Retailing: competing for the minds, hearts and conscience of customers
George Shaheen, was the CEO of Andersen Consulting from 1989 to 1999. He was one of the driving forces behind the growth and expansion of the global consulting firm which spilt from its parent Arthur Andersen. Finally, it went for an IPO with the brand Accenture. The rest as they say is history.
In September 1999, George quit Andersen Consulting to join a dot com start-up. It was called webvan.com --- an online grocer. By joining the start-up George Shaheen not only quit a top job with an annual compensation of $5 million, he had to forego the upside of the Accenture IPO which must have run into tens of millions of dollars.
Headquartered in Foster City, California Webvan promised to deliver products to customers' homes within a 30-minute window of their choosing. At its peak, it offered service in ten US markets: San Francisco Bay Area, Dallas, San Diego, Los Angeles, Chicago, Seattle, Portland, Atlanta, Sacramento and Orange County. It had plans to expand to 26 cities. But that was not to be.
It invested in infrastructure far ahead of the market. Too much cash was burnt too quickly in fleets of trucks and warehouses. Webvan filed for bankruptcy in 2001 destroying hundreds of jobs and the reputation of a fine consultant.
The idea of an online grocer clearly was ahead of its time and its growth projections were a classic example of “irrational exuberance”. CNET has picked webvan as the “largest dotcom flop in history.” The brand today is shadow of itself and is now part of the Amazon stable.
Ironically since then, online retailing has been gathering steam and is now disrupting the brick-and-mortar models. Walmart and Amazon are fiercely competing in the space. I chuckled to myself last week when I ordered groceries, fruits and vegetables from a Calcutta-based online grocer called SaltnSoap. I placed the order and transferred the money to them at 9-30 PM. My purchases were delivered at my door step at 1 PM next morning.
The vegetables and fruits were fresh and in fine shape. For time-stressed customers like me who travel extensively –our prayers have been answered. Shopping experience is a relative term. Shopping in glittering malls may be a great pastime for those with plenty of time. But there is a customer segment that hates queue and does not enjoy spending two or three hours on shopping for weekly groceries. To them the online grocer appeals.
There are other ways in which retailers are pulling at your heart strings and appealing to your conscience. Take the case of Theo chocolates based out of Seattle. There is no doubt that they make a superb range of uniquely flavored chocolates. While they make a wide variety of chocolate products, the one that attracts me like a magnet every time to their store is the Limited Edition Bar called Ghost Chilly. It blends the Bhoot Jolokia ,a strain of chilly from India reputed to be the hottest in the world, making one- of- a -kind chocolate bar.
But Theo appeals to your conscience as well and pulls on your heart-strings. Here is how they procure cocoa beans which is the main ingredient for chocolates: “We’ve built Theo around the belief that cocoa beans are more than an ingredient. Our beans and the lives they touch are at the heart of our business. Each and every one of our cocoa beans is organic, Fair Trade and Fair For Life purchased. That means they are grown sustainably in ways that promote biodiversity and positively impact the lives of the farmers we buy from. And by committing to fair pricing, we ensure that we get the best beans available, all the time.”
The opposite behaviour impacts brands negatively. When international brands use sweat shops, the customers are bound to react adversely. On 24 April 2013, Rana Plaza collapsed near Dhaka. The search for the dead ended on 13 May with the death toll of 1,129. Approximately 2,515 injured people were rescued from the building alive. The Plaza housed garment sweatshops patronised by the biggest international brands and designer labels.
It was not a fire-eating revolutionary but Pope Francis who declared in shock, “A headline that really struck me on the day of the tragedy in Bangladesh was 'Living on 38 euros a month'. That is what the people who died were being paid. This is called slave labour. Today in the world this slavery is being committed against something beautiful that God has given us – the capacity to create, to work, to have dignity. How many brothers and sisters find themselves in this situation! Not paying fairly, not giving a job because you are only looking at balance sheets, only looking at how to make a profit. That goes against God.”
But “do no evil” is not enough any longer. It is only expected. Retailers are now expected to do some good. Amazon has launched a program called Amazon Smile. In the words of the company,” AmazonSmile is a simple and automatic way for you to support your favourite charitable organization every time you shop, at no cost to you. When you shop at smile.amazon.com, you’ll find the exact same low prices, vast selection and convenient shopping experience as Amazon.com, with the added bonus that Amazon will donate a portion of the purchase price to your favorite charitable organization. You can choose from nearly one million organizations to support.” I have, for instance, chosen a charity that is committed to bringing clean and safe drinking water to people in developing nations. Every time I make an online purchase I am comforted in the thought that a small part of my money is going to a charity I chose! It is a whole new world where you compete differently and behave responsibly.