The Uber-ization of retail

January 12, 2016 03:10 PM

In a few short years, the concept of Uber has become almost a generic term. From its roots as a new-age driver-for-hire business, it now stands as a representative of an entirely new philosophy that focuses on service, experience, and open-concept usage. It has reached perhaps the pinnacle of mobile-era achievement: just like Google, Uber can be used as a verb. Could there be any greater triumph than that?

Retailers may feel distanced from Uber, seeing it as an obscure taxi service and nothing more. But to dismiss it so lightly would be a grave mistake, because Uber carries with it the seeds of commerce in the new era—one that is quickly becoming the domain of millennials—as customers, employees, and suppliers.

Uberization involves and consolidates several features essential to ongoing commerce success, which do not have, at first glance, much to do with the cars themselves. It is the Uber process that must be attended to. This includes:

1.  The injection of mobile payments. Uber embodies a thrust away from established taxi and transportation companies, outpacing them with agile, spontaneous availability. This is now happening for payment systems, with the introduction of instant, single-click services, such as Apple Pay and Android Pay. Although people have been using debit and credit cards for many years, single-click bypasses major banks, and removes the need for cash registers and their lineups. The freedom to purchase instantly, from any location in the store, will substantially change and improve the in-store sales process, and will soon pave the way for future virtual payment systems such as Bitcoin.

2.  Real-time data. A hallmark of Uber is the availability of drivers in real time. This means capitalizing on real-time data to offer fluid access to their cars, and replacing the dispatcher-led posting system. For retailers, the lesson here is in the power for understanding the needs of every individual buyer and then pro-acting or reacting accordingly. Retailers who used to think in terms of weeks and months must learn to think in terms of minutes and hours for their ordering, selling, delivering, and customer service standards.

3.  Instant gratification – push a button, get a service. The speed of life has brought with it an increased speed of expectation and demand. Take private jets, for example. Most people instantly dismiss the idea of flying anywhere by private jet. Cost of ownership of such things is the domain of celebrities and captains of industry. Unless, of course, you push a button and connect with an Uber-styled private jet service, interested in selling you a reasonably priced empty seat on a passing LearJet. Last-minute clubs have been around for years, just like taxis have, but now the growing trend of Uberization is touching a wide variety of services, as can be easily observed at sites likeProductHunt, a “Uber-for-X” directory.

4.  Dynamic pricing – an efficient supply/demand relationship. Many people associate Uber with surge pricing, but the overall effect of a for-hire service is a self-regulation of prices based on real-time data paired with efficient competition. Uber is not the only car-for-hire service. Others, like Lyft, help ensure reasonable and competitive rates. In the retail world, Amazon and Walmart are market leaders in establishing dynamic pricing, and their influence forces markets to reassess the approaches to selling products while still maintaining a margin. Dynamic pricing can work in both directions. It is up to retailers to master this.

5.   Injection of unused assets into the marketplace. In essence, Uber is about renting out the back seats of other peoples’ cars: empty space that can be capitalized on. Retailers can learn from this as they survey their store layouts, their warehouses, and their inventory, as well as the obvious opportunity to hire Uber or its competition to deliver products to customers’ homes.Rent The Runway is a clothing rental business that rents out dresses for four or eight days. A sort of “Uber of Fashion,” they are making strides in many U.S. cities by making dresses available for events without the commitment to buy. Although tuxedo and prom dress rental is nothing new, the availability of a wide range of designer dress styles is. Traditional retailers, looking at an inventory of items gathering dust on warehouse shelves, now have a new avenue for monetization.

6.   Disintermediation. Through the use of real-time data and a crowd-sourcing approach to transportation, Uber has started to remove the middlemen: the taxi company, the dispatcher, and the traditional license owner. This delivers a message to all types of retailers and manufacturers: the need for warehousing and brokers is diminishing as both groups (retailers and manufacturers) realize they can sell direct to the public. This becomes an integral part of improved fulfillment.

Who Buys Uber-styled Services?

Change is a difficult thing to accept, and established retailers, unused to new techniques, will staunchly stick to the old ways until the day their company or job evaporates. It is worth reiterating: Uberization is not about cars. It is representative of a new sharing economy. A growing segment of the consumer public is choosing to consume differently. They do not necessarily want to own as many things—they want access to experiences instead. This is especially applicable to millennials, who constitute an increasing segment of the marketplace, and who are spurring the success of car-sharing companies like ZipCar. When they do place an order, they cannot wait 48 hours for delivery, when 48 minutes is available. When they need a car, they need not commit to 48 months, when one hour is all they need.

The Metamorphosis

The strongest lesson to learn from the Uberization model may be this: mobile means carrying your life along with you, rather than going back home to live it there. People carry their lives in their smartphones—music, photos, passwords, and apps, and these guarantee ongoing experiences wherever they are. No one has to retreat to home base.

This opens up a huge opportunity for any retailer willing to re-visualize their store, transforming it from “a place full of items people buy and take home,” to “a place where experiences happen.” A kitchenware store, for example, should think seriously about introducing interactive cooking demonstrations as their centerpiece. A clothing store should ramp up its sales associates’ skill level to incorporate a higher level of fee-based consulting service, in which the purchase of clothing may actually be incidental to a beauty/makeover experience provided in the store.

The consumers are there, waiting for this to happen. Young sales associates come pre-loaded with the skills to navigate apps and wirelessly delivered customer information. Both sides are savvy and comfortable. Uberization stands for dynamic, real-time, customized service. That message is the most important item it will ever deliver.

NewStore provides a mobile retail platform designed to improve conversion and engagement online and in physical stores and to modernize fulfillment.





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