“This is the raw stuff.”
Stefan Olander, head of Nike’s three-year-old Digital Sport division, is watching a group of his engineers hack an experiment together. They’re using a pair of Nike trainers with embedded sensors. The sensors measure pressure created when the shoes, which happen to be on the feet of a lanky product manager named Brandon Burroughs, strike the ground. The data are collected and then fed wirelessly to an iPhone; the iPhone is plugged into a MacBook; the MacBook’s screen features a program that is busily imitating a 1987 Nintendo video game called Track & Field II. Which brings us to the ostensible goal of all this madness: finding out if new-age sensors and wireless devices work with an ancient video game.
That’s why Burroughs, who is outfitted head to toe in Nike attire, is crouched in anticipation like a runner before a starter pistol is fired. Suddenly, a whistle screams from the MacBook–it’s the game’s signal that a steeplechase “race” has begun–and Burroughs starts sprinting in place. It isn’t pretty. He’s panting heavily. He’s been at this for a while and is clearly spent. His feet thud against the carpet like a clumsy drumroll as his crude avatar lurches forward on screen. And he’s doing all this in a big, clean, stark corporate lab full of engineers, which isn’t very glamorous. But the experiment is working, sort of: As his avatar nears the first hurdle, Burroughs leaps too late, leading his digital self to trip and tumble into a pixelated pool of water. “Arrrrrrr!” yells Burroughs. “Come on!”
Olander, who bears a distracting resemblance to Matthew McConaughey and looks fit enough to have cleared that hurdle with ease, jokes that the only problem here is that Burroughs “is not very fast.” He actually loves that the group is “just mucking about and having fun,” as he puts it. “Really cool stuff can come from the opportunity to test without constraints.” And that, in sum, is innovation, Nike-style: a messy, exhausting process culled from myriad options and countless failures.
The other innovation is the Flyknit Racer, featherlight shoes that feel more like a sock atop a sole. Created from knit threading rather than multiple layers of fabric, it required a complete rethink of Nike’s manufacturing process. The result is a shoe that’s more environmentally friendly and could reduce long-term production costs. “Flyknit could turn the [shoe] industry on its head,” says Nike sustainability VP Hannah Jones.
To produce even one of these innovations in a given year is a rarity for any company, especially one with 44,000 employees. But Nike CEO Mark Parker knows he can’t just rely on celebrity endorsements and the power of the swoosh when confronted by big-name competitors such as Adidas and upstarts like Jawbone and Fitbit. “One of my fears is being this big, slow, constipated, bureaucratic company that’s happy with its success,” he says. “Companies fall apart when their model is so successful that it stifles thinking that challenges it. It’s like what the Joker said–‘This town needs an enema.’ When needed, you’ve got to apply that enema, so to speak.”
Every CEO says this kind of thing (minus the enema part). The difference is that Parker delivers. Last year, Nike’s annual revenue hit $24 billion, up 60% since he took over the reins as CEO in 2006. Profits are up 57%, and Nike’s market cap has more than doubled. This story is about how he has achieved that growth, and how he has driven a commitment to the company’s culture. Nike is a business with much corporate lore, that lovely, misty story of how a bunch of renegades with a waffle iron bucked the system and revolutionized an industry. But a close examination of the development of Flyknit and the FuelBand, based on interviews with top Nike executives, current and former designers, engineers, and longtime collaborators, reveals four distinct rules that guide this company, that allow it to take big risks, that push it to adapt before competitors force it to change.
What makes Flyknit so truly disruptive is that it isn’t a shoe–it’s a way to make shoes. As the team members who spent four years developing the technology like to say, they’re “breaking the sewing machine.” The old Nike model involved cutting rolls of prewoven material into pieces, and then stitching and assembling them. But with Flyknit, a shoe’s upper and tongue can be knit from polyester yarns and cables, which “gets rid of all the unnecessary excesses,” says Ben Shaffer, studio director at the Innovation Kitchen, Nike’s R&D center. The Flyknit Racer, one of the first shoes in the Flyknit line, is 5.6 ounces, roughly an ounce lighter than its counterparts. Nike uses only as much thread as it needs in production, and the shoe can be micro-engineered–tightened here, stretched there–to improve durability and fit.
Parker clearly has big expectations for Flyknit, telling shareholders it “is one of those technologies that has incredible potential, not only within running, but across multiple categories.” That’s a massive bet given Nike’s dominance of the athletic-shoe business, where, for example, it owns half the running market and a whopping 92% of the U.S. basketball shoe business. And Nike has gone all-in on that bet, building a whole new manufacturing process around the product. “Does this change our business model in some cases, or our supply chain? Absolutely,” Parker says.
Shaffer shows me some of the 195 major iterations the Flyknit went through as we tour the Kitchen. Some appear as rudimentary as a ballerina’s slipper. The prototype that marathon runner Paula Radcliffe marked with scribbles now looks like a rejectedProject Runway design. Nike’s ambitions for Flyknit can be seen in the trays full of feet that live in tall carts around the Kitchen. The disembodied wooden lumps–most generically sized and others made by scanning some of the actual feet of the thousands of professional athletes that the company sponsors–are all waiting to be fitted, like Cinderella, with the perfect prototype shoe.
“Flyknit is a platform,” Nike’s Jones says. “We’re reimagining the upper, the bottoms–the whole caboodle.” In addition, as materials such as rubber become harder to come by because of overharvesting or climate change, “we’re going to be able to navigate the volatility of these resources,” she adds. Then, perhaps reminded of the fierce competition Nike is in with Adidas over knit shoes, Jones stops short and wavers, “I can’t say anymore.”
Before the FuelBand, a product called Magneto was, briefly, Nike’s next big thing. You’d tape magnets to your temples and then clip futuristic eyewear onto them. “Perhaps we went too far with that idea, because we actually started to make it,” admits global brand EVP Trevor Edwards. Parker decided the product was impractical, and he killed it.
That sounds like an obvious call, but Parker reputedly approved Flyknit after being shown only a tube sock stitched to a rubber sole. Early on, great ideas can resemble bad ones: They both sound ridiculous. “Steve [Jobs] had a good bullshit meter, but also an open mind,” Parker says. “It’s that bullshit filter that says, ‘Really? Is this really compelling?’ We kill a lot of ideas.”
Parker says he often feels like Tom Hanks in Big–a kid at a toy company whose job is to approve only the products he has fun with. In the FuelBand, Parker saw what athletes would instinctively value. As a “smart” version of the already popular Livestrong bracelet, the FuelBand would give users their own digital coach to motivate them. They could connect with other users and with their friends and family via social media to cheer them on, whether it’s to lose weight or train for a marathon. Nike would benefit from this community, thanks to the ongoing connection with its customers, as well as every user promoting Nike with each post or tweet of their activity report. Plus, people were already comfortable with wearing a silicone wristband, unlike, say, face magnets.
As if to prove the point, when Parker and I meet, he’s wearing a FuelBand on each wrist–exactly double what any user needs. “I don’t normally wear two,” he says, beaming, “but I have to admit, I’m obsessed.” The company is now working to extend that obsession to others. In December, Nike partnered with the startup mentoring firm TechStars to woo entrepreneurs to launch companies that will build on top of Nike’s digital platform. Nike has already announced games built on Fuel points.
This three-steps-ahead thinking is important for any product. Flyknit is not only valuable because its technology will help Nike make all kinds of lighter, better-fitting shoes, but also because it fits into the company’s global growth initiatives. With Brazil hosting both the 2014 World Cup and 2016 Summer Olympics, Sterne Agee analyst Sam Poser believes Flyknit will help Nike reorient how it makes and sells shoes in such an important international market. “The duties importing from China [where Nike does much of its manufacturing] to Brazil are absolute craziness–way too cost-prohibitive, and the [manufacturing] in Brazil is so expensive,” he says. “But Flyknit is much less labor intensive. If they can go into Brazil and set up [knitting] machines, they win.” Poser goes further, imagining that Flyknit will one day allow customers to digitally personalize shoes to match the exact shape of their feet.
Parker wouldn’t be blamed if he had passed on Flyknit after seeing a modified tube sock, but if Nike doesn’t bet on crazy ideas, its rivals will. “They’re like sharks,” says Poser. “If they stop swimming, they die.” Adidas, also after four years of research, launched its Primeknit line only months after Flyknit’s. Nike then dragged Adidas to court over patent-infringement claims related to knit technology.
Stefan Olander has barely ushered me into his neatly arranged office when he invokes FuelBand lore. He has an early prototype at the ready, the very one that his team used in 2010 to pitch the idea to CEO Mark Parker. “We pulled up [our sleeves] and revealed this,” he says, sliding his fingers over the white leathery Velcro bracelet marked with green calculator-like numbers. “Mark is so consumer-driven that instinctively he said, ‘Go do this now.’ His first question was, ‘How fast can you build this?'”
The tale is burnished to a high gloss, which is a shame, because an idea as big as the FuelBand does not get cooked up in a single lab. It doesn’t become a sophisticated, beautiful product just because Parker admired a leathery wristband. Nike doesn’t like to discuss the gritty details of how something like the FuelBand gets made, but the real story shows how messy true innovation is.
In a world of rapid disruption, companies no longer must–or can–own all the skills required to thrive. Just as Google needed Android to attack mobile and Apple needed Siri to give it a foothold in search, successful businesses need to constantly evolve, either through partnerships, new talent, acquisitions–or all three. “You can’t have a barrier or restriction,” says lead Nike engineer Aaron Weast. For the FuelBand, Nike had to open its doors.
The FuelBand’s road to reality began in March of 2010, when a three-person Nike team flew to San Francisco to share their idea with the industrial design firm Astro Studios. “They had this concept of a tennis sweatband with an electronic watch,” Astro design EVP Kyle Swen recalls, as he sits in the same third-floor conference room where the meeting took place. “They wouldn’t even leave us the pitch; it was super confidential.” Nike also consulted engineering firms Whipsaw andSynapse, and longtime digital marketing agency R/GA.
This team of outside partners created hundreds of prototypes, imagining concepts for displays that resembled an Amazon Kindle screen; bands that fully illuminate with color; ones that fit over your leg or upper arm; and even a fastening system modeled after a gas nozzle.
“Everything was custom, custom, custom,” says Astro designer Anh Nguyen.
Olander played the shepherd. “You will never get good work out of anyone if you hand over a brief and go, ‘We have no clue what we want, but why don’t you just do it for us,'” Olander says. During the FuelBand’s development, for example, Nike’s specific requests to partners included its red-to-green color scheme; the idea of Fuel points, which Olander felt would encourage competition among users regardless of their sport; and a dead-simple interface without excessive metrics. The team learned that last insight from its experience with Nike’s earlier digital products, for which 30% of users turned off calorie tracking.
Nike’s role was between a coach and a traffic cop. Nike designer Jamian Cobbett describes it as an “ebb and flow.” Astro’s Swen relates how engineers from other parts of Nike’s assembled team would see what the designers had in mind: “They were like, ‘No fucking way,'” he says, laughing. “But that’s innovation: full throttle, hit the brakes; full throttle, hit the brakes.” The effort produced several breakthroughs, such as when Whipsaw embedded 120 LED lights in the bracelet (to look like an old-time scoreboard) and Synapse developed a curved lithium battery. Both are key features of the final product.
R/GA was tasked with the interactive experience and toyed with making Fuel points spendable. “We had conversations around racking up points and spending them on Nike socks,” says Ian Spalter, who was then R/GA’s product design VP and who now serves a similar role at Foursquare. The agency tinkered with tabulating Fuel points in aggregate for public causes–the digital equivalent of charity runs. Several sources say Nike considered selling FuelBands synced in pairs (so spouses or best friends could track each other’s progress), and it even explored using the system to create campfire moments–that is, lighting up all the FuelBands in the world at a particular time to connect with its community, such as when the Olympics commenced. In the end, the pull of getting a small shot of electronic serotonin from checking your progress all the time, the same way many people incessantly refresh email and social media statuses, proved more than addictive. “There’s something about dipping into feeds,” says Nick Law, R/GA’s chief creative officer, “whether it’s fantasy football, Twitter, or Instagram.”
As the product rounded into shape, “editing [then] becomes critical,” Parker says. Olander adds, “It was like, ‘What if we know your heart rate and have galvanic skin response, or add a gyro and magnetometer? We could know everything.’ But who’s going to do all that stuff? It’s this interaction between design and engineering that keeps the experience refined.”
And during that process, “Nike was the ultimate creative director,” says Spalter. “What’s more important–the people who cook up all the options or the people who curate and make the decisions? For a company of Nike’s size, they keep the number of editors to a pretty damn short list.”
I am sitting in a Winnebago, parked in the middle of the Innovation Kitchen. The team purchased it on Craigslist for $750 to use as a conference room. There’s plenty of meeting space elsewhere, but as legend has it, Nike cofounder Phil Knight first sold shoes in the back of an RV like this one. So here we are.
Nike’s campus is full of odd talismans like this, a living museum of itself, a container of legends and oral histories. The waffle iron that cofounder Bill Bowerman ruined making rubber soles in the 1970s? It’s enshrined on campus like the Liberty Bell. In fact, with so many bits of lore around, anything can be mistaken as symbolic. The clock inside the Winnebago reads 2:59 even though it’s barely past noon. My PR handler makes a point of asking about the significance of the clock’s time. “I don’t even know,” Shaffer says, “but there’s always something superdeep in things like that.” Adds my handler, “That’s the kind of detail people obsess over here–little things like this have a story behind it. Or, well, maybe it just means the battery is dead.”
If Nike treats its past with reverence, it represents its present in a different but equally honed way: as “top secret.” In Parker’s office, he shows me a pink running shoe that he says will reinvent Nike’s manufacturing processes yet again. (It fuses Flyknit technology with a new, peculiar honeycomb-like sole.) “You might be the very first person outside of Nike to see this,” he says.
In fact, I’m repeatedly dipped into the company’s inexhaustible supply of secrets–so much so that I wonder if Nike labels ideas “secret” the way the government broadly labels files “classified.” Inside a garage on the outskirts of campus, behind a day-care center and a security firm, with its door simply marked “A,” I witness two toned athletes lunging in front of a pair of Xboxes. This is the Sparq performance center, which was key to developing the analytics behind the FuelBand and other digital Nike products. At one point, Sparq performance director Paul Winsper insists, “We don’t want anybody to know about this.” And as I enter the Zoo, another of Nike’s “secret” facilities, an engineer confides, “Sometimes you want to be nice and hold the door for someone behind you, but you just never know.”
All of this surely has some level of truth: Nike doesn’t want full details of its R&D leaked out, nor does it want, say, some Adidas employee wandering in to snap photos. (Ahem: “Hell would freeze over before we copied a product,” Adidas design lead James Carnes tells me.)
But like an action movie, the story isn’t built to withstand serious inquiry. I’m told, for example, that only a few dozen employees have access to the Zoo and the Innovation Kitchen. Yet there are clearly more than a few dozen employees inside both, which, mind you, are on the first floor of the Mia Hamm building, behind only slightly tinted windows through which passersby can clearly see from the campus sidewalk. At one point when I walk by, a door to the Kitchen is propped open, unsupervised.
So what’s with all the hush-hush? Culture. Employees internalize their own stories–that their work is imbued with a value worthy of secrecy, vaulting Nike into the lofty heights of philosophical (and sometimes self-important) corporate cultures alongside only Apple and Disney. When I bump into Nike coach and three-time New York City Marathon winner Alberto Salazar, in between the campus’s Olympic-size swimming pools and sky-high climbing walls, even he tells me, “This place is like Disneyland.”
That cohesive culture begets tangible benefits, such as talent retention. At Nike, you’re a rookie if you’ve been at the company for less than a decade. Workers quote the company’s maxims like the Ten Commandments. More than a dozen tell me, independently and unprompted, “Be a sponge” and “If you have a body, you’re an athlete.” “We can almost finish each other’s sentences,” Parker says. “But not in a drinking-the-Kool-Aid, cultlike way.”
That self-image is infused into every marketing message and product release, and transferred to a public eager to finally be let in on the secret. The more exclusive the presentation of those products and brands, the more they are desired. Parker borrowed more than a bullshit meter from Steve Jobs. No wonder consumers and media line the block for both Apple and Nike product launches.
“There’s a halo effect of being seen as an innovative company,” says Forrester’s Sarah Rotman Epps. “It’s hard to overstate how important it is that Apple CEO Tim Cook is seen wearing one of your products onstage at an Apple event,” as he was with a FuelBand during the iPad Mini launch last October. Never mind that Cook sits on Nike’s board. The cool kids are sitting at the same table, and you’re invited.
After leaving that secretive garage on the corner of campus, the one labeled A, I’m told I won’t be able to locate it again. It’s that hidden, my handlers say, like a witch’s cabin that vanishes into the woods.
It seemed like a challenge. So the next day, I go hunting. I search in the rain for 45 minutes, down endless little roads. Finally, there it is–unguarded, intact, no laws of physics denied.
Another Nike myth busted? Perhaps. But I can’t go in; the garage is empty. The lights are turned off. The building is there, but the ideas inside are gone. The secret is kept.
For nearly a decade, tennis star Serena Williams has been one of Nike’s most visible athletes. (In March, in fact, her core workout will be released on the Nike Training Clubapp.) But she’s also a serious entrepreneur: Her clothing line Signature Statement is on HSN.com, and her business investments range from skin care to tech startups to part ownership of the Miami Dolphins. And she credits Nike for setting her business standards.
1/Always offer something new
“You look at where Nike started, from the ’80s until now, and it’s such a huge difference,” Williams says. “I wonder, like, how were athletes able to play back then? Every time I turn around there’s something new–pants with ventilation, seamless fabric. They actually invent fabrics, which is really cool for me, with my fashion background. I always use them in my line. I’m like, ‘So what are the colors for next season?'”
2/The invisible is as valuable as the visible
“When I first came to Nike I said, ‘I don’t care how I feel; I just want to look good.’ And they said, ‘We’re going to make you look good, and we’re going to make it comfortable.’ Last year at the French Open, my dress was almost like a Herve Leger [bandage] dress, really tight fabric. But I was able to perform, I was able to move. It was really functional, but it was also bringing design and style.”
3/Consider yourself an underdog
“I’m not disrupting my brand enough. I need to do it more. Nike always tries to improve. They never say, ‘I’m No. 1, and I’m happy.’ They always say, ‘How can we get better?’ Beyond a company, beyond entrepreneurship, you can really take that attitude in your life, like, I want to be a great mother, or a great student, or a great doctor. What can I do to be better?”
–As told to Whitney Pastorek
[Top photo: Jason Pietra, Prop Styling: Erin Swift; Parker: Art Streiber; Fashion Styling: Melanie Leftick; Grooming: Juanita Lyon; Serena: Photo by Art Streiber; Hair: Nikki Nelms; Makeup: Sheika Daley; Prop Styling: Nick Tortoricii]
“We should be able to quadruple the web business without the site crashing,” explains Shulman. “We believe our website will be a $150-million business, and we should be there quickly.”
American Apparel’s other main focus, according to Shulman, was creating a personalized online shopping experience. “We aim to become more customer-centric,” she says. “We didn’t set up our system in way to maximize on serving customers. The customer shouldn’t care what channel they’re shopping in — channel is our issue, not theirs. We need to enable seamless shopping across channels, and hand off shopping between channels, from store to web, phone to web.”
The basics retailer found its solution in Oracle‘s ATG Web Commerce platform, which Shulman describes as consistently reliable in terms of scalability and stability. What’s more, “Oracle is innovating around personalization,” adds Shulman.
American Apparel operates 15 country-specific e-commerce sites that weren’t united on a single platform. “We’re still perfecting integration — we couldn’t migrate all systems immediately,” Shulman explains. To ensure a smooth transition, the company is migrating one country at a time to Oracle in a controlled rollout.
“The secret sauce is integration,” Shulman says of the e-commerce implementation. “There’s a myth that disparate systems don’t play well together.” The ATG platform is fully integrated with American Apparel’s ERP and POS systems.
In the first phase of implementation, which took three months, the company launched its U.S. web store. But as the busy holiday shopping season was approaching, the retailer held off on making further changes until January 2013, with the full technology rollout expected to be completed two months later in March. But once the platform is securely in place, Shulman’s team will focus on the more innovative end of the project: redesigning the shopping experience. “We will be tying it into mobile with our iPhone app,” she adds.
“In store, people gather things they want to try on and they sort it out in the fitting room socially with friends — what things you want and don’t want — and then you make the decision,” explains Shulman. “Sometimes you decide, ‘I want that item’ but you want to wait to purchase it. You may want to decide later. When you do that online, you build a wishlist, but the web store doesn’t support that very well. The redesign will support that better: gather, support, decide.”
American Apparel plans to take the best features of web shopping — such as rich data, comments, ratings and reviews — and bring that into the physical store experience by pushing that kind of content to a shopper’s mobile device. The brand currently develops for the iPhone but plans to support other mobile operating systems soon.
Shulman says that with the ATG platform in place, American Apparel’s operations team has an easier time with merchandising and creating advanced promotions. The biggest change, however, will come when it implements the platform’s enhanced search functionality, which can change the look and feel of the website based on a user’s search and interests.
With the new platform in place for the critical Black Friday and Cyber Monday shopping days, Shulman says sales on the site were up 125 percent over the previous year. “We ran the same promos as last year,” she adds. “We did no additional promotions or marketing — nothing different, except the technology.”
Cyber Monday brought 20 times greater traffic than AmericanApparel.net had ever previously managed or been able to track. Shulman says that after shoppers complained on Facebook about the slow site speed, her team was able to scale out the infrastructure in just four hours by adding 16 servers, which resolved all performance issues. The company uses virtualized servers; it had virtualized its environment just prior to the Oracle implementation after its old system had crashed.
“We built our systems to handle four times the highest traffic we’d ever had,” explains Shulman. “We had servers on stand-by to give us an additional 50 percent capacity. We put three servers aside, in case we missed the mark on anticipating demand, but those three were inundated in traffic in under five minutes. We had to scramble, but it’s a good problem to have.”
Because Cyber Monday business was so good, the company extended the sale, and the next day itself outperformed Cyber Monday 2011 by about 25 percent, which Shulman chalks up to “pure technology — and some luck.”
American Apparel took down some of those additional 16 servers after the holiday shopping rush but Shulman expects to see higher web traffic over the long term. “This set the new high bar,” she says. “That’s what we want to start operating at regularly.”
Since going live, the online business has been trending up 40 percent overall. “We think it comes down to performance and site speed,” explains Shulman. “Our conversions are up. We’re trying to put our finger on it. No one in our finance team quite believes us, either.”
Innovation up its sleeve
American Apparel plans to unveil a new customer loyalty program when it fully launches the new site, offering exclusive access to its most loyal customers. The company also is improving its B2B process for wholesalers and distributors to better support its business customers. Shulman says her team is working on a two-year roadmap but leaving room in the timeline for “quick turn innovation.”
One of its most important innovations is its partnership with Qualcomm, which enables image recognition when a mobile-equipped customer scans in-store signage. Once the image is recognized, information about that product is pushed to the shopper, a functionality that essentially “turns each in-store sign into a shoppable web page,” explains Shulman. Her team is building on that capability by adding bar code scanning and enabling “silent sales,” which allow a specific user to see special in-store product prices via her mobile device. In addition to offering promotional hunts and prizes, American Apparel is creating a way for consumers to use any payment method, such as credit cards and gift cards, stored in their online account for bricks-and-mortar purchases, thus conducting and completing transactions “without taking out their wallets,” Shulman adds.
“With the iPhone app, a shopper can ask for assistance or different sizes in the fitting room,” she says. “She can complete the whole transaction with just her phone. That’s the long view, what we’re moving toward.”
Jessica Binns is a Washington, D.C.-based freelance contributing editor and former associate editor for Apparel magazine.
SCROLL DOWN to watch all the recordings from the SOURCE Brand Preview 2013, which took place online, and download the presentations below. Get an introduction to latest sustainable, fair trade, eco and ethical brands in each sector, and listen to the brand owners presenting from all over the world.
Hundreds of brand owners, boutique owners, buyers, professionals, press representatives, entrepreneurs and influential individuals joined the SOURCEBrand Preview 2013 event from all four continents, including speakers and participants from 41 countries, creating an exciting international forum and forging connections across the sector. Thousands of visitors visited the Brand Preview web pages and browsed exhibitors within hours of each event.
Women’s – Casual/ Basics http://vimeo.com/58580405
Women’s Young Brands http://vimeo.com/58584334
Women’s Established Brands http://vimeo.com/58577077
Eveningwear, and Bridal http://vimeo.com/58576922
New Generation http://vimeo.com/58572476
Handbags, Carryalls and Clutches http://vimeo.com/58647843
Footwear, Scarves and Headwear http://vimeo.com/58652103
Lingerie, Swimwear, and Loungewear http://vimeo.com/58656889
By Beth Carter | January 28, 2013, 3:00 AM PST
Many in the start-up game are seeking to change the way people shop, and for good reason. The Internet has transformed the process, but the sheer volume of stores you can visit and the overwhelming way items are displayed can leave customers clicking through endless pages of apparel – or whatever other sort of product they are researching.
If this is what shopping has become, are the good old days of catalog browsing totally behind us?
According to San Francisco digital catalog startup CoffeeTable, the future of this leisurely pastime is on your tablet computer. And apparently plenty of people agree: Its software is the No. 1 rated app in its category for the Apple iPad and is making ground on the iPhone.
In a world where impulse online shopping is the new norm, why take catalogs digital? “It’s an experience focused around discovery,” says Ben Choi, co-founder and CEO, speaking CoffeeTable’s SoMa offices, not far from where he grew up. “If you don’t know what you want, you’re looking to window-shop, there’s no fun in Google. It’s where you get your errands done.”
Rethinking a leisurely past-time
CoffeeTable is not meant to be a place where you get errands done, or where you have to actively search for something. It’s where you shop for enjoyment.
Retailers have spent decades researching customer shopping habits, trying to get a handle on what they want, what compels them to buy, and what inspires them to buy more than they expected. The creation of the catalog was the end result of those findings, and now retailers spend $15 billion annually on marketing, printing and shipping them — to people who may or may not even open them.
CoffeeTable asks; why not bring the right brand to the right customer at the right time, using mobile devices as the medium?
The app’s user experience is built around the swipe-ability of the iPad and iPhone. The more you interact with catalogs that interest you, the more the app learns about your habits and preferences. It does contain a search feature that lets users look for something specific, but the primary point of the app is to let people browse around and find something they recognize or even something entirely new. If someone wants to make a purchase, he or she is directed to the company’s Web site.
“The test for me was, I showed this to my mom when we launched a year and a half ago and she’d never used an iPad before,” Choi says. “She opened it up, tapped it and moved through it, and I didn’t have to tell her what to do. That was the first test in usability.”
Getting content into CoffeeTable is relatively straightforward. The retailer gives the developer a PDF and product information, CoffeeTable does all the formatting, mapping and data cleansing to make it part of its catalog.
There are now more than 150 brands represented across including catalog powerhouses like Eddie Bauer, Crate & Barrel, Coldwater Creek, Harry & David, Kohl’s, Land’s End, Macy’s, Neiman Marcus and Signals.
A free analytics dashboard lets retailers follow what their customers are browsing in real time. It answers questions such as: “How many pages did most customers get through?” or “Which spots on the page did they click on most? This is data that many retailers never had before.
“Our vision is to become a Pandora for shopping,” Choi said. “You want some familiar stuff, you also want some new stuff mixed in.”
A natural progression
Choi and his business partner Chris Friedland are veterans of the Silicon Valley tech scene. Choi’s background is in mobile startups and venture capital, most notably as part of Howard Shultz’s Maveron. Friedland started Build.com, the No. 2 two e-commerce site in home improvement after Home Depot.
The idea actually came from Friedland. Build.com’s base in Chico, California, is very far from major retail centers, so his wife became a catalog shopper. Friedland took note, and two and a half years ago after throwing the catalogs away, he came up with the idea for CoffeeTable.
The two met while Friedland was looking for funding. Choi thought CoffeeTable was such a smart idea that he suggested Friedland quit his day job and see it through. A few beers later Choi was the one quitting his job, and CoffeeTable was born.
The founders have already built and rebuilt the application three times. One big insight they uncovered is that Website shopping is on demand, and if you’ve shopped on a desktop computer before, you’re programmed to interact with sites that way. The catalog experience is designed for an altogether different purpose, it’s not a place for impulse-buying.
So instead of trying to take a revenue share on a transaction that happened on the spot inside the catalog, CoffeeTable learned that it must focus on marketing value.
With that in mind, CoffeeTable retailers pay per catalog open, along the same budget lines they have for their print copies. For this investment, retailers get to see how shoppers are engaging and even when browsers stop skimming the pages. That’s a world of data that never existed before, and it represents CoffeeTable’s core value proposition.
“It’s one of those rare businesses where the advertisement is the content,” Choi says. “Like a movie trailer. It’s entertainment that leads to a purchase.”
February 11, 2013
Digital Devices Invade Campus
Ty Wright for The Chronicle
J. Brice Bible, Ohio U.’s chief information officer, displays some of the digital devices students use in their dormitory rooms that have contributed to network overload.
By Jake New
In mid-March 2011, wet weather and finals week forced many Ohio University students indoors. Inside campus libraries and dormitory rooms, thousands of students connected to the Internet not only to study with online systems like Blackboard but also to watch movies and TV shows on Netflix.
The second, more leisurely activity was soon eating up the network’s bandwidth, and slowed Blackboard to a crawl as students prepared for final examinations. Network technicians twice decided to restrict Netflix traffic, but both attempts unexpectedly backfired, causing Internet outages across the campus.
The event has come to be known as the “virtual flood” among some network technicians at the university. It happened even though the university had already increased the amount of bandwidth at its data center by 10 percent, and had instituted an Internet speed limit in its residence halls, essentially capping the amount of bandwidth per user to about five megabits per second—still faster than many home broadband plans. That had helped, but the university still couldn’t entirely serve the campus’s hunger for bandwidth. Even now, capacity is barely outpacing demand, according to campus leaders.
Computers, smartphones, wireless printers, tablets, iPods, Xboxes, handheld gaming systems, e-readers, smart TVs, Blu-ray players—students now bring an arsenal of devices to connect to campus networks, often using multiple gadgets simultaneously. And campus networks, as well as some information-technology staff members, are buckling under the pressure.
In a report released last March by the Association of Information Communications Technology Professionals in Higher Education, about 76 percent of chief information officers surveyed said they were worried about increasing bandwidth use. In the same report, 77 percent listed an increasing number of mobile devices as a major concern about future network strain.
The spike in gadget ownership at Ohio University is drastic, but administrators on other campuses say they are seeing similar patterns. In 2008, 15,000 student devices were registered on Ohio’s network. Three years later, that number had risen to 70,000.
All of those Wi-Fi-hungry devices eat up bandwidth and require IT staff members to learn how to help students plug them all in to the network, said J. Brice Bible, Ohio University’s chief information officer.
For now, he said, he feels his staff —and the network—has adjusted to this new, multidevice world. But who knows what will come next?
“It’s a moving target,” he said.
Academics v. Amusements
It’s a target that has been on the move for more than a decade. In 2000 the music-sharing application Napster was wreaking havoc on campus networks. At Indiana University at Bloomington, Napster was reportedly eating up 61 percent of the college’s bandwidth. While many peer-to-peer programs would eventually be banned from campuses because of their dubious legality, Napster and other early file-sharing applications were blocked or slowed by some campuses because of the sheer amount of bandwidth they consumed.
Other bandwidth bandits soon moved in to take their places. Video- and music-streaming Web sites like YouTube, Spotify, and—possibly the biggest headache of them all—Netflix are now consuming large amounts of bandwidth. And that is exacerbated by the number of devices all using those services.
Ohio now has a limit on how much Netflix material each user may view during the day, and in 2010 the University of Oxford experimented with a temporary ban on Spotify, a music-streaming service. The ban prompted anger from students and lasted just one term.
Administrations must decide how to balance academic uses of the network with recreational uses, said Jack Suess, chief information officer at the University of Maryland-Baltimore County. That can be a tricky combination to figure out, especially for students who live on the campus.
“Probably 70 percent of our traffic is video of some form, either YouTube or Netflix,” Mr. Suess said. “Our view, especially in the dorms, is that we don’t want to cut them off from the things they would be able to do at home.”
UMBC, an institution with about 13,000 students, has not had as many problems with its network as has a larger university like Ohio, but the number of devices is still a concern, Mr. Suess said. An estimated 8,000 students are on the campus at any given time, he said, with more than 10,000 active connections.
A recent study conducted by Damian Doyle, coordinator of networks and security at UMBC, examined how many devices were connected in the library’s main study area. While only 120 people were using the room, there were more than 300 active connections, Mr. Doyle said.
Mr. Suess chalked it up to the way many students now multitask while they study or do homework.
“A lot of these students are running YouTube, but what they’re doing is listening to music through YouTube, using up bandwidth, while they’re connected to the Internet studying,” Mr. Suess said. “It’s just background noise.”
Multitasking students are causing a similar kind of problem at Virginia Tech. Too many devices are fighting for limited Wi-Fi airspace. In a large lecture course, a professor may try to connect via wireless to use an application for the class, said William C. Dougherty, executive director of network infrastructure and services there. Meanwhile the 300 students in that lecture are also connected to Wi-Fi on their laptops. While they may be using the laptops for class-related purposes, they’re also likely to be surfing the Internet, chatting on Facebook, or watching YouTube videos on their computers, on their smartphones, or both.
“Obviously we’re going to see poor performance with the professor’s application or the signal is going to be dropped,” Mr. Dougherty said.
Not Just Students
And the problem isn’t limited to lecture halls.
A recent poll of 60 students at Virginia Tech found that more than half of those living in dormitories regularly use two or more devices at any given time. And those students typically connect to the college’s wireless network rather than one of the two wired ports in each dorm room, which provide faster connections. That puts a strain on the Wi-Fi receivers, which are usually placed in common areas rather than individual rooms.
“We thought they’d take advantage of those ports, but everyone wants Wi-Fi,” Mr. Dougherty said.
Wireless access also poses a challenge in Virginia Tech’s Lane Stadium, where there are no public Wi-Fi access points but where football fans often want to connect during games. Devices attempting to connect to a wireless system in the stadium set up for ticket scanners sometimes render it nearly useless.
It’s not just students watching Netflix or football at Virginia Tech who are causing problems, though. The issue has even crept into faculty offices.
“It can be the staff, too,” Mr. Dougherty said. “I have two laptops, an iPad, and a smartphone. I’m just as much of a Wi-Fi hog myself.”
At Ohio University, Mr. Bible said professors often have more Internet-connected devices than the students do.
“But in my opinion, priority traffic needs to be there, with the faculty and staff,” Mr. Bible said. “It has to be. I would even put more restrictions on students, if need be, to help with teaching and research.”
Increasing the amount of bandwidth is another way Ohio and colleges like it are combating the gadget overload, Mr. Bible said. But getting ahead of the demand can be costly. From 2007 to 2013, IT costs at Ohio have risen an estimated 107 percent, Mr. Bible said, with most of that $174,000 increase being used for improved Internet service and copyright-management software to help staff members monitor peer-to-peer sharing.
In the 2012 survey of college tech leaders conducted by the IT professionals’ association, nearly 90 percent said the central IT department paid for the cost of the residential network’s bandwidth. And nearly 60 percent of the respondents said they did not recover the cost of that bandwidth through additional fees.
Before long, more restrictions and more bandwidth may both be coming to Ohio. In any case, more devices will be. This fall, Mr. Bible said, Ohio University’s 35,000 students are expected to connect 100,000 devices to its network.