The music industry has been all-but decimated by the rise of disruptors like iTunes and Spotify. As Amazon and Alibaba ready to go head-to-head in South East Asia, retail marketers need to get their act together and ensure they don’t go the same way, writes Big Data for Humans’ Peter Ellen
There’s trouble afoot in Singapore. Two huge e-commerce companies want to change the way people shop and if they succeed there will be empty units in the country’s popular malls.
Amazon and Alibaba are kicking off what they hope will be a revolution in South East Asia. They are armed to the teeth and ready for a long battle where they’ll be happy to fight one another for a dollar.
This begs the question: are Singapore’s retail marketers ready? Given that many of them are licensees with a history of operational expertise and diverse portfolios, they should in theory take comfort that they know what they are doing.
However, given past experience, I question whether they really do. The first time I saw a group of powerful licensees face up to well-armed tech companies, it was when the music business met iTunes and friends. During that period, many music companies lacked the rights to sell their physical products digitally and their revenues dropped by more than 40 per cent in 24 months.
Music labels’ management had seen decades of growth, but yet suddenly found themselves paralysed to respond. And now this has become a blueprint strategy for disruption in B2C markets: transform service, change customer expectations and invest big money in rapid execution.
Amazon’s strategy is to hit retailers hard with its Prime Now service that will deliver goods in around the same time as it takes to hail a GrabCar around to the mall and back.
Time is of the essence for anyone working in retail marketing in Singapore, and they may soon find they have less than they would like. In the meantime, however, here are some things that they can do to prepare:
Adopt a rolling plan for service innovation.
Retailers need to ask themselves some existential questions- like why are we here and what will customers want in five years’ time? Open forums are required in companies to think about what the most demanding customers require now and in the future. Think about how to democratise innovation in the company culture, as the best ideas may come from the shop floor. Make this process part of daily life for the business.
Embrace the strange alchemy of disruptive minds
I recently witnessed a very large Asian conglomerate retain one of the world’s top consulting firms to incubate the ‘start-up and entrepreneurial spirit’ in its business. But in reality, disruptive thinking tends to emanate from people who want to hack bigger problems by breaking tacit assumptions about the way things are done. Maybe it’s better to seek some restless outsiders with a nervous tick.
Mix creativity with pragmatism
Robot and drone delivery services make great headlines and are fun at trade shows, but it’s not so clear why they’ll make customer’s lives better. Focus effort on pragmatic innovations that can be explained simply in terms of value. Develop some simple problem statements and take it from there.
Double down to secure your customer relationships
Good news – you have customers already. It’s time to rapidly organise their data and insights so that you can secure these relationships with exceptional personalised customer experiences. Full programmatic customer marketing programs are essential to doing this. One more order from your top customers could be 15 per cent of next year’s sales.
Collaborate with retail ‘frenemies’ to build partner propositions
Some service innovations might require scale – like two-hour deliveries. Perhaps it’s time to team up with your competitors on service innovation projects. Malls hold a lot of inventory and service capacity which may become underused. Singapore businesses are already world class at running joint-ventures and partnerships.
Deal with price wars by constant price architecture innovation
Being the cheapest may no longer be an option, but whatever you sell, customers will be savvy to online prices. Retailers need to innovative pricing architecture to cope with blanket discounting and premium service innovation. Pricing architecture is a major area for focus in an everything-as-a-service world where customers subscribe for things.
Peter Ellen is the chief executive officer of research automation company Big Data for Humans, which has bases in Singapore and Malaysia
First published on: http://www.mumbrella.asia/2017/09/retailers-need-ready-amazon-alibaba-going-hit-singapore-hurts on 12 September, 2017