Retail 4.0 – 10 rules for the Digital Age. Philip Kotler writes about Milkman.

Do you want to know more about the 10 rules?

It is a great honour for Milkman to be cited as a virtuous example in the new book co-signed by Retail guru Philip Kotler and Prof. Giuseppe Stigliano: “Retail 4.0 – 10 rules for the Digital Age“.

Find Milkman under the ninth rule: “Be Exponential”. Here’s the paragraph telling about us:

“To make your business “exponential” you can work in two different directions: propagating through the new channels the usual offer or enriching it thanks to complementary experiences. We analyze, therefore, the first mode: the propagation and extension of the offer. First of all, this road can be used thanks to the as-a-service platforms, companies that offer a very vertical service to third parties, conceived in such a way that they can be utilized following highly flexible business models. It often happens that these third parties have no interest in promoting their brand with the end customer, therefore they allow the partner to offer an option that appears perfectly integrated with its own. Many home delivery services offer other distribution companies the possibility to take advantage of digital transformation without losing sight of their core business, outsourcing to a highly specialized company a business function that is difficult to manage but strategically relevant. In this sense, worthy of mention is undoubtedly the Milkman platform. This player is able to optimize logistics to the point of offering the end customer a punctual delivery service at home and in time slots normally not available through couriers. For this reason, the company has become the ideal partner for many traditional companies and e-commerce platforms. Milkman integrates with current delivery options allowing sellers to offer a greater range of possibilities. All without having to develop new operational processes and in a totally seamless way for the buyer, who simply sets the most congenial option. Despite having debuted on the Italian market quite recently, Milkman has already signed important commercial agreements with numerous brands including Nespresso, Eataly and Tannico’s online wine shop. The most significant collaboration, however, was achieved with Coop, among the Italian leaders of the GDO. The partnership has led to the launch of EasyCoop: an advanced and innovative food e-commerce service. The initiative immediately met with great success among customers, thanks to the logistical optimization of its dedicated warehouses and to the specificity of the delivery options offered by the platform.”

Do you want to know more about the 10 rules?

Here they are:

Be Invisible

Inside shops too often we see expensive tools that nobody uses or that are used only minimally in comparison to their potential, with all the inefficiencies that this involves in terms of costs, time and space. If, on the other hand, you are able to identify a need or a desire and to design a service whose technology is invisible, then you are creating value. This has positive repercussions on the whole business. The best example capturing this shift is the association of technological innovation with electricity: invisible, but capable of activating solutions that would have been perceived as “magical”. Furthermore, technological innovations gain greater value for users when they are able to create a frictionless experience. (…) We could say that high-tech makes sense only if it is configured as a high-touch amplifier of the “human touch”.

Be Seamless

We witness a fragmentation of the customer journey in hundreds of small moments, which Google has renamed micro-moments. Today the “battle” for the heart, mind and money of consumers is won (or lost) within these micro-moments. (…) The store becomes the culmination of a relational process with the much wider brand.

Showrooming means a process that starts at a physical point of sale but ends online. In contrast, webrooming identifies a path that is born and developed online, to end with a purchase in the physical point of sale. (…) Showrooming, for example, can concern those who, preferring a physical relationship with the product or the advice of a sales assistant, decide to explore a store but then, attracted by the possibility of finding a better price on the Net, end up searching online and completing the transaction via e-commerce. In their eyes, physical stores become full-fledged shoowrooms. In the case of webrooming, on the other hand, the consumer explores the products using web channels and then completes the experience in the physical sales outlet: a choice that may be dictated by the lack of trust in online transactions or by the need of reassurance given by an expert or by the willingness to touch products.

People show an increasingly “agnostic” attitude towards the channels through which they communicate, inform and buy. The new consumer wants to live an experience that we can define “onlife” commerce, in which the purchase is only the final part of a broader relational process that enhances all the contact points between the buyer and the seller.

Be a Destination

Product experiences today are more important than the products themselves. (…) It is essential to understand that retailing today does not mean putting products in the consumer’s bag, but building a cross-media relationship with him that can last over time, and then be rewarded with the timing and in the most congenial ways. (…) More and more people, in fact, see the shop as a sort of “playground”, where they can learn new things and express a sense of belonging, a style or a particular attitude. (…) “Be a Destination” means adopting a new concept of physical store as a creative meeting space between consumers and brands.

Be Loyal

The more a retailer invests in the customer experience, the more people who have positively got in touch with him will want to maintain and strengthen the relationship. It is clear, therefore, that in order to win the loyalty challenge, brands must activate significant experiences that go beyond the economic transaction and the obsolete earn and burn models. Following this strategy, brands will always be less defined by what they tell and more by the experiences that people live through them and their products.

Be Personal

Being recognized individually and receiving an offer designed according to specific tastes and needs are fundamental prerequisites for establishing a lasting relationship between people and companies. (…) From this point of view, the depth and speed of supply reassessment are no longer sufficient to satisfy the needs of consumers: retailers are thus obliged to change their strategy from a one-to-many approach – belonging to the mass market and characterized by a certain standardization – to the most customized, one-to-one solutions possible.

Be a Curator

In the past, there was a linear correlation between the exhibition surface and the depth of the assortment, and this mix determined an important competitive advantage. Several pieces of evidence show that today this is no longer valid. (…) Of course, the location of the stores will also be guided by priorities related to the phenomenon of urbanization, and therefore many outlets that are now located in decentralized areas will find spaces closer to the nerve centres of the city and obviously less big, given the much higher costs.

Keeping large quantities of goods almost immobilized in increasingly expensive spaces is so uneconomical as to represent a serious problem of business sustainability. (…) In a world in which any product becomes easily accessible via the Internet, a model that combines products and services in a combination capable of distinguishing itself is much more incisive, rather than trying to compete with digital players on the offer. Continuing to focus on a physical model of deep and undifferentiated offer, which cannot enjoy the benefits of digital commerce in terms of the search for articles (search engine, reviews, collateral services, etc.), ends up arousing in the customer the paradox of too much choice.

(…) We are not referring only to the possibility of selecting a certain number of products around a concept proposed by a curator, but to a combination of products and services chosen to reinforce each other, creating a unique cocktail. (…) The emotional connection with the reference audience must be kept intact.

Be Human

“Be Human” means for a company to take note that today digital is everything, but not everything is digital. (…) Retailers must reflect on the opportunity to act as a reference point for the communities in which they operate.

Service, Sociality and Sustainability. Global research conducted by Accenture Strategy shows that 73% of consumers prefer human interaction in the shop to solve problems, request advice and receive assistance on products and services. The need for highly qualified sales personnel is confirmed by another fact: 3 out of 5 customers say they are willing to pay a higher price to have a face-to-face dialogue with a competent and available person.

Sustainability. A concept that emphasizes the efforts made so that the exploitation of resources, the investment plan, the orientation of technological development and institutional changes are harmonious with the world in which we live and with the development of future generations.

Be Boundless

Notable developments experienced in the recent past by home delivery services have given rise to a series of interesting models:

a) Click-and-subscribe: to prepare the periodic self-resupply of a basket of goods through a subscription or a demand mode.

b) Click-and-collect: make purchases online and collect them at a physical store.

c) Click-and-commute: buy online and collect the goods at a store located on a specific route (for example, a subway station or a service area on the motorway).

d) Click-and-try: order a series of products online and try them in a store or at home before completing the transaction.

e) Click-and-reserve: book online goods and services verifying their availability in specific stores in real-time.

Be Exponential

In such a complex and dynamic competitive environment it is good to pursue innovation in a lean (“lean”) way, without necessarily developing (and possessing) all the elements that make up your own value proposition. This allows companies quick and relatively inexpensive experimentation, to invest in products and services that best meet the needs of the relevant public.

Be Brave

It stems from a reflection of the founder and CEO of Amazon Jeff Bezos, according to which two ways exist to diversify the offer and extend a business. On the one hand, make a list of what the company can do best and use it as a starting point for a linear innovation; on the other, reverse the perspective: analyze the customer journey and identify the needs that go unsatisfied (or partially satisfied), then work backwards by developing or acquiring the skills necessary to meet these questions and exploit the consequent business opportunities.

Retailers must have the courage to recognize that their businesses may have no future and therefore must embrace change.

It is no longer sufficient to base one’s competitive advantage on mass production at low cost, on massive investments in marketing and communication, on the strong bargaining power with trading partners, on an extensive network of agents and the ability to invest in research and development. Indeed, in the current competitive context, these elements could even represent a ballast and make companies less reactive. In short, “Be Brave” means, for traditional retailers, to face the situation by questioning the fundamentals of the value proposition.

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