Category Archives: Technology

Has the Best been Bought from Best Buy?

StorefrontBacktalk recently ran a couple of pieces on Best Buy that followed up their recent pieces on “Best Buy’s Black Friday Fiasco” and “Best Buy’s Wifi Porn”, which was expanded upon by SI in its recent posts on how if you wanted a best buy experience, you weren’t going to get it at Best Buy (Part I and Part II). In its first piece on “Best Buy’s Last Hope”, the author says that Best Buy has one shot — an expensive, painful, highly disruptive shot — to truly turn itself around. It must embrace customer service in-sore to an extent that would make Nordstrom, Trader Joe’s and Whole Foods blush. That means store associates who are true experts in the electronics they are selling.

Frankly, I don’t think this is going to happen. The mentality would have to change from “who will work for us for minimum wage and pretend they know enough about this product to actually sell it” to “where can we find someone who knows what they are talking about, is passionate about the products they sell, and will actually work for us as a sales rep” and “what is it going to take to get that kind of people”. Right now, the type of service I’m used to is “this isn’t my department, you’ll have to find someone that is working in this department” to queries as simple as “can you tell me if you still have any of this product in stock” (which any associate can do simply by logging into one of their terminals and doing a query) or, my favourite, in response to “I’d like that” (pointing to something in a cage). Get the key, open the damn cage, give it to me and/or walk it to the cashier. An untrained monkey could do it! (And monkeys are smarter than you think. Pete the Monkey taught himself to do dishes.)

Plus, as the author notes, they would probably have to fire most of their staff and replace them with Apple-store caliber employees. And any employee of that caliber is probably going to go work for Apple or, if they prefer Windows, Sony where knowledgeable associates are preferred.

After all, as the author notes, they currently think they can win a price war with Amazon. A company with massively deep pockets, minimal physical overhead (compared to a retail store chain), and a willingness to go eight years without turning a profit just to conquer a market. Winning a price war against Amazon in the electronics space is not going to happen. Amazon can, and will, win on margin every time if that’s what it takes to be the next major electronics retailer and put Best Buy and its competitors out of business. (And it won’t be hard when it’s customer service reps often give better service over the phone than Best Buy associates in store!)

The other piece that got my attention was that “Best Buy Planned Outages Due to Its Move to the Cloud”. If you believe the hype (and the doctor does not), the whole point of moving to the cloud is so that you don’t have outages. But the most ironic aspect to this story is that Best Buy is cutting Amazon a check for its cloud efforts. They might as well just sell to Amazon.com now and become Amazon’s mobile presence. One little glitch and a propagated purge command and — voila! — no more Best Buy online. (Not that it would make a huge difference anyway. What good is a web store that a growing portion of your market can only order one item from at a time anyway? [See Best Buy Experience? Not at Best Buy! Part II.] the doctor is now ordering more electronics from the local office supply depot because their web site actually works! And if you send them an e-mail, customer support actually responds! On the other hand, it seems that Best Buy’s method of dealing with problems is just to ignore them. It’s not a problem if you don’t recognize it, right?)

The nostalgic part of me would like to say that Best Buy still has a Bright Future, but, in the doctor‘s view, the only chance of Best Buy lighting up the sky is if the same thing happens to it as happened to the Buy More in the season three finale of Chuck. The way things are going, it’s going to be closing 50 stores on a regular basis. And I don’t think China’s going to save it. If Best Buy truly takes off in China, there’ll likely be so many indistinguishable clones in three months that it will just be hastening its demise.

GoTradeLive: A LinkedIn eBay on Steroids for Small Business Procurement to Groupon To.

GoTradeLive is launching its new, global, trading platform targeted at small and medium businesses in the US today. Its new free social commerce and commercial trading platform is poised to be as disruptive to the small business Procurement market as Coupa (Cabana) was when it was launched back in 2007 on Procurement Independence Day. This is not something the doctor says lightly.

So what is GoTradeLive? It is, simply put, a power-auction platform for small businesses on steroids. And what’s so great about that, you astutely ask because there are dozens, and dozens, of auction platforms out there ranging from free to seven figures in cost? It’s social. It’s networked. It’s mobile. It’s easy to use. It’s global (and multi-currency). It’s Free. It can be branded. And it’s proven — as it’s already been tested in Australia, New Zealand, China, and the UK, where they have offices.

Let’s take the benefits one-by-one.

  • It’s social
    You can create your own trading networks using a Facebook / Linked-In type interface and these can be public or private for public or private sales or trades.
  • It’s networked
    While the build-your-trading network ability of the Ariba or Ketera networks are not yet there, the building blocks are and you can see it’s coming. But the ability to define custom trading networks is unique.
  • It’s (a) mobile (platform)
    Like the consumer social networks and e-Commerce platforms, they have a mobile app that allows you to monitor your trades and bids from your mobile device.
  • It’s easy to use
    It’s as easy to use as Facebook, eBay, and other consumer sites.
  • It’s global.
    It has already been launched in Australasia and the UK and further global launches are already planned. It supports automatic currency translation for global buying and selling.
  • It’s Free.
    It’s using the Freemium model pioneered by sites like LinkedIn, DropBox, and BaseCamp. It literally costs nothing to use. No registration or account fees. No listing fees. No transaction fees. (However, if you don’t pay, you are subjected to ads and there is nothing to prevent an advertisement for a competitor’s product or auction appearing on your listing page.) Given that the cost of some platforms include transaction fees of up to 15%, this is a great deal.
  • It can be branded.
    For as little as $15 a month, which gives you one-user access, you can brand the site into your own trading platform (with your logo, colour scheme, etc.) and eliminate advertisements. Small Business Pricing is coming soon, and will start at less than $100 / month.

It’s a great social commerce platform for quickly moving slow, excess, or end-of life inventory and a great platform for many small businesses, especially those in retail, construction, and similar goods-based verticals, for spot-buying product needed at irregular intervals. And it has a lot of promise. This is one platform the doctor will be watching closely.

If Your Supply Management Vendor Gets Acquired, Is It A Good Thing?

Over on Software and Services Safari, Brian Sommer recently asked about Cloud Software Consolidation — Is It All Good? It’s a fair question, as there has been a lot of consolidation in this space, between SaaS/Cloud and non-SaaS/Cloud vendors alike, and a lot more is still rumoured.

The companies will always spin it as a good thing, and if the acquisition happens, chances are that the investors (that control the Board of Directors), think it is a good thing, but that doesn’t necessarily mean it is a good thing from an existing customer point of view. As Brian notes, investors are looking for deal synergies, up-sell or cross-sell opportunities, cost reductions/efficiencies, etc. and customers want to know if the product will be around several more years, whether the product will get enhanced over time and what happens to customer support. And the problem is that these two sets of goals are often incompatible.

What usually happens is:

1. Existing Customers Get the Short End of the Stick.
For example, they will be promised new, different, technical architectures that may make some of their prior integration efforts no longer valid.

2. The Acquired Product Often Gets Slated to be Decommissioned.
And the customer has to migrate or lose access to functionality entirely. (And if the innovative start up was bought by the lumbering gorilla, functionality will typically be lost.)

3. The Acquired Product Is Frozen in Time.
It may be supported for the length of time in the newest customer’s original contract, but forget about improvements. The existing customers will be lucky to get bug fixes.

4. Prices Increase
After all, the new company, which probably has a higher overhead, has to make a profit after spending all that dough on the acquisition!

5. But Vendors Still Create Incredible Works of Fiction to Explain How the Products Will Be Rationalized Into Their Product Line.
Which are too amazing to explain in a few short words!

And, most importantly, no one ever discusses the real economics of the transaction and why it was driven in the first place. And Brian does a great job of summarizing what typically drives these deals in Cloud Software Consolidation — Is It All Good? the doctor strongly recommends that you give this post a read. It is worth your time!

Risk 2011: Technology

In our last post, we indicated that the World Economic Forum had recently released its 6th annual Global Risks report, it’s 2011 edition. This report was filled with risk, thirty-seven types of risk divided into five categories to be precise. Today, we are going to discuss what Sourcing Innovation thinks are the top three technology risks from a Supply Management perspective.

03: Threats from New Technology

Your business depends on its profit margins. Its profit margins depend on keeping revenues up and costs down. Revenue often depends on having the best product for your target customers at the best price point. Keeping costs down usually depends on a lean, streamlined process which, in turn, often depends on leading-edge technology to keep it running as efficiently as possible.

If your competitor identifies, latches onto, and implements a new technology before you do, then your competitor may be able to lower its production and operating costs well below your production and operating costs. If this happens, it will be able to lower its price point, and increase its revenue at the expense of yours. Then your organization will face declining revenues with higher costs. Profits will quickly disappear. Given the rapid pace of progress in many technology verticals, this could happen overnight if your organization doesn’t at least keep up, if not stay ahead of, the curve.

02: Online Data and Information Security

Every week we hear about another data breach at another retailer. What we don’t often hear about, because consumers aren’t directly affected, is yet another network intrusion at a Global 3000. While the average hacker might want your credit card, the average hacker employed by organizations that resort to corporate espionage wants your data – and your Supply Management related data in particular. What are you making? What are the specifications? Where? With who? When are you shipping? From Where? With what carrier? If any of this data finds its way to your competition before you’re ready to release a new product, the losses could be crippling. What if your competitor is able to use your plans to jump-start their development of a better version and beat you to market? What if thieves intercept your critical shipments and sell your product on the black market? While a consumer’s financial solvency depends on her credit card information being kept secure, your organization’s financial solvency often depends on your Supply Management data being kept secure.

01: Critical Information Infrastructure Breakdown

Let’s face it, it’s impossible to manage a global supply chain without modern supply management systems and the information infrastructure that supports them. What happens if your primary data centre gets taken out? What happens if your headquarters loses power for 48 hours? What happens if the land lines fail and the one satellite that carries cellular signals for your (remote) location stops responding? The minute your internet goes down, your business stops. Literally. And since your information infrastructure could breakdown as the result of a (power) grid overload, a data centre failure, an environmental disaster, or a terrorist action, all of which can not be predicted (or prevented in many situations), this is a significant risk that requires risk mitigation plans be in place and ready to go at a moment’s notice.