What Crocs, JD Sports Execs Say About Metaverse, RFID, Returns and AI – Sourcing Journal
At the Aptos Engage 2023 retail technology conference last week, Todd Steiner, chief information officer from JD Sports, and Doug Goehl, Crocs VP of global enterprise applications, fielded questions from Aptos general manager, Americas, Jeremy Grunzweig on topics ranging from customer engagement to last mile challenges, returns, sustainability and “hot or not” takes on trending technologies.
Grunzweig kicked it off by asking what keeps the technology leaders up at night.
Steiner responded by calling out the company’s 30 percent order cancellation rate.
“That tells me somewhere along that journey that something’s not working right,” the JD Sports exec said. “And everybody on that journey thinks it’s someone else’s fault.”
He said solving that problem has required IT and the CIO to evolve beyond technology and to ask what incentive store associates have to remedy the cancellations front. The answer proved to be creating incentives for stores that perform better.
“As crazy as it sounds, with just that simple change, a drop in the cancellation rate can happen,” Steiner said. “It’s not always just the technical problems or challenges… it’s the overall ecosystem and flow of things that you’ve got to step back and look at, which is hard.”
As for the equally vexing problem of returns, Steiner said there are no easy answers.
“I don’t think anybody has the perfect answer around how to minimize that cost outside potentially charging the customer, which we don’t want to do,” he said.
Buoyed by a large number of brick-and-mortar locations which enables JD Sports to fulfill 70 to 80 percent of orders from stores, the UK-based retailer is able to dropship orders to minimize time and expense.
“We prioritize, so instead of going to the vendor against the dropship, if we have any of that product in our network we’re going to prioritize that over going to the vendor and getting another one,” Steiner said. “So we don’t have to ship it back to the [distribution center], don’t have to have that single outlying product. We’re able to get that out to the customer and handle it that way.”
On sustainability, Goehl said that Crocs would have been in line to meet its goal of being carbon neutral by 2040, but its 2021 acquisition of Hey Dude forced the company rethink its net-zero timeline.
“We extended the date in order to make sure that we’re going to be authentic and we did receive some criticism for that because we changed the date,” Goehl said, adding that environmental stewardship remains a top priority for Crocs. “We’re projected to be reducing our carbon footprint by 50 percent over the next five years or so.”
As for the “hot or not” rundown of trending technologies, Crocs’ Goehl was bullish on generative AI, and the metaverse, but dubious about RFID.
JD Sports’ Steiner was somewhat warmer on RFID and a believer in generative AI, but didn’t see much business application for the metaverse.
“I think, whether we like it or not, it’s coming,” Steiner said of widespread applications of artificial intelligence technologies. “We have some things where we use it, obviously with our call center and we have some things with code assistance. It’s not quite there where you can ask it to develop software, but there’s some useful tools out there, so I see it progressing.”
Steiner said that as much as he wants to see the metaverse be relevant in his company, he hasn’t seen a strong argument for it outside of some “novelty” use cases, but for Crocs, Web3 is a key marketing component, led by its Crocs World Minigames on Roblox, where players can buy shoes that exist in stores.
“A lot of our consumers are completely digital and they’re online,” Goehl said. “We were one of the first companies to utilize TikTok where you can actually purchase footwear.”
Goehl said Crocs’ three areas of exploration are gaming, augmented reality, where in a popular Snapchat feature, a user can put Crocs on their Bitmoji, and the third includes digital platforms and celebrity collaborations, including with recording artists such as Post Malone.
Working with popular personalities and engaging through virtual media “keeps the brand hot,” Goehl said. “So whether there’s a true ROI on, ‘hey, we sold a million digital signature products online, I don’t know that we’ll make a ton of money on that, but if that consumer set wants to work with us personally, that’s a big benefit to us.”
Goehl said Crocs hadn’t engaged with RFID until it some business partners recently requested it use the inventory tracking technology. One came from a larger distribution center which asked Crocs to put RFID tags in its products to improve sorting and distribution. The company has also recently begun exploring RFID tags in response to anticipated biometrics laws coming out of California and elsewhere.
Steiner said that before he was at JD Sports, he worked at Target where the running joke was that it had been piloting RFID for 10 years—and that was 20 years ago.
“There is a practical application for RFID… and from my lens, the technology is solid,” Steiner said. “The challenge is, how do you deal with the noise? Meaning, if you scan, from an inventory standpoint, how do you deal with the defective items or the damaged goods that in the back room and exclude from that?”