Yoox Group is an Italian e-commerce company, devoted to women’s fashion. It’s responsible not only for its own online-only luxury clothing sites, but for the web-enabled components of major luxury brands like Bottega Veneta and Armani. And it is making significant efforts to improve web shopping experiences with new digital tools. But it sees its future as bridging the gaps between different shopping channels, be they online, in-store, on a phone or on a tablet.
The results? Their revenues grew 40.3 percent 2006 and 2012, with analysts expecting their revenue to rise another 25 percent this year.
What’s at Stake:
$64.8 billion of quarterly sales, online. And a sales channel that is growing 18.4% annually, versus 4.5% for sales inside physical stores.
Today’s shoppers are more digitally connected than ever before. More than half of all Americans own a smartphone, while 34 percent own a tablet. For retailers, it’s a given that you must have a functional website and mobile site, but the need to incorporate digital into the shopping experience goes further than that.
“Mobile should blow up the hard lines between these channels,” says Julia Ask, an analyst with Forrester Research focused on electronic commerce strategy. “Mobile brings digital into the store. That’s the awkward part of this. What happens when I bring my mobile phone in the store? I don’t shop one channel. I use mobile while I’m shopping in the store.”
According to Cisco, 65 percent of U.S. shoppers research products on a computer before making a purchase in-store. And it’s not just the computer: A study by Conlumino and Webloyalty in 2012 found that 40 percent of shoppers consult three or more channels, including catalogs, tablet equivalents, websites, and more, before they buy. That is a figure that’s grown from just 10 percent in 2002.
Enabling omnichannel isn’t just about providing consumers with the apps and information that they might need. It requires changes in an organization in everything from fulfillment and ordering (such as allowing online purchasing and in-store pick-up or real-time inventory search online) to synchronizing back-end functions (such as ensuring that prices and sales online and in-store are coordinated).
“Retailers are really struggling with this disconnect between the digital world and the physical world,” says Fred Geyer, a partner at Prophet, a brand consultancy. “It’s not just about a new website or a new app -- it’s the underlying things about how you treat customers.”
While Yoox’s own yoox.com, thecorner.com and shoescribe.com are multibrand, online-only stores, 70 percent of the Yoox Group is in their work for single brands, including Dolce & Gabbana, Alexander Wang, Valentino and Balenciaga, among many others.
For these brands, Yoox offers to use its digital expertise to boost their “omnichannel” retailing. Its contracts with fashion suppliers gives Yoox a portion of their online revenue, as well as the ability to move consignment-priced products. Yoox handles online store setup and operations, including shipping, returns, and invoicing as well as additional services such as web marketing and content production, customer analytics and more. The brand controls pricing, inventory, store management, and also provides guidelines for website look and feel. Currently, Yoox processes one order every 12 seconds.
But when Yoox works with a brand, it’s doing more than just building an online store and shipping products. The Internet “retailing partner” is working towards giving brands the ability to reach their customers across channels, something they see as an opportunity to run more effective marketing and customer loyalty campaigns, get offline customers online, and to be close to their customers more of the time, in more personalized ways.
The company, listed on the Milan Stock Exchange, defined the target customer as a tech-savvy, social- media-connected global shopper, who uses multiple devices. That (female) shopper also doesn’t think in terms of channels; she just moves between different devices while shopping for one product. That kind of customer expects a “consistent, seamless and above all continuous brand experience” across all of them, Yoox says.
Yoox breaks its omnichannel efforts into four categories: Personalizing services, keeping the experience consistent across channels, providing new services that add value and keeping fulfillment and return flexible.
These initiatives include building customer databases that bring together online and offline information about them, such as past purchasing history. Its systems also allow customers to check inventory held in physical stores from online. They can also book in-store tailoring appointments, from online. Purchases can be returned, through the mail. Or to a store. that are done in the store. Marketing efforts are even beginning to marry digital and print promotions: Yoox’s latest partners include fashion magazines such as Harper’s Bazaar, blending ecommerce with editorial content.
The shopping experience includes a voice-recognition enabled app (just tell your smartphone: “I need a suit in navy blue”) , interactive videos that let you reserve clothes off the runway, as well as shopping sites built specifically for desktop, mobile and tablet presentations. So you might see a dress from Bottega Veneta during a fashion show video, decide to buy it through that video, have it shipped to your house -- and then after changing your mind, go to a physical store to return it.
Yoox is not alone, even in the fashion business. Bebe Stores, a fashion line for women with over 300 stores across the world, had spent zero dollars on digital marketing through the end of last year. Now, with the addition of a new chief technology officer, Ben Baum, the company is looking to satisfy customers across all and any channels they can, while moving the organization into the digital world.
The company has pushed hard on social media, using Instagram as a funnel for customer engagement by soliciting user photos as well as working with iCrossing, a digital marketing agency, supplied Bebe with a new social media campaign that used the celebrity of the Kardashian sisters to drive engagement on Twitter, Facebook, with blog influencers and in the store. On the fulfillment end, Bebe recently merged inventory for ecommerce with the inventory for its hundreds of stores, so that customers can now make purchases that would have been unavailable before.
The key: Do not by trying to do something glitzy, online. Apply Marketing 101. Figure out what your customers want. Determine how you can best deliver what they want and what can be delivered through a store -- what’s delivered through an online channel will inevitably follow.
Here you can start with stuff from Yoox and analysts. And keep the best of what you have from Bebe.
Take control of your inventory. Yoox allows customers to search the inventory for a physical store online -- something only 22 percent of brands do, according to L2, a digital innovation think tank for brands. Beyond that, customers can even buy or reserve products online and pick it up in the store, as well as ship products from online to a nearby store. “You need to build the platform and enable it to service all touch points -- build that infrastructure to facilitate a single view of orders, customers and inventory,” says Adam Silverman, an analyst focusing on in-store commerce technologies with Forrester Research, who notes that it is “arduous” to integrate legacy point-of-sale systems with new digital ordering mechanisms. “With recent consolidation of commerce systems, such as Oracle buying ATG, there comes a greater focus on creating a solution that is omnichannel out of the box.’’ ATG, Art Technology group, is a provider of eCommerce software and commerce optimization apps, which lets brands manage online customer experience with content personalization, recommendations and live help. At Bebe, inventory used to sit in different pools for stores and for e-commerce. But new CDO Ben Baum recognized the lost opportunity there. “Within 30 days we were able to bring all of our inventory together as one pool and we are already seeing results,” Baum said on a call with analysts and investors in September. “We’re excited about indicating a lot more completed purchases online.”
Know your customer, no matter where they’re shopping. “[Most] retailers create a ton of information and in the online world they actually know that consumer but then they go to mobile or in store and it’s like they’re a new person,” says Fred Geyer, a partner at Prophet, a brand consultancy. “That makes them mad as hell.” Yoox avoids irritating customers by integrating online and offline customer information in one database using unique identifiers to keep information such as shopping history and brand preferences for one person tied together. They even allow loyalty points to be earned whether a customer spends money on a site or in the store. Bebe, which has had centralized databases for customer information since 2003, is sticking to its guns despite the digital shift. “We want to make sure that the message is the same, whether she is in store or using her phone in store, yet recognizing the different possibility that the different devices can offer,” said Baum. Though “very few retailers have a 360-degree view of their customer,” according to Julie Ask, an analyst with Forrester Research focused on electronic business strategy, referring to a brand’s understanding of its customers’ habits online, or off. She notes that brands such as beauty retailer Sephora and pharmacist Walgreens are introducing loyalty programs, not just to lure customers, but so that they can know who their customers are and what their purchase history looks like when they walk into the store. “The good retailers are connecting what happens in store and digitally to actually figure out what to offer you next and what additional services you might be interested in,” says Geyer. “It’s a simple idea but so many retailers don’t do it yet -- collecting data from wherever you shop and integrating it into one place and making an offer no matter where you are.”
Use digital for a “smart” shopping experience. Don’t just add technology to the store to seem more “digital.” Give customers something they’re looking for. In Bebe’s new stores, they plan to create “live streaming content so that the girl that wants to shop Bebe and goes online and sees a new message on a daily basis, she can get a similar kind of feeling when she walks in our store -- so you’re not going to walk into the stores and just see a static image… this new technology that we will be testing will help us implement either individual store or regional messaging that we can focus on additional products,” said Baum on the call. You can go even deeper. At Uniqlo’s locations in Tokyo, a digital mirror-- a giant screen that displays your image while measuring your size and shape -- lets you try on clothes, right in the mirror without ever having to physically take a shirt on or off. “You’re actually flipping through clothes and the mirror is putting it on your image,” says Geyer. At Yoox, something as simple as allowing customers to browse and buy from iPads inside stores has proved popular.
Don’t put up walls between physical and digital stores. “A lot of stores have an online division and a brick-and-mortar division,” says Ask. “They have different pricing, different shipping and delivery policies -- different everything.” When the lines between commerce and e-commerce are as blurred as they are today, you can’t afford this organizational lag. “These silos get in the way,” says Geyer. “It takes money to integrate databases, but the rewards are quite big. It’s surprising how the internal stuff gets in the way.” Your online division and in-store division shouldn’t sit on different “floors.” They are both trying to get the same thing done. Consider the flexibility of Yoox’s shipping and fulfillment model. They offer customers the ability to buy or reserve products online and pick them up in the store, to return products bought online in the store, to buy online and exchange in store, or to buy products available in a store online and have it shipped to their homes. Whether you’re online or off, Yoox treats products in the the same way and allows customers to do the same. At Bebe, CEO Steve Birkhold made it clear that they their digital initiatives are an integral part of retail initiatives. “As much as Ben and the digital team are focused on online, the offline traffic driving initiatives are a very substantial part of his responsibility also” he said on the call. “ So working with our marketing teams, our retail teams and making sure that we’re driving footsteps into the store.”
Solve customer problems. “Start with the consumer and start with what they want,” Geyer says. Yoox’s customers are shopping for high-end, luxury items. So some of their offerings are catered to the kinds of people who are willing to drop a few thousand dollars on a pair of pants. Their added value services include booking tailoring appointments online that are conducted in store, as well as giving customers the ability to talk to a shopping consultant on the phone as they shop at home, and even buy over the phone while they do so. This mirrors the personal shopper services many high-end stores provide. They’ve also recognized that their customers are tech proficient: Yoox’s first mobile site was in 2009, their first app for iPhone in the same year and their first iPad app in 2010. They’re also reaching out to possible customers through the luxury fashion magazines that they’re likely to be reading. Beginning in September 2013, Yoox will partner with Harper’s Bazaar to create a web store for the site that allows readers to shop for the products they see in the magazine, linking articles to a web store, shopBAZAAR.com.
While luxury retailers have often been seen as the laggards of e-commerce, Yoox has shown that the customer appetite is there -- if you know how to reach it. Though they’ve always been digital, they’re shepherding the brick-and-mortar contingent onto the web by employing strategies that work just as well offline.
“When you see retailers who are doing it right, it’s interesting because they don’t start with digital,” says Fred Geyer, a partner at Prophet, a brand consultancy based in San Francisco, CA. “They start with an understanding of a few core groups of consumers and what they actually want. The guys who do it wrong start with the digital and it doesn’t connect in the end.”
At Bebe, the company is using digital not only to give customers new utilities, but to help them figure out exactly what it is their shoppers are looking for. An Instagram campaign asking users to send in pictures of themselves met with enormous success as thousands of submissions were entered within a few weeks. They’ve noticed that customers are using tablets to browse the site casually, so they’re building out a tablet-specific landing page.
Geyer divides consumer need into three time periods: pre-purchase, during purchase and post-purchase. Pre-purchase might include opportunities to help a customer make their decision, such as Nordstrom’s outfit creator, which lets you put together an outfit online -- and pick it up in-store. Post-purchase gives retailers the chance to keep consumers happy and to anticipate their next needs, such as CVS’s prescription renewal service, which also reminds you to re-up when needed.
“You think about other products like this and you wonder why other retailers aren’t doing the same thing,” says Geyer. “With auto, for example, why don’t they remind you every X days that you need a new air filter?”
Of course, the need for user opt-in to track single customers effectively with an identifier such as an email address or other personal information -- and concerns over the violation of privacy over what companies could do with that information -- might get in the way. At Nordstrom, the revelation that the store was using in-store cameras and user mobile phones to track customers was met with shock and disapproval. They’ve since ended the program. But if they’d been using that information to better serve their customers, the reaction might have been different.
“There are a lot of caveats there,” says Julie Ask, an analyst with Forrester Research focused on electronic business strategy. “There’s going to be an element of how much value the customer perceives. I believe customers will forego their privacy if there is enough convenience or utility of what I’m getting for what I’m giving.”
And at the end of the day, it really is all about making the customer happy.
While giving their customers the support and flexibility to shop, buy and return items, Yoox hasn’t stinted. And in return, customers have continued to buy. Revenue has grown nearly 20 percent year over year from 2011 onwards, and could reach 25 percent this year. Bebe’s looking for the same results.
“We’re excited about indicating a lot more completed purchases online and increased customer satisfaction,” Baum said on the call. “This is really chapter one of our reinvention.”
Amy Lee is a business and technology reporter for CruxialCIO. She has written on technology for the Huffington Post and is a 2010 graduate of Yale University in English and writing.