Soft Goods Online

• Apparel: $15Bn
• Flowers, card, gifts: $6Bn
• Home products: $24Bn
• Jewelry, Luxury: $4Bn
• Total: $49Bn

Soft Goods have tens of millions of SKU’s, with no reliable UPC

Aesthetics are major purchase drivers

At the core, Riya is a search engine focused on Visual Search and currently consumers are very used to Text-Based Shopping (keywords linked to pages indexed with those keywords).  Riya focuses on abstracting the search terms and trying to match that with images – he uses the example of “Red Strappy Shoes” and how it fails to find the right item in the traditional engines.

He proceeds to go through a number of interesting slides with Riya’s new user interface for Like.com that they’re launching soon.  The technology is amazing!

Next up is Ron Schaeffer from Keycode.

Keycode is a barcode coupon business, that relies on the user printing the coupons and taking them into the offline store, but also online coupons.  Keycode syndicates their data out to hundreds of sites, sub-affiliates/super-affiliates and private labelling.

Lincoln Brown from StarStyle takes the floor now. They work with TV shows & Music Videos to make items from the shows available on their site.  Very innovative and clever!  They are launching thelookbook.net for stylists to use for their clients.
Matt Syrett from Linkshare continues with a talk on how the industry is moving from the old affiliate model where you have one site that clicks through to a merchant, to a more engaging approach (not sure I agree with this).

Brandon Ramos, Linkshare

Amy Solomon, Linkshare

Panelists:

Robert Baer, Vice President, Online Marketing, JPMorgan Chase & Co

Connie Young Fong, Director, Marketing & Business Development, Sephora USA

Michael Jacobs, Vice President, Products, iMarketing, Ltd

Clark Stephens, Vice President Marketing – New Business, MyPoints.com
Panels are always difficult to blog, but I’ll focus on the major points of discussion. The starting point is the issue relating to trademark bidding and affiliates. They start by making people stand up and down to figure out who is on which segment (Merchant/Affiliate/TM Bidders/Non-TM bidders, etc).

Amy poses a question to the panel: “Recently Chase & Co changed their policy and started to change their policies. Why?”

Robert short response was that the cost to maintain it was too high as they have to justify the spend to higher powers in addition to the money they are already spending on branding. Michael argues that is a mistake and throwing out the baby with the bathwater. His argument is that if Search Affiliates are costing you too much – you’re not managing it properly – which I agree with.

Next question: “Is it better to see an affiliate link on the SERP or a competitor link?”

Robert says that it’s better for them (without a decent justification, imho), just to have a single ad and again, Michael rebutts him quite adequately. The ensuing verbal battle is typical of a Goliath (Chase) vs David (iMarketing) struggle, where the big companies just don’t understand online marketing and in particular, search.

Last question on this topic: “What value do Search Affiliates bring to Merchants?”

Extra links/keywords, better messaging, deeper linking – Michael puts this straight up. Robert strikes back with the fact that he claims that they have not seen a significant hit to the volumes, after putting more restrictions on their search campaigns.

Connie communicates that Sephora is happy to share their trademark terms, provided they maintain position #1 on their keywords.

Clark argues that not every merchant’s customers act the same – so each merchant needs a different set of rules, and that which works best for them.

Next topic: The Hot Buttons

Loyalty Affiliates vs New Customer Acquisition : What are merchants afraid of?
They do the same standup, audience segmentation exercise again.  A nice mix of both exists.  Clark starts off with the fact that loyalty sites also conduct new customer acquisition – it’s not that it’s the same customers coming back, but a new continuous stream of customers.  Connie advocates that loyalty affiliates provides an indirect, unquantifiable benefit that does exist.

Clark and Connie basically agree that it’s important that the two interests are aligned carefully.

The panel is going to open up to the floor now – I’m rolling up my sleeves now

I research the… “Behavioral Economics’ of Modeling, Experimentation & Innovation in Organizations, via their Models, Prototypes & Simulations. Behavioral Economics maps how people ACTUALLY behave, not how they are supposed to behave.

Our Goal: To transform how you perceive Innovative Risk Management.

Self-Segmentation:

Cheap Innovation

Cost Effective Innovation

Best Value Innovation

Critical Strategic Observation:

Innovation is a Means to an End.

Critical Innovation Emphasis:

From [Greater] ‘Creation of Choice’ to [Greater] ‘Value from Use’.

Means & Ends must result in better Alignment

Good ideas are WAY overvalued! Firms overinvest in ‘Good Ideas’, Strategic Analysis, “Voice of the Customer”, Validation Testing & Speed to Market.

‘Good Ideas’ are Cheap; Good Implementations Aren’t.

Transforming the Economics of Modeling, Prototyping & Experimentation Transforms “How We Invest”.

What is a Model? A relevant approximation of reality – THAT WE USE!

Where is the Model’s value? A ‘Cost-Effective’ ‘Relevant Approximation of Reality’ … that we ‘Cost Effectively’ can use.

Tesco Innovation Strategy:

Better for Customers

Cheaper for Tesco

Simpler for Staff

Ex-P&G CIO Steve David: “We do almost 100% of our concept testing online now”

Warren Buffet Redux: How can we buy $’s of innovation at 50% of the price.

Innovation Economics: 80% of the Information @ 20% of the cost/20% of the time.

What’s the nature of the Resistance?  What the barrier to entry?  Resistance is by far the clearest window into understanding The Firm’s internal economics of Innovation.

What we ostensibly have is a “Fear of Failure”.  We are actually afraid of the cost of failure!  So why do we (Really) model, prototype & Experiments?  To cheap cheap cheapen, the costs & risks associated with failure = ROU = Reduction of Uncertainty.  What kind of uncertainty?  Validation, Costs, Trade-Offs, etc.

ROU for/with whom?

Innovators?  Clients?  Customers? Affiliates?

Spreadsheetification of Product/Process/Marketing Innovation makes the economics of experimentation of small enterprises is so much  affordable than for large corporations.

Our Embarrassment of Riches: The more choices you have, the more your values matter.

So what “Innovation” Business are We now in?  The experiments business.  You need to be the CEO – the Chief Experiments Officer.  The CEO’s deliverable:  A Portfolio of Testable Hypotheses that Matter!

Twofers :  Crafting NLHs (No Lose Hypothesis).  Valuable whether or not it tests true or tests false.

In the network area, there is a move to Experiment & Scale, and away from Research & Development.

5×5 ‘X’-Teams – run to get innovation going in the organisation.

5 People/5 Days

5 Experiments

$5000, 5 weeks, $500,00 in growth or savings

Half of the ideas are usually terrible, but 3 or 4 are really good and help the organisation.

The Internet is the greatest medium for rapid prototyping & speedy simulation.

Great talk!