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July 8th, 2020 at 3:08 pm

The future of commerce belongs to the frictionless

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Striving for a frictionless experience for your customers, employees, suppliers, or other stakeholders isn’t just something that the digital era has enabled you to do. At this point, it’s a requirement.

 The businesses that will survive after the pandemic are the ones who give us back our time.

FOR A MINUTE there, at the start of the global lockdown, it seemed to be an open question: Would we all be able to get everything we needed delivered? Three months in, while nobody’s getting two-day deliveries anymore, it does seem as if Amazon alone might be able to provide almost all of us with our commodity needs.

Way back before Jeff Bezos began delivering almost everything to everyone, there was another open question: Was ordering just a few things at a time from Amazon bad for the environment? The answer is a little surprising. While it’s obviously more wasteful and damaging to place several small orders as opposed to fewer larger ones, it’s also obvious that having Amazon deliver everything to everyone is a more sustainable option than going to the store ourselves.

Christiane Lemieux is a design entrepreneur, author, and regular contributor to Architectural Digest. Duff McDonald is a journalist and author of several books. Their new book, Frictionless: Why the Future of Everything Will Be Fast, Fluid, and Made Just For You, published by Harper Business, goes on sale today.

The Earth is thanking us for keeping our cars in the driveway. (We, in turn, would like to thank every single delivery person on earth.) Maybe Amazon was so named because Jeff Bezos may just reforest not only the Amazon but the planet itself. Who saw that one coming?

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Now another question arises: Which companies other than Amazon have come into their own during the pandemic and will thrive beyond it? While the idea of frictionless commerce is not new—see Amazon itself—we think that the argument we make in our new book about the forces of frictionlessness is very much so.

Ask any CEO today about frictionlessness, and they’ll rattle off one or two spots where they are focused on eradicating friction: Making the web shopping experience easier, facilitating data collection from consumers, allowing employees to work from home, or using digital connectivity to help squeeze the friction out of entire systems, such as distance learning or supply chains.

Our argument goes a step further:

Striving for a frictionless experience for your customers, employees, suppliers, or other stakeholders isn’t just something that the digital era has enabled you to do. At this point, it’s a requirement. If you aren’t reducing friction in every part of your business, you will soon be done.

The reason is simple: When you remove friction from a process or a system, you give the people in that system back one of the only things that is utterly nonrenewable, time. And as more and more time has been ironed out of almost everything we do—the most recent example being the elimination of commuting for much of the planet—people have realized that for far too long they’ve let someone else choose how they are going to spend their time. Those days are gone. Everyone values their own time more than they used to, and if you think you’ll be able to get away with taking more of it than you have been allocated—by leaving too much friction in place—you are gravely mistaken.

AT THE BEGINNING of 2020, a business that offered you a real person in real time to help you with your needs would be considered a luxury and somewhat exempt from the forces of frictionlessness. Nobody was complaining about having an attentive waiter in a restaurant or having a hotel concierge who can tell you about the best restaurants nearby. Those days, a few months ago, were the old days. In the Covid-19 era, personal touch has become taboo. The forces of frictionlessness are now making their way into places we used to want or even demand humans.

Let’s set aside pure ecommerce companies for a second and focus on companies that actually have some kind of presence in the physical world. Some have already taken humans out of the equation. You don’t really need to interact with anyone in person to rent a car these days. If you consider which companies managed to figure out how to respond to Covid-19 better than others, it’s those who had already merged the digital and analog components of their business. They’re the ones who could pivot midway through the pandemic.

A compelling example is Mint House, which has retooled the concept of the hotel. Instead of offering travelers a typical hotel room, Mint House converts former multifamily luxury apartment buildings, an idea that founder Will Lucas landed on when he realized consumer tastes were gravitating toward AirBnb-style accommodations. His average room size is three times that of the typical hotel room, with full kitchens and washer/dryers. When we asked how the company was faring during the pandemic, Lucas said, “It’s funny that you’re calling, because we had the words frictionless luxury on the first slide of our fundraising presentation.”

That’s how they were selling themselves pre-Covid. Today, Mint House’s main edge over other hotels is that they have leveraged technology from start to finish to power the whole consumer experience. They’ve never had in-person check-ins or checkouts; you do it all on their app. They also have a bare-bones staff on location. Most guest requests don’t require a person on site. The refrigerator is stocked with your customized order as well. “We’re objectively safer in today’s environment,” says Lucas. “You don’t even have to leave—and maybe deal with someone else—to get your favorite amenities.”

The average four-star hotel spends 42.5 percent of revenue on labor.

Mint House spends 10.5 percent. When Covid hit, Mint House, like everyone else, saw bookings fall off a cliff and cancellations go through the roof. By the end of March, they had single-digit occupancy booked for May. Lucas was forced to lay off 20 percent of his team to try to save the company. At that point, though, a frictionless infrastructure allowed them to pivot. They pitched their no-interaction check-in model to various target groups, including medical professionals, who soon made Mint House a home away from home. They became an office away from home for people who didn’t want to work from home, and a home away from home for high-risk people who didn’t want to return home and risk their families.

Almost as quickly as reservations had vaporized, they reappeared: Average nightly stays went from 3 days to 21, and occupancy in April and May was 52 percent and 68 percent, respectively, compared to an average of 15 percent for urban upscale hotels.

IT’S NOT JUST Mint House that’s thriving. It’s most digital-first companies that have embedded a frictionless philosophy into their approach. Consider the men’s athleisure company Mack Weldon. When the pandemic started coming to a head in March, CEO Brian Berger told us, the company braced for the worst. It expected customers to disappear and the economy to tank. And that was coming off a tough competitive backdrop anyway: For those in the online growth-advertising space, competition was high, the price of online advertising was high, and it was getting increasingly hard to scale. But then, as the broader economy ground to a halt, the cost of advertising plummeted, both online and off. For a subset of companies in certain categories, as customers settled into a “weird state of capture” in front of their screens, he said, they experienced a surge in demand. (For a time, you couldn’t buy yeast. Or elderberries.)

Berger told us that sales of key categories, such as men’s sweatpants, were 30 to 50 percent above what they’d forecasted. But it wasn’t just that. Everything turned in their favor: Advertising costs fell, demand rose, and conversion rates (the website visitor who becomes a buyer) rose. “It was the perfect formula,” he says.

How can a company sustain the higher performance that lands in its lap in a situation like Covid? It comes down to marketing prowess. Can you capitalize on opportunities? At Mack Weldon, they took the wins from online and redeployed them to radio and television. Both traditional realms suffered an exodus of major advertisers and the company was able not just to find the right places to advertise but also to negotiate compelling deals. All told, the company’s blended customer-acquisition costs have fallen between 30 and 40 percent since March. And while they thought they’d be slashing budgets just a few months ago, the marketing department is still spending at or above levels they’d forecasted pre-Covid, without any adjustments to the plan. They’ve handled the whole thing frictionlessly.

OF COURSE, THERE is friction standing in between many companies and frictionlessness. Not everyone can become Mint House overnight. So what’s the most frictionless way to become frictionless? If you’re thinking that this all sounds like too much, remember that most of us just learned it’s nothing of the sort. After a few weeks of wondering just how we were going to get work done while locked at home, those of us whose work didn’t actually require being somewhere specific all eventually figured out how to get it done. Again, in a few weeks.

In fact, the ease with which most of us in the information economy adjusted to the new normal has expedited even more frictionlessness to come. Most of us already preferred one airline, hotel, or other businesses that reaches us through the web, because of something about the digital component of the consumer experience. Now that we’ve all simultaneously realized the benefits of the digitization of office life as we knew it, the demands for a frictionless workplace, which we discuss at length in our book, are going to come like a tidal wave. But there’s nothing to worry about, because we know how to do this. We just did it.

Friction needs to be eradicated everywhere you find it. We can use one of us as an example: Christiane moved offices for her company The Inside into a shared space in New York’s Soho District in July 2018. Just over a year later, she realized that she wasn’t attacking friction anywhere near as much as she could, and moved again. In that second move, The Inside shed office phones, a showroom, all sorts of IT equipment, including printers and servers, as well as a rusty old elevator. Everything but computers and cell phones.

It’s not that hard to achieve frictionlessness. It’s also way cheaper once you get there. Friction is what costs you; frictionlessness is priceless. In that way, it’s very much like love: They both seem hard to find, but they’re not. All you have to do is look around you. And once you do that, you will find that everything is way easier than you ever thought it would be.

Until recently, Mack Weldon had put off a move into brick-and-mortar retail because the necessary and rising costs of online advertising were eating too much of the company’s marketing budget. But with online showing improvement across all metrics, it looks like the digital business is going to fund the company’s brick-and-mortar presence, with the opening of its flagship store in New York City’s Hudson Yards when the right moment presents itself.

The pre-Covid numbers they’re crushing? Those include the sales they had forecasted with the Hudson Yards store. But it turns out that they didn’t need to staff a retail store to hit their targets. Their customers apparently don’t require that staff, either. A flagship store is about more than sales, of course, but when it comes to digital hospitality or retail, it turns out that as customers, we want, more than ever, a frictionless experience where we get everything we want with zero people involved. The digital-first company delivers exactly what we want exactly when we want it to exactly where we want it, and we want it all now.

Via Wired.com

 

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