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Wednesday 16 October 2019

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Payments Awards 2019

The great leap forward

Written by Glynn Davis
30/11/2015

With the advent of internet connectivity the worlds of technology and retail have become increasingly intertwined. Both retailers and the technology firms that deliver solutions to merchants used the recent Wired Retail 2015 conference to reveal some of the ways they now crossover and to also highlight how technology platforms are becoming almost ubiquitous

Paul Clarke, director of technology at Ocado, revealed how the company has been moving away from simply being a grocery retailer to also developing the Ocado Smart Platform (OSP) that combines its unique automated Central Fulfilment Centres (that include complex robotics) with software in the cloud that can then be sold to retailers around the world.

Over the years it has added artificial intelligence, robotics, and Bayesian statistics to push the boundaries of its online grocery delivery business and this intellectual property is now being offered as a solution to other merchants. “We can use OSP to put other grocery retailers around the world online. We’re a retailer and a technology business,” he said, adding that selling its platform was first in evidence with the joint-venture it struck with Morrisons and that others will follow.

He believes Ocado is in a strong position compared with other online firms like Amazon that are looking to move from non-food retailing to delivering food items because it is much more complex dealing with perishable goods. “If you can do online grocery retailing – with multiple temperatures and short shelf lives – then you can do other forms of product. But the reverse does not follow,” said Clarke, who reckons this should make its OSP solution equally attractive to retailers of non-food as it is to grocers.

Creating such platforms for other retailers and brands has been a feature of the internet since eBay appeared 20 years ago. Among the many new providers is Zalando, which is now a major force in online fashion even though Robert Gentz, co-founder of Zalando, told delegates: “We had no idea [initially] about retail and fashion but now we have automated warehouses (that are the biggest in Europe)...We continue to change and improve the fashion industry and need lots of partners in order to re-imagine retail in the future.”

One area that continues to be re-imagined is delivery and a number of innovative solutions were in evidence at Wired Retail including Flytrex, which has developed a platform for managing drones. Yariv Bash, CEO at Flytrex Aviation, is convinced widespread use of this method of delivery is inevitable: “The drones are coming. There is no congestion with them and they go in a straight line. There is a great challenge with them but also a great opportunity. Optimistically they’ll be in use in five years but more realistically it will be seven to 10 years,” he suggested, adding that he is already talking to potential corporate clients in Africa.

Much closer on the horizon is Uber, which is pushing its proposition well beyond its original model of transporting people. Jo Bertram, regional general manager for the UK at Uber, said the company has undertaken “stunts” in the past delivering flowers and ice cream but it is now taking the delivery of items much more seriously with the launch of UberRush that uses its network of drivers to solve the last mile issue for retailers.

She observed that as many as 20 per cent of trips made by people are to pick up goods, which suggests lots of inefficiencies when extrapolated across a whole country and this therefore represents an opportunity for an operator like Uber. “We’ve a technology platform that links drivers with people, and it is just the same with delivering goods. We can combine multiple deliveries on one journey,” noted Bertram, adding that there are great benefits to retailers, especially when same-day fulfilment costs to customers are brought down. In the US, UberRush costs $7 per delivery but she says this will reduce as the business grows.

Removing inefficiencies is certainly fundamental to Uber and it is the same with 3D Hubs as it looks to play a part in re-inventing manufacturing that will revolutionise retail and reduce wastage because at present 30 per cent of products are thrown away, according to Bram de Zwart, co-founder and CEO of 3D Hubs. “3D printing will change retail. In the future there will be no more [wasted] inventory. There will be unlimited numbers of designs, and customisation. Retailers will benefit from local production and on-demand [manufacturing],” he suggested.

Although it is still early days for retailers – with most 3D printing centred on industrial applications – Zwart said there were some examples appearing including US-based DIY retailer Orchard that enables the customisation of products such as door handles which are designed on screen and then printed on-demand.

This clearly represents a massive potential disruption for retailers and will change dramatically how they use physical store space in the future. This will continue the trend of stores moving away from simply housing piles of inventory, which is presently driven by sales gradually transferring online.

This is prompting a merger of digital and physical, which is exactly where Not Just A Label finds itself, according to Stefan Siegel, founder and CEO of Not Just a Label, who stated the company was originally an online platform for contemporary fashion labels to sell through but today as much as 50 per cent of its sales are offline. This is down to the company experimenting with physical space, which has included creating a large pop-up store in Dubai to showcase various labels by “recreating Shoreditch and Williamsburg [in Brooklyn] in Dubai” with retail, workshops and 3D printing all combined in one dynamic space.

“It was a huge opportunity to show something genuinely new and almost push retail into the background. The successful bit in the mix was not relying on sales. We created an experience where the content is important. And there is a transparent opportunity for designers to sell,” explained Siegel.

This led to a joint-venture with Zalando for Berlin Fashion Week that involved a focus on workshops and a shop on the first floor; a temporary store opening with the Waldorf Astoria hotel in New York; and Not Just A Label planning to open its own dedicated store in the US city soon.

Regardless of whether it is digital or physical there is ultimately a transaction in retail and there have been plenty of new innovative payment solutions coming to market. Among them is Klarna that provides a solution for online stores that allows customers to enter just a postcode and email address when checking out. Actual payment can then be completed at a convenient time some weeks after purchase when the goods have been received by the customer.

Sebastian Siemiatkowski, co-founder and CEO of Klarna, said the company works with ASOS and Marks and Spencer in Germany where there is a culture of payment-on-delivery of goods rather than paying for them at the time of purchase online.

But as Klarna expands it is gaining some traction in the UK as evidenced through its work with online retailer Wish that went live in August. With over 10 million registered users in the UK the site has seen an increase of 15 per cent in unique buyers, six per cent increase in average order value, and a ten per cent improvement in conversion rate from the time of adding to the cart to completing a purchase.

With these sorts of metrics Siemiatkowski said he expects to make an impact in the UK: “We’ve been live here for only a couple of months and we’ve some very exciting retailers lined up – in addition to those we’re already working with overseas such as ASOS and M&S.”

It is clear that retailers have never had more opportunity to embrace new technologies and solutions, which can enhance their businesses – provided they are willing to make the leap and start experimenting. As Clark at Ocado stated: “Fortune will favour those companies that are getting their feet wet. I urge companies to now take action.”


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