Jörg Heinemann, Otto: Innovating For Today’s Consumer
- How Live shopping is unavoidable if you want to excel in eCommerce since Jörg considerate it as “the bridge” for eCommerce and retail
- The critical role of messaging when it comes to conversational commerce
Interview highlights :
Hello, everyone. Welcome back to another conversation with short, insightful discussions with CX leaders and innovators around the globe. I'm joined by Jörg Heinemann, who drives innovation and digitization for Otto, Jörg Heinemann is a well known public speaker throughout Germany and Europe, talks about all things: internet of things, smart homes, conversational commerce and his previous companies. Include too, as well as general business creations include. Otto is a part of the Otto group for those German friends out there, this is a very well known name, household name in Germany, founded in 1949. It's one of the world's largest online retailers, with over, 50,000 employees in over 30 countries, and Jörg leads digitization and innovation for Otto. So it's an absolute pleasure to be joined by Jörg today. Today's topic again is innovating, for today's constantly evolving consumer, Jörg thanks for joining.
Thanks for having me, and you are so well-prepared so, yeah, almost nothing I can add.
You guys are obviously one of Europe's most successful commerce companies. Tell us a bit about Otto and the Otto Group.
So Otto is only based in Germany and I think you can order from Europe. But we have focused totally on Germany. For the US people, I think maybe you know Crate and Barrel, the famous furniture store, they belong to the Otto group, like we do. We have €4.5 billion turn over, and we have like about 2.6 million qualified visits a day to our shop, and we have at the moment more than 70% mobile traffic. But we come from a heritage like you said, founded after the second world war, like a classical mail-order big book company because like our slogan on the website start-up since 1949. So I think transformation is business for us, and we transformed a lot. And, I think, that's the reason we are the only historical big book company that's still on the market and very successful. We would call us now an E-commerce company or digital company and not a mail-order anymore. And we have the customer base grown a lot during the pandemic, and we have now 10 million active customers and, as you know, Germany is a little bit over 80 million people. So as you see, we are very well known in Germany.
If you could pick or prioritize only three, which of the trends are you most excited about keeping your eye on?
Only three, it's not easy. But I have a trick because I think I've put some trends together. Maybe I think the first, I would say, is the next level of customer guidance, with all the new techniques like guidance with video, helps desk improve bots, augmented reality. And possibly if you use the full potential of omnichannel journeys, by combining things you can do better online, so you can have a better customer experience offline. So I think the next level of customer guidance would be one trend. And for that you have to use all the news you have on the market and in the digital business, especially artificial intelligence, which is one driver of that. But If you look from a customer perspective on that artificial intelligence, you see it's a trend. But it's a base for you to be able to offer better customer experience. So that was first. Second, it's a little bit shorter. So I think it's not a surprise. It's conversational commerce focused on better bots and integrated journeys, you have the messenger tools now and the third is life commerce. Mobile video commerce that everybody inside the company understands. It's not teleshopping 2.0. It's focused on mobile devices and the format you have on smartphones. It's not horizontal, it's the other way.
But talk to me about this live shopping trend, have you tested it? Have you found it impactful? What benefits does it bring your customers? What can you share?
Yeah, to be honest, we are testing at the moment, so it's a great new channel in E-commerce. It is very successful in Asia and already there, And I think they have made 300 billion revenue this year, and they have I think over the third of the E-commerce revenue is driven by that, so crazy figures. But it will be successful in Europe and in Germany also. So why Livestreaming is successful? Everybody knows that, especially in the pandemic, teleshopping was and is successful in Germany. Chatting is more popular than having a call, and E-commerce is scaling a lot. So why should a combination of all that not be successful? So that's the reason we are testing at Otto. So classical format optimized for mobile, the possibility to chat with service staff and the moderator during that. We had two shows at the moment. So we have four in the test period, not a lot compared to China. I think there are, 50,000 shows a day throughout the country, but for us, it's a test to test everything, the technical API, the production… The working together with brands, so the first shows were focused on our own brand. So we will have one show with a famous tech brand in December. So we are testing a lot and I hope that we will roll that out, that format out next year. And my dream is having Otto TV 24/7, maybe not every time-life but to have the whole day content, recorded shows, a mix of recorded shows and live shows. That's my dream and I think it's not unrealistic.
No, that's like Amazon Live, right? They do that as well.
I think not in Germany. You have that in the US already. I think that will be a very relevant channel in the future and, like you mentioned, especially in the pandemic. Because you can't smell or touch things, but the people in the stream, the moderator, and the influence, they can do it for you. And I think that's a much better experience than the one you have if you are only on the website or in the shopping app. So I think there's a bridge between E-commerce and retail, and so that's the reason I think it will be successful in Europe, and especially in Germany also.
Now, conversational commerce is one of your favorite topics, of course, iAdvize messaging and our solution is focused on text, voice, and video and making sure that we give consumers every way of engaging and communicating. But frankly, I'm sure you've seen that the communication between a consumer and retailer or brand has evolved quite a bit. What have you seen lately, and what does this actually mean for businesses?
I think the popularity among customers is increasing, and I think I can only speak especially for Germany. But we were not on top of the digitalization but the pandemic sometimes for the business focus the pandemic or corona is the best for CDOs, is the private field also. Especially in the focus group of the silver surface you call, so more and more people know how to use WhatsApp and video calling and all that stuff. So it's very popular on customers side. And as a business, you have to be on all channels that were primarily used by your customers. So you have to be there on the different channels. You have more and more possibilities because they are more and more features they add. It's a very easy way to communicate with companies and speaking for my own. It's my most famous, and most favorite channel, and it doesn't matter if it's a worldwide company or the coffee shop in the next village I live. Because of different opening times, or you want to order something It's so easy, it's only one chat away. And I think, like we said before, one trend of the next level of customer guidance was video and all that stuff. So that's the reason, because if you add something like that to the chat like you do with friends. I think most of the time they're only chatting, but if you want to show something to your friends you can add video with a fingertip, and if you are able as a customer or a company, to activate for example a video, then you have your private live shopping session. Which is going to be a booster of the customer interaction and the happiness of customers, I think.
I know from discussions that Otto is doing some pioneering voice assistance, which are big in Germany. What can you share about your use cases?
That's right. We were one of the first and the reason we were, was a trip to the US. I think it was in January 2017, and we were there on the West Coast on an innovation trip, and we went to a store near Seattle and there was an Amazon sold out sign during Christmas shopping. And that was the moment I recognized it will grow, it will come to Germany, and it will be in the center of the population and not only for nerds. And that was the reason we started more innovation project like I told I'm an internal expert for things like that, and we said we have to test that, and we started with a customer focused use cases. And focus topic inside the service field was: we talked to our relation center and asked them what is the most asked question when people call you, and it was where's my package? So I can imagine that because I receive the notifications I have my, my special parcel tracking for me. It's unbelievable, but it matters because it's what most of the consumers want to, if they call us we could talk about costs of that. So it was a very easy way because it's easier for customers to ask a smart speaker digital assistant. Because the digital assistant works on smartphones, it works on smart TVs, and we started with that use case and that works well, but it is little compared to other channels. So I think we have 300 interactions a day with that, and we have 10,000 of cards, and we have only one million WhatsApp conversations a year. So it's a very small channel, but we have to test it, and also we have added some functionality, but the usage is not scaling a lot. But that's for our business. I think if I would be in an online grocery sector or if I would be in the pizza delivery field or something like that, I think the use case would be much higher. So don't think about what if it's valuable for Otto or not. You have to think if it's valuable for your customers and do you have good use case you can offer to your customers through that digital assistant before competitor of you does, so that's the point!
Now give me your definition for conversational commerce, and then I want to learn a bit more about how you think this actually applies to the buying journey.
For me, it's from a customer perspective. It's a possibility to communicate with a company like you can do with friends and family, with the messaging app. So the same experience, easy with all the possibilities you have. So that's from a customer perspective and that's my vision, it is not there at the moment. That's for me the target where it should be in the future or at the moment. And I think it can be irrelevant in all steps of the journey. You should be prepared at the business and offer customers more value through that and at all steps where it makes sense, and it depends on your business. But I think it's valuable almost for every customer of every business to be there and offer something - from companies like us to the small coffee shop I mentioned before.
I like that analogy. What are some obvious obstacles, or maybe not so obvious obstacles, that someone would encounter when deploying a conversational strategy?
The tough thing is starting to do it. You have to test it, and sometimes it's easier for small businesses. Because the difference is like for the coffee shop, the owner has his private smartphone and private mobile phone number, so he can play that on the website, and he's ready, so he can start and maybe after he has to scale to add technical back and solutions in the future. But he can start that way. As a company, you can't do that. You have many challenges, and it depends on the abilities of the company. So there are technical to-dos, there are organizational topics and there are many challenges you have to tackle. But you have to think from a customer perspective and like I said, where you can give value and then maybe you start with an MVP to test if it's really valuable to your customers, and I'm very convinced that you will find it, that there is a big yes, and then you can start with that use case and maybe add more and more.
Do you have any tips or suggestions or words of wisdom for someone who's looking to get started?
I think, like I mentioned before, you have to start with your first use case. And if you have people in the company that didn't trust that, you have to be there in the conversational commerce scene, you have to ask them how they communicate with friends and family and why they do it that way. I think their answer will be they chat with them, and if they told you they only have conversation with telephone or with letters, I think they are not the best decision makers in your company! But I think you have to ask that question and have to change their mind to the customer perspective and show them that it's valuable for the customers. And then you have to think about what can be the first use, the first MVP. Like we started our voice commerce journey within Google action that can only answer one question, we have added a lot more after that. But I think you have to start, and you have to find your use case based on your business model. You have to choose the right channel and that depends on the favorite channel of your customers, what messenger solution they use or if you can start on your website, maybe with a chat. So that depends on if you have enough service staff, then maybe you can start with a conversational commerce and persona, or you are forced to start from the scratch with a bot. So it depends on your customers, on your business model and your possibilities you have inside the company, but you have to start.
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