Ubergate: Considering the Ethics of the Services We Use

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Warning: This is a rant. Turn away now.

I have been an enthusiastic user of Uber for some time. My rides have always been good.

I enjoy talking to the drivers about their experience and motivations. I love the convenience and the in-the-background payments. The first time I used it and simply got out of the cab without paying or tipping it was a revelation.

I also liked the idea that Uber was “disrupting” the curmudgeonly taxi industry. I no longer feel that way.

Like others I’ve been disturbed by all the revelations of threatened dirt-digging and surveillance against journalists (i.e., Sarah Lacy), the user-privacy violations, the incidents with drivers, the frat-boy mentality and “in-your-faceness” of the company generally. ‘Sup brah.

The drivers are just normal people trying to make a living. The executives are not. There’s something disturbingly predatory and mercenary in the attitudes coming out of Uber over the past year.

Dropping off a rental car the other week at the Oakland Airport I consciously tried to use alternative services: Flywheel and Lyft. The former had no cabs available and the latter had boosted prices considerably, presumably because of a shortage of drivers at that time. So rather than waiting an uncertain amount of time or overpaying I called Uber.

I felt bad about it because I felt that I was using the service of an unethical company. However the driver was very nice and we had a great conversation. I rationalized my choice accordingly.

I asked him what he thought about the Ubergate revelations. He was marginally aware of them but they seemed distant and even unrelated to his day-to-day driving.

Uber and Lyft are pushing down the prices of taxi medallions in New York. That may not be such a terrible thing. But in San Francisco Uber is helping to put regular taxis out of business.

That wouldn’t be as bad a thing if Uber were an admirable company. If the executive team were replaced (or at least key individuals fired along with some sincere mea culpas) it would go some distance to restoring the company’s image and integrity.

Investors aren’t in the least disturbed by the Ubergate parade of revelations and negative stories, they just valued the company at $40 billion.

The “bro-culture” problems or the single-mindedness and quasi-nihilism of the Silicon Valley mindset aren’t limited to Uber. Most recently the controversy surrounding Facebook co-founder Chris Hughes and The New Republic (editorial mass exodus) is symptomatic of similar problems with Silicon Valley values permeating the larger marketplace.

Much is good about them but there’s also a very dark side to some of these “disruptions.” One gets the sense that Hughes doesn’t actually know what he’s doing or how it might impact the publication ultimately.

However Hughes defends his effort to turn The New Republic into a “vertically integrated digital media company” (an empty slogan in this case). Essentially he wants to duplicate The Atlantic Wire or perhaps more likely Buzzfeed. It’s a sad day when Buzzfeed becomes the new model and exemplar of online journalism. (Buzzfeed would not have broken this corruption story for example)

But that’s where we are it seems. Click bait. Native ads. Advertorial.

Back to the question of ethics. It’s very difficult to back up your values with your spending for many reasons (stores like Whole Foods make it somewhat easier but everyone can’t afford to shop there). Yet it’s important that we at least try.

If people across the US and abroad were to stop using Uber in a coordinated way for a couple of weeks to protest the way its executives are behaving, they would panic and take action.

The market can be a very powerful thing and so is conscious spending among informed consumers. My hope is that the “transparency” wrought by the internet will make it easier for people over time to buy in accordance with their values and have an impact on the culture and direction of some of these companies that are taking over as more traditional enterprises fall away.

This is a version of what Small Business Saturday is supposed to be about: spending to protect the diversity and integrity of our communities.

I recognize this post isn’t totally coherent but I’m increasingly disturbed that some Silicon Valley companies and the often unreflective mentality that accompanies them are sweeping aside established institutions. As I mentioned, in some cases disruption is needed and good.

Uber is an impressive company. But what it also represents is an attempt to generate immediate, short term wealth for a small number of insiders without much thought to those who actually deliver the service (the drivers) or its larger, long-term impact on the society as a whole.

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Cyber Monday’s $2 Billion in Perspective

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ComScore is out with data trumpeting the single biggest day in US e-commerce history. This year, according to the measurement firm, Cyber Monday sales were just over $2 billion — a new single day record.

There are conflicting numbers from various sources about whether there was positive or negative growth this year for the big holiday weekend. Assuming that comScore’s figures are accurate, boosted by a big Cyber Monday, online sales certainly were impressive this year. For the Thanksgiving through Monday period comScore estimates that e-commerce revenues came in just under $6.6 billion overall.

The National Retail Federation (NRF) earlier estimated that the full weekend would likely see about $51 billion in US consumer retail spending. While this was intended to be an overall estimate it’s not clear whether it extended to or included Monday.

For the November – December period the NRF projects roughly $617 in total retail spending. It cites a Shop.org e-commerce projection of roughly $105 billion for e-commerce for the season. It’s not entirely clear if the $617 million is all inclusive. If so then, using these numbers, e-commerce would come in at around 17% of total holiday sales.

That would be a big deal and a new high water mark. Yet comScore’s data suggest that November – December e-commerce sales this year will land between $50 and $53 billion, roughly half the Shop.org number. In such a case e-commerce would represent around 8% of holiday sales. That is much more likely than Shop.org’s larger figure.

Based on preliminary numbers I had crudely estimated that in-store sales were about 20X e-commerce. That didn’t include the big Cyber Monday, whose revenues close the online – offline gap somewhat (although the numbers from NRF are not entirely clear). But overall we’re still looking at a full-year 2014 in which e-commerce lands right around 7% of total US retail.

As I said in my earlier LSA post, most of the e-commerce volume is very likely coming through online and mobile properties associated with familiar, traditional retail brands such as Walmart, Best Buy, Target, Kohls, Macy’s and others. Certainly Amazon and eBay are big drivers of online sales but it’s brick and mortar retailers who were/are the primary beneficiaries of this year’s online sales boom.

Comscore and others are eager to draw a bright line between online and offline but in the reality of consumer behavior that line isn’t quite as clean or clear as the press releases suggest.

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Survey: Print Circulars Dominate Other Media in Cyber-Weekend Deal Seeking

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There were lots of media channels used by retailers to promote their Cyber-Weekend deals. And unless there were specific discount codes assigned to each channel, determining which of those “worked” is a challenge for the retailers and their agencies. Even with channel-specific codes, it wouldn’t capture the full multi-channel picture of consumer behavior.

As were most of you I imagine, I was bombarded by email and retargeted display ads. I also search for products and looked at lots of content and many sites on my iPhone and Android tablets (plural). Apart from my own product-driven searching and browsing, I started to wonder if any of retailers’ myriad “push” efforts were having a genuine impact or whether they were all receding into the background as noise.

There’s evidence that email was probably the most successful “push” channel over the weekend. But I was fascinated by earlier National Retail Federation survey data also released over the weekend that showed where/how consumers discovered shopping deals and information.

The survey was conducted November 28-29 by Prosper Insights and involved 4,631 US adults. Below is the hierarchy of media channels they say they used for Cyber-Weekend shopping discovery:

  • 47.1% looked for information on Thanksgiving weekend deals in advertising circulars
  • 35% utilized retailers’ emails
  • 27.4% searched online (search engine, mostly Google)
  • 20.2% paid attention to television commercials
  • 21.3% used word of mouth

This is all self-reported data so that has to be factored into to any analysis. Self-reported data are frequently not entirely accurate.

However it’s fascinating that the top method used were retailer “advertising circulars.” Email followed and then search. It’s curious that social networks don’t appear in here as a choice. Other data sources said that Facebook and Pinterest did drive awareness and sales.

The press release and related data didn’t disclose whether “advertising circulars” also refers to digital versions. My guess and assumption, however, would be that the overwhelming majority of these people are referring to print newspaper inserts.

What do you think about this data? Do you believe it?

If it’s accurate it would mean that print newspaper advertising trumped digital channels (other than email) by a significant margin.

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Is Small Business Saturday For Real or Just a Feel-Good Symbol?

Small business saturday

Situated awkwardly between Black Friday and Cyber Monday is the more recent shopping day devoted to SMBs: Small Business Saturday. I’ve been skeptical for some time about whether Small Business Saturday is a real thing and whether it actually helps deliver additional revenue beyond what consumers would already be spending.

Started in 2010 by American Express (as a mostly cynical marketing ploy for the banking giant itself), Small Business Saturday has taken on something of a life of its own, with new sponsors and more widely distributed signage. There are also claims by Amex and others that it has boosted revenues for SMBs across the US over Cyber-Weekend.

I remain skeptical.

There are various promotional tools provided by Amex in the run up to Small Business Saturday. However most consumers don’t consult Shopsmall.com or the Amex site to look for products or deals. Accordingly it’s somewhat naive to think that these once-a-year tools can make much more than a very marginal impact.

Small Business Saturday still seems like a mostly symbolic “feel good” effort by all those involved. The big beneficiary continues to be Amex, which positions itself as the champion of American small business. (If it really wanted to help SMBs it would cut card-processing fees.)

Small business Saturday

One very strange aspect of the day is the way it has the tone of charitable giving: “support small businesses.” Most US consumers aren’t going to make charitable contributions to SMBs. And while everyone likes the idea of supporting SMBs (like buy American) consumers want to buy specific products and services. They need to be presented with specific offers or information about those products or services in a very concrete way.

In a majority of cases simple awareness doesn’t translate into behavioral change. For their part, SMBs need practical ways to rise above the noise and capture consumer attention in a market dominated by Target, Best-Buy, Walmart, Kohl’s and so on. (This of course leads immediately to a longer discussion about the challenges of digital marketing for SMBs generally.)

All weekend I was deluged by Black Friday emails from online retailers, department stores and big box stores. There’s almost no way for individual SMBs to break through in that environment unless they band together and/or piggyback on a larger entity’s promotion (e.g., Groupon).

Generally speaking consumers shop at local stores for many reasons:

  • better quality
  • better service
  • personal relationships
  • immediacy and convenience
  • yes, to support the community

One day a year, which is still mostly a promotion for Amex, doesn’t really build the “infrastructure” necessary to make a difference to SMBs. If Amex and its partners were truly champions of small business they would make a sustained effort to turn every Saturday into Small Business Saturday.

I could envision how that might work. But it would mean a true (not just symbolic) commitment to SMB success.

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Reviewers Mostly Positive, 67% on Yelp Are Either 4 or 5 Stars

Yelp logoThere are lots of data about consumer reliance on reviews and the impact of reviews on purchase decisions. Surprisingly, however, there’s not a ton on review distribution or consumer motivations for writing reviews.

There’s an “anecdotal” perception in the market that most reviewers are motivated by anger or frustration and that the bulk of reviews accordingly are critical. Among the few studies I found on reviewer motivation, the bulk of research shows people are typically motivated to help others or by what might be called “constructive reasons.”

For example, a 2007 Bazaarvoice-sponsored survey of 1,300 online review writers found that 87% of reviews were positive and that reviewers were motivated to help others:

  • 90% said they write reviews to help others make better buying decisions
  • Roughly 70% want to help companies improve their products
  • 79% write reviews in order to reward a company
  • 87% of the reviews are generally positive

Yelp review distribution

Above is a comparison of the distribution of reviews on Yelp from 2009, 2012 and 2014. As you can see, there has been growth at the extremes: five star reviews have grown and, to a lesser degree, so have one-star reviews. Yet the majority of reviews on Yelp are positive: 67% are either four or five stars. Only 33% are 3 stars or fewer.

This should help remove some of the fear and trembling associated with embracing online reviews, which many small business owners continue to resist.

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The ‘Moral Imperative’ Behind Small Business Marketing

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There are a lot of people I meet in technology who want to talk less about about the money-making side of the businesses than about the “social good” that their companies do or contribute to. I see this as part of a larger human desire to have a positive impact on the world.

Whenever I encounter this sentiment I find it very interesting. And I share it.

A couple of years ago at an LSA event in Las Vegas I was doing a joint presentation with Neal Polachek called the “SMB State of the Union.” The theme of the presentation was the discrepancy between SMBs survey data and “behavioral” data — what they’re saying and what they’re actually doing.

Surveys tend to paint a rosier picture of the SMB world than the data gleaned from crawling the web. Accordingly, most small businesses are simply not keeping up with the market — and it’s largely unreasonable to expect them to. Technology change is happening too fast for even the most sophisticated brands and agencies to adapt to.

At the end of the LSA event presentation I offered an impromptu pep talk to the people in the room. There is a “moral” dimension to helping SMBs succeed with digital marketing. If they don’t get it right they will fail and our economy will not only suffer but we’ll all be reduced to choosing between Walmart and Subway: giant corporations that don’t particularly care about communities and franchises that have no local character.

Last week I was in Chicago for a presentation and visited a childhood friend. My wife had earlier told me that our dryer had broken at home and he said that there was a great independent appliance and electronics store called ABT in his area. We went there and it was truly impressive. The selection but most importantly the staff knowledge was so much better than anything I would encounter at a chain or big box it was really striking.

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Back in the SF Bay Area this weekend my wife and I were shopping for that dryer. We planned to visit Sears, Best Buy and Home Depot, the usual suspects. But based on my earlier ABT experience I did a Google search on my iPhone on the way to Sears. I was looking to see if there were any non big box stores like ABT in our area.

Scrolling through search results I found a family owned independent appliance store called Airport Home Appliance. My intuition was that we were going to have a better experience or at lease become better educated by visiting this store first. Conveniently there was one on our way. (The store has multiple locations.)

There was a mobile website but it wasn’t as easy as it should have been to find store locations and addresses.

The short version of what happened next was: we had a great experience with a very knowledgeable salesperson, we found a great deal on a washer and dryer, bought them and didn’t visit another store. And while Sears may have had some reasonably well-trained personnel I was anticipating little or no real help at Best Buy and Home Depot.

Had Airport Home Appliance not had a mobile-friendly website and not ranked well in Google search results I never would have found it and we would have been relegated to another mediocre big box experience.

Generally speaking the big boxes and Walmarts of the world don’t pay well or train their people well and experience high turnover. They’re being forced to look at these policies because of showrooming, but overall the shopping experience is inferior because of poor service. Airport Home Appliance has multiple locations and is large enough to be able to compete on price with some of the big boxes, so the company may not be typical. But it is a local business vs. a national chain.

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These independents need exposure, even in their own communities. They need to be discoverable, get reviewed and rank in local search results. They need mobile sites and social sites. And in the majority of cases they’re not going to be able to accomplish these imperatives without a great deal of help. This is even more the case for truly small businesses with four or fewer employees.

National entities have massive advantages over SMBs when it comes to marketing, not least of which are their top-of-mind brands. I didn’t know about Airport Home Appliance. I would simply have gone to the stores I knew. There’s a big “discovery problem” for most local businesses.

It’s up to all the sales entities and players in the local/SMB ecosystem to genuinely help these business owners succeed — not just push “products” on them. There’s a lot of lip service paid to the “trusted advisor” role.

Yet that’s what these business owners genuinely need. And the economy needs them to succeed (lifestyle businesses or not) in order to maintain the vibrancy and diversity of local communities. Otherwise, as I said, the future is Walmart and Subway.

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Despite Disappointments, Social Is Still Top Marketing Priority for SMBs — Survey

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Local directory site Manta has come out with another of its regular SMB surveys, most of which I don’t write about because they tend to be focused on taxes, politics or hiring and are intended to attract mainstream news coverage. The most recent one however a couple of findings that struck me.

The survey asked, “Of the following, what is the main technology investment will you make in the next six months in an effort to help increase sales?

  • Social media promotion/advertising – 31%
  • Web upgrade (mobile optimized, online payments, etc.) – 17%
  • Search marketing – 15%
  • Create a website or other online presence – 14%
  • Adopt mobile payments processing – 5%
  • Other– 18%

As you can see, social media marketing was the top response. This confirms numerous previous surveys that indicate social is either the top SMB channel or one of very high interest. Anecdotal information continues to support this idea as well. Just this evening I heard about the demand for Facebook Pages among SMBs in Sri Lanka.

Manta also found that “access to a social media guru” was number three on its top 10 “holiday wish list” for these SMB survey respondents. Number one was a new computer and number two was free advertising space.

There continues to be huge interest in social media mixed with strong ambivalence about the time commitment and confusion about ROI. The Manta survey polled just over 1,200 of its members in October.

A year ago I wrote about the gap between SMB social media adoption and perceptions of effectiveness. The large majority of “serious” SMBs are on social media in some form. However only a minority see it as “most effective” vs. other channels.

For example, a 2013 survey from Vocus found that 77% of SMBs use social media in some form to market themselves. Yet the survey also discovered that social was deemed “most effective” by only 25% of respondents (and only 20% in the $1 million+ revenues category).

I attribute this gap to the SMBs’ lack of expertise in using social media. This likely explains why they want “access to a social media guru.” They know it has huge potential, they just don’t know how to use it effectively. (This story repeats itself across most of digital marketing for SMBs.)

Ultimately what I think will be bundled in third party Facebook marketing programs for SMBs are the following:

In other words, this is what I think the Facebook package will probably become — all or most of the elements above. And I think the outsourced content creation (e.g., a post a month) will eventually be minimized or fall away entirely.

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StepsAway Offers App-Free Solution for Indoor Marketing in Shopping Malls

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One of the major challenges of indoor location and marketing for venue owners, malls or individual retailers is getting an app onto users’ smartphones. Retailers need to make an argument to consumers to download their apps and engage them to ensure usage. That’s because without an app there can be no notifications or other promotions — until now.

A company called StepsAway now offers an indoor marketing solution for mall owners that doesn’t require a prior consumer-app download. This is quite significant for obvious reasons. Shoppers sign in to the mall’s WiFi network and then are re-directed to a browser-based HTML “app,” featuring stores and promotions for that that location.

Users can search the app by category or store name. Time-sensitive offers for that location can be promoted by any participating retailer. StepsAway also has a WiFi business but its portal can work with any existing WiFi system.

The company makes money on monthly subscription fees that are paid by retailers to distribute content and offers through local mall “apps” provisioned by StepsAway. The company works with mall owners and retailers at the national level. It doesn’t approach individual stores in specific locations.

This should make penetrating the market much faster. And because there’s no app to develop deployment should be much quicker. The company currently works with 10 malls around the US. Obviously retailer participation is key to the success of this initiative.

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Here’s the company’s pitch to retailers:

Our patent-pending proprietary desktop platform is built to easily repurpose your existing digital content. Whether there’s inventory that needs to move or a ‘price-test’ to capture more gross margin dollars, SA Connect is your ‘go to’ solution to communicate with shoppers for your ‘Regular Promotions’ or ‘Flash Sales’.

There is a StepsAway-enabled mall not too far from me but I’ve not had the opportunity to test out the experience. It’s not clear whether the portal can be used to promote individual retailer app downloads but it doesn’t appear so currently. It’s also unclear whether the company will be selling ad placements or position within the browser-based “app.” I suspect it will over time.

More than 80% of US consumers have used smartphones in stores to look for coupons, check prices or product reviews (various sources). And while nearly 90% of time spent with mobile devices happens in apps that’s not true in the retail vertical.

According to consumer research from Local Corp, conducted by the eTailing Group earlier this year (n=1,300 US smartphone users), when it comes to product research only 24% of consumers use an app. Most use a search engine (Google) or mobile website.

The StepsAway solution is thus well aligned with the current state of the market and the limited adoption of retailer apps.

Given all this I would expect that national retailers and mall owners will be quick to embrace StepsAway as one indoor marketing solution that removes much of the current friction and barriers to adoption from the consumer experience.

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Google Promotes Yelp, Facebook, Twitter in New Videos Aimed at SMBs

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On Monday Google posted a series of six videos aimed at helping SMBs get online and improve their digital marketing capabilities. Together they represent about 30 minutes of viewing time.

Narrated by Google’s Maile Ohye. They’re mostly basic and pretty accessible:

In the videos Google explains and promotes Google My Business but, interestingly, also discusses the value and importance of Yelp, Facebook, LinkedIn and Twitter. To my knowledge this is the first time Google has “officially” and publicly promoted third party services that in one way or another compete with the company’s own offerings.

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I’ve long wondered if Google would build or embrace presence monitoring, listings syndication and reputation monitoring tools involving third party sites. This video series implies that it could well do so.

Take a look at the videos and tell me whether you think their recommendations are well calibrated for online newbies or whether you think they’re still too challenging for most SMBs to implement.

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Right Time and Place for Curbside

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Curbside a new mobile shopping app has formally launched with almost $10 million in funding. Jaron Waldman is CEO. He was the head of the “Geo Team” at Apple following the acquisition of his mapping startup Placebase.

Simply put, Curbside taps into the “buy online, pick up in-store” infrastructure of major retailers such as Target, Toys R Us, Home Depot and Crate and Barrel. Just as that suggests, users shop and buy within the app. They then pick up the merchandise at the physical store.

It’s very analogous to online ordering for restaurants; however it’s about products. Waldman launched the app in private beta earlier this year (he and I had a quick discussion about it some time ago). He told me today that their early repeat usage numbers are strong and that people find the app “pretty compelling.”

Lots of startups have in way or another been trying to solve the real-time product inventory problem for years. The first of these was Kendall Fargo’s StepUp Commerce, later followed by NearbyNow, Milo, Krillion, Retailigence, Goodzer and others. Nokia dabbled in this space for a little while.

Curbside arguably offers the most complete consumer experience available to date: inventory + in-app payments. Waldman and his team are only able to do this because the digital inventory systems of major retailers have matured to the point where he can access their data.

The “omni-channel” movement in retailing is also helping his cause. Many retailers, he told me, see this as another way to combat pure-play e-commerce. He added that he’s getting access, as far as he knows, to all the real-time inventory the retailers make available on their own sites.

Curbside

I asked about smaller retailers; is there a plan for them? Like others before him Waldman said that smaller retailers’ inventory systems are mostly not ready for prime time and so cannot participate at this point. He would like to help and include them however. Indeed, that was his original vision.

The company had to turn to larger retailers when it became clear that SMBs weren’t able to support Curbside. Waldman thus found out what StepUp, which had a similar vision, discovered more than eight years ago.

The difference now is that new POS systems, such as Square Register and others, could enable SMBs to participate in Curbside. Most of the inventory in the Square Market is coming from inventory cataloged in Square Register. As more SMBs adopt iPad-based POS systems they will be increasingly able to participate in digital product syndication.

One interesting thing the company is testing with the Oakridge Mall in San Jose California is a multi-retailer curbside pickup. Currently only a couple of retailers offer this (e.g., Target) but on an individual basis. However we’ll probably see this feature expand.

He also told me that at the Oakridge Mall customers get temporary preferred parking (and can go into stores to shop thereafter). That’s another incentive to use the system.

Most of e-commerce is about convenience rather than price. This is a hybrid: ensure the product you want is there waiting for you and then go into the store/mall to shop for other stuff. This buy online, pick-up in store solves many of the same problems as e-commerce same day delivery, but without the massive cost involved. (Google Shopping Express is probably not going to survive long term for this reason.)

There are many product extensions available to Curbside over time: coupons/promotions, FSI circular data and even indoor location. Regardless, Curbside appears to be at the right place at the right time. Retailer inventory systems are mature enough to support this; consumer mobile shopping (and payments) usage are fairly well established and retailers are investing in supporting multiple sales channels.

Waldman is therefore lucky but he’s also experienced and smart. He knows the local space well and is familiar with its challenges and opportunities. And I think that based on the early feedback and momentum, Curbside looks like it’s tapped into a big one.

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