Ori Marom

Founder and CEO, Segmentis
I am an expert in the design of advanced, technology-intensive market mechanisms. My primary expertise lies in the development and implementation of state-of-the-art dynamic pricing schemes. I taught economics and business administration at top business schools in Europe and the US. I founded Segmentis B.V. with a mission to save physical stores from an unfair free ride by online retailers. Segmentis is a consultancy that works with brands and retailers to reorganize supply chains in truly revolutionary ways. Science is often a wonderful thing. My science helps retailers to survive, and indeed also to thrive in a most challenging competitive environment.
  • Posted on: 02/01/2017

    Has Amazon fundamentally changed the way Americans shop?

    Amazon has created the first ever platform of truly frictionless commerce. This means that sellers who use Amazon cannot expect, in the long-run, to turn positive profits. While it seems counter-intuitive that a seller would freely enter a business that is expected to make it a loss many businesses (such as Walmart, the hero of yesterday’s discussion) are still myopic about the fact that online sales cannot be profitable. Ever. In this environment retail businesses have but two choices: either exit or radically re-invent themselves. Re-invention is a wonderful option with vast potential since, just like Amazon, physical stores can become very profitable platforms that loss-taking online sellers can use.
  • Posted on: 01/27/2017

    Will drop shipping online orders deliver results for retailers?

    Then why are retailers needed? Online product discovery is usually done via online marketplaces or price comparison websites. Therefore, if in addition inventory risk is borne by the supplier alone there is no need for a retailer. It is that simple.
  • Posted on: 01/26/2017

    Do retailers need to work on making more emotional connections?

    Consumers are willing to pay price premiums to retailers for multiple reasons. For example, convenience or trust. It may be true that a price premium can be collected based on emotional connection. In that respect, of course, it is a good idea for retailers to invest some effort in this (rather limited) aspect of brand equity. However, if stores do not dare to charge a premium for the concrete advantages of convenience and immediate delivery why would we expect them to charge a premium for the rather vague advantage of emotional connection with the brand? Today, not too many retailers are likely to do that. An attractive brand identity is nice to have. However, I think that the crisis of retail today is deep and merits bolder and more radical solutions. What is needed is a comprehensive redefinition of the role of a store in a supply chain and how it should compete.
  • Posted on: 01/24/2017

    Are the days of pure play e-tail coming to an end?

    The advantage of visiting a physical shop is greatly eroded when the store does not provide an immediate delivery option, as in the cases of Bonobos in the U.S. or Sneakerboy in Australia. Therefore, this is NOT the way to go. It is important to understand that the concept of a PURE brick-and-mortar store has never failed or diminished. What has apparently failed is the business model of traditional stores foolishly trying to provide costly services such as immediate delivery while competing on price with online retailers. Any logical line of reason would indicate that brick-and-mortar stores must be able to charge for SERVICES rather than profit primarily by selling products. It is a simple choice between deep change and death. So why choose the latter?! In any case, in my opinion Bonobos’ concept is not useful and will not prevail. I put my money on the marketplace concept of Amazon Go and its future followers.
  • Posted on: 01/23/2017

    Is four-wall profitability still a relevant metric?

    There is clearly a symbiotic relationship between stores and online retailers in geographic markets. This fact strongly motivates more accurate measurement of performance at the territorial level, as well as at the in-store level. Still, I think that the problems with out-of-store metrics (e.g., territorial-level sales) are many. First, it is still hard to attribute a given online sale to a specific store when more than one store exists within a given neighborhood. A second problem is that a pure-online sale can be mistaken for a store-originated sale. We can think of technology-based solutions to both problems but I know of none that is effectively used. While several brands such as Giant Manufacturing or Trek (in the market for bicycles) are already measuring territorial sales and crediting local stores for assisting them, the aforementioned sales-attribution problem compromises the practicality of such compensation schemes.
  • Posted on: 01/13/2017

    Penney CEO says stores critical to omnichannel push

    J.C. Penney has been turning losses for five years in a row. They must either get their act together or liquidate the company. Just closing stores is not good enough. It is a rare admission by the CEO of a retail chain that online sales are not profitable. In fact, they will never be. I have a question then: what makes in-store sales profitable when online prices are usually matched? Evidently, no such ideas are reflected in J.C. Penney’s financial reports. When you mix two losing operations (in-store plus online) you do not usually get a profitable operation. Only innovative companies have a place in the retail arena today. The ones that create little new should have the decency to return the ENTIRE surviving capital to their shareholders. They deserve nothing less for their patience and restraint from taking legal action so far.
  • Posted on: 01/12/2017

    Will 2017 be the year retailers start making their stores relevant again?

    The real tragedy in the story of the decline of physical retail is that it is highly avoidable. Easily avoidable. Let me break the problem down here. Online retailers have brought about a situation in which no money can be made by making sales, be it either online of offline sales. Physical stores have insisted on making sales for a living. Thus they are actively bringing about their demise. Do physical stores HAVE to make sales for a living? No. They do not. Their competitive advantage lies in selling SERVICES. Do physical stores charge substantial fees for providing services to brands, online competitors and consumers? No. They do not. It is time for retailers to perfect the marketplace model and create a new type of coalition with their suppliers, who suffer greatly along with them. The solution is simple and unique. There is no other. Yet retailers must show both courage and an open mind.
  • Posted on: 01/11/2017

    What will more job cuts mean for Walmart?

    I think that this move has little to do with retail strategy and more to do with overall trends in society. Automating routine tasks such as accounting and invoicing jobs is expected to be accelerated by all commercial enterprises as indicated in a recent study by researchers Carl Frey and Michael Osborne at Oxford University. As for Walmart, its cost disadvantages vs. Amazon and dollar stores are deep and therefore cannot be overcome only by job cuts. Even a miraculous cut of all jobs won’t help. Walmart employs billions of dollars in real estate and other capital investments at a time when Federal interest rates are starting to climb again. With ever-decreasing margins, how can it show a return for this capital?! The business model of Walmart is bankrupt and online sales will never be profitable. NEW ideas are needed urgently!
  • Posted on: 01/06/2017

    What would an American Apparel acquisition do for Amazon or Forever 21?

    My guess is that Amazon would use American Apparel as a lab for new in-store technologies. By launching Amazon Go It has clearly signaled that it is heading in this direction. And why not? If the current market players are not willing to change their business model Amazon can quickly seize the opportunity to re-invent physical retail. By then, it will probably be too late for the laggards. Indeed, the biggest risk in business (and in life) is trying to play it safe.
  • Posted on: 01/05/2017

    Will store closings and layoffs end Macy’s woes?

    I think that this is a wonderful comment by Tom. Macy's is caught in a death spiral and is trying to look “better” by closing its worse performing stores. By the way, why is the GROWTH of online sales so celebrated by retail executives these days? I think that this is an insult to investors’ intelligence. They do not make any money on online sales. This is exactly the signpost "to hell."
  • Posted on: 12/21/2016

    How are manufacturers failing retailers?

    The article seems to focus specifically on the grocery category. Arguably, this category suffers the least from the changing trade environment. In other categories, such as apparel or consumer electronics, the need for better manufacturer-retailer collaboration is much more acute. For example, if retailers such as Best Buy did not receive direct assistance in the form of preferred wholesale prices, store-within-a-store contracts and minimum-advertised price policies from brands, they would simply cease to exist. The main problem I see with existing brand-retailer partnerships (of the types mentioned above) is that they uniformly assign the physical store a role in the supply chain that it is no longer suitable to fulfill, and completely neglect the role that it is most suitable to fulfill. Namely, we can all see that stores are handicapped in their capacity to compete on price. Sadly, this must mean that physical stores are no longer good sellers. Consequently, it would be natural to expect that brands recognize and compensate them for delivering the service components of the customer journey. The problem is that brands do not do that. The mind-shift required seems to be unattainable. Nevertheless, it MUST come soon.
  • Posted on: 12/19/2016

    Did retailers doom their holidays with deep discounts?

    The propensity to offer deep discounts is a response to intensifying online competition. Customers have access to the same discounts via their smartphones. To state the obvious: this cannot go on much longer. Physical retailers do not have the cost structure required to compete with the lowest online price. Even online retailers have to lose money at the lowest available price point. 2016 has been a pivotal year that finally wiped out any illusion about the fate of physical retailers who refuse to innovate. The physical store is going nowhere. It fulfills a vital function in all modern societies that online commerce cannot fulfill. In 2017 we will see whether the existing market players prefer to innovate or die. It is not too late to save physical commerce!
  • Posted on: 12/15/2016

    Will test show Amazon’s drone program is ready to take off?

    “Aviation is fine as a sport. But as an instrument of war, it is worthless.” — General Ferdinand Foch, Professor of Strategy, Ecole Superiure de Guere, 1911. Most major innovations that changed the world were initially dismissed by field experts as utterly impractical. While I can never understand how this concept could potentially work, I hope that Amazon has a solid idea of what it is doing. Time will tell.
  • Posted on: 12/12/2016

    Is in-store videoconferencing omnichannel’s logical next step?

    “Seventy-four percent are more likely to purchase when video is part of the process.” But purchase from whom? Most likely from someone else! Here is the root of the problem: retailers somehow still believe that giving better in-store service can win them the customer and save the day. Is that a realistic expectation backed by evidence? No. The customer would gladly accept the free service (in this case the costly personal video call) and once her decision is made will search online for a better price. Only a fundamental change in their business model would allow them to charge directly for the service and thereby justify the improvement in its level. Before that happens, improving service with no plan for the recovery of the added costs would only make things worse, much worse.
  • Posted on: 12/06/2016

    Will the tech behind Amazon Go redefine convenience at retail?

    As long as they can grow by 30 percent each year. :-)
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