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November 23, 2020: Gen-Z upgrades for Nike, Bebe enters the furniture vertical, Group Nine Media launches Swipe.Shop.

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Hosted by Julia Raymond

Written and produced by Gabriella Bock

Edited by Trenton Waller

 

TRANSCRIPTION

Julia Raymond Hare:
Welcome to the show today. We’re joined by my guest Debjani Deb and Alexander Genov. Debjani is the co-founder and CEO of ZineOne, a predictive engagement platform that creates positive outcomes for brands and consumers. Alex holds a PhD in experimental social psychology and currently leads customer research for the Zappos family of companies. Debjani, Alex thanks for joining today.

Debjani Deb:
It’s great to be here.

Alexander Genov:
My pleasure, Julia.

Julia Raymond Hare:
So the first bit of news we’ll go over is Nike, one of our favorite brands. In a play to improve its digital game they agreed to be the corporate partner for this year’s Adobe Analytics challenge. And this is a 15-year-old competition and they gave university student teams across the globe access to evaluate data from Nike’s digital site. The winning team is from the Indian Institute of Technology and they had suggestions for how Nike could redesign its website, improve engagement on social media and focus better on likely buyers.

Julia Raymond Hare:
As part of the Gen Z team’s redesign, it recommended a feature called “Journey Tour” for first-time users that replicates the experience of walking into a physical Nike store. The redesign also included a chat bot that would mimic a store associate and for engagement, the team recommended creating a “social hub” and that was explained as a networking site that would incentivize users to create an account in order to receive Nike discounts and benefits. So I’ll pass this to you first Alex. Do you agree with team Alpha’s redesign and engagement suggestions for Nike and what feature recommendations would you think of for retailers that are redesigning digital?

Alexander Genov:
Sure Julia. That’s that’s a great question. So first of all I want to mention my big support for such collaborations between companies and academia. And I spent quite a few years in academia and I’m a firm believer in this kind of symbiotic relationship between the industry and academia [inaudible 00:02:22]. Primary research and innovation that comes from universities and from academic can be applied to the industry and then the industry can support financially efforts that make sense. So I think it can work really well. And in this case, again, Nike like I said is a fantastic company. One of the most valuable brands out there. I’m a big fan of their digital experiences, physical stores, and just the whole approach that they take to retail and innovation and not knowing exactly the details of these suggestions or redesigns, I cannot intelligently speak to them really in depth.

Alexander Genov:
But what I would say is that if you are a customer-centric, you usually start from the customer need, right? And this is a bit of in this case, kind of the cart before the horse a little bit, I would say because it feels like it was application of technology. And then the teams were looking for problems to solve. Again, I don’t know if that was the case but without really understanding consumers first in depth and their needs and jobs to be done and so on, I think it’s great to apply new technologies but I think it would be even better if you really understood the customer need and then sold it through the application of new technology.

Alexander Genov:
So for example, let’s take this virtual tour. People and companies have tried this before and know these virtual worlds where you walk through, you have an avatar walk around. They never panned out really in the commercial setting. They’re really great in video games but so these are two different mindsets. Then in terms of the chat bot, again the chat bot is a how. I would say a what is, or the purpose would be bringing the spirit of customer service to the digital world. That’s something that I’m very passionate about and trying to help solve is to bring the spirit of customer service to the digital experience because right now I believe there’s a big opportunity there.

Alexander Genov:
And then the last one was this community again I don’t know if customers necessarily go to Nike to join a community in general. It seems like a business need to get people to sign up. I mean, consumers nowadays see through those things. So I’d be careful how you apply technology that doesn’t start with a customer need.

Debjani Deb:
It’s actually very interesting that the timing of this, right? So I was reading somewhere at the beginning of this year, pre COVID if you remember, there was a lot of discussion of direct to consumer. And I was reading that Nike’s goal was 30% direct to consumer and the goal was about a year out or so. In the last five or six months of COVID, apparently that goal has been surpassed. So just imagine this very, very, very gigantic global brand who’s transitioned to direct to consumer has been so fast that they are sort of in the midst of how do you then therefore take that ever-growing digital channel and make it seamless in its journey, from the digital to the physical, to the retailer and so on and so forth.

Debjani Deb:
So there, the idea of the omnichannel has become ever-present ever more so now, given sort of COVID has led us into a set of circumstances. I have been a strong believer that data is a democratized asset. Data could reside anywhere. The engagement is what it powers a very intelligent sort of engagement. And I’m so very happy to see Nike doing this in a crowdsourcing manner essentially, getting the best minds in the universities to come together to suggest things. So here the ability to really personalize the customer journey, using data that they already have and resides within those platforms that here too has been locked essentially within those platforms and not used to enable this sort of a seamless customer experience across channels is an awesome initiative I think.

Debjani Deb:
And is I think a must have if you are appealing to the Uber generation as they are evolving. That Uber generation, as they evolve demand contextual interactions, wherever they are. They need for the brand to know them, they need for the brand to respect their context and they need for the brand to react to them in real-time. So things like this that Nike is doing is essentially a path to enable those sorts of journeys seamlessly across channels, especially with a growing digital presence.

Alexander Genov:
So I cannot agree more with Debjani about… Debjani you gave a beautiful example of this, like a customer-centric goal which is a seamless experience across channels. I think that’s a worthy goal, right? Signing up people to create accounts is not a customer-centric but this seamless interaction is what people look for.

Debjani Deb:
Yes.

Alexander Genov:
And I think if then the data is applied to that goal, I think it would be great. I think where companies kind of stumble is where they start with a method, which is let’s use data and then how can we now apply it? And in terms of personalization, that’s another topic that’s near and dear to my heart which is, again as a psychologist that I’ve been trying to help Zappos understand their customers as people. And that’s my pitch is when I give these keynote talks is understand customers as people, people are not data, people are not numbers.

Alexander Genov:
And I think if we achieve this balance between the big data and then the psychology of the consumer, I think that’s when the magic happens. Because I think too many times we say, “Okay. We have this new technology, it’s big data, data science. Let’s use it.” Versus what are we solving for. And we struggle with this even at Zappos. We have a algorithm that’s written by brilliant people but then do you check with actual consumers? Do we get feedback if it’s really working for you because personalization it’s a buzzword, but right now in e-commerce I would say in commerce, personalization is just best guests recommendations.

Alexander Genov:
But how do you make it so that people actually say, “Wow, how did you know that? I didn’t even know that I needed this or I would like this.” That’s the goal versus, “I just bought a sink. How about 10 more sinks that you can purchase right here?” I’m not outfitting like a hotel or something. That’s right.

Debjani Deb:
There was a conversation about this at the Gartner conference. And I think Gartner said, “Help is the next personalization mantra.” Which is to say that things have evolved from exactly what you said. Just because I bought this, give me 10 more of that versus understand me and help me in this moment in time with the context that I have and what I need. They also did a survey very interestingly about age groups. The Uber generation, the newer age groups said they would trade convenience versus security. So the data can be used for convenience and if it’s convenience, use my data. The older generation, the boomers said the opposite which is I prefer security rather than convenience. So I think there is a changing demographic where data will become more and more useful and needed and demanded because that Uber generation is demanding a different kind of experience.

Alexander Genov:
Exactly. I completely agree. In our research, we found very interesting when you dive a little bit deeper under the surface you see individual differences in terms of security versus convenience. There is security and that’s probably partly is personality, partly it’s attitude, partly it’s just our interactions with commerce. We track on a quarterly basis trust in retailers in general in the US. It’s a question we use that was developed by the creator of the net promoter score and it’s basically retailers always have my best interest as a customer in mind from zero to 10.

Alexander Genov:
The net is a dismal minus 40, 50, 60. Think about that. There’s no trust in retail because of these practice. So you take that and I think you are right Debjani. I think younger consumers tend to be more trusting but maybe that’s because they haven’t gotten a chance to be screwed over. I think it take that and if you understand, just like you said, if we help customers and if we ask them, “Do you believe Zappos has your best interest as a customer in mind?” If you say yes I think then you’re on a good path.

Debjani Deb:
Yes.

Julia Raymond Hare:
And I think you both praise Nike for its use of data to help make business decisions which as you both pointed out in different ways, that there really should be a foundation in understanding your customers and data analysis is only one activity and part of understanding what customers want. And as Debjani you said with the Gartner webinar recently, there’s definitely a rise of consumers demanding help and convenience from brands and retailers in exchange for their personal information. I will say they did make big strides. Nike purchased the predictive analytics company Select last year. And before this podcast, I went and I looked on Nike’s website because I knew there was a Nike app. I downloaded it once in the past. And then I found that there’s actually like four Nike apps. There’s the Nike Run Club, Nike app, Nike Training Club app, and then an app called Sneakers.

Julia Raymond Hare:
And so when I saw these three recommendations, I was like, “I don’t know about the social hub as being the best,” just from a bird’s eye view. Because it seems like they already have social communities that they’re running. So if you already have four apps, do you need another one? Do you need another social aspect? So my last question before we move on to the next segment, out of the three recommendations, the chat bot, the journey tour and the social hub, which one would you pick if you had to choose one as seeming like the best idea?

Alexander Genov:
Yeah, I would go with the chat bot again with the caveat that this is one of many possible solutions but the problem is just like Debjani said is bring this spirit of helpfulness and customer service to the digital experience.

Debjani Deb:
Yeah. I think it’s a little difficult to pick one Julia for the reason that I think you talked about the four apps, then they have the website, they have digital presence within the stores and so on and so forth. So essentially each of these platforms there is a purpose for it. And that purpose aligns for the location they are in, what the consumers want to do in the location. So for example, the Sneakers app is perhaps a community around running. Now that has a different need for engagement, personalization, help, whatever the case may be than the website on which Nike is doing the largest amount of e-commerce business, where the need is very different which is about helping consumers make decisions with the right information at the right time, at the right moment in their journey.

Debjani Deb:
So my fundamental belief is going back to the original thesis is that data informs what the consumer needs in any moment on any given channel, which may be different from each other and that information powers the brand with the decision that they have as to how to help that consumer in that moment. So we have worked for running apps, Strava was one of our customers very early on, the help, the personalization needed within that app was really about helping the consumer if they had some question in regards to running stats and so on and so forth. Which if you’re working for a retail brand that is doing e-commerce, you could think about chat bot, you could think about personalization in the moment as they’re buying very different communities, very different needs and very different ways you can service the customer where you’re adding value.

Julia Raymond Hare:
All good points about having specific needs that you’re addressing with the different channels. So, great points. This might be one of the most unusual deals we’ve reported on. If you remember the Euro fashion brand Bebe, they used to have a lot of stores in malls. They purchased 47 of Buddy’s Home Furnishings, Rent to Own franchises. So it was a 22 million and one a half million share deal that includes the rights to additional franchises and protected geographies specifically in the South Eastern US.

Julia Raymond Hare:
Buddy’s owner is the franchise group and they said the agreement includes plans for Bebe to open an additional 20 new Buddy’s locations. And you might recall a few years ago in 2017, Bebe closed all of its physical stores and expanded its partnership with the brand management company called Blue Star Alliance. And when they did this, they turned over their intellectual property rights, their international wholesale agreements and all e-commerce URLs to their joint venture. Bebe’s CEO called recently the deal with buddy is a transformational acquisition that will diversify its profit stream and better utilizes existing net operating loss carry forwards. Debjani, I’ll pass this to you first. At first take this acquisition seems a little odd. What are your thoughts on Bebe’s push into the Home Furnishings vertical.

Debjani Deb:
This is an interesting one. So what we are seeing largely, so one of the things that we have been looking at very closely, especially over the last five, six months is which are the sectors within e-commerce that are doing well within this COVID framework, if you would. And the ones that have been doing well are home furnishings, sporting goods, groceries, furniture in general, and things of that nature, and what we’ve studied as a result of looking at this matrix of e-commerce/ retail that’s over-performing while the rest of their brethren in some cases are underperforming, is that there might be some crossovers happening so that there can be synergies drawn among very specialty retail goods that don’t have that much of a pull in these COVID frameworks scenarios to the ones that are haves, like sporting goods and home furnishings and so on and so forth.

Debjani Deb:
This is new to me but from the news that you’re talking about, there must be some of that synergies happening, because if you’re drawing people in for multiple purposes, especially with the category of goods that are universally appealing in the middle of a downturn, there is some upside to be had about that.

Alexander Genov:
Debjani’s analysis was really thoughtful and in-depth. It feels like they’re trying to diversify like they said the revenue stream. I don’t know if there’s really a deeper strategy or the analogy that comes to mind is movie stars buying a restaurant chain just to kind of diversify their income stream and so to me… I don’t know that there was just this very iconic fashion brand irreverence and then to pair it up with home furnishings personally to me, it doesn’t make much sense from a brand perspective and so on but maybe there is a deeper strategy there that’s not apparent to me.

Julia Raymond Hare:
I know the categories in general are doing pretty well. Debjani you mentioned home furnishings, sporting goods, grocery, but to your point, Alex I don’t know if I believe them that they’re really going to open an additional 20 new stores of Buddy’s Furniture because it just seems like there is a bit of a downturn in the US at least according to IBISWorld, they’re reporting that furniture stores, their revenue has been adjusted to decline almost 7% this year. So I think it’s an odd one and maybe it’s just for the financial side of things but I could be wrong.

Julia Raymond Hare:
There’s a lot to say about this third segment. In an effort to bridge the gap between mass retail and small business, Group Nine Media has launched its new swipe.shop mobile commerce platform on its website. So these are the people they run the website called NowThis, The Dodo, POPSUGAR, Thrillist and Seeker. So there’s a lot of viral content that gets pushed out through these sites that you might’ve seen when you’re on social media. And among the numerous retailers that have opened mobile storefronts using swipe.shop include Gap, H&M and Kohl’s so some pretty big players. And while Group Nine has committed that 50% of all products will be from small business owners, the media company will also promote stores among its social channels and out of home billboards and taxi shops in New York city.

Julia Raymond Hare:
So a lot going on here, the company will provide 20 million impressions worth of free advertising space to 10 small businesses affected by the pandemic. Alex, what are your thoughts on the new swipe-shop launch? Do you think this platform will bring some big wins for small businesses and in general, what are your thoughts on Instagram just updated their app so that you can shop even more through their platform. So do you think this is where we’re moving?

Alexander Genov:
Sure. Julia, yes. So this is the diametric opposite of the news Bebe buying retail furniture stores. So you had a few questions in there. First of all I think that’s where things are going. And it’s a very interesting trend of blurring the lines between entertainment and shopping. And it can be extremely effective for business. I don’t know on a social level, I see making it so easy to shop. This can be addictive so the psychologist in me is thinking it’s almost like enabling gamblers in a way. Make it super easy, but that’s a different topic. I think it’s a very interesting trend and interesting application of these new technologies. And I believe that there’s other related trends like social shopping and actually Asia is really leading in that respect.

Alexander Genov:
The US I think ironically I believe is lagging behind but I think that’s an interesting trend. It has a huge potential. And then to your question about small businesses, that I’m not sure about. I think big businesses are going to take advantage of it and they’re going to thrive, but small businesses we have these cautionary tales from like Groupon where it was a great platform and it offered a lot of promise and a lot of small businesses got really burned from using it in the sense that they would generate a lot of interest but then they couldn’t fulfill it, then the profitability took a dive. And so on that note, I’m not quite sure.

Debjani Deb:
Yeah. I think Alex is right. I think from the perspective of the social shopping, this example brings home to me multiple trends that sort of intersect and come together. Social shopping, we’ve always known from the early days of social media. One of the biggest reasons we buy something is that one of our friends said they bought it or they like it, or whatever the case may be. Second this also speaks to mobile. Shopping, irrespective of location in the minute, wherever you are, et cetera is really the way the next generation is going. It also speaks to a younger demographic that is very engaged in these forms of social media and really are sort of doing so in a collective group, social setting, which speaks to a future trend or a here and now trend that is evolving very, very fast.

Debjani Deb:
And in regards to small businesses I agree with Alex, it is to be seen. The one thing I will point out that again, in this COVID framework over the last six, seven, eight months, what we have seen is the likes of Shopify, et cetera, that enables small businesses to have better and better presence, have done really, really well. So anybody who had to shut down storefront went to somebody such as the Shopify or something to that extent to put up a store. To be seen how they do over time but it certainly is a trend where small businesses are coming online and offering their goods online. So it’s interesting to see and I believe that all of those strengths will sort of see themselves out in the next few months and years. And we will see where they go.

Alexander Genov:
Just to follow up on what Debjani was saying about social shopping. Again, I’m not surprised that it’s a huge trend and now technology is catching up because think about the way we shopped 500 years BC or a thousand years BC. It was in the markets. And the [inaudible 00:29:41] and the markets were… Shopping is social if you think about it. And so now we’re getting to this point where we’re enabling it with technology but again, I think we need to go beyond the buzzwords and to think critically about what aspects of it are social, where it makes sense because now a lot of retailers they think shop social shopping is just that you just bought something and then share it on Facebook. Like we have a button that said, “I bought this pair of shoes.”

Alexander Genov:
Like who does that? And what’s the purpose of that? Maybe to brag but that’s one aspect of shopping. It’s like to show off to brag, but then another completely different aspect of social shopping is before you buy to ask your friends, “Is that good? Am I going to look good in this? What do you think?” So that’s completely different. So when we lump everything under social, and then we plug in the little technology tools that we have available or just share on Facebook and say, “We’re done.” And then businesses are saying, “Well, it didn’t work very well for us. So social is not really a great thing.” Without really critically thinking, what are you exactly enabling?

Julia Raymond Hare:
I would have to add to that Alex. And I won’t call out any brands, so I’m feeling nice today. So I won’t call out who it is, and I know it’s hard for retailers but they’ll integrate the Instagram feed or another social feed but it’s not real time. It’s curated because they want to have the control. But then what you get as a user is pretty old posts in some cases. And it’s like, “Why do they even have this feature?”

Alexander Genov:
Right. Exactly. Yeah, exactly. So it’ll just say that check off a box. We integrated social somehow but what exactly is the purpose of that?

Debjani Deb:
One interesting data point that adds to this. One of the features that we are enabling for retailers is on any given item, we are tracking the last five minutes of how many people are seeing it, how many people bought it and so on and so forth. So it’s getting a real-time monicker if you would, in regards to the number of people. When Mexico women’s team won the world cup, we saw in real time, the curve go up on the Jersey that said, I think it said MEH. And it was selling like in real time, like hotcakes. Long story short, it even amazes me how much that specific information drives sales. You would think, “Well, I see these monikers all the time.” But the data shows that people want to know if other people are buying it and how many are buying it. And it directly correlates to sell, which sort of goes to the idea that socially we need the reassurance that my peers and my fellow shoppers are buying things.

Alexander Genov:
That’s a fantastic point Debjani. As a social psychologist I’m actually going to hours of giving the basic science behind this. A lot of our reality is constructed by socially constructed. We don’t know what’s going on. We look at others to see what is going on. And so there’s a ton of studies and then this is basically the sense of urgency, the sense of feeling left out if you don’t have it so very powerful psychological motivators. And I hope they’re used for good. That’s all I can say is let them be used for good because they’re so powerful that it can be [inaudible 00:33:55]

Debjani Deb:
Yes, yes, exactly.

Julia Raymond Hare:
I’ll be interested to see if we… Because I have noticed not on the majority of retailers that I look at but I’ve noticed on some of them, they’re now putting how many people have bought the item. And so it’s really relevant that you guys are talking about this now because it’s something I’ve just recently taken note of. And I think it’s weird. One more thing on the exclusivity because I am doing this luxury series where I’ve been talking with a lot of luxury retailers and it’s a different conversation, but it seems like there’s some crossover, because even with luxury, you want to see, “Oh, who else has bought it? How many are left?”

Debjani Deb:
Yes. So Alex brought it up. So we think about it as urgency, we think about it as scarcity and we think about it as real time in the moment engagement, which is how many people are looking at it now. And all of those have had amazing correlation to upticks in sales. And to your point, Julia, we haven’t seen very much of a difference between essential goods and luxury goods other than in the luxury goods segment it is more subtle, the way sort of it is treated verus in the essential goods it’s more just data that’s made available.

Alexander Genov:
To add to that we’ve done a really in depth mindset or psychographic segmentation research within luxury for Zappos. It’s not just for Zappos just these luxury mindsets and they’re different ones. There’s some that are all about strength and power, others are about trend, others are about creativity and they’re mutually exclusive. So for example Julia you mentioned how many people are looking at something. There is this aspect of luxury which is I don’t want anyone else to have it. In which case which is like, “Oh, 1500 people bought. Forget it. I’m not buying it.” So I think again you need to understand there’s somebody who’s driven by this. Like I want to be the only one who has it. But then the other ones who say, “Oh, you know what? This is trending. So I need to have it.” Again on the one size is not going to fit all.

Debjani Deb:
I agree.

Julia Raymond Hare:
Well, I would like to take a moment to thank our amazing guests who have joined today to share their insights. We have Debjani Deb, the CEO and co-founder of ZineOne and Alexander Genov head of customer research for the Zappos Family of Companies. Thanks for joining guys.

Debjani Deb:
Thank you for having us. Have a good day.

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