August 21, 2013

Kevin, Why Do You View Mobile As Being Different Than E-Commerce?

That's the question of the past several weeks - "Kevin, why do you view mobile as different than e-commerce?"

Let's go back to the 1995 - 1999 timeframe. E-commerce was a spec on the commerce scene - lots of chatter, not much in the way of annual sales. Now, how did you find out about different e-commerce businesses? Maybe Yahoo!? Portals were like the evolution of the phone book. We could not envision that we needed search the way we eventually needed search.

Search was the "killer app" of the e-commerce generation. Once Google solved search (and nobody saw Google coming in 1999 - be honest with yourself), and once Amazon solved site search, Jennifer (you remember Judy / Jennifer / Jasmine, right?) was liberated. She did not turn back to the old-school version of marketing (catalogs). She searched and she searched and she sampled companies and then she bonded herself to Amazon to the point where she pre-pays $79 a year just to get deliveries sent quickly. She pays $79 for the right to buy merchandise in the future, you offer merchandise at 20% off plus free shipping and struggle to compete. Wow.

But I digress.

It didn't matter that you had an integrated, branded experience, fueled with a catalog that drove you to a website. The killer app, search, transformed Jennifer. For catalogers, the tail of the demographic spectrum was cut off - Jennifer and Jasmine left. Today, catalogers are on an island, with a 55+ rural audience that needs catalogs, still plenty of room for profit (as I measure every day), but on an island nonetheless.

Catalogers experienced "the opposite" outcome - they were told that e-commerce and multichannel would save them. Instead, e-commerce accelerated catalogers into the embrace of a niche audience.

This brings us to e-commerce.

My thesis is that mobile is not an extension of e-commerce. Yes, I get it, my thinking is opposite of your thinking.

We view mobile as an extension of e-commerce because mobile does not yet have a killer app. E-commerce needed search. We don't know what mobile needs. Yet.

And we won't know what mobile needs until it hits us in the face and we say "duh", and when that happens, e-commerce is in trouble.

Why is e-commerce in trouble?

The killer app will be fundamentally better than e-commerce. It will be a fusion of mobile and social (I used to call this 'hologram marketing'), and will be infinitely more appealing and convenient (and smarter, so much smarter) than a boring website on a laptop computer in an office.

When that happen, when that killer app presents itself, Jasmine will be the first to jump all over it. She will believe that somebody finally understands her. She will switch. She will bond with the killer app.

Worse, the mobile assortment, by definition, is going to be simplified. It has to be simplified. Mobile does not lend itself to 6,000 styles, especially on a phone. This means that merchandise performance will be wildly skewed. Instead of 500 winners out of 6,000 styles, there will be 85 winners out of 6,000 styles. This will shift the merchandise assortment significantly, as time progresses and as Jasmine picks the 85 winners (as opposed to today, when Jennifer picks 500 winners).

In response, e-commerce brands will be told to "integrate" mobile with e-commerce. They will be told that the combination of the mobile/social killer app and classic e-commerce is better, and that it appeals to all generations, and offers the full merchandising assortment. 

At that point, e-commerce is done.

Not done as in dead.

But e-commerce will be on an island, belonging to Jennifer. 

Jasmine will leave, she'll go where the killer app that brings mobile/social/commerce to life tells her to go.

Companies will be created around this ecosystem, and Jasmine will embrace them. This will stall classic e-commerce growth (no more +15% or +30% growth year after year after year), and you'll see the e-commerce crowd add mobile sales to e-commerce to make e-commerce look good, just like retailers today add e-commerce to store sales to make comp store sales growth look good.  

Wait, that's already happening! Folks already add mobile sales to e-commerce. Oh boy.

In Digital, we've learned that there is only one winner. Google. Amazon. Facebook. Netflix. There will be a mobile + social + commerce version of Google, Amazon, and Facebook, fueled by a mobile + social + commerce killer app, embraced by Jasmine.

Big books ... JCP and Sears and Spiegel ... they were killed by targeted catalogs.

Targeted catalogs were killed by e-commerce.

E-commerce will be killed by a fusion of mobile + social + commerce ... we just can't see it yet, because we haven't seen the killer app that will facilitate this transition.

Rest assured, it's coming. This is what history teaches us. How many of you shop Gimbels, Montgomery Wards, or Kresges? Each generation embraces a technology that is tailored to the needs of the generation.

This is why I am so opposed to omnichannel. It's a noble concept, one full of hope. It assumes that history can be avoided (big books to targeted catalogs to e-commerce), that this time, folks can avoid the course of history by simply creating a world where all customers love all devices, landing in a frothy mug of commerce fueled by twenty-seven devices and two physical channels. When the mobile + social + commerce killer app arrives, omnichannel is finished - customers (Jasmine) will run to the killer app, and will align around 1-2 screens (TV and Phone - those are my early guesses).

Look out for this killer app. It's coming. And when it comes, e-commerce is in trouble.

Time for your thoughts - go! And please think. Don't quote a Woodside Research report that costs $499, that's not thinking. Craft a narrative. Use the comments section to craft your narrative. If there are good ones, I'll publish them in a separate blog post, with your permission.


  1. Thought-provoking post, thanks for sharing.

    I took away two observations:
    - A new channel (like mobile) is not "more of the same". It is a massive shift where it + its associated killer apps will lead to new winners and losers.
    - Certain segments of your current customer base may desert you and go to those winners when this happens; as a result, you may be one of the losers.

    If this is how things are likely to unfold, what should a retailer do **today**?

  2. It is common for many retailers to own alternate brands that appeal to a different customer segment. If you are Chicos, you cannot force your 57 year old customer to do things with an iPhone - but a Gap has Old Navy and Gap and Banana Republic, all serving a slightly different demographic segment.

    Department stores avoid the problem too ... they have swim lanes with merchandise that caters to different demographic cohorts (like Nordstrom, my former employer).

    My data shows that it is terribly, terribly difficult to change the demographic profile in the short term (i.e. 5 years).

  3. I'm shocked more of your readers didn't rise to your challenge. I wrote a post so long it wouldn't fit in the comment box. recently I read this book:

    it contains lots of clues about where this whole thing is headed.


  4. Based on my expansive research on the subject, my 14 year old daughter, I wonder if the pre-cursor to the killer app you refer to is already among us. That app? My teenage daughter spends hours looking for clothes and accessories on her iPad mini and her Wanelo app. Their tag line is "The best way to shop." In the past she would not spend time on the computer looking for clothes or use individual store apps. Wanelo is a whole other thing. Based on my unscientific observations, the Wanelo app is the number one used app on her iPad mini.

    1. There will be something, like this or something we cannot yet anticipate, no doubt. And by the time it is figured out, your daughter will be bonded to it, much like middle aged folks are tethered to Amazon.

  5. A wonderful thought-provoking read Kevin. You're spot on in that eCommerce needed search. The reason it needed search is because it made research, selection and comparison easy. And those are key elements of the purchase process.

    I agree with you that mobile will change eCommerce in a way we can't envision yet. However, I believe smartphones (tablets less so) are generally ill-suited for early-stage research for more complex products and needs. In many cases, that sort of task-oriented activity simply requires more screen estate. It will be fascinating to see how mobile will tackle this.

    Thanks for sharing your thoughts, always a pleasure to read.

    1. I think you are right, if the end result includes today's version of search.

      If a different, and far less limiting version of search is created, then that small screen is even more compelling. Who knows what this looks like - small screen projected onto a TV, projected into a hologram, who knows?


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