Do you remember when “unbundling” hit the travel sector? Popularised, maybe even invented, by the likes of Expedia and, the internet allowed customers to create their own ‘custom’ travel experience by breaking down the components, like flights, hotels, car hire and so on, into discrete elements which the customer then configured. 

I think the same is happening to the retail shopping experience. And, if I’m right, there are some very considerable implications for retailers and those that play in the retail chain.

Chris Roe, now at Virgin Holidays, claimed to have invented “unbundling” whilst at Expedia many moons ago. This concept is now pretty standard and accepted in the travel sector, but I think we’re going to see it happen increasingly in the retail sector. Except it is perhaps more complicated and nuanced in retail because of the greater offline (store) experience and the whole logistics, warehousing, returns, delivery, packaging etc. complexities. 

You can look at the customer buying process in a number of ways. McKinsey have this nifty application trying to explain the consumer decision journey and Dr Mike Baxter depicts and explains it excellently in his Online Retail: Checkout Special guide written for Econsultancy in the “In the Mind of the Customer” chapter. 

It’s not rocket science. You can depict it how you will, or describe it how you will, but, broadly-speaking, most of us when buying something will go through the following stages:

  • (I assume the ‘desire’ or ‘attention’ or ‘intent’ part of the process i.e. you already know you want something.)
  • Research: this clearly happens both online and offline.
  • Purchase: this clearly also happens both online and offline. 
  • Delivery: assuming we’re talking about a physical product this can only happen offline.
  • Service / Support: this happens both online and offline. 

Of course, in simpler times, it was quite typical for all these things to happen through one retailer. You’d go along to John Lewis, talk to the awfully well brought up young man about TVs, buy it, pick it up later from the Customer Collection Point, take it home, and, if it went wrong, get the nice people from John Lewis to come out and fix it. 

Then came the internet.

And, before you knew it, your competition were positively encouraging your customers to abuse this process by taking all the lovely (= expensive) in-store advice from said awfully well brought up young man but then to go online to get it cheaper:

So already the Research and Purchase phases are very deliberately being broken apart. 


This behaviour is clearly nothing new. People research online and buy offline. They research offline and then buy online. And in both cases the brands and retailers are likely to vary. And in both cases satisfaction with the experience impacts repeat purchase likelihood across all channels (see ForeSee Reults E-Retail Satisfaction Index among others for data on this). 

But things are getting more complicated and more multi-channel.

For example, the purchase component itself perhaps isn’t quite as straight forward as it seems. What if the purchase experience isn’t actually “owned” entirely by the retailer? Look at iTunes, look at Amazon, look at PayPal, look at Google Checkout, look at O2 Money, look at… you get the point. If big players aren’t clearly squaring up in an attempt to try and ‘own your wallet’ or become your default ‘billing platform’ then I’ll eat my hat. They have to. They know how much is at stake. 

[UPDATE on 15 Feb 2010: if you're not offended by strong language have a read of Dave McClure's "Subscriptions are the New BLACK. (+ why Facebook, Google, & Apple will own your wallet by 2015)" Assertion #3 near the end which very much follows my own argument here.]

But if even this small piece of the puzzle is true, what does this mean for retailers? It means they might not ‘own their customers’ quite as much as they would like. Can you seriously imagine the likes of Tesco or Wal-Mart allowing everything bought from them to go through someone else’s virtual tills? And, horror, that their fabled customer data and customer insight, including all transaction data across all purchases, would slowly migrate to someone else? It might happen.

At a dinner I was at recently the Chairman of a large multi-channel retailer, when asked to name his top two competitors going forwards, answered ‘Google… then Amazon’. Smart chap.


But the transaction is just the start. What about the delivery and service elements of the shopping experience which we know to be extremely important to ‘online’ shoppers.

Have you got Amazon Prime? I finally succumbed and paid up for it last year. And it is awesome. That is some logistics machine. The closest anyone else gets are the large supermarkets. In the US, and inside the M25 in the UK, you can buy something from Amazon and it is delivered to you the same day

So I’m thinking… maybe I can research online, go in store to touch and feel, but buy via Amazon so they can deliver it to me for free later that day. Because, you know, I can’t really be bothered to fetch my new mega-sized TV from the collection point, carry it to the car, into the house etc. 

A friend of mine went to the new Westfield Shopping Centre in London to do his Christmas shopping. He went round all the various shops, talking to all the nice sales people, and used his Amazon iPhone app to compare prices for what he was looking at. He added everything he wanted to his wish list on his phone, saved £80 overall, and, at the end of the day, over a nice Latte in some café clicked the buy button on his phone and knew it would all arrive at his house the next day with delivery charge. 

Every single transaction went to Amazon. 

Think about it. How apocalyptically galling would that be to you as the store owner who’d paid for that space, those sales people, that stock?

He described how he took a picture of a childrens’ book in Waterstones and used his Amazon iPhone app to check for a lower price online (which he got). And you think Waterstones has problems now (which it does)? We ain’t seen nothing yet.

Service and Support

But wait. What about service and support? 

You see, much as I love Amazon for the delivery component of the shopping experience, I don’t really trust them with the service component. With commodity items like CDs, sure I trust their excellent do-it-yourself returns process – a marvel in its own time no less. But a washing machine? What happens if that went wrong? Do Amazon even have real people to help me? Are there oompa-loompa-like Amazon service support people who magically appear? I don’t think so.

But John Lewis – now, they will not only deliver the washing machine and install it but also take away the old one. That’s very important in this particular shopping experience. 

A computer on the other hand… I could get someone like Geek Squad to provide me with the support component couldn’t I? So I might research online, touch and feel in store, buy online using Google Checkout from a discount computer retailer, get Amazon to deliver and Geek Squad to support it? And all of that, apart from the store experience, I could do from my phone

Core competencies

The prevailing wisdom at the moment is that, as a retailer, you need to offer your customers a multi-channel proposition. Allow them to flit between channels, online and offline, as they go through the shopping experience with you. Make sure everything is seamlessly integrated between the channels so the customer can ‘pick up’ where they left off across channels. Argos’ Check & Reserve and centralised single stock/inventory depletion across all channels is a good example.

But this assumes the customer actually wants to do all elements of the shopping experience with you? 

Maybe my friend and I are highly unusual. Or maybe, increasingly, customers will mix and match as they unbundle, and reconfigure, their buying experience across the experience chain to suit them

It brings up the question of core competencies across the value chain. Perhaps a fully integrated buying experience with a single retailer will become less and less common as customers atomise and reconfigure it according to the core competencies they trust at each stage?

And, if this is so, it means retailers will have to think much harder about what they are good at. And perhaps they’ll need to partner with erstwhile competitors in order to focus on what they’re good at but provide the best possible experience to customers? 

Google are great at many things. Magnificent, in fact, at almost all they do. But customer service? I think they’re really falling down on that at the moment. And that won’t do as they become a retailer e.g. their Google hosted web store for their Nexus One phone. In my eyes Google are a very long way from winning my trust in having customer service and support as a core competence.

What about Apple? Sublime in so many multi-channel ways: those wireless in store devices which mean you can configure and pay for stuff so easily without ever having to queue. But delivery? And at-home support? Still not a patch on some of the supermarkets for most of that. 

Implications for retailers?

If the above does indeed begin to happen more, how might retailers sensible react? A few initial thoughts:

  • Have unique products (or price). Always a good idea and seems very defensible whatever happens in the channel mix. 
  • Make sure that you can buy online in store: including kiosks, wireless devices, and by phone. Make it super easy to transition from product research to purchase in store.
  • Have a single, and complete, source of stock/inventory available to all customers all the time. This goes with the point above. It is appalling how often you can’t buy something in store because “they don’t have it in stock”. That’s a sale lost to Amazon or someone else. You must be able to buy from the fullest range and inventory online, right away, before leaving the store, or the sale walks out the door.
  • Seriously consider other business models and revenue streams. Could you charge someone else to provide an (offline / store) research experience? Could you sell “intent data”, a form of market and customer insight based on observed research patterns (offline or online) but which don’t necessarily result in a sale - the likes of Criteo do a form of this already albeit on a first party, and not network, basis? In a strange twist of fate, as publishers rush towards commerce, perhaps store owners will need to monetise shopping browsers via advertising or product placement (you might laugh but I’ve spoken to some retailers already looking at this)? Should stores become an entertainment experience more than a shopping one and what does this mean for monetisation…? The talks between Simon Cowell and Sir Philip Green are very interesting in this regard. 
  • At the very least, to maintain margins and profit in the short term, get much better at using multi-channel data and insight to reduce wastage and improve effectiveness of sales and marketing e.g. a catalogue retailer I know recently improved ROI on the catalogue by 2X using behavioural insight from their email and web analytics. 

Further Reading

Our Jump event in October will be the event to learn about how offline and online are coming together but, in the meantime, we’ve got a lot on the topic of e-commerce. A few recent useful blog posts:

[Image by PinkMoose via Flickr, various rights reserved]

Ashley Friedlein

Published 10 February, 2010 by Ashley Friedlein @ Econsultancy

Ashley Friedlein is Founder of Econsultancy and President of Centaur Marketing. Follow him on Twitter or connect via LinkedIn.

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Comments (5)


Martin Gross-Albenhausen

Hi Ashley, I had some musings like these myself, albeit in German :-). I have two comments:

1) Since the 90s, many companies have "outsourced" former core competencies: Callcenter/Customer Care, logistics, marketing/SEO/SEM, IT (SaaS etc.). Still we do not see more unique stuff but sameness of merchandise. So, what is the core competence?

2) Sooner or later, Google might become THE shop. Google will syndicate comments, reviews, buzz, shops, info etc., combine it with it's checkout and have the retailer fulfill the order, service included. All guaranteed to the customer. Whose customer is it, in the end? How are we going to establish enduring customer relationships, are we entitled to it anyway?

Nobody knows the customers like Google does. Maybe some day the big G can also add transactional data to the picture. No single retailer can compete with this.

What Google can't, but individual retailers can, is: surprise customers. Google is looking into what is "likely" to appeal. Retailers are about disruptive shopping. Sure, they try to repeat yesterday's success, but how often did you find something you had never bothered to think about while browsing a (physical) shop or catalogue?

over 8 years ago


Paul Crick

This is a great view of where retailing is going and I'm sure things will end up close to this vision in the not too distant future.

What will get the winners over the finish line quicker, in my view, is:

  1. Keen consideration of shopper / consumer utility; the greate the utility created for the shopper and the extent to which providers create components of the shopping experience that enable higher levels of overall utility then the greater the likelihood of being first past the post. The extent to which openess is built into the utility will also cement market leadership position
  2. Affordability; with Greece, Spain and Portugal potentially leading us to the brink of a double-dip recession, affordability will be top of mind in for most shoppers and consumers for some time to come. Indeed price / promotion frenzy to sustain value share will reinforce a new mentality of the smart/savvy deal optimising shopper.
  3. Sustainability; the more the components of the unbundled shopping experience produce a real sustainable benefit (e.g. delivery mileage footprints are low, carbon emissions are low, locally sourced, ethically sourced, dividends are shared between retailer, shopper and producer), the more likely the component in the consumer/shopper value chain will flourish

There is a tipping point emergin (arguably in process) when consumers and shoppers now have the power to call the shots to major multiples and big retailers. Those that do will contribute to reversing some of the poorer 'marketing, sales and services' practices of the majority over the last 40 years. A new model of globalisation will emerge (the current model is broken / dead) and a new era of trade both at local, regional and national levels will emerge to benefit all.

over 8 years ago


Matthew Treagus, Managing Director at rtobjects

I like what you've done there.

My tips on the subject:

1. The biggest single multi-channel obstruction I encounter is a misalignment channel staff pay and incentivises. Fix this first. "In a mutli-channel world I'm only interested in how the other channels drive sales to, or carry cost for, mine."

2. Recognise that the "multi-channels" the customer sees extend beyond your multiple channels. (As Ashley describes). Too many brands don't look beyond their own worlds. The web folk tend to get very excited about esoteric user-experience planning processes applied to the world-at-large here. Some merit in this. But start by thinking - what's the user's context - what are they trying to achieve - how do we use our channels and proposition to answer that...

3. The transitions between channels are analogue. Don't expect to track every move or to codify it. Sometimes human intervention, small pieces of paper with codes on, an email sent from a store, a catalogue, an outbound phonecall, a number to call... work better with v. high-conversion.

To quote an AKQA Principle "It's better to be effective than digital."

The only thing I'd remotely disagree with...

Don't start me on kiosks though, online in-store struggles for human factor reasons. I'd make "buy online in store" about providing simple mechanisms to convert the instore 'disappointed would be purchaser' into an web/mobile customer.

NOT "You should try the internet" BUT "I can order that for you now and get it delivered for free".

NOT "We don't have that in Size 16" BUT "This code will get you the right size with free delivery"

NOT "We only stock those online" BUT "I can email you a basket with the right products in."

over 8 years ago

Ashley Friedlein

Ashley Friedlein, Founder, Econsultancy & President, Centaur Marketing at EconsultancyStaff


Some great points there and I like your AKQA principle - hadn't heard that before ;)

Yes, I agree about kiosks. Very rarely have I seen these work well. But I guess my point, as you then elaborate, is to find a way to allow the customer to buy online in store.

For many customers I think it won't be long before they'll be comfortable to do this on their own phones. For others I think a mobile device that the staff can use to process the order (and show a decent picture of the item, arrange delivery etc.) makes sense. Just as we are currently handed the credit card thing to type in our PIN I think we'll be handed the gadget to log in to our version of their site so that all our data, delivery preferences, discounts etc. are pre-populated and stored. Some privacy/security concerns I guess but nothing insurmountable or that we won't get used to for the convenience we get in return I suspect.

over 8 years ago


Mike Baxter

Great stuff Ashley, and timely!

The history of commerce is a repeated cycle of market innovation being followed by changes in customer expectations ... and I believe we are on the cusp of quite a significant shift in customer expectations.

My own Amazon Prime account has made me much more sensitive to, and intolerant of delivery charges by other retailers. Having been a dedicated Dell computer user for many years, my recent shift to an Apple has been great - apart from customer service. Whilst my Dell was on a next day repair-or-replace service, the equivalent service from Apple (at a similar price) requires me to take my laptop to the store, leave it for up to 5 days for the fault to be diagnosed and then up to another 5 days for it to be fixed. Come on Apple, get out of the design studio and start talking to your customers!

The shift in customer expectations that I foresee is intolerance of the weakest link in retail propositions. If you have a great product available for a good price, don't tell me its out of stock - don't punish me for your procurement problems! If I can buy online from you at midnight, why did your call-centre shut at 5pm? And ultimately, if you want the best from every aspect of your retail proposition, you need to unbundle it and at least benchmark each unbundled element against your competitors if not out-source them.

The practical implications of this, however, are huge. Let's focus on just one of your suggestions - having a single complete source of stock available to customers at all times.

Moneyspyder (declaration of interest - I am co-owner) has been dragged into this whole issue by clients unhappy with existing solutions. The standard solution for home delivery retailers (online and mail-order) is to have a stock management system underpinning separate e-commerce and call-centre platforms. In simple terms, this gives three versions of stock availability, which need to be synchronised and reconciled periodically. It can also give three versions of customer data and occasionally three versions of current promotions. Creating a single version of the 'truth' for retailers requires a major change to systems architecture, where all stock data, all customer data and all promotions data reside in a single data store.

Changes to business processes and underlying infrastructure can lead to better all-round propositions - but will this lead to wholesale unbundling of the retail proposition? The High Street appears to be crumbling before our eyes in the face of remorseless unbundling.

The very thought of going 'up to town' shopping on a Saturday morning appears to be filling an increasing number of consumers with horror and dread these days. But I don't think this heralds retail unbundling on a larger scale. Retailing's biggest asset remains customer loyalty and the more your proposition splinters into component parts, the harder it will be to retain that loyalty. Us technology geeks need to keep in touch with our humility by remembering that one of the biggest retail innovations over the past few years has been the resurgence of that 1950s phenomenon, the paper catalogue!

over 8 years ago

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