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Of late, I’ve had a string of familiar in-store shopping experiences. I’d like X. I’d like X in color Y. I’d like X in color Y and size Z. The person helping me comes out from the back room with a disappointed look on his or her face and says, “I’m sorry, we don’t have it here, but we can order it for you and have it sent to your house at no charge.” Three years ago, this would have been the store going above and beyond, while filling a distribution gap and retaining my business. When Nordstrom first started offering this model it was mind-blowing and revolutionary.

I Need You Now sheet music

Same song, new tune: In the Now Economy, consumers are willing to pay a surcharge for speed.

But, what worked 3 years ago, doesn’t satisfy the hunger for those of us living in the Now Economy. Want a song? Download it from a plethora of options. Want a movie? Fire up NetFlix, HBO Go, Amazon Video or any number of others, click and stream away! Want dinner? Order it on your phone and have it delivered to you in 30 minutes from GrubHub. We are in a Now Economy. We want it now. And if you can’t satisfy the itch that is now, we’ll find someone who will.

Of late, I’ve had a string of familiar in-store shopping experiences. I’d like X. I’d like X in color Y. I’d like X in color Y and size Z. The person helping me comes out from the back room with a disappointed look on his or her face and says, “I’m sorry, we don’t have it here, but we can order it for you and have it sent to your house at no charge.” Three years ago, this would have been the store going above and beyond, while filling a distribution gap and retaining my business. When Nordstrom first started offering this model it was mind-blowing and revolutionary.

But, what worked 3 years ago, doesn’t satisfy the hunger for those of us living in the Now Economy. Want a song? Download it from a plethora of options. Want a movie? Fire up NetFlix, HBO Go, Amazon Video or any number of others, click and stream away! Want dinner? Order it on your phone and have it delivered to you in 30 minutes from GrubHub. We are in a Now Economy. We want it now. And if you can’t satisfy the itch that is now, we’ll find someone who will.

A few months back I stopped into the Nieman Marcus at the King of Prussia mall. There was a jacket I’d lusted after for the past 2 years. Elliott, the salesman, who at this point knew me by name because of all the times I’d stopped in to see the jacket, was there that day. I said to Elliott, “today’s the day I buy the jacket.” He smiled. Went over to the rack. We both had the same look. I’m a 40R and the smallest jacket was a 44R. That’s far too big to tailor. Now at this point, Elliott could have said, “I’m sorry, we don’t have it here, but we can order it for you and have it sent to your house at no charge.” But, he didn’t. He understood the Now Economy. Elliott did 3 things:

1. He checked to see if there were other stores in the area that had the jacket in my size.
2. He found one and called to confirm the data in the computer matched what was really there.
3. He said, I can have it sent to your place today, via courier, for a nominal fee, if I wanted it today (aka now).

That’s pretty amazing service. There’s no denying that. But that amazing service stems from understanding that we were both operating in the Now Economy. Elliott knew he’d miss out on the commission if he didn’t sell it now and he knew I wasn’t going to wait. This wasn’t easy, I’m sure. I’m also sure it would be nearly impossible to scale individualized service to hundreds of thousands of shoppers each day. But as Amazon teases the idea of drones that can bring you same-day delivery, make no mistake, we’re all destined to be part of the Now Economy. ZipCar is the Now Economy. iTunes is the Now Economy. The food you see on the perimeter of grocery stores is the Now Economy, Uber the XBOX One, enabling you to download games instead of buying them in-store.

Uber car service home page

Uber uses a Surge/Value pricing model.

The Now Economy brings about even more disruption for retailers and service providers. Specifically, there are three critical challenges they must solve for:

1. Incorporating An On-Demand Service Model: This isn’t a new idea. Ever have dinner delivered, where there’s a delivery service charge on top of the cost of goods? Great, then you’re familiar with an on-demand service model. When we get something on-demand we usually pay a premium. In theory, this would be great for the retailer or service provider. In practice, it’s mayhem, because it brings about the need to create new models to support an on-demand consumer. For example, we’re all familiar with restaurants that simply won’t deliver. There are good reasons for them not to deliver. Some chefs will say the quality of the food experience is marginalized; that’s a fair reason. But even more daunting is trying to figure out the business model around predicting demand and staffing for that demand.

2. Surge/Value Pricing: People love to hate on Uber for their Surge Pricing model. For those not familiar, let me offer a quick explanation. Uber is a transportation service, connecting passengers with drivers. It has a fixed pricing model for time/mileage. You request an Uber and the ride is governed by those rates. This is similar to every cab you’ve ever taken. You pay a premium on those rates for a better car — one that looks like a private-hire — and more control over how it shows up to meet you. Simple enough. Well, during peak times, when there are more people requesting Uber rides than there are drivers, Uber imposes a massive up-charge. How massive? A ride that might normally cost $40 could turn into $240. Folks, that’s economics.

It’s the simple supply and demand concept. Nothing new. Even the surge pricing isn’t really a new concept; it’s just a slight modification of the “rush charge” associated with services like tailoring. But, let’s say you’re a clothing retailer. You have a shirt I really want. I call to see if you have it in my size. You do! If you’re like most stores, you might hold it to the side for an hour or a day, but if it’s something that’s inherently of limited availability it’s unlikely you will. What if I offered to pay double your asking price? Crazy? Perhaps. But, if you have the financial means and value it at 2x the asking price, why wouldn’t you spring for that? I can give you a great reason…your prices are governed at a corporate level and your point of sale system can accept a discount, but not an up-charge. Infrastructure, logistics and policy…all holding you back.

Picture a future in which sourcing logistics factor into your business model, and start rewiring.

Picture a future in which sourcing logistics factor into your business model, and start rewiring.

3. Sourcing Logistics: Have you heard of Pappy Van Winkle? It’s a bourbon, but not just any bourbon. It’s distilled in limited supply, without traditional distribution. Bottles are strictly allocated; your store might get four, it might get 12…or maybe one. The bottles retail for roughly $50. They’re re-sold on the secondary market (aka Craigslist) for anywhere from 3-10 times that amount. That’s the free market economy at work for you. Capitalism at its finest. There’s an urban legend about a Zappos customer care specialist going well above the call of duty. A woman had called to inquire about a pair of boots, but Zappos didn’t have the correct size. Rather than lose the sale, the specialist, ordered the shoes from Nordstrom (legendary for its well-stocked shoe department)and cross-shipped them. It wouldn’t surprise me at all if this bit of retail mythology was 100% true. It’s the Zappos way, and I think it represents the future. Auto Dealers are quite adept with this model. Let’s say you want a specific car with a specific set of features. It’s not uncommon for your dealer to trade a car on their lot with a dealer that has the car with your specifications. In fact, that’s exactly what happened when I purchased my last car. These dealers are simply swapping inventory. This works well when you’re all a part of the same family, but it’s much more difficult to do what Zappos may have done. I think organizations are going to need to grapple with a logistics model in which they don’t own all the inventory that they may sell you.

Speed is Life, as Facebook says. I say, Speed Wins. We live in an on-demand world, where our smart phones hold more power than the computers from 10 years ago. The business, operating and logistics models of the past will not be able to support the Now Economy. Start thinking about rewiring. The time is now, and you can’t afford to wait.

Adam Kmiec spent many years running global digital strategy for the Campbell Soup Company. Read more of his ramblings on “All Things Media” at www.TheKmiecs.com.

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by Brandon Gutman
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Brandon is an expert connector and seasoned business development professional. As Principal of Brand Approved, he's led the advisory to become the bridge between brand marketers and best of breed service providers that are reshaping the industry.

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