There are two things that still exist today – taxi cabs and phone books – that feel completely outdated and archaic, yet remain steadfast holdovers from a time when information was limited and options weren’t as abundant as they are in the digital age.
Both operations/enterprises have been unable to face the bitter truth that the power of consumption is in the hands and fingers of consumers whose mobile devices make them as godlike as medieval emperors who could once have answers to questions, be entertained, and be transported anywhere their hearts desired with the mere snap of their fingers.
Uber is undoubtedly the biggest reason why both the notion of hailing a cab or needing to secure a phone number for a ride seems like such an outdated practice. In capitalizing on a new custom of “shared mobility” which allows both consumer and operator to receive a mutually beneficial situation, Uber has not only disrupted the auto and information business, but the greatest byproduct of its success may be awakening the notion that consumer satisfaction may stem from convenience above all else.
As retailers and shoppers alike recover from the malaise and pandemonium associated with Black Friday, the retail hangover isn’t nearly as bad as has been the case in the past due to one major factor.
According to The Wall Street Journal, “e-commerce spending on Thanksgiving from [Visa’s] U.S. account holders increased 22% to $1.5 billion from last year. Amazon.com Inc.’s sales on Thursday rose 29% compared with a year ago.”
That is to say, shopping in your pajamas is becoming a cultural norm more than ever these days.
During this year’s Black Friday, overall retail profits in American stores fell from $11.6 billion USD to $10.4 billion USD according to preliminary figures from research firm ShopperTrak. Despite an absence of more than a billion USD in the pockets of brick-and-mortar owners, there’s clearly still a healthy demand for a traditional shopping experience which involves browsing, tinkering and trying on clothes.
We’ve come to a point in commerce where consumers want the convenience of one-click shopping – but haven’t completely abandoned the spontaneity and indecision which can make purchasing an item feel like sport. The convergence of digital ease with the dopamine release we get when a credit card is swiped through a machine has presented a unique conundrum.
While the name alone will soon become a verb in our lexicon – akin to something like “Google it” as a way of saying “use the Internet to figure it out” – Uber aims to become a multitude of services rather than simply something that gets a person from Point A to Point B.
While most upstart companies like Uber look to an IPO for an influx of revenue, they’ve avoided the need for regular shareholders thanks to recent investments from the likes of Microsoft which has pushed its company valuation north of $50 billion USD – the highest valuation ever for a venture-backed company, topping the $50 billion USD Facebook was valued at in 2011 when it completed its last round of fundraising before going public. This has led many to suspect that Uber has much bigger plans for the infrastructure that they have created.
“There’s nobody who has as big of a real-time logistics network than Uber,” says Jason Calacanis, a serial entrepreneur who was one of Uber’s first investors.
Uber has already expanded into the delivery marketplace with the roll out of their UberEATS service in August and UberRUSH in October – with both promising “just tap the app, meet your driver outside, and enjoy.” Uber’s greatest eureka moment may be realizing that bringing Point B to Point A is the next step in satiating customer’s desires.
Prior to the their announcement of UberRUSH, the company stated plans in September to unveil a large, e-commerce delivery program with retailers which would be unveiled in the fall of 2016. Those with insider information about the initiative pointed to New York City as being the first hub in which Uber would provide customers with hand-delivered pieces of clothing from flagship stores on Fifth Avenue in Manhattan.
The timing of Uber’s decision to look toward fashion as a means of growth isn’t a coincidence.
According to The Wall Street Journal, “In recent months, Uber lost out on the opportunity to make deliveries in some cities for Apple Inc. and Starbucks Corp., which discussed tie-ups with Uber but then made deals with startup courier service Postmates Inc., according to people familiar with the discussions. Popular food-ordering apps Eat24, owned by Yelp Inc., and GrubHub Inc. also held talks with Uber but haven’t reached any agreements.”
While they may have lost out on lucrative tech and food avenues, they still have a savvy play in the world of fashion.
As recently as 2013, 50 percent of all e-commerce clothing items were returned to retailers. Whether it was because the items weren’t what a person expected, the size/fit was wrong, or the time it took to receive the item via snail mail awakened that little voice in the back of their head which says “you don’t need this,” half of every transaction ends in failure for either the buyer or the seller.
“If you don’t have to return something then clearly that is a better experience than having to return something,” ASOS Chief Executive Nick Robertson told Reuters, adding the average ASOS returns rate is about 30 percent, taking into account variations between markets. Robertson also added that a 1 percent fall in returns would immediately add 10 million pounds ($16 million USD) to the company’s bottom line.
Clearly there is major room for improvement in the e-commerce sector. If slight upgrades could result in millions of dollars in profits for brands of varying degrees, it seems only natural that they’d explore every avenue that would dissuade consumers from returning items.
In its infancy, Uber catered to a more affluent crowd which wanted an alternative to livery services. The company really struck gold when they realized that they were drastically limiting the number of people who would use the service – changing from a livery model to one more geared toward the average consumer (UberX).
It seems they may be making the same mistake with fashion. Rather than focusing on high-end boutiques and the wealthiest one percent who are already accustomed to the decadence of personal shopping, Uber would be better served to partner with outlets and retailers with a broader demographic.
Imagine the possibilities. A simple delivery fee not dissimilar to UberEATS would allow one of of a pool of 200,000 drivers to pick up an item from a store and deliver it to a customer. The customer then has the ability to either accept or return an item in a matter of minutes – forgoing an antiquated postal service for something which leads to an almost instantaneous return. The convenience would be a plus for the consumer. As for the retailer, they could have products instantly back on shelves for other potential buyers. There’s even the notion that retailers could net slight profits off returns – making a failed transaction sting a lot less by simply making the buying experience more pleasurable.
Uber’s attempt at delivery is not without its major faults in the past. When Gilt – an online shopping website based in the United States – partnered with the service to appeal to last-minute shoppers during last holiday season last year, Uber was unable to insure many of the expensive items that were being transported. Again, the fault may lay in who is being targeted rather than the idea of bringing a virtual dressing room direct to consumers.
According to the Census Bureau of the Department of Commerce, the estimate of U.S. retail e-commerce sales for the third quarter of 2015, adjusted for seasonal variation, but not for price changes, was $87.5 billion USD.
Let’s make a modest assumption that clothing accounted for 10 percent – or $8.7 billion dollars – worth of purchases. Essentially, $4 billion USD of that money will ping-pong from buyer to purchaser and back to the buyer due to current e-commerce trends. That money is literally up for grabs because customers have already shown a willingness to spend it. Whether an established brand looking to make a real power push, or someone on the outside looking in, the wave of the future in commerce is undoubtedly tied to convenience above all else.