How Target will beat Amazon.com
Target.com won’t beat Amazon.com, but Target will by following three core philosophies the retailer’s top digital executive and Amazon.com alum Jason Goldberger shared with attendees at the Internet Retailer Conference and Exposition.
Goldberger drew a distinction between Target.com and Target the enterprise and elaborated on a digital innovation mindset and omnichannel strategy focused on leveraging physical and digital to offer customers, or “guests” in Target’s case, a seamless experience.
However, before getting into specifics Goldberger described Target’s epic fail earlier this year with the online launch of the exclusive Lilly Pulitzer line.
“We relied on consumer data that was less than six months old,” Goldberger said during a keynote address that kicked off the 11th annual Internet Retailer event in Chicago.
Just six months earlier the retailer’s Web site had performed flawlessly during peak volumes of Black Friday and the 2014 holiday season, but the company’s Lilly launch, dubbed Pink Sunday, caused a spike in volume that temporarily shut down the site and forced Target to severely meter traffic just to keep the site live.
“You can only test for what you can imagine,” Goldberger said regarding the unanticipated demand surge.
Disappointed customers vented their frustration on social media sites and Goldberger shared dozens of the posts with attendees in what was an uncharacteristically public mea culpa for the company.
Goldberger vowed that such a failure will never happen again before elaborating on three core philosophies that now guide the company’s omnichannel efforts.
Be guest obsessed, not channel obsessed, because customers don’t care, Goldberger said. “Guests become more valuable when they shop in more than one channel,” Goldberger said. “The content and the brand matter more than the channel.”
His other key point, and where Amazon surfaced during the presentation, related to reinventing assets.
“The best way to lose is to not use your most valuable assets,” Goldberger said referring to Target’s omnichannel efforts. “Target.com is not going to beat Amazon.com. Target is going to beat Amazon.com.”
Currently, roughly 25% of orders placed online are either picked up in store or shipped from store and that figure is sure to increase as Target expects to be shipping from 500 of its roughly 1,800 stores by year end and is become more proficient with in-store pick up operations.
Lastly, Goldberger said Target has become comfortable saying ‘yes’ to new ways of doing things especially if it is something that guests want. He offered an example of the company’s new subscription service which cause internal conflict at Target because, “we are basically telling customer not to come to the store.”
Nevertheless, Target launched the automatic replenishment service and the fear impact on store traffic failed to materialize. In general, Goldberger said there are a lot of really smart people with very different opinions about where things are headed when it comes how people will shop.
However, he cautioned that there is hubris in attempting to predict the future with specificity, offering the general assessment that, “technology will play an even more fundamental role in the way people shop.” This is especially true with Millennials poised to surpass Baby Boomers as the largest demographic segment by 2017