VR and conversational commerce - retail's omni-channel future according to Walmart boss

Stuart Lauchlan Profile picture for user slauchlan June 11, 2017
Summary:
Marc Lore is one of the e-commerce assets that Walmart secured when it purchased jet.com. Lore sees a future for omni-channel retail that includes virtual reality and using store associates as delivery mechanisms.

lore
Marc Lore

Walmart’s success in omni-channel retail has been well-documented, not least across diginomica. Over the past nine months the retailer’s e-commerce strategy has been bolstered by the addition to the management team of Marc Lore, founder of jet.com which was acquired by Walmart last year.

Prior to jet.com, Lore was founder of Quidsi, which was purchased by Amazon. Given his e-commerce track-record, he’s got some interesting perspectives on the evolution of retail:

In order to think about the future, you have to kind of look to the past a little bit and make sure you are looking through the right lens. When I think back to e-commerce and I think, ‘What was the real step change?’, if you ask the average person off the street, ‘What is e-commerce, what was the step change?’, I think most people go directly ro product delivered to your door. That’s the big step change.

That’s not really the step change, because we were delivering products to people’s doors for decades through catalogs. The real step change was taking the physical catalog, that was expensive to ship, that had a limited number of products, that was hard to sort of search and file through, hard to get content to know what people thought, to take that catalog and digitize it, expand it, add rich content, pictures, descriptions, reviews, what other people thought, make it really easy to find stuff in this catalog and make it really easy to buy stuff in the catalog.

Really the step change is about merchandise. So the merchandising step change, which is really the core of retail. So if you look through that lens and you think okay, well, what’s going to be the next step change in merchandising, how do you have a richer experience, how do you buy stuff more easily, how do you get access to even more products than you have today?

Looked at from that perspective, Lore can see areas of interest in how the future will be shaped, beginning with what he calls “conversational commerce” driven by AI and machine learning advances:

It won’t be long before you are able to have a much richer experience and talk in a very conversational way, where you are talking to as much an expert in a particular product category as you would if you walk into a specialty retailer and talk to the expert on the floor. Combine that with having as much knowledge about what you like and don’t like as your mom or dad, like in combining the power of that and be able to do that in a very conversational way. I think takes the commerce experience to a whole another level.

Futher out is the role of virtual reality technology in retail, he suggests:

We are talking 10 years plus out, but where you are able to create a much more immersive, richer, 3D experience, where you are able to see the products in their native environment. So you want to go camping and you literally can just say, ‘I am going camping, looking for a tent’ and then there you are at a campsite, in the lines to the places you like to camp. And you are able to walk the campsite and see the tents and ask about the different tents and get expert advice on it. You are able to see it and feel it and almost touch it and do that.

This is applicable to all sorts of retail sectors, he suggest, including food and produce:

[You can] be able to be buying produce and seeing an apple and being able to say, ‘Show me where this apple was picked’ and you are transported to the orchard. And there you are able to see the farm and able to see the people that are doing the growing and picking and ask them, ‘What’s special about these apples?’. It’s organically farmed and all this stuff. I think millennials like and crave information. They don’t want to just buy products. They want to know where they are made, what they are made of, that they have a soul and a mission for being. And I think that comes to life through virtual reality.

The Walmart experience

Since the jet.com deal closed last September, Lore has been busy restructuring Walmart’s e-commerce operation and putting the right team in place to execute wider changes. That’s now underway with a focus on two main areas:
One is getting the value proposition much improved. So that’s the CVI, the consumer value prop index, really focused on making sure we have the product people want. They could find it, display all the information they need, priced right and delivered with a great experience, so really focused on the basic fundamentals. And then another part was focused on innovation and leveraging Walmart’s unique assets to do some things that only Walmart can do.

That has included an initiative to make it as simple as possible to re-order items from Walmart online, he says:

We have got 30 million shoppers’ data in store that they can now see online in a really easy-to-reorder list with no latency. They can quickly add things to their basket.

Other innovations include the introduction of Pick-Up Discount, which gives customers a discounted price for ordering online, then picking up the purchased goods. This deals with the most problematic aspect of online retail, explains Lore:

The most expensive cost of delivery is really last mile. So we thought, well, if we can pull those supply chain shipping costs out of the system, we can share a lot of those savings back with a customer, give them great prices while, at the same time, driving them to the store. And we see that people coming to the store to do their pickup are also going to the store and buying food.

It’s a long tail, and it’s very simple math. It costs a small fraction to get it to the store than it does to get it to somebody’s home. We basically say, ‘We have all these savings, but share these savings with our customers to give them a better price point’, so that we sell more products to get better value and, at the same time, we are driving traffic to the store.

There’s also a trial underway to leverage the 1.2 million associates that work in-store across Walmart to make them a different part of the supply chain:

We are sending packages to the store everyday from the fulfilment center or pickup. If we actually put the e-comm transactions on that same line, I’ll leverage the Walmart’s trucking infrastructure. Associates are already located in the same location as the packages. We could optimize and give the packages out to the associates based on whatever route they decide they go in after work to minimize the distance of their commute. You can imagine, with hundreds of associates, there is a lot of routes going in all directions, so the actual distance to deliver the package is pretty small. We’re excited about the test we are doing. We still have a lot of work to do before we are ready to roll it out.

With the addition of the jet.com platform into the Walmart world, there’s now a drive to create different retail experiences for different demographics, adds Lore:

There are two main sites in Jet and Walmart, both mass sites going after different audiences, but sharing the same back end. So we get leverage on the retail teams, on the logistics. But from a consumer standpoint, we get access to more customers. We are sort of able to now push Jet more premium, going after the higher income urban customer, which is not the typical Walmart.com shopper and Walmart.com with everyone else.

One challenge - or opportunity - that is still evolving is around the online ordering and delivery of fresh produce. Lore feels that Walmart has positioned itself well here:

We have got over 700 stores now with same day pickup of fresh, where we will pick the product for you and bringing out to the trunk of your car, where by the end of the year, we will be over 1,000 stores with fresh pickup. The customers absolutely love it. We will continue to roll it out to more stores.

We have done the hard part in sort of building the picking operation and being able to bring it out to the car. The next step is really same day delivery. We have got same day delivery tests now in 10 stores and that’s working out really well. But I think this is one of Walmart’s unique advantages, in that we have got fresh and frozen food in over 4,000 points of distribution around the U.S., where the fresh food has gotten there in full truckload.

My take

An e-commerce visionary whose presence undoubtedly boosts Walmart’s prospects in the increasingly tough world of omni-channel retail.

Image credit - Walmart/YouTube

Disclosure - Lore was speaking to the Robert W Baird Global Consumer, Technology & Services Conference.

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