All marketers face challenges with marketing in a digital world, but for retailers—many of whom are struggling to force-fit digital into their legacy systems and technologies—the biggest challenges with digital stem from within their organizations.
“The single biggest complexity is the speed at which retailers move to actually implement software,” said Faisal Masud, Staples’ chief digital officer, in an exclusive interview with CMO.com.
Masud spoke at the NRF Big Show earlier in January about the current state of digital in the retail space. CMO.com caught up with him afterward to talk about mobile retail, which he believes is not up to par, working with startups to be more agile and nimble, and the benefit of bringing work in-house rather than relying on agencies.
CMO.com: What are some of the digital challenges that retailers face?
Masud: The biggest challenges that retailers face are not really coming from competitors: It’s really coming from the customer because the customer has been trained pretty well in having an appetite for things where and when they want something. They want to be able to just search for products, find them, purchase them, and then they expect to receive it within two days or less. And that drives a pretty distinct behavior, especially when compared to what retailers have been used to in the past decade or so.
In the old days, you go to a shop and find what you are looking for. There was no comparison shopping. That has changed. And adapting to that change has been very complex for retailers.The single biggest complexity is the speed at which retailers move to actually implement software that allows all of those things to happen–especially brick-and-mortar retailers.
So for us, I think that the challenges are on the order management system side, and integrating that with our in-store, online, and mobile inventory. That’s a big structural challenge that’s very unique to the retail space.
CMO.com: Those sound like big challenges. What about the fact that digital is evolving so quickly? How has Staples been able to stay on top pf the game?
Masud: When I got here we already had a large business and were fortunate to have a good part of our business be B2B, so our challenges are slightly different to other retailers, but we still have a large population of consumers that buy from Staples.com.
So for us it was all about becoming more flexible and more omnibased, where customers have the choice to buy anywhere they want, and we can recognize the customer anywhere they come from and from anywhere they’re going. We invested a lot in building our own technology teams and to take over a lot of the technology that we wanted to have oversight on. We acquired companies on the West Coast and took pieces of our experience in-house.
CMO.com: How do you decide what work to bring in-house and what to outsource?
Masud: We think about it in terms of the most compelling, critical piece of technology that is super important to our business that we need to have control over. So in my opinion, search. It’s a big piece, and we’re on track to bring it all in house.
If you look at managing personalization, we’re on a path to moving personalization in-house where we don’t need third parties to do that for us. We have all the data internally. You know, we didn’t have a large recommendation team when I first arrived. Today we have built a pretty robust team who is now helping us facilitate recommendations on the site, rather than paying a third party.
So recommendations take up a significant part of our business, search takes up a very substantial part of our business, and the other piece is mobile. We don’t want to do it for the sake of doing it. We want to do it because we want to see major impact on the experience for the customer and for the bottom line for us.
CMO.com: Where does that leave agencies if a majority of brands bring their the work in-house? Do they become extinct?
Masud: If the agency is strong at what they do, they’ll always find ways of working with a retailer like us. They’ll always have core competencies that we would not have just because they’re specialists in that area.
On the other hand, just handing off the entire thing to an agency–I just feel like for a retailer our size it doesn’t make sense. We can have our internal agency do a lot of that.
But there’s always going to be a place for agencies. I’m just not sure we have to be doing all or nothing.
|Staples employees at one of the company's innovation labs.|
CMO.com: And so these acquisitions and in-house hires, are these all part of the E-Commerce Innovation Center that you discussed at NRF?
Masud: Yes, to some degree. Seattle is our software development center that houses over 75 people. Our in-house search team and mobile team are out of that center. The Seattle team is one of the innovation centers we have. We have other innovation centers around the country, like in San Mateo and out in Cambridge.
These innovation centers help us stay on top of our game, but we also rely heavily on startups as well, for the iteration and quick-launch stages of programs.
CMO.com: Can you talk about some of the programs or experiences that have come from these innovation centers?
Masud: I think mostly it’s been around customer experience trends where a lot of the focus has been to manage the current stability of the platform and just run the business day to day. But one innovation has been the launch of our mobile site and smartphone app. We were one of the first retailers to have Apple Pay fully integrated into our app experience. All of that was built in-house from beginning to end. We did not outsource the technology for that–and those were pretty big wins for us.
Additonally, all the user-facing changes to desktop that have come around have also come from our internal team. These have yielded very large improvements in the metrics that we track closely.
Beyond that, we launched most recently our on-demand greetings cards by Staples.com, which can be found at design.staples.com. The back-end of that service is fully powered by one of the recent acquisitions we made of an on-demand printing solution called PNI.
CMO.com: At NRF you made a bold statement when you said that retail really has a long way to go when it comes to mobile. Why is it taking so long? What’s so hard about implementing mobile?
Masud: For retail, the challenge with mobile is the changing venue. If you look at desktop and you go back to 1995 and you add eight years to that, you’re still going to have a desktop experience that was not quite like shopping in a store. It was still in it’s somewhat infancy stages. I mean, yes, maybe Amazon.com at that point knew what to do, but the rest of the retail was not clear on what the experience online needed to look like.
If you recall, many retailers had a Web site, but you couldn’t transact. So I’m not saying that’s where we’re at in mobile, but what I’m saying we’re not where we need to be yet in mobile. And that includes everything: not just retailers that are brick-and-mortar, but everybody.
|The Staples mobile app.
Until the user base and the penetration of mobile becomes even more significant, it’s going to be a learning curve. And are we going to get there? Yeah, we will. But to say that we’re there already or that we’re getting there soon, I think that’s an overstatement.
As I’ve said, we’ve done lots of changes to our mobile environment, and I’m admitting that we, too, are still not there. We have a lot of work to do because we have a different challenge: a B2B customer.
But if you go and shop on several retailers’ sites and then you look at their mobile experience, a lot of the services that are available on desktop are not available on mobile–and that’s the single biggest challenge. If you want to return an item, you can’t return an item sitting on your phone. You can’t print that label to a Wi-Fi printer. You can’t use some very simple tasks that you can do on a desktop. And part of it is not all the APIs are built up to allow all the functionality to be deployed on mobile. Mobile is still serving for that impulsive buyer and not the primary buyer. It’s not yet the primary purchase destination; it’s more of a secondary destination.
At the moment the tide turns and it goes to primary, that’s when you will see all the features being in mobile. In fact, more features will be available in mobile versus desktop.
CMO.com: What about mobile measurement? I’m hearing a lot from people I interview about mobile about cross-platform attribution. They say it is super difficult with mobile. Is that something Staples has figured out yet?
Masud: It’s definitely challenging. I think for us the advantage is we have a large rewards program, and we have millions of users on rewards, so we’re able to track a lot of the activity. We try to figure out the best method and means to target people by looking at the last time a person checked in. What part of the journey influenced an order? We go with the methodology that was lowest customer effort, so that we’re able to fix the experience wherever the journey began or wherever the journey was enhanced by the customer.
So, yes, I think the challenge exists out there in attribution. But I think we don’t want to get too focused on that because it’s all derivative channels anyway. I’ll give you an example. I bought an item online a week ago, and I wanted to return it at the store. When I called them to return it, they said, “We can only do a full exchange.We can’t do a return at the store.” It's things like that that create friction and barriers for customers. I think if you just make it completely frictionless and remove the silos and just treat it like one retail and connected-commerce experience, that’s when you resolve some of these issues.
CMO.com: What are some of the biggest mistakes you see retailers making from a digital standpoint?
Masud: One of the biggest mistakes is that retailers get very obsessed with competitors. And I’ve always believed that you should not be obsessed with the competitors. You should be obsessed over your own customer. I’m going to say 85 percent of our sales are B2B, small businesses. And I think the more we know about our customer, the better job we can do for them in the end, rather than worrying about what everybody else is doing.
And I do believe that a lot of retailers get hung up on what everybody else is doing.
What really matters in the end is, are you up to date on technology? Are you up to date on the experience that you’re supposed to provide? And do you have spectacular customer service when there is a problem? If you can do those three things, you’re able to be far ahead of the rest of the pack rather than trying to see what everybody else is doing and following and copying.
CMO.com: Do you have any tips for brands and retailers from a digital perspective?
Masud: I do. The notion of channel just creates this arbitrary sort of constraint on retailers. My tip is the less we think about channel, the better we’re going to be because, as organizations, the biggest thing holding retailers back is structure. Worry less about channels and more about the customer.
CMO.com: What are your top three digital priorities for this year?
Masud: Mobile is a huge one for us. We’re seeing a large amount of our business on mobile, so we will be focusing on growing in that space.
Second is being able to have a flexible environment for delivery. You can pick up, you can have it shipped to the store, you can have it shipped from the store. We will focus on enabling flexibility in our fulfillment centers. Currently, we don’t have a unified inventory view. That’ll also be something we focus on so that we are never out of stock on anything, and we’re always available closest to the customer.
Those are the two big ones. Besides that I think really bringing some of that technology that I mentioned in-house especially search, fully, would be a big one for us, too.
CMO.com: Let's talk about talent for a moment. Is there a talent shortage from a digital perspective? And how does Staples go about attracting and retaining so-called digital talent?
Masud: I think it all comes down to leadership, in my opinion. We give new talent a very crystal-clear picture of who Staples is, where we want to go, and how we are going to get there. I think the clarity of the vision and actually executing it helps this talent understand that there’s some substance to what these people are saying.
In terms of recruiting, we go to where the talent is. We opened the innovation center on the West Coast. We’ve gone to where the talent is rather than forcing the talent to come in and work with us where we are–that’s No. 1.
And No. 2, [we are] providing flexibility to that talent on how they end up working with us. We have a flexible work environment. Because of all that we’ve had amazing retention on the team, and we’ve had an amazing hiring spree both on the West Coast and on the East Coast. And people, I believe, strongly enjoy working here.
CMO.com: You already talked a little bit about working with startups. Can you give us some more insight? What is Staples doing with Startups?
Masud: I’m a big fan of startups just because I work a lot with them myself. I personally advise or invest with them. I find that startups have this unconstrained view of the world where anything’s possible. Whereas I’m coming from a large company and anything is not possible, right, because there’s lots of established controls and parameters.
Where I find startups being critical to our success is that they are sort of the source and energy for a lot of great ideas that we may be thinking of but we haven’t completely materialized. And in today’s world of cloud-based services, to integrate some of those ideas becomes a lot easier.
By working with startups we get to learn and iterate on a very fast pace. It’s just very hard to do if you’re going to keep assembling teams yourself. But eventually the goal is either work with them, figure it out and build it yourself, or we go down the path that we have in the past where they’re actually acquired from startups that we work with.