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Alcohol Retailers Vulnerable

The Battle for the Liquor Industry

Data as a Core Driver of Commerce

Nowadays people can do pretty incredible stuff with just the touch of a button. One can call a friend, check a social profile, take and share pictures and stories, record content, recommend and purchase digital and physical items over the internet and have them shipped or delivered to you in less then a day. In real life each one of those activities leaves behind signs - in the digital domain these are known as digital breadcrumbs.

The Wine and Spirits industry is an incredibly unique space as the market for e-commerce is still in its infancy. Retailers in the Wine and Spirits Industry including the biggest ones are still exploring the opportunity in the digital domain at a very basic level. Concepts like remarketing, retargeting and consumer journey that have been widely adopted in other industries have only lately been introduced to this unique market. Part of it is a result of regulatory oversight that has prevented vertical integrations on one hand, and the creation of super chains (and super data players) on the other hand. Another reason, tightly related is the absence of customer ownership. In other words the mutual ownership of the customer often entails an actual lack of ownership of the customer and its journey.

The need for better digital solutions for retailers, distributors and suppliers has been evident for a few years now. For the retailer, capitalizing on the opportunity data may have to offer, entails having good access to its Point of Sales (POS) and consumer data. Many retailers, understand that and seek to replace their POS only to end up in more or less the exact same place. The POS market is extremely competitive and fragmented and very few (if any) companies would bother to do anything with the particular retailer’s data to the extent that retailers are stuck with a flashy dashboard and the backend of a 40 year old database not allowing any real automation or even the most basic data-driven decisions to take place. The truth is that squeezing value out of data is very hard. And while I have been hearing more and more executives praising the value of data and increasingly willing to pay an obscene amount of money for a sexy sample of a random data set, many from the small retailers to the top brands of the country do not have an appropriate data strategy.

City Hive Data

The 3 Options: Do Nothing, Do Something, Do the Right Thing

Own everything
Most Beer, Wine, and Spirits merchants do not have a digital strategy. I mean some of them might be under the impression that they do, but a quick look at their website will reveal the hard truth: they are not in the competition. There’s a good reason for that; building a sustainable and scalable digital strategy all on your own is expensive twice: Firstly, the upfront cost is prohibitively expensive with prices for a basic website ranging from $2500 to several tens of thousands. Secondly, and even more importantly, maintaining a good digital channel in this rapidly changing world will require significant and ongoing time, effort, and ultimately money, making it a non sustainable solution. The DIY set of solutions is an interesting approach that takes away the upfront cost but has not been proven to be a good enough solution at this stage. It also requires significant investment to serve as an actual ongoing alternative.

Outsource everything
Having this bad experience maintaining their own digital assets has some stores deciding to say no to e-commerce. Worse yet, others have taken outsourcing a few steps too far and are entrusting their sales with third party sites and platforms. Customers go to the 3rd party sites and order their alcohol there, as opposed to on retailers own, brand-labeled website. The result? This ultimately destroys their independence, as they no longer have control over their customers and sales. Retailers lose out on driving business to their own web page, their own Mobile App, and finally their store. They lose out on utilizing data to help their business grow. And most importantly, they lose out on creating a long-term customer base that will serve as their very own customer base and community for years to come.

e-commerce

e-Commerce People?
So why are retailers doing this when they are clearly losing in the long run? The easy explanation is that the world of e-commerce is an extremely tough environment, and it could be hard to get people to your website, let alone build your own. So when someone comes along and says that they will integrate with your POS system and drive sales via a delivery network for you, and all it will take is for you to give up brand recognition (and your e-commerce customers), you take it. That is indeed true but captures only a very small part of the story. Many merchants have repeatedly insisted that these are “new customers”, “different customers”, and in fact “new money” as if there’s a hidden world of e-commerce people accessible only from platform 9 ¾. While this is a very appealing narrative, the truth is that there are no e-commerce customers, there are just customers. People that shop digitally are more often than not the same people that shop offline and so by giving up your e-commerce customers you are in fact giving up your customers. We have the numbers to show for it: more than 9 out of 10 people shopping online for wine and liquor make an occasional visit to a store. If you still insist taking that short sighted route - one advice summarizes the situation, insist on getting full customer information from your new 3rd party provider - Literally none of the marketplaces will agree to give you that. And then sit down and ask yourself - “why?”, and immediately after “what are the consequences?”

Customers

Own your customers
The right solution starts with defining the right goals. As simple as it sounds we have seen business owners and operators get lost already at this very early stage and we do not blame them. It is very easy (and often facilitated by all kinds of helpers) to fall for “fake” measures like impressions, awareness, clicks, foot traffic, reviews and even top line sales and revenues. For retailers, at the end of the day, the goal should boil down to increasing the bottom line. To get there all those soft measures mentioned above may be good proxies but they should not interfere with the main goal of increasing the bottom line. After establishing that, we can strategize what could be the approach to get there but we need to at least agree on that.

Next, we can begin to think about how to reach this goal of increasing the bottom line. I believe there are two channels for this: optimize current customer output and reach new customers. Retaining customers is extremely important. From my experience it is 5-8 times easier to retain a customer than it is to acquire a new one. Nevertheless, both are important for any business to succeed in the long run. There are many techniques being used today to engage customers and prevent them from going to other sources for their purchases. Perhaps the most important is that consumers are provided a seamless omnichannel experience. That is because it takes about 3 seconds for people to decide if they will keep a product. This means focusing on things like design which could be done using wireframes, A/B testing or hiring a UX specialist. Assuming your site is flawlessly arranged, and consumers coming to shop are having an amazing experience, it is time to focus on offline engagement. Directly this can be done by sending coupons, notifications of promotions, and special deals to loyal customers. Indirectly this takes on the form of social media engagement and Search Engine Optimization (SEO), which are really measures taken to drive traffic to ones site in order to acquire new customers.

The more important part of owning everything is having the ability to oversee everything. While this can be done with a notepad or spreadsheet, it would be a primitive way of going about it. Machine learning and artificial intelligence provide incredibly powerful ways to automate and improve operations. And finally, as we saw with the Facebook-Cambridge Analytica data scandal, data security should be taken extremely serious these days. By having your own ecommerce presence you retain full control over all the data you create, mitigating the chances something horrible like that happens in the future.

Two Lessons Learned: The Print Book and the Publishing Industry

Most people do not know this, but the Amazon revolution for the print book industry had two major casualties. The obvious one was with major brick and mortar retailers like Borders and Barnes and Nobles. Their demise was far from being unstoppable; it was facilitated by the celebrated and later described as catastrophic partnership that Borders has made with Amazon in 2001. This is what led to Borders losing its customers, its brand-recognition and ultimately to its going out of business (funny enough the model of the deal was similar to the one Amazon struck with the late Toys R Us). While retailers in the Wine and Spirits industry are in some sense protected by regulators, they are still at significant risk of falling into the same trap. Some of them are not only playing this dangerous game, they are playing this game with none other than that same Amazon.

The second and unfortunate casualty, which was for some reason less obvious although it is textbook material...that market concentration at one level can adversely impact the position of other levels in the market. In short, that smooth $9.99 price tag you pay for your books today, publishers did not actually agree to that rate, they had no choice. What was later known by some as the Hachette dispute was a direct result of a very poor strategy and significant short sight by the Book Publishing industry. By monetizing on orders from their “new” partner at the time, the publishers lost grip of their dominant position in the industry. Today they no longer call the shots and doubtfully will ever regain any control over their own faith.

Conclusion

In the last two years I have spoken to over a 1000 business owners and operators and cannot overemphasize how much I appreciate the hard work they are doing and the challenges they are facing, growing and maintaining a business in what is not always a welcoming environment. As we have seen time and again technology can definitely disrupt existing businesses and business models, but it also creates opportunities for new businesses and for existing businesses to improve themselves and come out stronger and better on the other side. With the exception of the battle of Stalingrad, a battle has never been won by focusing strictly on defense. In the Battle for the Liquor Industry the Retailers that prove to be the most successful will be the ones that are willing to adopt new technologies, take chances, establish the right partnerships, and aim to win. This is an exciting time for the industry as a whole, and it presents Retailers both big and small with the chance to meet these challenges with creativity, wisdom and grit. Those that seize this tremendous opportunity have significant upsides waiting for them on the other side.

- Roi Kliper

Going Online

Why You Should Not Spend a Dime to Take Your Business Online?

Okay, it doesn’t take a genius to know that everyone is spending more and more time on their smartphones. If you did not notice that, just ask your significant other - believe me - they have noticed! According to Techcrunch, people are spending as much as 5 hours a day on their smartphones, making purchases, manage their banking, emailing, reading the news or a million other things, so if you have a business no matter how small, why wouldn’t you want a presence on your customers’ phones?

online business - phones

You have to spend Money to make money - But do you?
The problem is that if you don’t come from the technology world, it must cost a fortune to build your own branded mobile eCommerce app. You might even have tried your luck with building a website and been burnt. You might have spent $5000, $10000 or more and gotten nothing out of it. In fact, if you’ve built a Mobile app you’d know that the build cost is just the beginning and what really kills you is the maintenance.

Well, guess what? It doesn’t work that way any more. If you are a business owner wanting to go Mobile and even if you are a bigger store with multiple locations, more and more technology is available to meet the challenges of your business that don’t require large investments. These technologies work on a subscription or SaaS (Software as a Service) mode where you can pay as you go essentially de-risking the process of taking on this venture. They start from low functionality do-it-yourself apps and going up to high end, endlessly customizable and feature rich solutions that are simply a few clicks away with very little or even no upfront cost.

online business - money

Oracle as a Metaphor
Gone are the days where you either go out and spend huge amounts of money on Oracle, IBM or Microsoft, although some still do because that’s just what they are used to and as you know, no one was ever fired for choosing Oracle (although I can definitely think of a few that should have been.) Do a quick online search and you can probably find multiple solutions at a fraction of the best price you ever thought imaginable.

The “No Free Lunch” Principle - Revisited.
One of the biggest obstacles encountered by businesses exploring the adoption of new technologies is disbelief. People tend to assume that if something doesn’t cost a lot it clearly has little or no value as that is often the case in life. On the other hand, independent business owners are unwilling (or even unable) to invest up front without clear proof of value. - This maybe the biggest paradox of independent businesses - big or small - in this brave new digital era.

I’ve recently heard Prof. Scott Galloway define the current economic environment as “the age of the consumer”. So while this is fairly self explanatory when you think of all the free services we get as individuals e.g. email, photo storage etc… This has yet to dawn on business owners and business professionals. The abundance of technology, the accessibility of very advanced tools the easiness of implementation and even the availability of AI infrastructure makes building amazing solutions and applications readily available for everyone.

online business - City Hive - Branded App

We encourage our customers to let us show them what we can do. Don’t expect to pay anything before you see the product and the value. Get your fully branded mobile eCommerce app and eCommerce website. See how well it integrates to your POS system and provides you with full real-time data. Even then, don’t expect to pay anything unless your customers are actually using it. Let it run, set up a Loyalty plan, or let the system take its course. A few months later you will start to realize that you are now a digital company with a powerful CRM (Customer Relationship Management) tool at your disposal, that you have seamlessly built a powerful customer database and that you suddenly have in your hands capabilities that are on par with Amazon and Uber and that finally that instead of being an old fashioned retailer, you have maintained the integrity of your brand while harnessing the power of data to take you to the next level.

- Roi Kliper

Curating The Customer Experience

Why You Should Offer a Curated Wine Package Today

Curated Packages

We’re all too familiar with this situation:

A customer comes in and says “I’m looking for a wine for tonight’s dinner.” You, excited to help your customer, swiftly and confidently ask “What type of wine were you thinking of?” The customer kindly responds with a “well maybe a red…maybe a white.” And it’s awkward silence from there as you slowly blink at each other.

Sound like a scenario you’ve been in? You and I both! Selling (and buying) wine is about learning your customers tastes and preferences, and building a relationship from there. Understanding and providing wines that meet your customer’s taste is what will make them come back to you, become a loyal customer, and be even serve as an unofficial brand ambassador.

Know your Customer

One way to solve these awkward moments is to host tastings at your wine shop. Events like this will allow your customers to explore with you what they like and what they don’t. By sharing your wine knowledge and listening to your customer’s reactions, you’ll start start building lifelong relationships with them. Unfortunately, it doesn’t really solve the “tonight’s dinner” problem or translate well to the online channel (if only there were a way to virtually try wine…I wish).

Though we may never be able to have wine tastings online, online wine clubs are gaining interest. And what’s not to love about them? They provide recurring revenue and increase customer loyalty with very little effort on your side. Simple! But wine clubs are also a big commitment from the perspective of the buyer.

A One time Curated Package  

That’s what’s great about curated wine packages! As the retailer, you can show off your sommelier skills you learned from watching the Somm documentary on Netflix. By curating a package to showcase a stunning portfolio of the world’s wines, the customer will gain trust in your ability to select quality wines that out-perform their price and deliver a package that lives up to the quality of the wine. Whether it’s a package for your customer’s dinner party they’re hosting, or just to enjoy, they help establish trust and strengthen the relationship between you and your customer.

Unlike wine clubs which are subscription-based, curated wine packages are a one-time purchase. Once your customer is sold on your ability to curate a killer selection which nails their taste and budget, they are bound to come back for more and even subscribe into one of your wine club offerings.

Retailers get ready, because City Hive now has a feature to include curated packages on your mobile app and website. We offer a way for both consumers to explore new tastes and retailers to do what they’re good at: tasting, selecting, and producing a great package.

Curating Personal Packages that Scale

Our Artificial Inteligence set of algorithms can help retailers decide what would be the best wines for each specific customer based off their previous purchases, their profile and general wine and market characteristics. By offering curated wine packages, retailers have another opportunity to build their brand and increase loyalty with their customers. Providing your customers with great wines they’ll love in an easy and convenient manner, your customers will keep returning for more.

- Tina Nori

Creating Lifelong Customers Just Got Easier

Why You Need a Loyalty Plan

loyalty-plan

It’s safe to say in the Alcohol Beverage Industry there’s a lot of competition…and I mean A LOT. With numerous boutiques to larger liquor chains and franchises, what is it that makes the consumers keep coming back to you? Two words: loyalty programs.

Now if you’ve been in the retail business long enough, you know this isn’t as simple as it sounds. Sure, making a loyalty plan your customers will like may be the easier part. But maintaining those loyal relationships with your customers is like dating in your 40’s: hard. So a good start is creating a loyalty program that provides value to your customers. After all, it’s the returning and loyal customers who make it possible for your shop to continuously make sales, expand, and grow.

According to Invesp, 69% of consumers say choice of retailer is influenced by where they can earn customer loyalty/rewards program points. Just an increase in customer loyalty by 5% can lead to a 25%-100% increase in profit per customer. So if you’re on the hunt for a long-term strategy to increase customer retention, it’s time you set up a loyalty program. 83% of customer’s state loyalty programs can influence their buying decision. So what’s stopping you? The effort it might take? Please, that didn’t stop Tom Hanks in Sleepless in Seattle and shouldn’t stop you either.

Luckily with City Hive, you can take your loyalty program from in-store, to online and mobile. Our system easily allows you to develop your own or add an existing rewards program to your app or website. Loyalty programs are a great addition to your digital store since they’ll help you develop a brand image that will feel more like a community and less like a corporation who’s only after one thing: your money.

A great example many alcohol retailers are adopting is offering store credit. Once your customer makes a purchase, they will receive a percentage of their purchase back in credit which can be used towards future purchases. It’s a win-win! Not only will your customers be more inclined to choosing your store in the future, but they will likely make repeat visits allowing you to stay profitable and keep your business growing.

Loyalty Plan

With a City Hive powered mobile app, your customers will also have their points accumulated visible on their phone.

My good friend Pareto once said 80% of your sales come from only 20% of your customers. This means you must nurture these relationships with your customers. They have a higher lifetime value, meaning that over the course of a customer’s projected buying time with your business, you can predict a higher return on investment. Loyalty programs can help this by increasing the number of repeat customers and repeat purchases. But by how much you ask? Well, that’s no longer a guessing game! City Hive has been running loyalty plans for hundreds of retailers and have seen a 30% increase in odds of purchase each week after introducing a loyalty plan. Also, we’ve noticed the average customer’s yearly value has grown up to 5X after the implementation of a loyalty program.

Whether you also want to include promotions that will offer double, or if you’re feeling it, triple the loyalty points, City Hive can easily help you execute it with a click of a button. We’re here to help you build the digital experience your customers want in an easy-to-use fashion for both you and the customer.

Have a loyalty plan that’s been working for you? Let us know in the comment section below!

- Tina Nori

Why Personal Touches Pay Off

A Little Personalization Goes a Long Way

personalization

You receive an email from your favorite alcohol retailer. You couldn’t be more excited since you’d like a little liquid confidence for that party you’ve got planned tonight (you’re trying to impress a girl). You quickly jump to open the email for the potential of some coupons. You start reading and as quickly as you got excited about the email…you become disappointed. The deal was for a sweet white wine…when you’ve only purchased Vodka. Ouch.

For retailers, succeeding in the digital age is about providing great experiences. But for the individual, it should feel like an experience designed just for them. And I’m not just talking about including their name in an email (that’s so 2008), but really designing your promotions and communications that meet their wants and needs at the right time and place. Let’s be real, if your customer has only ever purchased Vodka like in the example above, then how likely are they to purchase a sweet white? Probably slim.

So what do I mean when I say personalization?

Create an experience where the consumer feels like it was made specifically for them. Not only will this create a deeper customer connection, but your customers are more inclined to choosing your store and referring you to their friends.

Thankfully with City Hive, we are all about creating these experiences, such as sending birthday wishes, introducing a ‘Your Favorites’ section, or offering coupons for frequently purchased items. City Hive crafts and manages thousands of rich user and product profiles that includes thousands of characteristics and user behaviour measures. From there we’re simply efficient matchmakers, like eHarmony but for alcohol.

We then use big data and AI algorithms to understand and predict what consumers want and when they want it. Our system personalizes the offer to each specific customer to optimize their experience and continuously choosing your outlet.

At City Hive, we’ve recently introduced “Special Event Messages” where consumers will receive a personalized message just for them. By offering personal messages, customers will feel more connected to your store and will want to support your store from the experience you create.

City Hive also gives you the tools to market directly to your consumer. City Hive’s system is great at recognizing patterns and will create customer segments for you (that’s right, no effort on your side). You’re given information such as what they’re buying, when they’re buying, and frequency of purchases so you can create promotions geared towards them. You have the ability to send individualized push notifications from our easy-to-use platform to you customers. Maybe you want to send coupons to your most loyal customers? Maybe you want to create a deal to try to re-engage users with varieties they have purchased in the past? You can quickly and effortlessly create a personal push notification to your consumers. By doing so, you can build a holistic and integrated approach to customer data and continue delivering a truly personalized customer experience. To see what more features we offer for retailers, check us out here.

So where does that leave your customers? Continuously shopping with you, with digital offers that want, building loyalty and brand engagement.

- Tina Nori