems to have limited value in actually spurring social commerce. In Booz & Company’s 2010 survey, 71 percent of social networking users said their “liking” a company on Facebook would have no impact on their propensity to buy from that company."
"Social commerce will almost certainly have the biggest impact at the lower end of the funnel, in the consideration, conversion, and loyalty and service stages. These are areas where it is possible to establish clear metrics—including conversion rates, incremental revenue, and repeat business—and thus more accurately measure ROI. The key for companies will be understanding how to use social media in each of these stages."
"Social commerce will have the biggest impact in the consideration, conversion, and loyalty and service stages of the client relationship."
What truly amazed me is the speed with which the brands mentioned in the above Bloomberg article closed their Facebook F-commerce stores. The results from the F-commerce "experiment" were so bad evidently that they had no other choice but to close them quickly. Albeit, there are a few F-commerce successes, including Starbucks, but we are still very early in the F-commerce experiment, but a pattern of negative F-commerce results is already developing, and this is not good.
A lot has happened since the above referenced Booz & Company study, including the formation of numerous startups that have developed applications that allow merchants and brands to setup their own F-commerce store on Facebook. One of them even asked if I would promote them on my blog. Incidentally, a couple of them disagreed with my assessment of the future potential of F-commerce, but none of them were willing to provide conclusive evidence that proves beyond a shadow of a doubt that F-commerce is an overwhelming success as they claim on their sites. I take those criticisms with a grain of salt.
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