Embodee recently spent time with Thomas Davis, global head of e-commerce for PUMA, to discuss changes and challenges in the apparel industry. Here, in the first of two installments, are excerpts of our conversation.
Embodee: What are the most significant challenges for apparel companies like PUMA in this omni-channel sales world? There’s certainly a lot being written about it.
Davis: It depends on what kind of company you are. I’ll boil it down to just PUMA and the wholesale channels because this is a landscape of your retail and wholesale channels; and obviously your wholesalers are partners and clients too. Secondly, the brand has to decide what is the balance between sales and marketing. So it’s a complicated dance to figure out, and there isn’t one right or wrong answer. Further, how do you get these channels to work in concert while still balancing the needs of marketing and brand? Making sure that all of these business interests---everything---work together and complement each other is much easier said than done.
Customers don’t care or understand the internal conflicts. Nor should they. Customers simply want what they want, which in our case is our product and our brand experience. Customers don’t think in terms of business units or channels. They think in terms of product and buying that product as easily as possible.
Trying to find that multi-channel synergy is really, really hard because traditional brands like a PUMA or anybody of this size that has grown as a traditional wholesaler aren’t prepared for some of the changes happening in the retail world. Some of the rules for the last 60 or 70 years are breaking down. And what took decades to establish is now being broken down in months as the speed of the digital world is accelerating. Example: Rocket Internet. They are basically copying the Zappos model outside the U.S. and growing their business to billions in revenue in just a year or two, which is x-fold faster than Zappos, which was x-fold faster than traditional wholesale distribution. It’s jaw-dropping how fast everything is evolving, especially outside the U.S. What retail looks like in five or 10 years, who knows? But you’re seeing examples of companies trying to find their way in this marketplace. Some are doing well at it and some aren’t.
Embodee: Speaking of those challenges, how does your vision for e-commerce address them?
Davis: For PUMA specifically, we have to attack the market in a very focused way because the reality of our situation is that we can’t compete on price, meaning we can’t be the lowest price out in the market. That’s just kind of cutting ourselves off at the knees. Further, we don’t have the luxury of running a break-even business, meaning we can’t put all of our operating expenses toward overnight shipping and service. Yet, we are consistently compared to those digital players. But that is the reality we live within, and we have to find creative ways to be relevant.
So I try to look at where can we compete and compete effectively. One is product content. I believe we must have world-class PUMA information about our products (photography, copy, content, digital assets, etc.). We also should have the most comprehensive, user-friendly experience for shopping decision-making in the digital world.
We hope that our PUMA experience will be better than an Amazon’s "shop in shop" presentation for PUMA, and better than a Zappos, for example. Specifically, as a retailer we don't have much control over the presentation of our products in our partners' stores/marketplaces. We're losing brand control, if you will. Search Google for "puma suede" you will see the varying degrees of photography/presentation. Some good, some bad. Theoretically, we should be able to showcase our products in our store in the best lens possible, and we will aim to do this over the next few seasons.
One of our key strategies is product information management. We’ve spent a tremendous amount of effort and time over the last two years honing these skills internally. Unfortunately, it’s generally a behind-the-scenes kind of project. The only in-front-of-the scenes result of that is really the output of a website and customers interacting with that information.
But I believe that’s a cornerstone of our strategy. The other cornerstone is product selection. If we’re selling the same exact product as Amazon, and if they’re going to beat us on price and service and be comparable on product information, then we’re still going to lose. Probably nine times out of 10. But if we can create a product assortment, develop product awareness, product depth---whether its size, color or make of material---that’s different than what’s in the wholesale channel---then we have an area for competition and a reason for customers to come to our online store.
So between world class product content and offering a product selection that’s different or at least complementary to what is in other channels, that’s where we can play and immediately be competitive.