A Prime Mover

On Wednesday, Amazon and JPMorgan Chase announced they have partnered to introduce a new Amazon Prime Rewards Visa Signature Card, which will be the first card to target members of Amazon Prime.  For all credit card issuers not named Chase, it is a sad day.  There is no more valuable partner for a credit card issuer than Amazon because Amazon Prime has a massive user base and these users spend more often than nonmembers.

Amazon Prime had 49.5 million members in the US alone as of Q3 2016, according to Cowen & Co. estimates. Amazon Prime members accounted for 57% of all Amazon purchases in October 2016, compared with 49% last year. Moreover, 83% of Prime members made a purchase in that period, compared with just 49% of non-Prime members.

Amazon Prime represents the future of loyalty programs – a subscription-based program with very rich benefits.  Here’s the list:

  • FREE Two-Day Shipping on eligible items to addresses in the contiguous U.S. and other shipping benefits. 
  • FREE Same-Day Delivery in eligible zip codes. 
  • Prime Now: Get FREE two-hour delivery or scheduled delivery on over 10,000 items, from groceries to electronics and more. Plus, get free delivery from your favorite local stores.  
  • Restaurant Delivery: Get FREE one-hour delivery from popular restaurants with Prime Now. 
  • FREE Release-Date Delivery: FREE Release-Date Delivery on eligible pre-order items delivered on their release date to ZIP codes within the continental U.S. 
  • Prime Video: unlimited streaming of movies and TV episodes for paid or free trial members in the U.S. and Puerto Rico. 
  • Prime Music: unlimited, ad-free access to hundreds of Prime Playlists and more than a million songs for members in the U.S. and Puerto Rico. 
  • Prime Photos: Secure unlimited photo storage and enhanced search and organization features in Amazon Drive for you and the members of your Family Vault. 
  • Prime Pantry: Access to Prime Pantry, where members can purchase and ship to addresses in the contiguous U.S. low priced grocery, household, and pet care items for a flat delivery fee of $5.99 for each Prime Pantry box. 
  • Amazon Elements: Access to Amazon Elements products, Amazon’s own line of everyday essentials.
  • Amazon Dash for Prime: Never run out of your favorite products with Amazon Dash Button. 
  • Prime Early Access: Get 30-minute early access to Lightning Deals on Amazon.com. 
  • Kindle Owners’ Lending Library: access to members in the U.S. 
  • Prime Reading: You can borrow books, magazines, and more from the Prime Reading catalog and read them on your Fire tablet, Kindle e-reader, or the Kindle reading apps for iOS and Android. 
  • Kindle First: Early access for members in the U.S. to download a new book for free every month from the Kindle First picks. 
  • Audible Channels for Prime: Get access to Audible Channels, a $60/year value, for free. Audible Channels includes unlimited listening to original audio series and playlists handcrafted for every interest. You’ll also receive access to Prime Exclusive Audiobooks, a collection of streaming audiobooks including best sellers, family favorites, celebrity-narrated classics and more. Just download the free Audible app and sign in with your Amazon account to start listening.
  • Amazon Music Unlimited: Prime members can get discounted Amazon Music Unlimited monthly plans and there are annual plans available exclusively to Prime members. 
  • Video Add-On Subscriptions: Members can purchase Video Add-on Subscriptions to premium content providers. 
  • Deals and Discounts, Compliments of Amazon Family: These include 20% off diapers through Subscribe & Save and 15% off eligible products from your baby registry. 
  • Twitch Prime: Members get exclusive discounts on physical games pre-orders and new releases. Twitch.tv users who link their Amazon Prime account get ad-free viewing on Twitch, a free Twitch channel subscription every month, and exclusive access to free game content. 

 

Progressive retailers and financial institutions have begun to view Amazon as an asset rather than competition, because partnering and associating with Amazon significantly widens a brand’s potential audience, thanks to Amazon’s global reputation and customer base.

The future promises to be challenging for financial institutions that use products such as credit cards to re-enforce their brand as retailers emulate Amazon’s value proposition and utilize online technology that allow consumers to store card information on their website for convenience.  With card credentials stored with retailers, consumers can avoid deciding which card they use for purchases at that retailer – the default card will win.  Much to the chagrin of the financial institutions whose cards are left in their customer’s wallets.

Hungry? There’s seconds

Collaborative consumption has gained cache in part as a reinvented method to swap or share things on a large scale.  Generally new technology is the driver however the maker movement is achieving the same thing through personalized or customized solutions.  These two trends along with the effort to move toward a more sustainable society have conspired to produce a low-tech approach to hunger in Brazil that meets the hungry where they are.

The “Street Dish” initiative is the work of anonymous citizens going by the Makers Society, who have affixed labels onto trash bins reading (roughly translated) “Leave foods that are still in use for consumption.” The notices wrap around tubes jutting out from the cans, allowing individuals to hang bags of leftovers, say, or restaurants and markets to leave extra grub or produce in plain sight.

The idea is to give the homeless and/or hungry places they can go to find free food, without having to dig through trash to find it.

Leah’s Pantry in San Francisco and Feeding America San Diego and SuperFood Drive have taken food donations a step further by creating a holistic model for change –  providing both food and health to their clients.  The food pantries commit to offering healthier foods through their pantries and they’re given infrastructure support to ensure they can safely keep and distribute these foods to their clients. They commit to deliver nutrition education and cooking skills along with their food donations.  Finally, they provide their clients a toolkit that includes simple, seasonal recipes that incorporate food bank foods and nutrition messaging for their clients.

The model is managed through quarterly meetings, site visits, and ongoing training ensure the program continues to make overall health and wellness is a priority.

How did I get here?

That’s the question I have been thinking through today after I was asked to submit a speaking request form for a conference.  They wanted to know the range of topics I can speak on.  I thought it was as good a time as any to revisit my purpose for wanting to conduct research into the future of consumption in general and why post to a blog.

I’m looking to shed light on the future of consumption because I believe my insights will:

  1. Help businesses prepare and position themselves for the future.
  2. Educate and empower consumers to embrace the future of consumption with intention and awareness, and
  3. Inform policymakers and maybe influence policy.

I’m still forming my thesis, however in the evolving world of consumption, buyers and sellers still come together to exchange value, though the form of value exchange may look very different than traditional transactions.  The foundation for any value exchange between two partiers is trust, and trust is made up of identity and reputation.  The virtual communities and marketplaces are providing new ways of establishing reputation through observed behaviors, values, and skills reported to communities by influencers.

The lubricant of this evolving system of consumption is personal data – and this is what is very interesting to me.  While I have yet to articulate the questions I want to address, I know they revolve around personal data and the interplay of trust, privacy, reputation, and influence.

I invite to you reach out if you have insights or a perspective to share, if you would like to be interviewed as part of my research, or if you would like to collaborate on this project.

Take two and call me in the morning…

I’m feeling under the weather this afternoon and evening, so I went on to WebMD and some homeopathic websites in search of some medicine I can begin taking.  After describing my symptoms, it appears I could have any number of illnesses ranging from a cold to lung cancer.  Now I’m ill and depressed.  I’ll be back tomorrow.

Are you lonesome tonight?

Day 2 of my road trip to the east coast found me at a national chain restaurant for lunch where I noticed the majority of tables occupied by only one person.  There are times where I like some time alone, however there are many times when I’m travelling I would enjoy having a conversation with someone new over a meal.

That’s why I’m intrigued with The Living Rooms project Camerados, a non-profit that is committed to ending social isolation through cups of tea.

Crumbs and stripes of jam are left behind on plates, sitting on a polka-dot tablecloth. Clusters of people lounge and chat on sofas and armchairs sprayed with floral patterns or stripes. The space is cozy and unpretentious; it invites plopping down and staying put for a while.  Last spring they launched their first location in Blackpool, England.  Two locations are slated to open in New York City this winter: one in Manhattan, and one in Brooklyn.

Maff Potts, the founder of Camerados spent decades working in social services, and noticed a common denominator underlying the push to connect folks with concrete services: a cloud of loneliness and a harried pace. The Living Rooms offer a model where “You can come sit all day,” he adds. “It’s up to you to engage with it as much as you want.”

Camerados is teaming up with Kindness.org, a platform dedicated to encouraging people to do nice things for each other, to bring the Living Room concept to New York. This site, which launched this fall, invites users to tackle some easy challenges: leaving a sketch or hand-drawn card for someone to find, or dropping a copy of a favorite book, hoping that a stranger will connect with the story held in its pages.

Kindness.org recently conducted a literature review of 21 studies examining kindness—many of which didn’t stand up well to scrutiny. “Our research suggests performing acts of kindness will not change your life, but might help nudge it in the right direction,” Curry said in a statement. Lindsey says she’s hoping to conduct more research in the future, in an effort to tease out how kindness might have long-term reverberations.

On the Road Again…

I’m writing this from a hotel in Columbus, Ohio where I’m spending the night while en route to Washington D.C.  While it’s quicker to fly I enjoy a road trip because I enjoy watching the scenery roll by.

I used my smart phone to check the road conditions, determine the route, estimate the time of arrival, find a Starbucks, report a traffic incident, find our restaurant for dinner and book the hotel while in the car.

Some of you may take this for granted but for a dedicated roadmap collector like me, it’s amazing to reflect on the connectivity, functionality and convenience of the smart phone as a tool.

Remember the blue light special?

It’s official – consumers love their convenience (with a caveat).

On Thursday Macy’s announced that it will close down another 68 stores and cut an additional 6,200 jobs, Kohl’s announced holiday sales were down 2.1% while holiday sales overall were up 3.6%, and Sears sold its iconic Craftsman brand to Stanley and announced it would close 109 Kmart and 41 Sears stores.  This is a continuation of a trend a long time coming.  Macy’s, Nordstrom, JCPenney, Sears and other department stores have seen in-store sales per square foot decline 24 percent since 2006.

This news came on the same day Amazon announced its Fulfillment by Amazon service delivered more than 2 billion items around the globe in 2016, grew more than 50 percent during the holiday season, and is in talks to purchase American Apparel.

Why are physical stores struggling to draw in shoppers and earn sales? Clearly the popularity of digital commerce is rising.  But it’s not just the convenience of shopping at home, it’s about giving shoppers options – allowing consumers to buy products however, whenever and wherever they want. It’s also about personalization and creating a seamless, engaging and memorable shopping experience regardless of what channel customers are using.

Another factor is the high cost of maintaining a retail space in a shopping mall, particularly for anchor department stores.  Department stores need to close hundreds of locations if they want to regain the productivity they had a decade ago. Research from Green Street Advisors estimates that the closures could include roughly 800 department stores, or about a fifth of all anchor space in U.S. malls.

Mall owners are also proactively seeking retailers that do a better job of driving shoppers to the centers and lifting overall mall sales.  Landlords are nudging out big box chains in favor of sporting-goods retailers, fast-fashion chains, supermarkets, gyms, restaurants, movies theaters and other types of entertainment as they seek to keep their properties relevant in an age increasingly dominated by online shopping.

Finally, the type of retailers occupying malls today is vastly different than just 10 years ago.  Exclusive specialty retailers that offer luxury items find malls very attractive because shoppers still want to try on the ring, sit on the loveseat, or feel the heft of the copper pot before buying it and bringing it home.  So while for most consumer goods such as clothing, if you know your size, shopping for the best price and free 2-day delivery is the way to go.  When shopping for that expensive gift, we still want the service provided by specialty retailers.

Note that regardless of what they’re buying, consumers want service, it’s just that services means something different based on the good.

Does this make me look fat?

Augmented reality (AR), an enhanced version of reality created by the use of technology to overlay digital information on an image of something being viewed through a device (as a smartphone camera) in real time, is quickly becoming a powerful tool in retailers’ marketing toolkit.

As virtual and augmented reality technology rapidly improves, analysts predict the retail industry may be one the biggest beneficiaries. IDC estimates the market for the technologies will explode from about $5.2 billion in 2015 to $162 billion in 2020.

2016 saw the hype of AR explode with Pokemon Go! yet the more sustainable use cases for this technology may come from changing the way consumers browse and select their products.  The promise of AR when shopping is that through platforms such as Google’s Tango platform, users can select images of furniture or décor from a retailer such as Wayfair’s online catalogue and use the touch screen on their phone or tablet to position the objects on their room’s floor, walls, or ceiling.  Not only can they see how the piece would look in their room they can see if and how well it will fit with the existing decor.  

Kyle Nel, executive director of Lowe’s Innovation Labs division believes this usefulness will extent to their living space. “This technology is an important step forward in our vision for how AR and VR will shape the way our customers design, build, and enjoy their homes.” Nel thinks contractors, architects, and designers will buy the phone to help their clients conceptualize projects and he hopes that consumers will buy it, too.

Microsoft Corp., Facebook Inc. and Snap Inc. have joined Google in investing heavily in augmented and virtual reality. Apple Inc. hasn’t revealed any plans for AR, but Chief Executive Officer Tim Cook has touted the technology publicly multiple times. Amazon.is thinking about virtual reality shopping too, according to IDC.  Though the promise is enticing, companies, however, must grapple with the dual challenge of mastering the necessary tech and finding an actual market.

It turns out that shoppers like the idea of using AR to explore and learn more about their prospective purchases, based on a new survey of 1,100 adult U.S. adult shoppers conducted by Interactions Consumer Experience Marketing.  The study found that most people would shop at a retailer more often if they offered augmented reality.  Here are the most popular, according to the survey:

60% — Furniture

55% — Clothing

39% — Grocery

35% — Shoes

25% — Makeup

25% — Jewelry

22% — Toys

The survey found that more than a third (34%) of shoppers already use augmented reality while shopping and nearly half (47%) of those like to use it both online and in a store.  Most (77%) of those who have used AR want to use it to see product differences, such as change in color or style, while more than half (65%) want to use it to get more product information.  Most (71%) shoppers said they would shop at a retailer more often if they used augmented reality and 61% said they prefer to shop at stores with AR over those without it.

AR also may have some influence on impulse purchasing, since 72% of those who have used AR said they purchased items they weren’t planning to because of augmented reality. Almost half (45%) said it save them time and 68% said they spend more time at a retailer if they can shop with augmented reality.

The fine print

Policymakers have a tough job trying to keep up with the advances made possible by technology. An area they’ve been active in lately is the online advertising industry.  It’s booming. Digital-ad revenues in America in the first half of the year reached a record $32.7billion according to the latest figures from the Interactive Advertising Bureau. 

The Economist recent reported that the Federal Communications Commission (FCC) announced a new rule to protect personal privacy online. Internet-service providers, such as AT&T and Comcast, must now ask consumers for permission if they want to gather and share data deemed to be sensitive, including financial information and users’ browsing history.

Marketers and digital-ad firms insist that they already police themselves well. They consider data on browsing and apps, in particular, to be essential for targeted advertising. Under the FCC’s rule consumers can “opt in” to share this information, but firms fear that many will not.

There is a limit to the FCC’s order, which perversely makes it only more controversial. It will restrict data collection by internet providers, but have little impact on broader online tracking. Notably, it does not affect so-called “edge-providers” such as Google and Facebook, which have operated under a separate privacy framework from another agency, the Federal Trade Commission (FTC).

The order further tilts the advantage to Google and Facebook while the consumer has less clarity than before because now limits for gathering data depend on the identity of the gatherer.  The question now is whether regulators will look at this mishmash and apply stricter limits to Google and Facebook, too. 

I believe it’s time for policymakers and regulators to adopt an approach used by scenario planners for years – the futures wheel, in order to identify 2nd, 3rd, and 4th order implications of proposed rules before they’re enacted.  It will make policymaking more complex in the short run, but would highlight areas key leverage points that would ensure the policy or rule matches the intent.

Back to work

The holidays have officially wrapped up, as evidenced by all of my co-workers reporting back to their desks this morning.  Stories, funny and tragic were shared and now it’s back to the matter at hand, which for me is, “What is the future of payments?”

Consumer expectations around the shopping experience continue to favor more convenience and for years consumers have told us they want their payments to be “fast, secure, and convenient”.  The response was the launch of “The Pays” – ApplePay, Samsung Pay and Android Pay, along with a multitude of mobile wallets that fulfill on what consumers told us they wanted.  

The trouble is, after the initial hype and uptake my bleeding edge types, the new adoption rates have been falling.  Why?

As I see it, there is a struggle in the minds of consumer between convenience and trust.  Trust goes beyond security in that while I believe Google (for example) will hold me information secure, I don’t know that I trust it will not use my information in ways I either don’t know or don’t approve of.  

Financial institutions have built this trust up over centuries sine the days of the Medici’s.  I believe consumers feel their data is another asset, just like the car or house title, or the stock certificates.  It’s clear to me retailers are applying technology to make the shopping experience very convenient and secure.  It’s a matter of time before they build trust among their customers.  

The implications for financial institutions isn’t that payments will move to retailers – financial institutions will do this for the foreseeable future.  It’s a battle of brand influence and who is perceived to deliver value.  This is important because those who deliver value will be those who can charge a premium.