IKEA’s acquisition this month of TaskRabbit, the gig economy company is just one more proof that smart companies are increasingly competing on convenience.
Some see the acquisition as a way to overcome the annoyance assembling furniture from IKEA, allowing consumers to hire TaskRabbit assemblers to put together IKEA pieces in your home. It actually portends a bigger opportunity for IKEA in taking the retail giant outside of the brick and mortar building and into the home not only for assembly, but for other tasks as well. In short, it enables IKEA to support the growing trend of providing convenience as a competitive differentiation.
Convenience is an important movement today that is showing up as the inflection point of innovation in many areas, such voice assistants on your phone and within the home from Amazon Apple, and Google, as well as Amazon’s move to purchase Whole Foods, their Prime Now two-hour deliver service. Convenience has become a point of competition and a potentially lucrative one as well.
The Attraction of Convenience
Convenience has become attractive because it requires less of two things that we value highly: time and effort, and has the ever addicting benefit of immediacy.
It’s not that we don’t have enough time. Despite our continual complaints to the contrary, our time spent working has been dropping steadily and our leisure time has grown. But for many, as their pay goes up, the value of their time rises as well. People simply value their time more because it has the potential to earn more money. And specifically for Millennials, convenience has been commonplace in the world they have grown up in. They often make choices based on convenience because they choose to spend their time on other things, including being online, and because they are accustomed to immediacy. The Netflix generation has given everyone an expectation that the entire season, series, and catalog should be available right now.
The New Basis of Competition
There is no doubt that convenience has been a consumer focus since before the rise of fast food and home appliances. But Convenience has become the new basis of competition, the differentiating benefit to the customer, for nearly every company. It is one of the main reasons for Redbox’s meteoric success: they carved out a space for their kiosks by creating availability at the intersection of the right place at the right time to make DVD rental convenient and replaced a much less convenient solution from Blockbuster. As Mitch Lowe, Redbox’s President noted, “Two-thirds of all films for rental are selected between 4 and 9 in the evening.” As it so happens, that is right around dinner time for most of us. So, Redbox’s bright red DVD machines are at all the places you might stop for dinner or on your way home: grocery stores, fast food restaurants, and convenience stores. It’s a great two-dimensional play that has been successful.
Walmart and Amazon increasingly intense battle over retail commerce, it driving both companies to innovate around the convenience of shopping. For Walmart this includes, mobile ordering with curbside pickup or giant Pickup Towers at the front of the store to speed up purchasing by letting Walmart workers do the shopping for you. With the new Walmart August service, it may mean Walmart delivery people actually stocking your shelf instead of theirs.
The use of data analytics and algorithms is already changing the face of convenience as well. Uber and Lyft are have become more popular because they take advantage of algorithms to create a fluid pool of drivers when and where they are needed making them more accessible immediately. Eventually the battle for transportation will be won or lost on the convenience of getting you from point A to point B.
The drive for convenience can and needs happen through all stages of the customer journey. Recently, Walmart has launched a test of 30-second customer returns of online purchases using a mobile device. This follows pioneers such as Zappos who delivers on a promise of rapid and unquestioning shoe returns, a far cry from companies that have traditionally buried customer service, cancellation and return options deep in their website.
At the other end of the spectrum, predictions are that by 2020, 80% of the buying process for customers will be complete before they ever speak with a sales rep. Companies that win will better manager the buyers journey from the beginning to end, including making it more convenient for the customer to find information about them and make their purchase decision.
Convenience is also one of the most effective ways for companies to enter a market. It was why a startup like Netflix 1.0 (the DVD by mail company) could so effectively take on Blockbuster. It’s also why Google will undoubtedly make inroads in the job search market. The search giant is now providing an AI-based search capability that makes job searches much easier. There is no longer a need to go to multiple job boards when you can now simply search “Software developer, San Francisco,” and get back results.
Does Convenience Add Value?
In 1997 Amazon applied for a patent innocuously named, “Method and System for Placing a Purchase Order Via a Communications Network. The patent, which was granted in 1999, was for one very convenient action: purchasing online with just click.
Despite efforts to reverse it, Amazon retained the patent until it in September 2017. However, before expiration, the patent clearly covered an advantage that Amazon held for years in simplifying the online purchasing process for its customers and preventing others from doing so. How much was that advantage worth? One online estimate put the value to Amazon at over $2 billion in additional sales for one year alone. In addition, it was valuable enough that Barnes and Noble paid a settlement for infringement and Apple paid to license it.
How to Win on Convenience
Customers want convenience. How can companies best deliver it? Here are a few suggestions to get started:
Look to simplify. Although some consumers claim they want an abundance of features, most would trade off for simplicity. No matter how complex your product, look to present simplicity. The year before Apple launched the iPhone, Nokia had launched 39 new models. Apple won the market with one. Netflix has built an incredibly complex system to present you with the right selection out of more than 13,000 content options to help you choose what to watch in 60 seconds or less.
Take an empathetic view. Anyone who can look back at their pre-Lyft taxi hailing experience can easily see why Lyft and Uber is a superior service, but can we see the issues in our own product or service? It takes scrutiny and empathy to take a close look at how your customer learns about, buys, uses, and disposes of your product or service. But as you look close enough, and you will find ways to make it more convenient for them.
Look at all points on the customer journey. Convenience doesn’t start or end with the product or service, so look at every touch point from beginning to the end of your customers’ journey. Walmart, for example, now includes an aisle indicator in its mobile app, telling you exactly which aisle you can pick up a product in the store, facilitating access and purchase.
Simplify your messaging. Continually refine and reduce your product positioning to focus on the key benefits of your product or service, and what key items differentiate you. When you think about the reasons you purchase one product over another, there is usually one thing, possibly two that stand out. Focus on those in your own messaging to help potential customers pick you out of convenience.
Competing on convenience requires making choices to optimize availability and access. With a sense of customer empathy and some constructive dissatisfaction any company can improve on it and compete on convenience.
I'd love to hear your thoughts on how you are using convenience to your advantage.