December 26, 2013

Now Commerce: Trying to Solve Demand for Instant Gratification

Over the last two decades, the world of retail has transformed from one led by big box retailers who courted shoppers through coupons and print advertorials or splashy television ads, to one where online commerce takes an increasing share of information gathering and eventually, purchasing behavior. Names like Blockbuster and Circuit City will soon be as quaint as Woolworth, Mervyn's and Gemco - symbolizing a generation of stores that didn't adapt quickly enough to take on more nimble competition, who won on scale and speed.

With Christmas 2013 now behind us, the headlines are not just of yes, more shoppers flocking online, mixed in with uncertainty over just how many people were impacted by Target's massive card hacking, but of a completely unexpected surge in last minute buying that doomed shipments by UPS and FedEx, the alpha and omega of delivery systems, connecting the virtual world world with the physical world. But it's clear what's happening. As an increasingly connected Internet populace abstracts the physical world of commerce to an online shopfront, so too vanishes the perception of physical limitations - such as distance, time, and weight.

We are progressing toward a world of "now commerce", where we can order it now, and expect the results practically instantly. The end of 2013 shows we're getting closer, but the system's not yet quite ready for the pressure, even if consumers are.

Simply put: Nobody expected everyone to wait until the very last minute to order Christmas gifts, but everyone did. As UPS told BusinessWeek: "We had our peak projections, and the volume has passed our projections." So all the models failed.

Web giants like Amazon and eBay learned over their young existence to do whatever possible to keep their sites up and keep transactions flowing. Slow load times, inaccurate shopping carts and price mismatches can sap users' patience and reduce trust. So they've prepared for massive amounts of scale - leading to Amazon's supporting upward of 426 transactions a second at peak time, without crashing. But it becomes even more challenging to prepare a physical delivery system like UPS or FedEx for scale of 2 to 3 or 10 times expectations, which is where the system broke, and barring big changes, we should expect this again.

2013 Brought Google Shopping Express to the Bay Area

Take a look at two notable bits of news from two big players in 2013 - the first being Google Shopping Express (disclosure: I work at Google) and the second being Jeff Bezos' announcement of shipment by drones. The promise of both? Even faster fulfillment to customers. In Google's case, they've partnered with retailers in the San Francisco Bay Area to ship under the Google Shopping Express brand, and deliver in specified time windows, just like or traditional meal delivery. Amazon's promise is to take its already fast Prime shipping down from a few days to possibly a few hours. Now, instead of wondering what day you could get something, you just have to know which hour.

Four-plus hours from order to delivery at my door.

Like many others this Christmas season, I put e-commerce to the test with a last-minute order - looking to cross some items off my shopping list, having them come at the last possible moment, to avoid discovery and reduce clutter in my home. So with the knowledge that Google Shopping Express had a noon cutoff on Christmas Eve to deliver that day, I placed an order just after 11, and selected a time window for delivery between 1 and 5 pm that afternoon. As you can see from the screenshot in my email, the gifts were delivered just over four hours later, to my door - not only saving me a trip to the store, but providing near instant gratification.

Often, one's vision of the tech future is colored by the Star Trek computer - one which responds to voice commands, and can produce physical objects by request. It's been said Google is obsessed with building the Star Trek computer, and innovation like the world of 3D printing makes this vision of virtual to physical conversion seem more possible. But before we get that, we're already seeing a generation of people who expect things to happen instantly. One can instantly turn on Netflix or iTunes or YouTube and see practically any piece of video ever made. One can turn to Spotify or Google Music and get any song on demand and play it on any device, practically anywhere, assuming you have enough bandwidth. We expect it immediately, and growl if buffering makes it imperfect.

So you can see this coming, can't you? The consumers are expecting instant gratification. We're getting incredible service when it comes to entertainment. We can order practically anything virtually and delivery windows are tightening. We know what we want, and we want it now.

Disclosures: I work at Google, which runs Google Shopping Express and in various ways competes with Amazon. Google also owns YouTube and in various ways competes with Netflix. My house is an Amazon Prime household and our kids watch way too much Netflix.