WWTT? Walmart Learns Important Lesson About Third-Party Sellers This Holiday Season

I’m not sure when Ugly Christmas Sweaters became a thing, but they seem to show up regularly each holiday season, spurred by Ugly Christmas Sweater parties and people who enjoy making poor fashion decisions. However, it seems this trend has gone awry for Walmart Canada.

I’m not sure when Ugly Christmas Sweaters became a thing, but they seem to show up regularly each holiday season, spurred by Ugly Christmas Sweater parties and  people who enjoy making poor fashion decisions. However, it seems that what used to be ironic sweater-wearing has turned into shock-value sweater-wearing for some individuals, and there are sellers out there who will gladly cash in on that trend. And so we have the recent problem that Walmart Canada faced when a number of highly inappropriate Ugly Christmas Sweaters were made available for purchase on walmart.ca by one of the third-party sellers, Fun Wear, that sells its merchandise on the site.

The sweater that has caused the most uproar features a bug-eyed Santa Claus in front of a table with three lines of a white substance, with the words “Let It Snow” below. Okay, so not great. But then it gets way worse.

https://twitter.com/HurrbaSousJohn/status/1203353309396029440?

Unfortunately for Walmart, this is more than an embarrassment for selling something tacky and enduring some snickering from the Internet. The product description, partially seen in the tweet above, is particularly problematic:

“We all know how snow works. It’s white, powdery and the best snow comes straight from South America. That’s bad news for jolly old St. Nick, who lives far away in the North Pole. That’s why Santa really likes to savor the moment when he gets his hands on some quality, grade A, Colombian snow. He packs it in perfect lines on his coffee table and then takes a big whiff to smell the high quality aroma of the snow. It’s exactly what he needs to get inspired for Christmas Eve.”

On Saturday, Dec. 7, Walmart Canada removed the product, and issued an apology. A spokesperson provided the following quote to Business Insider:

“These sweaters, sold by a third-party seller on Walmart.ca (our website in Canada), do not represent Walmart’s values and have no place on our website. We have removed these products from our marketplace. We apologize for any unintended offense this may have caused. These sweaters were not offered on Walmart.com in the US.”

Despite the removal of the product and the apology, the reference of “Colombian snow” has the National Agency for the Legal Defense of the State in Colombia prepared to sue. According to the Washington Post and El Tiempo, on Dec. 10 the agency stated that Walmart’s apology about the product from a third-party seller on Walmart.ca was not enough. Agency director Camilo Gómez Alzate provided this statement to El Tiempo, reported by the Washington Post:

“The Walmart sweater is an offense to the country. It generates damage to the legal products of Colombia and damage to the country’s reputation. Although Walmart apologized, the damage was done.”

So the lesson to be learned here: third-party sellers may expand the amount of business you do and the revenue you pull in, but you can’t always trust that their products will be in line with your company’s values. This was not the only Ugly Christmas Sweater that Fun Wear had up on Walmart Canada’s site … and the majority of them were in rather poor taste.

While Walmart may have policies in place to limit undesirable products from third-party sellers, it’s clear these policies are either difficult to enforce or they’re not being enforced. The consequence of losing customers over this is one thing, but having Colombia’s National Agency for the Legal Defense of the State sue if appropriate reparations aren’t made is an even bigger problem for the retailer.

What do you think marketers? Is it worth it to have third-party sellers offer their products on your sites, checked or unchecked, or are issues like this enough of a reason to avoid third-party relationships? Oh, and yes, Amazon is selling products with similar and identical designs.

 

Jurassic World Eats Pokémon Go at Augmented Reality App Marketing

Two years ago, Pokémon Go made waves as the first really successful augmented reality app to gain a broad user base. This year, “Jurassic World: Fallen Kingdom” is the summer’s latest blockbuster, and a geolocation augmented reality app may just be its secret marketing weapon.

Two years ago, Pokémon Go made waves as the first really successful augmented reality app to gain a broad user base. While the mobile game was a stand-alone product and not marketing, it left us asking: “What could AR technology do for marketers?” This year, “Jurassic World: Fallen Kingdom” is the summer’s latest blockbuster, and a geolocation augmented reality app may just be its secret marketing weapon.

Pokémon go was not insignificant for marketers. It broke ground by getting users to engage in a geolocation-based augmented reality experience (which continues to this day, the game still has a significant user base and recently added new features). And it was one of the first AR experiences to offer location-based digital advertising.

But Pokémon Go is a game, not a marketing experience. While it offers sponsorship opportunities, it does little to prove the role AR can play in a marketing campaign. That’s where Jurassic World Alive is different.

The New Breed of Branded Augmented Reality

This new, geolocation augmented reality game is, as Polygon puts it, “Pokémon Go, but With Dinosaurs.” And while it is stand-alone game with its own revenue model via in-game purchases, the entire experience was created through a partnership between Universal and Ludia, with built-in partnerships with AMC and Walmart.

The "News" tab on Jurassic World Alive links directly to the brand's social media pages and advertises that tickets can be purchased at your local AMC.
The “News” tab on Jurassic World Alive links directly to the brand’s social media pages and advertises that tickets can be purchased at your local AMC. | Credit: Jurassic World Alive by Thorin McGee

It should be noted that Ludia was not a part of Pokémon Go, and has developed several games on its own beyond Jurassic World Alive. So this type of game is not limited to certain developers. If you wanted to pursue one for your own brand, you should look for a studio like Ludia to help create it.

An important brand impression is made every time the user opens the app. And the game itself lines up perfectly with the theme of the movie, which sees the Jurassic World dinosaurs escape into our world.

There are several in-game mechanisms that allow Universal to use the app as a marketing base. For example, an in-game message system allows the brand to send marketing messages to every player. And an in-game news feed lights up with notifications whenever a new offer hits. The news section also links to the movie’s social media properties, and has a prominent banner reminding players to get their tickets at any local AMC.

Like Velociraptors, AR Marketers Hunt in Packs

The partnerships with Walmart and AMC are built right into the app. Each brand has special “supply drops” at its locations that give players generous bonuses for entering the storefront and engaging.

When Walmart has a new supply drop, players are greeted with a full-page ad telling them to pick it up a their local Walmart.

The nearest AMC is that red dot in the background. The big crocodile is a "Sarcosuchus."
The nearest AMC is that red dot in the background. The big crocodile is a “Sarcosuchus.” | Credit: Juassic World Alive by Thorin McGee

The AMC partnership is more prominent in the game. In addition to the call to action to visit AMC to pick up your tickets, “nearby” AMC locations are also marked on the player map, even if the closest one is miles away. Inside, the supply drop is very generous, especially over the movie’s opening weekend. I understnad the digital swag given away was enough to sway several gaming movie-goers I know to visit the closest AMC over competing chains.

AR apps and geolocation have come a long way for digital marketing purposes. They’re not right for all brands, but when the brand opportunity lines up with the features of the platform, it’s a great chance to change the rules of your customer experience.

How do they fit into your marketing strategy? Let’s talk about it in the comments.

Ding Dong, Prime Day Is Here

‘Twas the night before Prime Day, when all through the lands, consumers were searching for their favorite brands. Online purchases were placed by the shoppers with care, in hopes the 2-day delivery soon would be there.

‘Twas the night before Prime Day, when all through the lands
Consumers were searching for their favorite brands;

Online purchases were placed by shoppers with care,
In hopes the 2-day delivery soon would be there.

What am I, a farmer?All right, look, I may have been a literature and creative writing major in college, but I am not qualified to parody any more of that classic Christmas poem. I’m sorry. Send your complaints to mward@napco.com.

Sternly written complaint drafted? Excellent. Let’s talk Prime, and I don’t mean Optimus.

The number of Amazon Prime members is a fairly guarded secret, but according to a CNN Money article from January 2016, nearly half of the households in the U.S. have a membership, with the total estimate being 54 million memberships. That’s a whole lotta boxes.

Cats love Amazon Prime
TRUTH.

Nevertheless, Prime Day is upon us. I know this because I couldn’t look at a single thing online in the past week without coming across this most joyous of newly made up shopping holidays, July 12:

Will the sales be any better than last year? (Fact: While a bunch of people complained about the sales for 2015 Prime Day, sales in the U.S. were up 93 percent.)

What sort of deals should shoppers prepare themselves for? (Get your credit card ready: Prime Day is going to feature more than 100,000 deals worldwide exclusively for members.)

Are other retailers trying to soak up some of the Prime Day juice? (Walmart is offering a five-day period of free shipping, with no minimum purchase and open to all online shoppers.)

The bigger thing here, in my opinion, is to recognize just how HUGE of a disruptor Amazon is.

Sure, Amazon is essentially our e-tailing overlord, and we have accepted it willingly. I won’t say “no thanks” to the ability to order 40 pounds of cat litter, as well as a retro-style dress (thankfully not in the same box), and have them delivered to my doorstep in two days, thanks to my wonderful Prime membership. Hello future, I love you.

But the real disruption — and I’m sure the experts, a.k.a my really smart colleagues over at Total Retail, could do a WAY better job digging deeper into the retail nitty gritty — is this: Amazon has the power and ability to create a shopping holiday in the middle of July, and proved it successful in 2015 on the first Prime Day when customers ordered 34.4 million items worldwide, breaking its Black Friday records.

Other retailers who have some serious FOMO are jumping in, trying to get a piece of the holiday Prime Day pie. Will they be successful? We shall see.

But keep this in mind: If Amazon can disrupt the natural order of the retail industry’s Black Friday and typical holiday shopping ahead of December by creating its own day of shopping delight in July, what’s next?

Or more importantly, who’s next?

Jeff Bezos and the robot uprising

 

Loyalty Programs? We Don’t Need No Stinkin’ Loyalty Programs!

Without fear of (much) argument, it’s a fair statement to say that all companies want, and try to generate and achieve, optimum loyalty from their customer bases. They should want this, because study after study shows the financial rewards of having loyal customers. Some companies reach this goal through superior value delivery, built on quality products and services, and positive, consistent customer experiences. For the past several decades, many companies have relied on customer loyalty cards or programs, by which they can track purchase behavior and give rewards for repeat and volume buying activity.

Without fear of (much) argument, it’s a fair statement to say that all companies want, and try to generate and achieve, optimum loyalty from their customer bases. They should want this, because study after study shows the financial rewards of having loyal customers. Some companies reach this goal through superior value delivery, built on quality products and services, and positive, consistent customer experiences. For the past several decades, many companies have relied on customer loyalty cards or programs, by which they can track purchase behavior and give rewards for repeat and volume buying activity.

Customer loyalty programs are especially popular among retailers. During the years, retailers have found these programs to be powerful business tools within their highly competitive markets. But some retailers have completely disavowed loyalty programs, either never initiating them in the first place or canceling them, in favor of reduced pricing. In fact, this has become something of a trend. What’s behind it?

Let’s start with the biggest retailer—Walmart. The company has long claimed that a loyalty program isn’t needed because its prices are so low. Walmart believes that loyalty programs can, indeed, provide excellent information about customers who participate; however, as one Walmart executive put it: ” … some of the loyalty programs are very expensive, and we don’t think that serves everyday low cost and everyday low price.” Lower-than-competition everyday prices has been Walmart’s merchandising and marketing mantra since its inception. But, at least for groceries and sundry products, that often isn’t the case. Supermarket chains like Save-A-Lot and Aldi’s, neither of which has a loyalty program, will often beat Walmart’s item-for-item pricing by a significant margin. And other competitors can use their loyalty programs to selectively pick products, and individual customers, to offer pricing—which undermines Walmart.

As for generating customer purchase data, Walmart has a “scan & go” app for mobile devices, which allows customers to scan their own items as they shop; and this provides the company with valuable information on what customers are purchasing, the length of time they’re shopping in the store, and what offers and coupons might drive future purchases. Walmart uses additional methods of understanding individual customer purchases. One of these is Walmart credit cards. Another is reloadable MasterCard and Visa debit cards. A third is “Bluebird,” a prepaid debit card which functions as Walmart customers’ alternative to having a checking account, with which they can make deposits, pay bills—and shop at Walmart. Like Tesco is already doing in the U.K, Walmart has been considering development of its own bank, which would provide even more customer data.

Asda, a Walmart-owned supermarket chain in the U.K, also has no loyalty program. It’s the second-largest supermarket company, behind Tesco; and, as in the U.S., newer low-priced chains, such as Aldi, are actively competing with Asda. In place of a loyalty program, Asda believes it provides customers with what they want most, a “great multichannel retail experience.” The chain, according to executives, focuses on the key fundamentals: prices, quality, convenience and service. Alex Chrusczcz, Asda’s head of insights and pricing, offers two explanations of how the organization is endeavoring to build customer loyalty:

  • “Aspire to treat customers equally, or you’ll create a fractured brand and shopping experience. If you have someone paying one price and another customer with a coupon paying a different price, the perception of the brand is becoming fractured. Make sure it’s consistent.”
  • “Be pragmatic in terms of technology and analytics. They aren’t a silver bullet. Use these tools and combine them with the experience of your team.”

From my perspective, the second explanation is common sense; however, the first statement is really questionable—even counterintuitive, if a subordinating goal of loyalty behavior is to help drive customer-centricity. Simply put, all customers are not equal in value; and marketing strategies which treat them as such often create lower revenue.

In the U.S., regional supermarket chain Publix has no loyalty program. The company doesn’t have, as a result, the ability to track, at a household level, what customers are and aren’t purchasing in their stores. What Publix does, instead of loyalty cards, is try different alternative approaches to build sales. One of these, for example, was to test a program where shoppers could set up an online account where they could digitally clip coupons; and then, in the Publix store, the discounts they’d set up online could be automatically applied by typing in their phone numbers. Publix also has a BOGO program for their own brands, and accepts competitors’ coupons in their stores.

Some retailers do more than emphasize the sales and service fundamentals. They build genuine passion for, and bonding with, the brand by creating a more human, emotional connection. And, though there are few organizations like this, retailers such as Trader Joe’s are the exception that proves the rule. Trader Joe’s has no customer loyalty program. What they have is enthusiasm, achieved through differentiated, every-changing customer experiences, enhanced by upbeat, helpful employees. This has enabled Trader Joe’s to generate sales per square foot that are double the sales per square foot of Whole Foods. So, another way of stating that Trader Joe’s creates loyalty behavior without a program is to say: The shopping experience is, defacto, the loyalty program.

Now, we come to retailers which had customer loyalty programs, usually of long-standing, and elected to discontinue them. Actually, much of this has been done by one organization, Cerberus Capital Group, the early 2013 purchaser of multiple regional retail supermarket chains from Supervalu (Shaw’s, Acme, Star, Albertson’s and Jewel-Osco). Calling the new positioning “card-free savings,” and reflective of the first strategy stated above by Asda, each of the chains issued statements with themes like “We want buying to be simple for all, so that every (name of company) customer gets the same price whether a loyalty card has been used or not.” Additionally, and again like Asda, these chains have said they will go back to the basics: clean stores, well-stocked shelves, reduced checkout time, clearly marked sale items and creation of a more customer-focused culture. Some of their executives have also theorized that the chains will now adopt a more local-level approach, rather than customer-level, to their decision-making, and that individual store managers will now be more actively involved in driving successful performance.

So, the chains acquired by Cerberus appear to believe that “sunsetting,” or eliminating these programs, is a calculated risk and that they would still find good ways of providing value to retain more loyal customers, as well as incentives for those with the potential to move from purchase infrequency. Most analysts, however, felt that Cerberus eliminated the programs largely because the chains they purchased were either not mining card data, or not effectively analyzing and applying this material for better marketing and merchandising, thus making the loyalty systems too expensive to maintain.

Cerberus has entered into takeover discussions with California-based Safeway, which also owns Vons and Pavilion. If this sale takes place, it’s a good bet that these chains will also drop their reward cards, because Cerberus-owned supermarkets clearly don’t need, or want, no stinkin’ loyalty programs.