Monthly Archives: August 2014

The 800lb supply chain gorilla continues to disrupt with payment services

Amazon announced today it was going to jump right into the deep end when it comes to physical, in-store payment systems. They have unveiled a mobile payment service for brick and mortar stores. Taking direct aim at other mobile POS systems – Square, Paypal as well as Google and Apple. From the reports, Amazon will look to undercut other mobile payment systems – taking 2.5% of transactions versus 2.7% for the likes of Square – to grow their market presence. They are giving merchants an introductory rate under 2% to build that beachhead (feels like a credit card invitation – 0% APR and then only a slight bump to 33%).

In the online world, Amazon already knows how to handle and secure credit cards. They are also well versed when it comes to mobile payments as their iOS and

Coming to a brick and mortar store near you...

Coming to a brick and mortar store near you…

Android apps’ success has demonstrated. The natural progression was to push into the brick and mortar space – where 90% of retail transactions live. In the near term I am not sure that Amazon will do more than offer a secondary maybe even tertiary option. Brick and mortar retailers could view the Amazon system as letting the fox into the hen house. It would be understandable if these brick and mortar players do not flock to embracing Amazon and their payment systems. But I am sure that the favorable financial set up will force a large number of players to give it some serious consideration. Whether or not Amazon is widely successful with this venture is secondary to what the eCommerce 800lb gorilla is doing with regards to their overall supply chain disruption.

A quick look at what Amazon has been doing to become the 800 lb gorilla in supply chain:

  • Acquired Kiva Systems to add sophisticated robotics and automation to their massive distribution centers.
  • Gobbled up the likes of fabric.com, CDNow, Zappos, Pets.com to constantly expand their ability to offer a wide array of inventory.
  • Pushed out a tablet and now a mobile phone under the Fire umbrella. Both of which are really hand held sales terminals for Amazon to leverage.
  • Started pushing last mile grocery delivery in certain markets with their AmazonFresh offering.
  • Even leaking that they are thinking of delivering via drones.

This is in addition to their deep experience in the online retail world. Taken together and you have the 800 lb gorilla that is disrupting the supply chain jungle. Add to this the news of them pushing into the payment space and you see Amazon gaining access to POS data from brick and mortar, coupled with all the data they have on consumer online buying. Amazon is quickly aggregating vital data sources on how consumers buy, where demand is being generated and how it impacts the retail supply chain.

So now Amazon is dabbling in last mile logistics, continually working on more efficient warehouse management, putting portable POS systems in consumers’ hands and now putting POS systems in the retailers’ hands.

That 800lb gorilla might have added another 50lbs of lean muscle.

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Filed under Current Events, Mobile payment, Retail, Supply Chain

Customer loyalty goes beyond a plastic card in your clients’ wallets.

Customer loyalty is the holy grail for retailers, consumer product companies (CPG), airlines, credit cards, media, and so on and so on. Companies across the majority of industries are striving to understand why their consumers are willing to hand over their hard earned income for goods and services. Why or will these consumers continue to purchase from the same source? And how can these companies keep these customers coming back and hopefully spending more and more.

Companies have created and leveraged many creative means to gather and nurture information from their customers – whether it be loyalty cards you have at CVS or Shaws

How many of these are in your wallet or on your key chain?

How many of these are in your wallet or on your key chain?

grocery store or Vineyard Vines or Barnes & Nobles or Starbucks. These vendors know that for the most part they need to give you something for you to give over some information – usually they give you discounts, early views of new product lines, reward points etc. Airlines, of course, were one of the first movers to give you what was a highly sought after reward for your business – miles and status. Hotel chains were quick to follow. Anyone who spends time on the road, knows how vital is it to have “status” on an airline. While it still doesn’t beat flying private…so I have been told…having that status can usually make the drag of travel a little more tolerable.

All this information has added fuel to these supply chains – an insight into the most profitable client and demand. A view into a data source that can potentially drive the most profitable and desirable side of the supply chain. But are our supply chains getting a less than complete picture of what is really happening?

Looking at our consumers’ buying patterns for just our products is far from a complete picture. Grocery chains and drug stores are very aware of this. They work with vendors like IRI, Neilson, Orchestro or RSi to get a more complete view of the consumer basket. These software vendors will aggregate data across a category or across an entire store or region. This allows a more complete view of what is truly happening. But is that enough? No. Not if our supply chains want to be even more finely tuned when it comes to servicing our clients.

The reality is that our supply chains are no linear and they do not exist in a vacuum. They are all intertwined. The way to make sure our customers stays loyal to our supply chains is to understand how the interact with all the supply chains that are connected. This type of visibility cannot occur if we are only looking at that data that comes in from the loyalty program specific to my business. I need to understand how that customer interacts with tangential goods, potential substitute goods, services and even items that might not appear to be in the same cohort.

Companies need to step away from the loyalty card table…okay they still need to take in and leverage that information. But the data that needs to be added to the supply chain is information of how consumers behave when they are not giving you their information – meaning when they are doing other things with their time and money. Credit card companies have a leg up on this, they already have all that data. Smart supply chains will find ways to get access to that information. Just think about how much wiser your supply chain could be with true demand.

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Filed under Consumer Product Goods, Marketing, Supply Chain