How to sell in a recession: 10 tips from experts

Amidst the coronavirus turmoil, it seems inevitable that we’re about to enter a global recession. Stocks have already taken a huge hit, but the real economy is just starting to see the effects.

This means now is a perfect time to start reading up on how to sell in a recession.

How to sell in a recession in retail

During the financial crisis, management consultants Ken Favro, Tim Romberger and David Meer published a piece in the Harvard Business Review about selling in a downmarket.

They use Starbucks as an example of companies hit hard, which feels a bit off in retrospect, given what a massive success it became in the following decade.

This choice of case strengthens two key points to remember:

  1. Starbucks did many things right during the financial crisis
  2. There are opportunities to dramatically improve your business during a downturn

Let’s explore what learnings the management consultants derived from Starbucks and other retail companies they studied.

1. Go where there is market to gain and avoid excessive action

First and foremost, rushing to action has a low likelihood for success. Managers typically feel the need for broad and immediate action, but focus yields better results.

Retailers should focus on where they can grow market share, which the authors call headroom.

We define “headroom” as market share you don’t have minus market share you won’t get.

Favro, Romberger and Meer

For retail, the headroom often lies with non-loyal customers.

When times are good, loyal customers are often the most profitable and the easiest to grow. But when spending goes down across the board, it goes down also with loyal customers.

Non-loyal customers, on the other hand, are spending only part of their money at any given retailer. So even if their spending goes down, you can grow by capturing a larger part of their total spend.

2. Understand what the non-loyalists want and give it to them

Gradual optimisation will not help you capture growth from the non-loyal customers. They are not loyal for a reason and you need to understand what the reason is.

The authors give the following example about Starbucks.

Many coffee drinkers want a self-serve food experience much like that offered by such outlets as Pret A Manger. Coffee connoisseurs want the espressos, cappuccinos, and experience that can be found in Italy’s best coffee bars. And many just want their original Starbucks back—the socially responsible “third place” between the office and home.

Favro, Romberger and Meer

The gap between what the switchers want and what you offer can also be found in product categories, such as in the example below.

However, this retailer’s headroom in apparel was disproportionate to the sales it was realizing. Even its most frequent shoppers were going elsewhere to purchase their clothing.

Favro, Romberger and Meer

These gaps are, of course, difficult to capture in data, since data mainly shows you what has and hasn’t worked historically.

You need to combine historical data with inputs on possible growth segments (i.e. headroom) in order to identify which categories could serve those segments.

3. Take out bad costs

Every business has both good costs and bad costs.

Good costs are the ones which drive things customers are willing to pay for. Depending on your business, this might be convenience, speed or assortment.

Bad costs don’t add anything to the business that customers are willing to pay for. Every business has bad costs. During a recession, these need to go.

Another example by the authors on Starbucks below.

Starbucks’s bad costs might involve too much seating in stores used primarily by take-out customers, or unnecessarily extended hours in certain local markets, or too much inventory and space dedicated to accessories (those coffeepots, movies, and whatnot) that few customers purchase.

Favro, Romberger and Meer

The need to cut bad costs isn’t specific to retail. In my experience, all businesses need to go after bad costs relentlessly. It’s a grateful job, since margins go up and the negative consequences are minimal, usually limited to some individuals getting upset.

During good times, companies just tend to focus much more on growth and much less on cost, so the bad costs keep creeping up, a little bit at a time.

Recessions force most to cut out this fat and improve the health of the business.

4. Cluster stores and not just customers

All retail locations are different, but many of them share traits. By understanding which, and clustering together similar stores, decision making and optimising become easier.

In theory, stores could be clustered just by clustering customers and then comparing customer profiles, but this is often impractical if only for the reason, that many customers don’t fit neatly into given customer profiles.

The store clusters can be used to figure out which type of “headroom” exist for which cluster.

5. Adjust research and KPIs

During a recession, retailer’s research should focus on finding headroom and understanding what these new customers want and how to give it to them.

One supermarket chain we know of, for instance, routinely asks patrons, “Did you find what you need?” at checkout. But when the answer is “no,” the next question clerks ask is, “Did you ask for help in finding it?”

Favro, Romberger and Meer

The same goes for KPIs and performance management. The normal measures won’t help you understanding if you’re nailing headroom and closing the gap.

How to sell in a recession in B2B sales

B2B sales has a very different dynamic than consumer facing retail and hence the toolbox for B2B sales reps and managers will differ significantly from that of retail. Let’s dive into what previous downturns have taught us about this craft.

1. Risk-aversion does up, which means you should focus more

In the wake of the financial crisis, CBS news interviewed sales recruitment and sales training experts to figure out how to win in a downmarket. The key finding evolves around risk.

During bad times, people become more risk-averse. This means potential problems matter more than potential upside. If someone is scared for their livelihood, they will do whatever it takes to avoid bad decisions.

Adjust your story and focus accordingly.

Focus on risk slows down decisions. This means each prospect or lead needs more contact points to close a sale than during good times. In sales, you should focus more time on fewer leads, even if the default tendency would be to hedge bets by working as many leads as possible.

2. Change your attitude

Sales consultant Liz Wendling writes about attitudes.

When the going gets rough, we need to up our game to make it. In sales, the good news is that every sales rep can affect their outcomes, even when circumstances are bad.

In order to do this, you need to focus on your work instead of your circumstances. Up your activities and commit to getting deals.

3. Challenger sales methodology was created to sell in a downturn

The challenger selling method was created when the consultants behind it noticed, that some reps were able to keep hitting their quota while the majority underperformed during a recession.

So they dug into it and identified five different seller profiles:

  1. Hard worker
  2. Lone wolf
  3. Problem solver
  4. Relationship builder
  5. Challenger

The conclusion was that the challenger was the most likely to keep getting results in tough environments.

The challenger model builds on three fundamental parts from an individual sales reps point of view:

  1. Teaching
  2. Taking control
  3. Tailoring

Let’s take a look at each in turn.

Teach for differentiation

Key concepts for teaching are insights and reframing. What the challenger seller does, is to teach the customer something about their own business that they didn’t previously know.

One way of doing this is by reframing the customer’s problem or their proposed solution, or how they view their entire business.

Take control

The challenger will have control over the dialogue, push customer to action and resist any requests for discounts, expensive tailoring of the solution or other bad terms and conditions.

Pushing the customer to move is especially powerful in a downward market, since customers are more risk aware than normal.

Tailor for resonance

Tailoring doesn’t mean the solutions you sell need to be tailored. It means the messaging needs to be tailored and the customer needs to feel like they are getting something that’s as good a fit for them as if it was tailored.

In order to increase sense of tailoring, use the same reframing techniques as when teaching.

More information about challenger selling and rolling it out can be found in e.g. this Gartner summary and this Pipedrive summary.

Conclusions about how to sell in a recession

Selling and succeeding in a downward market is possible, but requires different tools and methods compared to selling and succeeding in a normal or growing market.

How to sell in a recession is different.

Because downward markets stir everything around, it can give a good opportunity to reposition your company for growth down the line. Like for Starbucks during the financial crisis.

There’s always business available somewhere, it’s just harder to find now.

What I have learned while travelling extensively for work

Over the last few years I’ve had to travel extensively for work. This means hundreds of flights and probably a hundred nights at different hotels as well.

Most of my travels have been within Europe meaning flights are fairly short (less than 5h).

These are notes based on my experience and are not intended as general rules suitable for everyone.

During my travels I’ve been optimizing for work productivity, living moderately healthy and maintaining routines that are sustainable over an extended period of time.

If you travel infrequently, like once per month or less, you can get away with having a shitty travel routine.

But traveling every week for years on end, the bad habits will take a heavy toll on you.

My advice is structured into seven categories. Feel free to pick and choose as you please.

Without further ado, here are my learnings. I hope they give you some new tips and tricks for your travels.

General advice

  • Healthy living while travelling extensively is difficult, but possible through rules, planning and discipline.
  • Sleep. For God’s sake sleep. 7-8h is possible with some planning and small sacrifices in social interactions.
  • Try to plan for something enjoyable. Planning for 30 mins of ”you time” for intense travel days pay off. I know it’s difficult, but it’s worth it.
  • Have routines to ground you. Evening routine, morning routine, coming to the hotel routine, leaving the hotel routine.
  • Read up on your company travel policy and tax rules on reimbursements etc. If you know the rules, you can optimize. This adds up.
  • Have backup cash with you. Many countries are still cash centric and getting stuck in a taxi for 20 mins while the driver tries to get his or her credit card terminal to work sucks and can get you properly late for a meeting.
  • Check and save addresses to all your locations in notes and/or screenshots before departure. If you get problems with roaming etc. you still make it to where you are going.

Packing

  • Packing light makes everything easier.
  • Get a light bag. You will be carrying it around a lot. You will definitely notice the difference between a 1kg and a 2kg bag.
  • Get a bag which fits under the seat in front of you on the plane. It will happen from time to time you can’t fit your stuff in the overhead compartment.
  • Bring only one power plug and changeable cables. Less stuff to pack, less mess in your bag and a lighter load to carry. Trust me, these small things keep adding up.

Work gear

  • Keep you gear plugged in whenever it’s possible. You’ll minimize the risk of running out of battery and eliminate the need for a power pack.
  • Switch to a light laptop. A 1kg difference is noticeable with hours and hours of carrying it around.
  • I’ve also done many trips with just an iPad and no laptop. Depending on what you do, you might or might not be able to pull this off. I’d like to be able to do so more often, but the restrictions are too many at this time.
  • Get a screen protector for your laptop for privacy.
  • If you do external presentations, have everything also stored in a cloud account and bring your own display adaptors for HDMI and VGA.
  • If you use a paper notebook, choose a small and light notebook. It will take up less space in your bag, weigh less and is more convenient in spaces with limited table space like the airplane, the airport and many conference rooms.
  • The more digital you make your work, the easier it is to work on the go. Get rid of everything that’s on paper.

Clothing

  • Merino wool rocks, you can wear it for days on end. Socks, t-shirts, underwear, sweaters and shirts are available in merino wool. Even suits come in merino, but having tried both pants and jackets in merino, I can’t recommend them.
  • Plan outfits based on the same basic pieces. This will lead to lighter packing and switchability between pieces. Everything you pack should go well with everything else you pack. Don’t bring pieces that only fit together with some other specific pieces.
  • Plan pieces of clothing to allow for easy switching between more and less formal styles. With a shirt, jacket, sweater and t-shirt, you can pull of almost any level of (un-)formality and wear a different outfit for many days with just a few pieces.
  • Wear comfortable shoes (which doesn’t mean they can’t be stylish). You’ll end up standing and walking a lot.

Eating and drinking

  • Severely limit alcohol intake. There’s usually drinks offered at way too many occasions and alcohol will be bad for sleep, energy and working out.
  • Alcohol free beer and club soda with lemon or lime will make you fit right in when others are drinking and you want to be sharp the next day.
  • At dinners, you can simply leave 2/3 of all servings of wine behind if you feel weird about refusing completely. Same goes for food. If you have big dinners, you will inevitably get fat if you indulge everything. Even with a solid workout routine.
  • Airport and airplane food is unhealthy. As is most restaurant food. Modify your orders. No fries, extra side salad, no dressing etc. Or you will get fat.
  • Don’t buy treats or snacks at the airport. You don’t need comfort food.

Working out

  • Change gym shoes to gym socks, it makes packing so much easier. I use Skinners.
  • A resistance band makes on-the-go workouts easier. It weighs almost nothing and packs into a very small space. Check out and try out resistance band exercises at home. You won’t have the stamina to research and learn on the go.
  • Google gyms and their opening hours in advance. Choose a hotel with a gym near by. Hotel gyms suck 99% of the time, so use a regular gym.
  • One-time fees to gyms are expensive, but that’s simply a cost you must take if you intend to stay fit with frequent travel.
  • If you’re in a position to do so, tell the hosting party that you’ll need an hour for yourself at a certain time, like between the meetings of the day and dinner. Usually people will assume you need to work or take some calls. This allows you to get a workout done.
  • The best time to secure a workout is early morning. Many gyms open at 6 or 6:30, which means you can work out, shower and have a good breakfast before an 8:30 start. 8:00 if you’re fast.
  • Find ways to walk. If I have time, I often ask taxies to drop me off 1-2 km from the office or hotel I’m going to. This is an enjoyable walk with light baggage, but not so fun with a trolly to drag along. I’ve tried walking for several kilometres with a trolly on cobble stone streets and I can assure you, it’s not enjoyable.

Flights and hotels

  • Having premium frequent flyer status makes life easier. Faster security, premium seats, priority boarding, free internet, lounge access etc. Otherwise all the minor annoyances add up over time.
  • Sign up to all the frequent flyer and hotel reward programs. Things add up over time.
  • Pre-plan work for flights, download everything, figure out how offline mode works in different apps and charge your batteries in advance.
  • Get back to the hotel 30-60 min before heading to bed. This allows to relax a bit and makes for better sleep than just falling straight into bed.
  • If you need to stop at security for unpacking or undressing, you’re doing something wrong. Optimize! You should be able to just walk through even if you need to get your laptop out and jacket off.
  • If you know you need something, like water or cough drops, buy them at the destination airport after landing. You will not have time to find a shop somewhere during the day or evening.
  • Use the same hotels in frequent destinations. It will make life easier. You’ll sleep better and need to worry less about how things work and where things are. You’ll also know what foods are available so you can plan for proper and healthy meals instead of chasing cravings when your exhausted after a long day.
  • Don’t put anything in drawers or cupboards at hotels. You will forget something for sure. Leave everything in sight so it’s easy to scan the surfaces for stuff before leaving.
  • In most hotels any card, even a business card, will work to keep the lights and outlets on. This is crucial if you want to charge devices while you’re out of the room.
  • Avoid shitty flight times whenever possible. The monetary savings will come from your attention and energy. (Yes, I’m talking about you, 6:00 Lufthansa flight from Helsinki to Frankfurt and/or Munich.)
  • I take the car to the airport. This effectively stops the urge to have a beer or some wine on the plane ride home. The temptation is there after long and exhausting days.
  • Flights are good for collecting thoughts, making and clarifying notes and doing emails in offline mode. Be aware that secure email might not work offline, even if the email client has a separate offline mode.
  • Stand up a few times during the flight. Once per hour is doable. Your body will thank you.
  • Prebook airport parking. It’s faster and cheaper.
  • In many cities it might be much faster and more reliable to take an airport train to the city compared to using taxis. Google this before departure.

Income generating websites as investments

I’ve been looking into websites as an asset class from an investment point of view lately. Given I’ve dabbled around with public companies, private companies, real estate and consumer loans previously, I wanted to make some notes on what I’ve learned about websites as an asset class until now.

In this post, I’ll start with saying a few words about different asset classes to set the scene and give some frame of reference. Then I’ll dive into websites as an asset class, their risks, opportunities and so forth.

Overview of investment types

Bear with me for some background, I’ll dive into the specifics about websites in a minute.

One of the best investment advise I’ve heard is to only invest in assets you understand.

If we’re talking about companies, this means you should understand that company’s business. Because when you do, you understand what makes a company strong or weak and thus better grasp the threats and opportunities it’s facing.

At the end of the day, the better you understand what you’re investing in, the better you can pick your investments and the better you understand the risks.

I’d venture a guess that publicly traded companies and mutual funds that are investing in publicly traded companies, are the most common investment people have.

If we’d count people’s own homes as investments, this would come in as number one. But I won’t, since it’s not a pure investment. Given this limitation, I’d imagine real estate coming in as number two, measured in popularity.

(Site note: Robert Kiyosaki of Rich Dad, Poor Dad fame writes about owned homes being liabilities since they cost money. I’m not that strict since (a) a home can appreciate in value giving its owner a return and (b) in many cases owning is less expensive than renting, thus giving its owner a quantifiable saving which can be paralleled to an investment generating cash flow used to pay rent.)

Both public companies and real estate are well understood and mainstream investment vehicles for both big and small investors. There are huge amounts of money, people and focus in both asset classes and thus markets are generally pretty efficient.

This means it’s difficult to find investment objects that are priced really, really wrong, if you do even a little bit of background research and comparison.

Because of efficient markets and because of regulators forcing availability of information, we can invest in both public companies and real estate without really understanding those investments without huge risks.

(Side note: I don’t recommend investing in anything you don’t think you understand very well. Just saying…)

The same does not hold for other types of investments, such as the asset class known as SWAG. SWAG is short for silver, wine, arts and gold.

I can imagine a thousand ways for how things can go wrong if I’d try to pick pieces of art to buy as investments. I’d give it a 90% chance of failure, since I wouldn’t be able to just pick up a Picasso and hope things work out 10 years from now.

From my point of view, investing in websites is much more like investing in art than investing in the S&P500 stock index. It requires expertise and things can go horribly wrong really quick, unless you know what you’re doing.

Taking this train of thought further, the best parallel I can draw is to acquiring a small or medium sized business. This type of investment comes with huge risks compared to public companies, are much less liquid and usually require a at least moderate involvement by the owner. Actually, most small and even medium businesses are build around the assumption of major owner involvement whereas public companies are designed around absolutely no owner involvement whatsoever.

Websites as investments and my background in this game

Since websites require expertise as investment objects, I’ll just call them a “concierge asset” like small businesses or art. Something that you should only buy if you have the proper knowledge to grasp the risks.

As for myself and my background in this field, I’ve been working with digital marketing and digital services since the late 1990s. So even if I’m not the best at everything, I’d imagine qualifying as a “concierge” of developing and growing websites in general.

I’m not an expert in SEO, but I know the basics. I’m not an expert copywriter, but I’ve written all sorts of content including books. I’m not a developer, but I have handcrafted both websites and apps, coding line-by-line. You get the gist of it.

I’ve built hundreds of websites over the years. I’ve subcontracted work, I’ve build things myself and I’ve even bought one ready-made, income-generating site. Still, I feel there are a lot of things to learn about the affiliate marketing kind of sites.

I’m currently somehow involved in running the following Finnish sites:

  • Kuono.fi, a site for dog owners. The site was purchased in 2017 and I run it together with a business partner. Income is based in advertising and content marketing partnerships.
  • Talousviisas.fi, a site about personal finance. The site was built together with a business partner in 2018 and has not been monetized yet. It generates about 1/10 of the traffic compared to Kuono.
  • Parasblenderi.fi, a product review site for blenders. The site was built by me in 2016 to test if I can still get a site to rank properly in Google. It generates very moderate affiliate income.
  • Verokuitti, a site to exemplify how tax money is spent. It’s neither maintained nor monetised, but won our project team some awards.
  • Kotisivubisnes.com is also worth mentioning, even though it doesn’t exist anymore. It was a content site around building website creation. It generated affiliate income, but given a competitor to my employer acquired the main affiliate partner, I didn’t feel comfortable getting income from them anymore and so I closed down the site.

After buying Kuono in 2017, I’ve been looking for other sites to buy. It seems like most Finnish sites are either minuscule or already properly monetized and sold to bigger media companies.

Since not finding proper sites to buy in Finland, I’ve started looking abroad.

The most commonly sold type of website from an investment perspective is one that’s doing affiliate marketing and generating income through referral based sales. There are some sites monetised through ads and lead gen out there as well, though.

This type of affiliate marketing website is a species on its own.

There are several marketplaces like Flippa, Empire Flippers and Investors Club that post sites for sale. These sites publish content in English and usually make a majority of their income thought the Amazon associates affiliate program.

Most sites seem to be priced around 30 x monthly profit, although prices commonly vary from 25-35x.

It seems like small, <$10k sites get sold in days. Once pass the $30k threshold, demand drops and >$100k sites seem to have much less buyers already.

If you want to start small, you’ll have to accept more risk, since the few day turnaround time doesn’t allow for proper due diligence.

Even if you do proper due diligence, there are still many inherent risks to these type of sites, like:

  • The traffic is usually based on Google searches. If Google changes their algorithm, you might lose tons of business.
  • Many sites make money on the Amazon affiliate program. Amazon has previously decreased the commissions they pay their affiliates and if this happens, you can lose tons of business.
  • Previous owners might have used black hat SEO tactics that haven’t yet been discovered by Google. Once discovered, your site can get punished, resulting in losing tons of business.

It’s also worth noting that new sites pop up every day and thus competition is fierce. If you don’t develop your site, it might hit a decline and eventually get worthless. This isn’t something that happens when you buy Apple stock. Then you can just sit back and wait, time will probably help appreciate rather than depreciate the stock you hold.

Growing the investments you’ve made

Once acquired, I’d assume both you and me want to grow our sites in order to generate more income and appreciate in value.

There are some basic measures that help almost any site, such as:

  • Publish more content on the topic of your site
  • Publish content in neighboring topics to what your site is about, in order to expand the niche
  • Improve content already published by updating, expanding and optimizing it
  • Get quality backlinks from other sites
  • Improve click-through to affiliate sites
  • Improve site speed
  • Add more revenue streams such as display advertising on an affiliate site

The best way to buy a site is to already know what can be improved before you purchase the site. This requires both research (to find the opportunities) and experience (to understand how easy or difficult it will be to do).

Sites that have already grown large, meaning at least 6 or maybe 7 figure price point, almost certainly have the basics covered. They are fairly authoritative, have good content, have broad content, have a lot of backlinks, have multiple revenue streams etc.

Smaller sites usually have much more room to expand and be optimized.

My goal is to learn how to take sites generating some revenue and grow them by 10x in a few years. This would let me grow much faster than starting sites from scratch. It would also require less capital than buying high 6 figure sites from the start.

Future topics and opportunities

The more I learn about this business, the more I understand I still have things to learn.

To be good at growing sites, you need to have good freelancers or the willingness and skills to do the work yourself. I’d rather outsource since, that enables more growth than making everything dependent on the availability of my time.

While running a digital agency in the past, I learned the value of good freelancers. They’re easy to work with, reliable, decently priced and very good at what they do. Like the dream employee, but without the downsides.

Once running, I believe the best deals are made with off-market opportunities, but I don’t yet know where to find them. The same holds true for real estate, privately held companies etc. If you’re the only bidder, it’s easier to get a good deal.

What are retailers thinking about in 2018?

I attended the eTail Nordic 2018 event and wanted to summarise some findings from selected keynotes on 2.10. – 3.10.2018.

Peter Mold, CDO, ICA

Peter Mold, the Chief Digital Officer of Swedish grocery and pharmacy giant ICA was first up. He stated ecommerce for groceries still hasn’t picked up in Sweden, concluding only 2% of the purchasing volume was coming in through digital channels in 2016.

One of the issues with ecommerce for groceries are the expensive and cumbersome logistics. As a grocer, you need to store, pick and transport fresh produce taking care of the cold chain all the way to the consumer, making it expensive.

Mold continued by describing the importance of data telling us that data is what feeds AI, which will become even more important.

Mold described the future of physical retail being all about the customer experience. He said retailers need to provide good experiences and even become a sort of hub connecting like-minded people or people with similar interests.

One of his views did not resonate that well with the audience. It was the future of voice vs keyboard controlled devices. Mold believed that we’ll see the keyboard vanish within the next five years. Asking the audience, there was quite some scepticism around this happening.

I’d like to support Mold’s view here. Looking at where efforts by Apple, Google, Amazon and other tech giants are, it’s AI enabled voice control. The technology is slowly but surely growing out of being a curiosity into being a usable interaction method.

Being a Finn, I expect to be among the last to use natural voice control, but in English the technology is maturing fast.

Mikael Lenneryd, Director of Digital and Loyalty, Apoteket

Mikael Lenneryd from Apoteket described a case from his former employer, Samsung. He told the story about how they connected their own first party data with the second party data from a telco to run better digital campaigns.

They used the combined data to target real people based on their interests. This was a challenge both technically and legally.

The technical challenge was combining the data and feeding it into the normal programmatic buying architecture. The legal issues were around sharing data between two large companies and then feeding it onto the other actors in the value chain. It took seven months to sort out the legalities to be able to execute.

But the results were good. Average click to conversion had a 35x uplift and the best segments had a 50x uplift. Which is, in one word, impressive.

The campaign was run on a regular promotion and not an extra sweet deal. So the results should be comparable. The product was a Samsung S8 with a 24-month contract.

Mei Chen, International Business, Alibaba

Next up is Mei Chen from Alibaba. Personally, I found this keynote very interesting given I have almost no knowledge about the Chinese market, but have been interested in it for a while.

The first shock is grasping the sheer volume of the market. The Chinese version of Black Friday is Singles Day. During the sale, Alibaba hit more than a billion dollars per hour for a 24-hour period. This means they totalled over 25 billion dollars during the day and night.

One key difference comparing China with the US or Europe is the age of the consumer. China has a huge number of young consumers and they want to stand out. This can be done by choosing what to wear, what to put on their faces (particularly women) or what to eat.

Alibaba is carrying a lot of European and Nordic brands as well. Given the wish to stand out, products coming from small and (from a Chinese point of view) obscure markets might have a lucrative opportunity ahead. And that’s how Alibaba wants to be seen: as an opportunity to move product, not a threat to local retailers focusing on Europe or a particular country within the region.

In China, marketplaces have a much stronger position than in the US or in Europe. Chen’s take was that the Chinese consumers don’t see a point in using a lot of different sites when you can find almost everything bundled together in just one place as well.

This is a trend we can see in the US as well with Amazon seeing that they have surpassed Google as the most used search engine for product search. So maybe this is the future of retail with platform players acting as supersized department stores and landlords deluxe for whomever wants to get their product out there en mass?

Caroline Carlqvist, Program Manager Personalization, Zalando

Caroline Carlqvist, working on personalisation for Zalando, talked about the challenges of fashion in particular. She described a small boutique in Italy where the owner got to know her so well her boyfriend could shop there for her and the shopkeep would make sure the clothes were a fit for her, in both style and size. That’s what Zalando wants to be as well, but at scale.

The particular challenge for fashion is size. It’s difficult to know if a medium is the same medium as you’ve gotten used to with another brand.

Sizing connected back to data. Zalando has a lot of data about returns and the reason for said returns. This data can help find the right fit. If you have a lot of people who bought brand A in medium sending back brand B in medium since it’s too small, Zalando can warn the next buyers of brand B to size up if they see medium from brand A as a good fit.

Zalando is also pushing this data back to the manufacturers so they know if their brand is consistently getting a bad fit from multiple people.

The threat of Amazon and the Intersport approach

There was a debate hosted on Amazon. I’m not going to dive into more detail about the debate, but I’d like to highlight something interesting presented by InterSport. They have started a cooperation with Tmall (a part of Alibaba) in China.

The partnership is an experiment into combining the upsides of physical retail and ecommerce into one package. Instead of bringing your shopping with you, you can stroll bag-free to lunch and get your new sneakers delivered to your house two hours later.

Louisa Nicholls, John Lewis

Louisa Nicholls from John Lewis shared some insights from the UK market. This is interesting for Nordic and Swedish retailers given that Amazon is already active in the UK market.

Nicholls pointed out that consumers are moving from buying more stuff for fulfilment into searching for experiences.

Given the trend, John Lewis have started adding services to their offering to lure people into the stores. E.g. their style studio service gets an uplift of 30% measured in revenues compared to fashion shoppers who don’t use the service.

Nicholls added to the stories by others before her on the value of data. She told us retail used to be about three things: location, location and location. Now that has changed into data, data and data.

Summary and reflections

Amazon is, of course, on everyone’s mind given the rumours about them entering the Nordic markets. Sweden would be first up, given it’s the biggest population in the region. The severity of the threat seems to divide people.

As a reflection on Amazon’s possible level of threat, I’d like to reminisce on video rentals in Finland. In an article published in 2013, the two major video rental companies thought companies such as Netflix and HBO are a curiosity, not posing any real threat for them. In hindsight, it’s painfully obvious how wrong they were. Disruptors have a way of looking harmless early on.

Data, both the importance of data and how to use it properly, was a part of most keynotes and case studies. Well, it was the main topic of my case study as well, so I might be a bit biased. Yet I’d conclude the significance of data is well understood in retail, but many companies still lack in tools and tactics to actually make the data work for them.

The future of the physical store was also a big debate. This is natural, given most incumbents come from the physical space and have expanded into ecommerce. The issues is, no one really knows what role brick-and-mortar will play in the years to come.

 

Adding layers of complexity

A colleague asked me why we had issues introducing a new feature into a product. On a high level, the feature was pretty simple. So I needed to explain how adding layers of complexity made the design and implementation increasingly difficult. Here’s the analogy I gave to explain the problem.

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At the end of the day, most tasks are conceptually easy. Need to install a piece of software? Just click a button, wait 30 seconds and voila, success.

Any trivial task can become enormous when you start adding layers of complexity.

I just noted installing software is trivial, right? But what if you need to do it on computers running OS X, Windows and Linux? What if you need to install 24 different language versions depending on the language of the OS? What if you need to install across phones, tablets and computers? What if you need to do it all automatically?

Getting complicated, right? Let’s keep the complications coming.

What if the automation needs to do the installation during nighttime, which you need to deduct depending on what timezone the device resides in just now? What if users have to be able to opt-out of specific installation times? What if you need to have a plan for how to maintain and update said software before being able to install?

Even one of these specific needs makes the installation much more difficult. Adding a new dimension makes the task exponentially more difficult.

Based on the discussion we were having, the same colleague told me an anecdote about Facebook’s logo redesign. She said that turning the logo from blue-on-white into white-on-blue cost the company 200 million Euros. Crazy, right? (Note: I have not fact checked this anecdote.)

If Facebook needed to test the logo to make sure it doesn’t contain unplanned meanings across most countries in the world, across most religions in the world and across a substantial set of sub-cultures throughout the world, the price tag starts to make sense.

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I’m often tempted to remind people of the exponential difficulty of adding layers of complexity when they wonder how it’s so difficult to do simple things in large organizations.

On the other hand, this presents a huge business opportunity for anyone who wants to serve the enterprise segment. Just select what types of complexity you want to support and build a product or a service to mitigate said complexity.