O2O is an opportunity to outperform

The rise of e-commerce…and the problem it creates

2014 was a record year for ecommerce revenue. Sources estimate that US holiday season shoppers spent over $50 billion online, while sales in the UK exceeded £100 billion for the full year and totaled almost $450 billion in China for 2014. There’s no doubt that a percentage of this growth comes at the expense of offline stores and brands with multiple channels are struggling to decide how to support all outlets.

I'Park Mall

Enter O2O: “online-to-offline commerce.”

Since the rise of e-commerce in the 1990s, retailers have experimented with ways to connect dot-com to legacy offline stores. In those days, brands would occasionally offer web-only coupons that could be printed out and redeemed in-store. Twenty years after Amazon.com first went live, the most effective tactic for driving online eyeballs to offline stores is still the coupon, albeit evolved via Groupon and LivingSocial. Other contemporary O2O tactics are also derivative from the days before e-commerce existed, like publishing weekly sales circulars online as PDFs or highlighting a brand’s latest TV commercials on its website. It’s time for these tactics to evolve.

Retailers have been the earliest to embrace O2O, but digital disruption has impacted companies of all kinds, from advertising to venture capital. Uber and Lyft have changed the way people (and regulators) think about hiring cars. AirBnB and HomeAway have changed behaviors around renting a room for the night. Nest and SmartThings have changed how people interact with their homes. Warby Parker has changed how people shop for eyewear. Kickstarter and Indiegogo have changed how business ventures obtain funding. The list goes on and on.

Filene's

Risk adverse companies will take small, incremental, and defensive steps to integrate digital methods into their business models. These firms, many of them industry incumbents, will slowly fade away. Brands that survive and thrive will embrace three key principles of O2O:

1. O2O applies to three primary venues: retail, home, and office

Korea is one of the most wired countries on the planet and ground zero for O2O innovation.

In June 2014, Starbucks launched its Siren Order app in Korea, bridging the gap between office and retail by enabling customers to order and pay in advance. After a successful rollout, the app was rebranded “Mobile Order & Pay” for launch in the U.S. in December.

Starbucks Siren Order

Also in December, Burberry opened a “Burberry Beauty Box” store in Seoul, including an RFID-enabled “Digital Lip & Nail Bar” to help customers match products to their skin tone.

Burberry Beauty Box Seoul via Wardrobe Trends Fashion

Beyond retail and office, the “Internet of Things” has captured mainstream awareness and companies including SmartThings/Samsung, Nest/Google, and Quirky/GE are enabling digitally connected home environments.

Internet of Everything

2. O2O works best in both directions

O2O is most commonly an abbreviation for “online-to-offline” and the reverse should also be true. Circuit City, Borders, and Blockbuster have all disappeared after being unable to implement effective offline-to-online strategies. Today’s operating environment contains increasingly powerful personal computing devices, widespread broadband connectivity, and changes in consumer attitudes towards sharing and engagement.

Nordstrom Pinterest via Business Insider

Nordstrom takes advantage of these trends by investing in technology to enable sales associates to deliver more effective customer service, integrating in-store merchandising with social media content, and offering free wifi to improve in-store customer experience. Success – and perhaps survival – depends on merging channel service levels to deliver customer experiences that meet and exceed expectations.

3. O2O is a business strategy

Making O2O work effectively requires commitment and coordination across internal departments approaching programs as part of strategy, not as seasonal campaigns. A single department might champion O2O initiatives, but success requires collaboration from IT, supply chain, marketing, and customer service. The unifying focus for these efforts should be how to deliver the best user experience optimized for customer segments, supported by process improvements and technology infrastructure. Solid use cases are required prior to implementing O2O strategy.

CenterStage

For example, Samsung created a B2B product called CenterStage, displaying appliances in life-size 4K UHD at retailers including Best Buy, Dixons, and Boulanger, reducing inventory carrying cost and floor space typically required by traditional white goods displays.

Strategies can benefit brands in industries far beyond retail

Over the course of 2015, the lines between online and offline will continue to blur. As revenue from online retail continues to grow, brands must be careful to not get distracted by the larger opportunity. Brands that build their business models around an O2O approach will create consumer value in the three key venues of shop, home and office. These brands will be the best prepared to increase market share while defending existing business from new digitally disruptive entrants.

What I saw at CES

I was at CES 2015 last week. Here are some reflections, in no particular order:

1. The Internet of Things was Everywhere.

Internet of Everything

From the opening CES keynote to every 20 feet on the show floor, IoT was everywhere. But while there may be “infinite possibilities of IoT,” the question everyone will start asking in 2015 is, “but why?”

Samsung Infinite Possibilities of IoT

If IoT ecosystems become truly pervasive, analysts will become the most in-demand professionals out there.

2. Wearables, but why?

I was speaking to a 20-something professional about new products and he said, “Watches? I don’t get it. My generation is the one that stopped wearing them; we use our phones to tell the time. So why do all these companies think that everyone is suddenly going to buy smartwatches?”

WonderWoof

The variety of wearables businesses plays out like a Mad Lib. I saw wearables for fitness. The elderly. Kids. Babies. Dogs. Cats. You name it and if it moves, then there’s a business that wants to put a sensor on it to collect data.

3. Surf like nobody’s watching.

VR at Intel

But when you’re demoing VR on the CES floor, everyone is. Except at the Oculus booth, which had the longest lines that I saw at the show.

Oculus queue

4. Give me a break.

Walking around the show can get so tiring for some people that they just fall asleep in the middle of the day. Some booths facilitate this.

Taking a break

5. Mirror, mirror on the wall

Some solutions like virtual fitting tech sounds great in theory but the demos show that there’s still a long way to go.

Virtual Fitting Solution

On the other hand, other offerings that focus on a smaller, more specific application work very well.

Panasonic Beauty

6. The Connected Car

Audi TTS

There were more automotive manufacturers at the show than ever before, with a heavy focus on connectivity and automation.

BMW+Samsung

7. Physical to digital to physical

Martha Stewart MakerBot

The transition from the industrial to information age is entering a new phase, where we are digitizing our physical world.

8. 3D TV won’t die

Samsung 8K TV glassless 3D

I was surprised to see that every major manufacturer was showing off some sort of “glass-less” 3D TV. Even in the sweet spot, they seem like an awesome UHD TV got messed up somehow with a blur effect around the edges. 8K, yes. 3D, no.

9. Robots and the uncanny valley

Easily the creepiest thing I saw was Toshiba’s “Communications Android,” which had disclaimers posted around it like “robot does not interact with you.” Even so, when she turned and looked in my direction, I felt a chill run down my spine.

Communication Android

On the other hand, fake robots like Alibaba’s interacted with the crowd and were entertaining.

Alibaba robot

10. Times they are a-changin’

After recent years of backlash, booth babes have almost entirely disappeared from CES, in exchange for slightly more practical robots and people working out. Moreover, people dressed in cartoon costumes seem to have disappeared from the Strip as well. Here are two types of people you probably won’t see at CES 2016:

Two types of CES staffers heading for extinction

When I visited the Intel booth, I looked across the aisle and the old Microsoft space was now occupied by two Chinese manufacturers, Hisense and Changhong. Sign of the times.

Changhong

However, what hasn’t changed is that the floor is primarily for media and spectacle, while business gets done behind the scenes and off the floor.

Samsung Smart Lounge

I’ll be keeping an eye on how these trends of digitization and connectivity play out over the year, with visible checkpoints at MWC, SXSW, and IFA.

Everyday digital in Korea

South Korea is one of the world’s most wired countries (if not THE most). While living here, It’s easy to overlook the extent to which technology is just a part of going about your business every day. For example:


Easy in and out of parking garages

Most parking garages have license plate scanners, at apartments, department stores, and office buildings. Almost all cars have European-style plates with black type on a white background.

Korean license plate

No need to pull a ticket when entering a garage; a computer will track when you enter and exit.

Apartment license plate scanner


A national NFC payment system

A national stored value contactless payment system called T-money enables people to pay for public transportation with a tap. T-money is also accepted in taxis, eliminating the need for cash or credit. Beyond transportation, convenience stores and some other small shops accept T-money as well.

Tmoney


Widespread wifi coverage

High-speed broadband and wireless LTE network coverage are widely available; so is wifi.

Screen Shot 2014-11-28 at 10.13.57 PM

In subways,  many riders pass the time by streaming video to their mobile (usually Samsung) devices.

Subway wifi


Wifi restaurant service

Dining in many food courts is a modified cafeteria-style, where patrons place their orders at a centralized location and pay in advance, then pick up their food when ready from a specialized outlet. In some upscale food halls, patrons place their order and then find a seat, then place a wifi beacon on the table so servers know where to deliver the meal.

Galleria 494 - wifi table service


Keyless building entry

Most people don’t carry around keys, because most apartment buildings are accessed by a NFC device, while apartment units use a keycode or fingerprint to unlock the front door. I guess young people never have to ask to get a key back if they break up; just change the code.


Thankfully in my daily life, none of this technology is used to serve ads or otherwise overtly monetize interactions for brand exposure. On the other hand, monitoring technologies like CCTV and internet filtering are also in use, so it’s likely that the digital enablers of everyday convenience have a latent governing and compliance purpose as well.

I am not Uber.

Funky Van

Received via the contact form:

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I tried all day yesterday to get a ride with NO luck.
I signed up with Lyft last night.
Please contact me in you are interested in my business.
Your service has been extremely frustrating to me.

The “Big Six” digital marketing trends

I’ve been getting up to speed with Cheil’s global digital capabilities, visiting with our teams in Korea, the US, China, the UK, and India. In speaking with our professionals around the world, my beliefs are further confirmed that there are six key digital marketing trends that all brands must master in today’s operating environment:

  1. Brands are back in the driver’s seat.
    I’ve always believed that this notion was a bit sensationalist but today, organic reach has plummeted and brands with big budgets are the highest priority for sites with investors in mind.
  2. Everything is shoppable.
    From Instagram to Pinterest to Twitter to Facebook to YouTube, all sites are adding functionality to shortcut the path to purchase.
  3. Show me, don’t tell me.
    We have seen the shift from blogs to Twitter to emoji. People prefer snackable pictures to the fine dining of text.
  4. Data drives mass personalization.
    Curation and customization can happen today at a fraction of the cost to serve, but yesterday’s service models must evolve.
  5. The Internet of Everything.
    Just now beginning to become commercialized and show its true potential in the Age of Context.
  6. The sharing economy.
    Old business models and human behaviors are new again, but this time brands are powering their collaborative economy efforts with new technology.

While the impact of these digital marketing trends may differ by country and industry, they are all relevant now. The Big Six are here today and will absolutely evolve tomorrow. Smart marketers will get to the front of the curve and have a front-seat view as new trends emerge.

The answer is no.

Seeking Shambhala

Last year, I wrote a post asking “Can brands be human?

A year later, I’m certain the answer is “no.”

Now, this may seem obvious. But for almost a decade we’ve been hearing about how social media “humanizes” brands.

After another year of social media strategists trying their best to be “modern marketers” with “content marketing strategy” and “real-time marketing tactics,” many brands have missed the mark on their 9/11 tributes.

Brands can’t be human but the operators of their social media accounts are (for the most part). So what motivates a brand manager to plan and publish a post that belittles a tragedy like 9/11 into an opportunity to sell? I wonder if it’s the same profit mentality of individuals trying to profit from the Boston Marathon bombing or missing Malaysia Airlines flight. Or maybe it’s a more simple issue that has stuck with advertising forever — people act differently when concealed behind the shield of a corporate logo.

In either case, it’s clear that brands should stop trying to be human and just stick to being businesses. Don’t forget to be respectful of your consumers along the way.

Six years, $60 million, and all I got was this stupid hoodie.

Voting for SXSW 2015 sessions has started.

Austin panorama during SXSW 2014

If I get the chance to speak next year in Austin, I’d like to tell you about the last six years of my working life.

Between 2008 – 2014, I committed my time, energy, and intellect to build a startup company as the first employee into a multi-million dollar, multi-national social business advisory and big data analytics company. We received quite a bit of funding from Austin Ventures along the way. The company was ultimately acquired by Sprinklr and the only tangible reminder of my experience I have left is the classic cliched symbol of a startup company: a logo hoodie.

I could probably write a book on what I wish I knew then. (Maybe I will someday.) In the meantime I’d like to share the highlights of what I learned about startup life. The great reads out there make even more sense to me after having lived the experience.

I guess it’s only fair to disclose that I don’t intend this to be a sixty minute smack-talk session. Even without the snark, somewhere in between the trips to Las Vegas, managing people managing their personal brands, working with acquired companies under earnouts, writing a book, and creating an entirely new category of advisory called “social business,” there are some lessons worth sharing.

This would be my seventh year speaking at SXSW Interactive; if you’re interested in hearing more, I’d appreciate your vote.
Vote to see my session at SXSW 2015!

After a month in Seoul

Sunset over Itaewon

It’s been a month since I left Austin and started as chief digital officer at Cheil Worldwide. I’ve been almost entirely focused on work and in many ways, “the work is the work.” Strategy formulation, change management, and matrix operations are fairly straightforward. Of course not everything is the same and after a business trip to New York last week, here are some differences that surface in my mind, in no particular order.

Social media is a lot less active when most of your connections are time shifted 13 to 16 hours from regular business hours. More signal, but lower volume.

I’ve been consuming most of my English-language news from BBC and CNN. Lately most of the coverage has focused on Gaza and Ukraine. Korea’s English-language media outlets focus very little on these topics and instead discuss regional politics, e.g. relations with China and Japan, celebrity dating gossip, and continuing Sewol ferry issues.

There are many, many coffee shops in Seoul. Some of them have outlets in the US, mainly California. One popular chain is called Paris Baguette; recently, it opened a store in Paris.

Seoul has a lot of traffic. You can expect to spend a lot of time sharing the road with many other Hyundais and Kias.

Korea is one of the most wired nations in the world. Broadband internet penetration is almost 100% and high-speed wireless is almost everywhere. Subways tend to be quiet with every other person watching TV on a Samsung mobile phone. Step into an elevator and most of the younger people will be KakaoTalk-ing. A mobile phone number is the key to making many services work.

However, when it comes to tech infrastructure, especially e-government, Korea is stuck in the days of internet past. As described in this blog post which Jeremiah Owyang pointed out to me, Microsoft Windows, ActiveX, and Internet Explorer are still the only way to get many sites to work. Even running a virtual machine on Mac won’t work in many cases. Maybe Seoul could follow in New York City’s footsteps and hire a chief digital officer, or learn from Code for America and start up a Code for Korea.

There’s a lot of baseball on TV in the evenings, showing Korean professional league games. During the day, there are LA Dodgers and Texas Rangers games. If the Red Sox picked up Ryu or Choo, it would save me the cost of a MLB.TV subscription.

It seems increasingly strange when I read articles in the marketing and advertising trade press mentioning “global” topics. Usually, these articles are mostly about a US topic, with mention of a foreign country. It’s one thing to be a business tourist — it’s quite another to do business globally.

The cost of living here for an expat is steep and surprisingly higher than New York and San Francisco, but more affordable than Beijing and Shanghai. Times have changed quickly.

I wonder what will seem different after I’ve been here for a quarter…

Bringing digital innovation to the retail experience

I’ve spent the past couple of weeks in Seoul getting up to speed on my team’s capabilities as well as our assets across the network.

Last week, Cheil client Samsung introduced a new digital showroom experience called “CenterStage.” I just got here so I can’t take any credit for the build, but I can certainly be proud of everyone who was.

Samsung CenterStage from The Barbarian Group on Vimeo.

The concept was built by The Barbarian Group, based in New York and part of our network. My digital experience team in Seoul provided input into the prototype, along with our brand experience team, which designs physical spaces like Samsung retail stores and installations at CES, IFA, and MWC.

Barbarian Group’s Cinder is the installation’s underlying code, which won the first ever Cannes Grand Prix in the Innovation category. Samsung products are the heroes of course and looking good is easy when your client also happens to make massive 4K digital and LED TVs like the ones used in CenterStage.

Everything that can be digital will be, even the traditional home appliance department, which for years has looked more like a scrap heap than a 21st century shopping experience.

Week One at Cheil

Today marks the beginning of my first full week as chief digital officer at Cheil Worldwide. I arrived in Seoul last week and have been getting settled into my new role, meeting the teams resident at headquarters and starting to plan forward.

As word got out last week regarding my change of scenery, I appreciated all of the kind words and mentions on the interwebs. Now the hard work begins.

Digital division office

So what exactly is the role of a chief digital officer? Broadly speaking, this executive’s charter should include formulating digital strategy, implementing operational initiatives, and managing organizational transformation, all with a particular focus on emerging technologies. In a service-based company like Cheil, a top priority for a CDO like me is to expand our digital proficiency across the global network in order to deliver innovative client work. A related goal is to harness the inherent talent, creativity, and curiosity of our people and give them pathways to bring great ideas to life.

For further exploration on the role of a chief digital officer, you can request a copy of a related report I wrote for Constellation Research.

I’ll continue to publish thoughts here as we build, change, and explore the future of digital ideas that move.

Social business and beyond.