I had the pleasure of being interviewed by Cyril du Plessis for his podcast Digital Doers, as part of a special series in exclusive partnership with One to One Retail e-commerce Monaco.
The purpose of this special issue, which is part of the very specific context of COVID-19, is to give retailers and solution providers the opportunity to ask questions about how the coronavirus will affect their business, the consequences in terms of transaction execution and the structural changes that this crisis will lead to. I was questioned by phone, due to the confinement.
You can listen to my interview here, also available on all listening platforms, or read the transcript of our exchange below.
Cyril du Plessis: Can you tell us about Advalo's value proposition?
David Le Douarin: Advalo is a predictive marketing platform that will empower retailers to develop customer value. In concrete terms: "the better I understand my customers, the more they will want to buy from me". Our strength lies in working with data with the use of artificial intelligence so that we can predict the needs of each consumer at any given moment and conduct marketing that will be more relevant and more effective.
For Advalo, what are the business and operational impacts and consequences of the current crisis?
In this very special context, the tangible impact can already be clearly measured in terms of our customers. We work mainly with retailers who are all currently facing massive administrative closures of their points of sale. The consequence of all this is that around 85% of their staff are currently in partial activity and are putting their CRM and digital marketing actions on hold.
So for the majority of your customers, we can understand that the crisis has postponed all marketing activation decisions?
Indeed, the global strategy is already speaking out less, because the moment is delicate and they have not necessarily identified messages that fit into this context. On the other hand, their major challenge is to prepare for a recovery starting from now on. Many of our customers in the textile market, for example, offer their customers products that are "perishable" because they correspond to a specific season and will not run out at the end of the season.
For these companies, the challenge is for them to be able, as soon as their stores and delivery warehouses reopen, to effectively speak out in order to emerge from the ambient noise - because everyone will be speaking at the same time - while maintaining a fair level of margin.
At Advalo, everyone's on deck, teleworking. In concrete terms, how do you manage to maintain and organize contacts with your customers?
Well, first of all, it's very relational. For us BtoB is " buddy to buddy " and we rely a lot on human contact.
Above all, and this is also true for our employees, we make sure that everyone is well and we want to maintain a relationship that allows everyone to know where they stand. Afterward, we organize ourselves to stay by their side and meet their expectations as best we can. Today they are asking us to think about exit strategies from the crisis and to work on best practices to be put in place to foster a recovery plan that is as efficient and effective as possible.
What are the issues before them? What differences do you observe between markets in their thinking about how to get out of the crisis?
Mention was made of textiles that carry a stock of a product that will no longer be sold for the winter and that must be disposed of as intelligently as possible before the end of the season, with as little markdown as possible.
Our customers in the automotive market anticipate a slightly longer recovery time. It is a market that generally implies a fairly engaging purchase and today the French are not very keen on spending. For the brands, the recovery plan will start around September.
Traditionally, open doors operations take place in the spring, when consumers are thinking about changing their vehicle for the summer, before going on vacation. This is a commercial highlight that will be delayed and will inevitably delay the actual recovery of the business.
We also work with hospitality industry clients, for whom the challenge will already be to maintain the link with professionals, who are no longer traveling and who will suddenly have many different requests when the recovery takes place. Another thing is to prepare for holidays: as we can see, many people are already canceling their holidays abroad, which can ultimately represent an opportunity that French hoteliers can bounce back on to generate traffic in their establishments as soon as the confinement ends and more generally during the summer period.
You described Advalo's value proposition to us earlier, and we can see that it's in its DNA to know how to adapt. What specifically does it consist of during this time period?
Our value proposition is ultimately to continue and deepen what we started out with.
When we created the company with Olivier Marc in 2014, we based it on the observation that retailers were seeing massive drops in traffic in their stores and that their response was reflected in a lot of promotional and marketing pressure being put on the consumer.
Unfortunately, this has jeopardized the retailer model, on the one hand because it has broken the trust that existed between the brand and its consumers, and on the other hand because the ever-increasing price cuts have broken their margins.
Our mission is to help them get out of mass marketing, which is destroying their entire business model, and move towards individualized marketing that will identify who are the best customers of the brand, those who are willing to pay the right price for each product, without any markdown.
The crisis we are going through today further crystallizes this reality by ensuring that we are able to target the right consumers and offer them the products they want to buy as soon as the recovery takes hold.
This is where we must make use of data and artificial intelligence to be able to identify the immediate need of each individual.
Let's look at two examples:
- in the case of consumers who have browsed on the website of a brand during the confinement, we can, thanks to our platform, collect all the data relating to navigation and have the models predict the products to offer them at the time of the reopening in order to reactivate them in a relevant and appropriate manner.
- For others, who have not visited the site, it is necessary to rely on the transactional history, look at what they have done in the past, to calculate product appetencies and be able to propose the most relevant product recommendations to encourage each person to choose the brand rather than competing brands.
Last question, in your opinion, what profound changes will this crisis cause in our ecosystem?
From a macro point of view, we already knew that some retailers had rather fragile cash positions, as can be seen, for example, in the case of André, which is now undergoing receivership. Many have been strongly impacted by the Yellow Vest crisis, strikes, hyper-competition... We must be aware of the fragility of retailers and support them towards a sufficient level of profitability or at least balance.
What I anticipate is that, in the very short term, the measures taken by the government will have an effect, but that in the medium term, by the end of the year and the first quarter of 2021, we will still see the defection of a number of companies that will have had difficulty refinancing themselves to stay afloat.
The slightly more positive side is that today we know that a customer that we would describe as "omnichannel", who buys both in-store and on the e-commerce site, will spend 3 to 4 times more than a consumer who buys only in-store or only online.
This notion of consumer omnicanality is a very strong value creator. In concrete terms, omnicanality means that we know how to talk to the customer before they arrive in the store, we know how to accompany them in their purchase but also afterward, by offering them the products that will lead them to buy in e-commerce.
If we know how to develop this virtuous loop, we quickly realize that e-commerce is going to become increasingly important. In spite of what we hear, this weight is still low among retailers today, since digital represents for the majority between 5% and 10% of total turnover, the rest being still generated in stores.
Today, confinement, teleworking, allow people to consume differently and these new behaviors will bring to retailers more and more customers who consume both in-store and in e-commerce.
In short, the advent of unified trade, a new terminology often used to evoke omni-channel subjects... Thank you David for the quality of this exchange and for sharing your feedback on the consequences of COVID-19 on your business and your sector of activity.
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