Macy's eCommerce Strategy: AR/VR Tech + Vendor Direct Program

When it comes to fighting Amazon in the ecommerce space, there is no one-size-fits-all solution.

For brands with a brick-and-mortar presence, such as Walmart, it means leveraging the power of omnichannel to get a leg up on online-only companies. For others, it's using new technology such as augmented or virtual reality to offer unique customer experiences which they simply can't get with Amazon. Whichever strategy is chosen, when it comes to ecommerce, the focus is nearly always on how best to compete with the ecommerce behemoth.

Department store Macy's isn't just banking on one ecommerce innovation to compete with Amazon, however, but is adopting a more comprehensive omnichannel approach.


One such innovation is taken straight from Amazon's (and eBay's) own playbook and is allowing third-party vendors to sell their products directly through Macy's ecommerce platform.

The initiative is called "Vendor Direct" and it empowers Macy's to greatly expand its product catalog with a minimum amount of admin required on its own part. Vendor Direct has already doubled the number of products available through Macy's and is still growing exponentially. It also offers those brands who sell through Vendor Direct various options to ship their goods - brands have the choice to facilitate delivery themselves, or via Macy's network of 650 stores which can be used as shipping hubs.

The program gives Macy's overall control over the customer experience, as the products are listed and sold within its own ecosystem, while leveraging the advantages of similar third-party vending schemes put out by other retailers.

"We curate for our customer through a highly edited assortment that is localized to a specific market, using our enhanced data and analytics, we are able to efficiently influence assortment down to the store level," said Macy's Chief Executive Officer, Jeff Gennette. "Macy's is attributing its 3.3 percent same-store growth in part to Vendor Direct, a connective tissue enabling ecommerce powered by its store network, along with a mobile shopping experience."

Macy's can curate product selection based on variables such as purchase history and geography using its vast data capabilities. The department store retailer can also maintain and build on its direct relationships with consumers by keeping them shopping on its own platform instead of redirecting them to third-party marketplaces. The store-hub delivery options are also helping to drive foot traffic into Macy's stores, increasing the chance for the brand to push additional purchases through the point of sale and other merchandising opportunities.

On the subject of omnichannel strategy, the brand is expanding its Market@Macy's innovation to drive these sales. By having fluid displays with varying products on market stall-type stands in the main walkways of its stores, Macy's gives itself every opportunity to drive these additional sales when customers come in to collect their orders.

Ecommerce Strategy

Macy's is using other digital technology in its omnichannel strategy as well. Much like other retailers such as IKEA and Wayfair, the company is using augmented reality technology to help customers visualize how furniture products will look when placed in their own homes.

Macy's is also using virtual reality to increase the number of furniture products it can display in its stores.

"By early November [2018], Macy's expects to have completed the launch of VR for Furniture in 69 Macy's stores across the country," reports Forbes. "The chain has seen the overall furniture basket sizes in stores with the virtual reality tech climb 60 percent higher than those without it. Customers using the technology are also less likely to return purchases, with the percentage of returns in VR stores falling to below two percent of all transactions. Another benefit of the technology is it allows Macy's to feature more of its furniture selection without taking up space on the sales floor."

Macy's is also using virtual mirrors in the makeup department. These augmented reality devices work in much the same way as those fun filters you can apply to your Snapchat or Instagram photos, allowing Macy's customers to visualize how they will look in various shades of lipstick, eyeshadow, foundation, and more, without going through the hassle of applying and removing makeup at a traditional demonstration station.

Final Thoughts

Digital technology is helping Macy's develop a solid omnichannel strategy to help it compete in the contemporary, post-Amazon, landscape. The retailer's expanded ecommerce marketplace is helping to draw more customers to brick-and-mortar stores where they can be exposed to innovative point of sale technology and further revenue-generating opportunities.

You can hear Macy's Vice President of Innovation and Business Development, Parinda Muley, speak at Etail East 2019, taking place in August at The Sheraton, Boston.

Download the agenda today for more information and insights.

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