The Value of Experiments
I was coaxed into a discussion on my favorite retail industry discussion site, RetailWire, about 7-Eleven’s decision to allow mobile ordering from an app, allowing consumers of certain Dallas-area stores to place orders and pick them up in-store or have them delivered via courier. My reaction, like many others who contributed to the discussion, was that this will not work. 7-Eleven’s order sizes are too small to cover the delivery expense, and 7-Eleven’s purchase experience has already been optimized to allow shoppers to grab what they need and pay in about the time that it takes to fill a tank of gas. Amazon’s Prime Now offering, for example accounts for about 1 percent of Amazon’s US sales, despite the fact that delivery is free for Prime members and is available in more than 30 US cities. Data from 2016 shows the flat penetration of Prime Now in Amazon’s sales despite significant expansion of markets in 2015 and 2016.
7-Eleven’s experiment however, warrants emulation across the retail landscape. I don’t mean that everyone needs to copy this particular test, but that everyone needs to be constantly trying new things that take them out of their comfort zones in order to spot opportunities that may (or may not) transform their business.
If 7-Eleven’s app experiment is an utter failure, there are a number of clear benefits that will accrue from it:
- - They will come to understand the logistics and economics of delivery to the consumer
- - They will learn to train their employees on helping customers troubleshoot the inevitable technical issues that arise. They may learn that their employees are more technically savvy than they think, and may be valuable assets in 7-Eleven’s push into the digital realm. Or they may learn that their employees are completely tech un-savvy, which may influence future HR policies
- - They will learn what times of day people use the service, how that differs from store traffic patterns, and how it varies in different neighborhoods
- - They will see what items are ordered for delivery and how that differs from in-store purchasing
- - They will develop relationships with courier companies, which could be critical to whatever model ultimately works
- - They will see how well the agency that builds the app is able to execute on development of consumer technology
- - They may find that the order ahead functionality helps them better manage busy times of the day
- - They will have to understand the online payments landscape, which may lead to innovation in their own in-store payments systems
- - Or, they may realize that consumers love the model already in place, that there is nothing that digital can do to improve it, and that they can happily revert to business-as-usual, free of the threat that the convenience store business will be disrupted by digital.
(My bet is that the last bullet is probably the least likely possibility.)
Finally, I’ll make the point (not for the first time) that it is incumbent upon all of us in the retail industry to experience as much of this as if we were consumers as possible. When you’re in Dallas, try it out. When you’re in Seattle, order from Amazon Fresh to go and pick up in the Ballard or SODO location. When you’re in Denver, order from Walmart Grocery and pick up your order at Walmart’s experimental gas/convenience store/online pickup hybrid.
We live in an age of retail disruption fueled by experimentation. We all have to adopt the mentality that there is no such thing as a failed experiment.