I am VP of Growth Marketing at MyRegistry.com and help companies grow through the interplay of classical brand and performance marketing.
The world where business leaders operate today is increasingly VUCA: Volatile, Uncertain, Complex and Ambiguous. Leaders are constantly preparing for the myriad of potential alternative realities to come. Anticipating technological changes, however, often conflicts with legacy business models, presenting a tradeoff between cost (margin) and growth (revenue)—and results in the “OR” dilemma.
On the other hand, the staggering success of the Ubers and Airbnbs of the world remind us that “AND” operating models, where both top line (growth) and bottom line (profit) advantages can be realized if leaders are thoughtful about which operational capabilities they build in-house and which ones they “access” through external providers. In these circumstances, challenging the status quo fosters productive collaborations between business and technology, especially when these teams come together to address real human problems
In these circumstances, challenging the status quo fosters productive collaborations between business and technology, especially when these teams come together to address real human problems.
To illustrate, let us take a closer look at the retail gifting ecosystem.
Retail is an industry that has been impacted by VUCA as much as any sector. While the core principles of delivering customer value haven’t changed, the channels of engagement have, as the fragmentation of retail alongside the rise of digital commerce has put the consumer in control of the retail relationship.
While retail is attempting to adapt to its new paradigm, its gifting ecosystem counterpart hasn’t yet evolved. To capitalize on the available opportunities in the gifting market, retailers should consider moving away from their current focus on the gift purchaser to one where the gift receiver is at the center. Why should retail consider this strategic shift?
The business of gifting is:
1. Big. Coresight Research estimates that the U.S. gifting market will grow at 6% CAGR to reach $816 billion by 2024.
2. Year-round. According to Deloitte, 23% of holiday spend in 2022 occurred by the end of October, up from 18% in 2021. This is a shift away from the year-end holiday trend, as a greater share of purchases is being made between January and October for moments like birthdays, graduations, housewarmings, baby showers, weddings and more.
3. Expensive. Bad gifts impose a cost to retailers through returns, restocking and the hassle they bring to both store and customer. Retailers must pass these expenses back to shoppers in a desperate effort to maintain profitability.
A recipient-focused model upends the current gifting mindset in retail
This model can impart three significant benefits for all parties involved in a gift transaction. This model:
1. Changes the gifting equation from a “one to one” transaction (one gifter to one recipient) and expands to a “one to many” multiplier (recipients with many givers).
2. Lowers the marginal cost of customer acquisition for the gifting transaction.
3. Reduces the financial and operational burden of returned gifts.
But how can these benefits be achieved to ensure retailers are actually in the gifting game? When properly deployed, technology can be a powerful enabler in reducing the costs associated with retail, generally—and with bad gifting specifically.
The right innovations can turn a lose-lose-lose situation into a win-win-win outcome for the receiver, the giver and the retailer, delivering the “AND” model for the gifting ecosystem.
To DIY or hire an expert?
When it comes to reinventing the gifting ecosystems, should retailers build the technology capabilities in-house or purchase the expertise of established service providers?
In general, the build vs. buy decision can be made by the following considerations in relation to your specific business needs.
• What will it cost in time or capital to build a solution vs. buying one? You need to consider the entire cost of lifecycle maintenance, customer support, research & development and even down-the-road replacement.
• What capabilities do you want or need now versus the time it takes to develop them? Building software takes a lot of time, even with today’s no- and low-code development stacks. Can you wait to be competitive?
• What is the value the technology will bring to the company? Does the technology provide you with a competitive advantage, or is it merely a nice-to-have, not necessarily crucial to your operations?
Put another way, is your business better off letting experts handle aspects of importance while addressing the imperative in-house?
Let me share a case example.
MyRegistry.com partner Kinder Cloth Diaper Company is a small business that sells smartly designed cloth diapers appealing to the modern consumer’s desire for sustainability. The company leverages Shopify’s e-commerce platform because it makes running their business less expensive and immediate, and the SaaS model means they don’t need to worry about upgrades or implementing new features, as these are done for them.
When it comes to gifting, Kinder Cloth understood the value that a recipient-focused gift list and registry could provide the business. They decided that the best way for a registry to fit into their business model was to access and offer our company’s solution as a core part of their e-commerce user experience.
Are you in the game?
Gifting is a huge market. Retailers lose the larger opportunity gifting can deliver when they focus only on the purchaser. Technology such as the gift list and registry platform offered by my MyRegistry and others can offer the opportunity to turn a “one-to-one” interaction into a “one-to-many.”
Gift list technology removes the friction in gifting because the purchaser knows what the recipient wants, creating more sales with fewer returns. I hope this article provides some valuable takeaways for leaders seeking to leverage the power of a gift list or registry solution for their retail site—and establish themselves firmly in the gifting game.