This morning on the 24th floor of CSN Stores’ office, MITX organized a panel focused on how technology – mobile and social in particular – are transforming commerce. Jeffrey Glass of Bain Capital Ventures and an MITX Board Member moderated the lively panel, balancing insights from entrepreneurs and merchants alike, who included (in order from left to right in the pic above):
- Dustin Humphreys, GM Digital, CVS – Humphreys shared that the company is in a “full court press” to catch up to speed on the digital front.
- Mike Dreese, CEO, Newbury Comics – Dreese shared how Newbury was one of the first retailers on the web, now doing $20M in revenue (with 80 percent year-on-year growth) largely thru eBay and Amazon. (He is also an early investor in DataXu.)
- Andrew Paradise, CEO, AisleBuyer – Paradise explained AisleBuyer as enabling mobile, “show and go” checkout. (Catch up on their recent press here.)
- Jim Crowley, CEO, BuyWithMe – Crowley described group buying site BuyWithMe as changing how consumers and retailers meet. (Catch up on their recent press here.)
- Tom Burgess, CEO, Clovr Media – Burgess’ company is transforming how people redeem offers, enabling card linked offers for retailers. (Catch up on their recent press here.)
On Mobile, And Merchants Approach to Adopting New Technologies
Glass first turned to Humphreys to kick off the discussion, asking what CVS’ top priority is on the digital front. Humphreys explained the company’s emphasis on pharmacy (it represents 70 percent of revenues), and how mobile is becoming increasingly important. Right now the company is focused on providing mobile solutions for those with chromic diseases (who may be taking 40 or 50 pills a day) to help them stay on top of their medications and connect them with their caregiver and doctors to share and manage information.
Humphreys, who sees tons of ideas and solutions from entrepreneurs in any given year, shed some light on how he ultimately chooses solutions for CVS. “The reality is we have to prioritize where we’re going to place our bets and where we’re going to invest in technology,” he said. “Patient care is #1 for us right now. But that doesn’t mean we won’t leverage mobile in other ways in loyalty and commerce.” Further on in the panel he hinted that a CVS loyalty card on Android is on its way.
Glass next turned to Paradise, asking him to explain the vision of AisleBuyer as a mobile solution, and why a retailer like CVS or Newbury Comics would be interested. “We are building out a broad commerce layer for retailers,” Paradise explained. His solution, right now in Magic Beans stores around Boston, enables a shopper to check out an item by using their phone as a barcode scanner. The company plans to incorporate more loyalty aspects for retailers in the coming year. “We want to be the glue between your in store and out of store experience.”
Humphreys, who recommends technology vendors and entrepreneurs take time to put themselves in a retailer’s shoes, remarked, “It sounds interesting, but quite honestly, you’ll see a lot of retailers pull back to wait and see which [solutions] break away from the pack.”
Dreese, owner of Newbury Comics, also weighed in around how he approaches new technology adoption. “Our main thing is this: does money come out of the other end,” he said frankly. He went on to explain consumer adoption hurdles, as well as the fact that his marketing team internally only has so much bandwidth and can only address four or five marketing channels at once. “A lot of new technologies aren’t solving big pain points. Things that solve pain have good paybacks,” he said. “But we don’t want things that require us to hire an MBA and team of consultants to help run it.”
For Dreese, he’s not interested in solutions that might help him achieve a 7 percent incremental sales lift – he’s looking to do things that make 500 percent incremental revenue. As an example, Dreese spoke to Newbury Comics’ spend on social media and the results they see that compete with spend and results through more traditional advertising. “We used to spend $3.5M on traditional media. Last year we spent $300k thanks largely to social media.”
Group Buying Wars
The next bulk of the panel discussion addressed social commerce, focusing almost exclusively on the group buying space. Crowley, who recently took the helm as CEO at the group buying site BuyWithMe, explained the potency of group buying in that it benefits both retailers and consumers alike. “We go to a merchant trying to acquire customers. Traditionally they’re putting ads on radio or printing flyers and don’t know if its successful. We’re trying to bridge that gap.”
According to Crowley, BuyWithMe’s sales in the past month are up 37 percent. The company also speaks to the merchant after the daily deal hits, sharing, “Our merchant scores show these retailers want to do it again because they’re finding new customers they wouldn’t have otherwise.”
Dreese piped in at this point saying, “Groupon is essentially pimping out Macys,” clarifying the statement by explaining how group buying sites are creating incredible margin compression, allowing the larger retailers to continue to pull away from smaller brick and mortar stores. To this point, Crowley responded, “Yes, there is a price point compression, but these customers are coming back to buy.” He went on to admit that for some merchants, group buying does not work. Humphrey said, for example, that group buying is not for CVS given this price compression and that they are more concerned with tracking current customers than acquiring new ones.
The critique of group buying is that a merchant gives away too much margin, with the consumer not necessarily coming back. And even if they do come back, there is no way for the merchant to know. Clovr Media’s solution addresses this critique, allowing a retailer to have trackable data attached to campaigns, since the savings on each campaign (be it a banner ad clicked on or a mobile ad) is linked automatically to the consumers payment card. In doing so, Clovr Media’s solution is helping retailers like CVS both drive customers to stores and increase their basket sizes. “CVS has 65 million loyalty cards, but lots of retailers – like WalMart – don’t,” Burgess explained.
On the Future of Commerce
When Glass opened up questions to the audience, panelists were hit with questions around everything from merchant adoption of Foursquare and Facebook Places, to QR codes and how technologies like Google Wallet and NFC might change the game.
After audience discussion, Glass asked each panelist to weigh in on what the biggest change for retailers will be in the future. Burgess believes the payment form factor (e.g., from plastic card to the mobile phone) is; Crowley and Humphreys both spoke to using data to drive personalization and invest in the customer segments you want to grow; Dreese spoke to big brands working directly with brick and mortar stores; and Paradise spoke to the shift from price competition to customer service at brick and mortar stores.
A big thanks to MITX for organizing a great panel, the audience for asking tough questions, the panelists for being candid and lively, and Glass to some excellent moderation.
