Service sector

Amazon, Kroger and Walmart are entering the service sector. Here’s why.

When the customer is your toughest competitor, getting everything right is crucial.

Perhaps that’s the thinking of many retailers now packaging and selling their own in-house innovations, from last-mile fulfillment processes to contactless payment technology. Recognizing the value of these competitive advantages, a range of retailers, from ThredUp to Amazon

AMZN

AMZN
are turning their proprietary technology into revenue streams, and other retailers are the buyers.

But sellers likely see something of even greater value than sales in some of these collaborations — the shared data and customer insights they generate. (As long as it adds value and consumers are willing to share their data in these environments.)

And that insight, in turn, leads to more effective selling opportunities: According to Coresight research, nearly 50% of brands saw at least a 4% increase in sales by sharing their data with retailers (nearly 27 % recorded a gain of at least 8%) .

They’ve got the merchandise – how retailers cash in

You can bet retailers are measuring the non-monetary benefits of selling their innovations, even if it’s to competitors. And even if data insights aren’t part of the equation, analyzing how their “customers” are using their innovations generates valuable intelligence. Here’s how six top retailers are bolstering their business-to-business portfolios.

  • walmart

    WMT
    in August 2021, began marketing its last-mile delivery platform in the form of GoLocal, a fulfillment service that provides white-label delivery to any business, from a neighborhood chocolate shop to a national chain . In October, Home Depot signed up as GoLocal’s first customer, followed by fashion retailer Chico’s. The customizable service is part of Walmart’s broader strategy to diversify its revenue streams, Walmart said in a press release. Other initiatives in the strategy include Walmart Fulfillment Services and – announced in July 2021 – a partnership with Adobe Commerce that integrates Walmart’s online, in-store and Marketplace fulfillment technologies. Through it, retailers can access Walmart’s cloud services for pickup and delivery and reach customers through the Walmart Marketplace, a community of professional sellers.
  • ThredUp learned the value of repurposed goods – reselling its reselling platform and associated in-house technologies. Its “resale as a service” is ready-to-wear, with product inspections, fulfillment, price analysis and listings included to identify the most suitable buyers. The growing list of RaaS customers includes Madewell, Athleta, LG, Adidas, Everlane, Hollister, and Rent the Runway. According to ThredUp, its RaaS platform indexed 1.73 million items. Some industry watchers predict the new venture could become more lucrative than ThredUp’s second-hand clothing, with revenue expected to reach $300 million by 2025 (its client list grew 30% in 2021 ). All of these additional sales generate specific shopper insights that should help ThredUp more accurately promote its own resale brands and products.
  • Amazon in 2020, began selling its cashierless technology to retailers so their customers could bypass checkout lanes in stores, much like shoppers do at Amazon Go locations. These shopping models, meanwhile, take advantage likely to Amazon in the form of customer behavior outside of its own brand. The bundled technology, called “Just Walk Out”, is now installed in the retail stores of Starbucks (in New York), Hudson Nonstop airport stores, TD Garden MRKT stores (a stadium in Boston) and the giant Sainsbury’s supermarkets (UK). The technology is also, unsurprisingly, in some of Amazon’s Whole Foods and Amazon Fresh sites. As with Walmart, this service as a business is part of Amazon’s game plan to monetize internal capabilities. As of November 2021, the cost of operating Just Walk Out was $159,000 in a 1,000 square foot location, which covers the cost of Amazon’s cloud technology and remote employees (to verify the accuracy of checkout and other tasks), but not marketing and merchandising. .
  • Macy’s, Lowe’s and Kroger

    KR

    are among retailers that sell ad placement on their own websites, apps and other digital platforms, using their internal shopping data as a selling point. These retail media networks are attractive because the outsourced data is believed to reach target customers more accurately, providing a higher return on investment. The models differ – Macy’s offers its customers the data capabilities of its Star Rewards program; Lowe’s combines its data insights and behavioral predictions for personalized ad placement across its digital outlets; and Kroger allows brands to access its customer data on their own or third-party platforms. These media packages are expected to generate a lucrative return on investment: eMarketer predicts the industry will generate $50 billion by 2023. In 2021, a quarter of retailers reported revenue gains of over $100 million from their media networks.

Sharing services means sharing knowledge. It was time.

Regardless of the customer, retailers know that building a good relationship requires an optimal understanding of consumers and their needs, and then using that knowledge to create the right experiences. These retail departments will therefore be tasked with the same challenges customer services face: an earthquake-sensitive gauge to predict operational changes, a constant eye on next-step needs, and delivering what the customer wants and sometimes what he does not expect – to an assess.

This is what one of the toughest industries in business demands. The competition is tough. But it makes retailers harder, and working together can be the glue that holds together the value they can deliver.