to your home and office than most stores. Today that notion seems increasingly anachronistic.
Besides being able to order virtually anything we want 24/7 from a device that is practically tethered to us, we are benefiting from a revolution in convenience. Products that used to take weeks to get delivered can often be delivered the same day and sometimes, with the advent of Prime Now from Amazon, within an hour or so.
Products that had few, if any, viable options (or were prohibitively expensive) are now routinely delivered by retailers or delivery services like Uber Eats or PickUpNow. And lead times on custom products continue to shrink.
What former J.Crew and Gap helmsman Mickey Drexler calls “the de-schlepping of retail” is now a key driver of e-commerce growth. Consumers increasingly choose to have big, bulky items like pet food, bottled water, and large multipacks of toilet paper delivered instead of hauling them home in their cars or minivans or via public transportation.
Subscription services help make sure that our wardrobes are current (Stitch Fix and Trunk Club), that we have a new head and battery for our ultrasonic toothbrush (Quip), that we don’t run out of razor blades (Harry’s and Dollar Shave Club), and many more.
While voice shopping is still in the early days of adoption, instead of pulling out our phones or getting on our laptop, more and more of us are simply telling Alexa and Google what we want, and before we know it, products show up at our doorstep.
Connection Is No Longer Scarce
Before the turn of this century, if you wanted to track down a long-lost high-school friend or figure out your genealogy, you were likely going down a rabbit hole. If you wanted to update your parents on what was going on in your life, your options were a (potentially expensive) long-distance phone call or writing them a letter, which would take days to arrive.
Today, many of us have hundreds, if not thousands, of Facebook “friends” and/or social media followers. Response time can be virtually instantaneous via SMS and direct messaging within the various platforms or Snapchat, WeChat, and the like. Rich media with sharing functionality not only allows for vast networks with rapid iteration, but enables a new depth of connection when augmented by photos, videos, and sound files.
We can (and should) argue about what this all means for emotional health and the development of certain social skills. But the redefinition of what “connection” means over the last few years is profound and undeniable. The boundaries that limited connection between individuals and brands have come down, and much of the friction, be it in cost, time, physical distance, or complexity, is now gone. We can source the wisdom of crowds to get feedback on just about anything, understand the price we should pay, glean advice on whether we look good in an outfit, get help determining the best dish at that restaurant to which we have never been, and so much more. We can tweet to a company customer service Twitter handle to voice a concern. Via an app we can almost instantaneously get connected to possible mates, find someone with whom to share a taxi, or see who is attending the same concert or play.
For retail, this shifts power away from brand-controlled marketing to individuals and those who build community influence. The new and far more detailed information availability is supercharged by the new forms of connection and empowers the consumer in previously unimaginable ways. The emergence of the sharing economy (think Uber, Rent the Runway, Poshmark) creates entirely new sources of competition for traditional retail models.
Cheap Is No Longer Scarce
Discount mass-merchandise chains, warehouse clubs, and outlet stores are hardly new. But the spread of “value”-oriented products and services has accelerated greatly. Whereas the availability of value-oriented merchandise once largely depended on whether you had a Walmart or dollar store near you, the internet changed everything. Today just about everyone in the developed world has a discount store on their phone or tablet.
The friction involved with finding the best price has been eroded in multiple ways. A simple Google search does a pretty good job of serving up useful information and a world of inexpensive choices. Various browser extensions will scour the internet to find the lowest price or even notify us when the price of a product we covet drops. The Groupons of the world offer all sorts of deals and offers that were previously difficult to come by. Offers of 10 percent off simply for a first order or for subscribing to a retailer’s emails are hardly in short supply.
Another factor—though one of questionable long-term sustainability—is the significant subsidization of quite a few “disruptive” business models by investors to the great benefit of consumers. Amazon was able to deliver low product pricing for years because its investors valued growth over profits and because its Amazon Web Services business—the division that provides cloud-based computing support to other organizations—is a huge cash cow. For many years it lost money in its more well-known retail division. Only recently has Amazon started to generate meaningful profits (though its margins remain below retail industry averages). It has also been able to offer superior and cheaper delivery options (and endure the high cost of returns) for similar reasons.
Amazon isn’t alone. Many of the sexy high-growth digitally native brands can offer both great service and value pricing because their investors will accept margins (for now) that are in many cases far below historical industry standards. As just one example, Wayfair, the rapidly growing online home furnishing brand, has been operating on margins that are markedly below its traditional competition. Its—I would argue—artificially low prices are a big part of why it is gaining market share. But Wayfair is hemorrhaging cash.
This imbalance won’t last. But for the time being, venture capitalists and other investors have allowed many of the disruptors to deliver incredible consumer value, fueling outsized revenue growth.
Everything, Now
Decreasing costs of computing power and the associated network effects have created a bountiful buffet of choice, much of it on demand, whenever we want it.
Before the internet, the shopping world consisted of a limited selection of outlets carrying a limited assortment of products that might work well for us, purchased at a hoped-for decent price, during regular store hours, delivered mostly on the retailer’s terms.
Not very long ago the typical customer journey might involve running around to a bunch of stores over a series of weekends and getting pressured by commissioned salespeople or flipping through magazines, Sunday newspaper circulars, or a stack of catalogs. Along the way we might get overwhelmed reading confusing technical product specifications or wonder whether it’s worth paying for more thread count or some other higher-priced option. We might get annoyed that the size or color we want is out of stock or that we could get what we want but have to wait several weeks to custom-order it. We might lament the fact that “all the good stores” seem to be in New York or LA or London. We might very well end up settling.
Today, the expectation is that everything can be had now. No compromise. No excuses.
As retailers seek to gain customers’ attention, engage in meaningful ways, and earn their trust, this is no small task. This new abundance forces us to rethink much of what made our organizations successful in the past. The scarcity that used to determine so many retail and consumer market decisions is now effectively over. Forever.
Good Enough No Longer Is
We could have an interesting philosophical debate about whether it’s desirable that so many of us have become weapons of mass consumption. We can make a good case for the many perils of an always connected, constantly distracted, FOMO-driven, social-media-obsessed culture. Real societal questions can
