"Everything Starts Out Looking Like a Toy" (No.26)
Unboxing day edition, when you see how everything is connected
This week’s toy: finding out exactly how uncool your taste in music might be if you use Spotify. I’m not sure whether I feel seen or judged, but it was fun to get tips on what the algorithmic kids think about my tunes. Edition No. 26 of this newsletter is here - it’s December 26, 2020.
The Big Idea
In the last week of 2020, going to the store feels very different than it did in the first week of 2020. Large retailers have now had enough time to respond to these macro changes and they are rolling out their new designs. An interesting one is about to drop from Walmart, where they are slowly integrating in-app and in-store experience.
Walk in, find your stuff (almost) immediately, and leave the store. If you need something, know exactly where it is. Say goodbye to browsing just because. In the age of COVID, the thing that most people want is to spend as little time in the store as possible. Giving them the ability to find what they want while navigating with their phone is what many customers want.
Why would retailers want you to leave the store?
Retailers are motivated by short term profits, and by long term customer value and loyalty. Helping customers to have a better experience (even if it causes them to leave the store faster) will build a better and stronger brand. Focusing on the data that retailers might gain by you using their app in the store might help us to isolate the benefits.
By tracking your whereabouts in the store, a retailer like Walmart can aggregate customer purchases and discover hot selling products by location. By understanding individual customer purchases, that retailer could offer you personalized loyalty offers, even if you’re in the store for a short period of time. And by getting real-time data on customer footfalls and store travel, that retailer can strategically order products and arrange the store for maximum customer benefit and profit.
What else could they give you in-store?
Using an app as a wayfinding method in a store is not the only method of using digital methods to help customers find information. Another key place where they have your attention is the actual shelf space - for example, the cold case.
Companies are looking to increase your spend at the shelf, not only at the store overall. By giving you personalized offers (imagine a screen in the cold case interacting with your logged-in app), retailers could build a shopping experience just for you.
By understanding your purchase history, seeing where you are in the store, and making guesses based on the time of day, a retailer could give you a customized offer even in the small amount of time you are in their store with an updated store design. The combination of proximity to a store area and your shopping list could also drive add-on purchases in a similar way to an Amazon recommendation (shoppers like you also bought this cheese - on sale today for $4.97).
How could they interact with you at home?
Combining the in-store loyalty experience in an app with your home inventory yields some interesting ideas for subscription and loyalty. If you buy that cheese every week, you might get an offer to have a basket of items custom-delivered to you or ready for you when you arrive at the store for curbside pick up. If you only go to the retailer every few weeks to stock up, they may give you an extra incentive to show up more often ($5 off your order of $100 or more).
Connecting the app experience while you are at the store to the browsing, ordering, and buying experience makes shopping something very different than it was pre-pandemic. And it’s likely to stay quite different. Now that customers are used to the idea of grocery delivery, curbside pickup, and just in time shopping, retailers need to adapt as well.
What’s the takeaway? The direct to consumer trend is arriving for grocery retailers. The winners in this category will build a digital relationship with customers that persists away from the store. This also suggests an entry point for hybrid aggregators like Instacart and Postmates who can map multiple retailers and give you a consistent experience across stores.
We’d like to know …
This week saw the first blockbuster releases straight to streaming, as Warner Brothers released Wonder Woman 1984 to HBO Max and Disney released the Pixar film Soul to Disney Plus. If this is the future, how much would you be willing to spend to see a first-run release in your living room?
Click the tweet to tell us how you’re voting.
Links for Reading and Sharing
These are links that caught my eye.
1/ Using Parkinson’s law to your benefit - when estimating a new feature in software, it’s often hard to determine how long things will really take. The work often expands to fill the allotted time, and you have to make tradeoffs based on the real work, not just the estimate. But what if you build by budgeting time instead?
2/ 👁 in the sky - alternative sources of company data are popping up all over the place, and one of the more mundane ones is watching the traffic in parking lots. It turns out that traffic measured over time is a good indicator of retail sales. For digital businesses, I wonder if there is a time series version of SimilarWeb or if using Google Trends over time provides insight.
3/ *cues theme music from “2001: A Space Odyssey”* - you knew this couldn’t last if you saw it yesterday, and it’s good to see that the Internet is still a place where goofy things spread joy, even if only for a day.
On the Reading/Watching List
Ghosts was recommended by a friend this week as a funny show suitable for streaming with teenagers who love fantasy and British accents. Dark humor by dead people - what’s not to like?
I’m excited to read The Power by Naomi Alderman. What would it look like if our traditional models of society were turned upside down? The best sci-fi and satire do a wonderful job of helping us examine the way things are to imagine how they might be different in the future.
What to do next
Hit reply if you’ve got links to share, data stories, or want to say hello.
I’m grateful you read this far. Thank you. If you found this useful, consider sharing with a friend.
The next big thing always starts out being dismissed as a “toy.” - Chris Dixon