If it seems like every day brings a new channel that retailers suddenly must sell in, you’re not alone. Channel proliferation is real, especially as social and messaging apps grab a greater share of consumers’ time and attention.
Managing all of this and creating a meaningful presence in new and emerging channels sounds like a tall order, but technology firms are rising to the challenge and helping apparel retailers succeed in an evolving marketplace.
OrderGroove is one such tech company, which has raised $40 million since its founding in 2010 and invested heavily in artificial intelligence and machine learning to create the SaaS Relationship Commerce Cloud. Sourcing Journal caught up with founder and CEO Greg Alvo to get his take on how apparel brands and retailers can use technology to excel in the Amazon age.
Sourcing Journal: How does OrderGroove serve brands and retailers?
Greg Alvo: We’re creating a new category of technology called relationship commerce. When you look at what Amazon’s doing, all their investments are in frictionless forms of technology, whether that is Echo, Alexa, or Dash or subscribe & save, or Go, or Prime. All of these different frictionless technologies they’re investing in are the tactics. But the “why” behind it – the reason they’re doing this—is to develop the ongoing relationship with consumers. Most e-commerce sites and most retailers are built for today’s transaction. What Amazon is built for, and is building all these investments in, is tomorrow, and the ongoing and reoccurring customer.
It’s about developing a relationship, moving a business from an episodic transaction to more of an ongoing, predictable relationship with a consumer. And making that brand or retailer indispensable to that customer’s lifestyle, anticipating their needs, and making it totally frictionless and easy.
We are a software platform that enables other brands and retailers to move their businesses from those singular, transactional type businesses, toward more of an ongoing relationship.
You see Instagram and Facebook starting to do commerce, and we enable that for brands and retailers, or it could be a predictive reorder, anticipating when the customer might need something and then prompting her with a text right before she might run out.
We think SMS is the most ubiquitous and untapped channel out there. Amazon’s got 30 million app downloads but there’s 3 billion cell phones in the world.
Subscription and membership services are more of a “set it and forget it” commitment to a brand or retailer. These are all technologies that you’re seeing Amazon invest in and we’ve created a software-as-a-service platform for other brands and retailers to develop that same ongoing cadence with their customers.
In apparel, we have a number of companies that might want to enable ordering a shirt from Facebook or Instagram. In other cases you’ve been seeing a lot of apparel companies get into box-type services, or membership or subscription services, where it can be something curated on an ongoing basis. Or in other cases, an apparel company wants to service their best customers. These are the ones making up the largest piece of their profitability and revenues. And for yet other companies, it could offering the customer a first look at new product before anybody else does. Send her a text and she gets a prompt saying “hey, there’s new style on file just for you. Reply yes and get it before anybody else.”
SJ: Is an apparel brand just inserting an intermediary if they opt for a curated box-type service through a retailer?
GA: I think there’s an opportunity for apparel brands to be doing this direct with their consumers and their websites, rather than having to go through a retailer. There’s no reason a Calvin Klein, for example, shouldn’t have an underwear service or something versus having to rely on a big department store to do it for them.
SJ: Do you see this as an actual trend that will be happening?
GA: Definitely. We just launched Fruit of the Loom on a subscription service a few months ago. If they already have an e-commerce site, and they’ve worked so hard to get the customer there, they might as well establish that relationship, retain it, and then really keep it ongoing and growing. I think we’re going to see that more and more.
SJ: How are the relationships between brands and consumers going to evolve in the future?
GA: I think brands still matter. I think some brands matter more than others, if they do a very good job of thinking about their customer and not becoming a “me too” brand but really differentiating and providing a unique experience, assortment and merchandising on an on-going basis. I think there’s definitely still a place for brands.
If you go to a shopping mall on Black Friday, what’s one store that has a line out the door but is not running a sale or promotion? Lego (or Apple). They’ve done a really good job of building a brand that people value and they haven’t gone nuts and sold everything on Amazon. They care more about their brand and their customers than they do anything else and they’re super customer-centric.
I think those brands that are customer-centric versus just product-centric and stay true to their brand and their customer base are the ones that are going to continue to thrive. And those that are undifferentiated and all they do is sell through retailers and not have that direct relationship with the consumer, I think they’re going to continue to struggle.
But I think in the apparel space, there’s an opportunity for that direct-to-consumer relationship that’s innovating around the experience and also making it really easy to do business with and having a really exciting experience with an exclusive product, like what Lego does on Black Friday.
These are all ways these brands can create relevance. I think we see this, too, in the luxury beauty space. If you look at L’Oreal luxury, they don’t sell on Amazon, and they don’t have to because they have a strong enough brand and they trust and believe in their brand equity.
I think it’s when these companies feel the need to kind of go against the real truth of the brand—the real promise of the brand—that they start selling out and it gets challenging. The luxury beauty industry represents a great case study for a lot of these apparel brands that are challenged right now. Some of these brands are creating that exclusive type of club and serving their most valuable customers could represent something really special for the apparel industry as well.
SJ: Why do you think some brands have finally caved in and started selling on Amazon?
GA: We have seen Nike and others sell on Amazon. I think that’s definitely a bit surprising for a number of folks. I’m not necessarily in agreement with it. I think Amazon is an amazing company, obviously, so this isn’t a knock on Amazon as much as it’s a knock on some of these brands’ decisions.
But I also think that in Nike’s case, they’ve done a really great job of still having those experiential stores. They still have personalized product. They still are very good at developing and maintaining that personal connection with the consumer. Now, whether or not Amazon dilutes that, we’re going to see.
Market share is important. That industry is under siege right now. Under Armour is obviously challenged. They probably have their reasons that might not be related to the best interests of the company and the brand, but more maybe related to the interest of Wall Street for the short term. So that’s just some of the challenges you see with a lot of these public companies. How do you balance the short-term results that are needed with the long-term brand equity that you’re still trying to retain?
SJ: Voice assistants and commerce are getting a lot of attention right now. Is this something apparel companies should be focusing their energy on for the moment?
GA: I think everyone’s getting voice wrong right now. Not everybody, but most. What I mean by that is ordering apparel through voice does not make sense to me just yet. The use case for voice that folks are latching onto—that Amazon knows but they’re just not saying because they’re trying to make it very broad based—is reordering product that you’ve already purchased. That’s a huge use case. There are some use cases for apparel in terms of commodity underwear, undershirts, etc, but in other cases, there aren’t.
Am I going to discover a new dress or dress shirt through voice? And then be comfortable ordering it? I don’t know how you do that without actually seeing the product. Voice commerce is built for the $8 trillion spent on consumer packaged goods per year, but not apparel. But ordering—which is not necessarily the same product someone’s purchased previously—or discovery, how do you do that through voice? At least, I can’t see it because I can’t imagine not seeing some of these products before buying.
Text message is so much better for apparel than voice is, in my opinion.
SJ: How should apparel brands and retailers think about entering new channels?
GA: Too often we’re seeing people peg this channel versus that channel. It’s not e-commerce versus omnichannel, it’s whatever the consumer prefers. It’s not WhatsApp versus SMS; in the U.S., SMS is probably more popular, but in Mexico, WhatsApp is probably more popular. Enabling all of those channels is what matters–it’s not one channel, it’s any and every channel. You’ve got to be everywhere.
SJ: Do companies come to you seeking to deploy one piece of the solution or the whole commerce experience soup to nuts?
GA: It really depends on their preference, but in many cases, clients are starting with one solution in one channel and then realizing there’s opportunities in other channels as well. Once they’re integrated into our platform, it’s super lightweight and easy to turn on additional channels.
We’re like a connective tissue that sits on top of their existing systems, like e-commerce, POS, backend systems, and enables them to pull those together and sell in whatever channel they might prefer wherever that customer relationship exists.
SJ: How can chatbots help apparel brands and retailers?
GA: We’re powering the chatbot experiences within channels like Facebook, WhatsApp and more, as well directly with these brands’ and retailers’ site and in stores in some cases. We’re actually enrolling customers for these types of service at the point of sale.
SJ: How do customers feel about hearing about chatbots in a physical store environment?
GA: Imagine The Children’s Place, for example, created a baby service where the onesie grows with your baby over time. And they ask if you’d like to enroll in the actual store. Going forward, at specific intervals you get a text message or Facebook Messenger post indicating there’s a product for you.
It’s important to be clear: it’s not about the “robot” that’s going back and forth with you. The reason why that’s happening is because of relationship commerce. Because that facilitates an ongoing relationship. The chatbot is just an enabler. At the end of the day, what really matters is that conversation turns into an ongoing relationship that translates to a great experience that translates to more dollars for that brand.
Chatbots are too much in the customer experience realm and have to be correlated with commerce over time.
SJ: What does the future of retail look like?
GA: The fact is that 88 percent of commerce still happens in physical stores. 2017 was the death of retail stores; 2018 is the resurgence of retail stores. Retail’s just going through disruption right now, it happens every decade or so. I think it’s healthy what’s happening.
I think Amazon’s going to be a $3-trillion company. But I think there’s plenty of space in a $23-trillion industry for a bunch of other players.