April 15, 2012

Dear Catalog CEOs: Placing Bets

Dear Catalog CEOs:

Last week, you read about a CEO transition at Best Buy.  Regardless of why the CEO transition is happening, Best Buy has been struggling to find ways to combat mobile and Amazon.

Last week, you also read that Instagram was purchased by Facebook for just a billion dollars.

I was in a retail store last week.  A manager and an employee were standing next to me.  The manager was explaining that his company was being beaten silly by Amazon.  He told the employee that there was a new plan to combat Amazon.  The plan was to cross-sell services to the customer.  The manager explained how the program would work, how the employee would explain to the customer that the company offered services, valuable services, services that Amazon could never hope to match.  The employee would attempt to cross-sell services, even if the customer had not yet purchased an item!

The employee had that "how fast can I get a job at Jiffy Lube?" look.  You could just see the dread on his face ... the dread of having to try to sell a service that the customer didn't ask for and probably doesn't want to purchase.

We're all placing bets these days, aren't we?

Take my former employer, Nordstrom.

Now, honestly, I couldn't care less whether you agree or disagree with the investments, that's irrelevant.

What is relevant is that folks are placing bets.  People are betting as to what they think the future of commerce is.

Earlier, I told you about the discussion between a manager and employee at a retail brand ... the manager was explaining that his management team was betting that service would trump online price and convenience.  Again, it is irrelevant whether you agree or disagree with the thesis, it's simply a bet.

This brings me to you.

What are you betting on?

Are you betting that Judy will continue to spend money well beyond retirement?

Are you betting that you can seamlessly pivot your business to Jennifer?

Are you betting that you can find a business model that relates to Jasmine?

Are you betting on free shipping as a way to compete with Amazon?

Are you betting on proprietary merchandise as a key differentiator?

Are you betting on selling the same merchandise readily available online, but with better customer service?