mind the gap: blog
What’s With the Hedgehog?
If you follow this blog or gap intelligence on Facebook, it may take you five minutes to realize that we are hedgehog crazy. We have pictures of Herbie the Hedgehog, gap university’s mascot, from locations all over the world. Herbie is pictured at company events, on the road in Haiti, eating food, and even driving cars! With that, it should come as no surprise that a frequently asked question by friends and visitors at our headquarters is “What is with the Hedgehog?”
Herbie the Hedgehog was inspired by Jim Collins’ wonderful book “Good to Great”, which is a cornerstone of gap intelligence’s business practices. The general philosophy of “Good to Great” is that companies that focus on just one business practice will achieve long term value and growth. Collins uses the help of a hedgehog to help describe the practice of focusing on just one business practice. The hedgehog’s ability to curl up into a tight ball and expose its spikes is a simple and extremely effective means to protect itself from predators.
The simple motion of the hedgehog’s tuck and cover protects it from predators in the light and in the dark, in good weather and in bad. Collins’ philosophy suggests that a simple, easy to execute business practice will drive a company’s long term success and growth in good times and bad, with rabid competition and blue ocean water.
The restaurant chain, In-N-Out Burger, makes burgers, fries, shakes and nothing else. Apple’s corporate strategy is to make “simplicity the ultimate sophistication”. By focusing to make these simplistic business practices even better has driven both companies’ growth over the past three decades. In-N-Out focuses only on making better burgers, fries, and shakes and Apple focuses only on making everything as simple as possible. Pretty easy, huh?
gap intelligence’s “hedgehog” is:
“Providing timely and accurate industry vitals in actionable solutions.”
There are a lot of action words in that “hedgehog” so let me break it down in parts.
“Providing timely and accurate industry vitals….”
This refers to our data and our never ending quest to capture more data, faster, with even more precision. “Providing timely and accurate industry vitals…” has driven our investments in our own web crawling software to collect e-commerce pricing faster and more accurately. Our hedgehog motivated us to develop our own iPhone application, called the gapApp, that allows us to collect timely information from any store in the world. Have we mentioned that gap intelligence is the only research shop that physically visits retail locations nationwide on a weekly basis? Though today we focus on collecting the “4Ps” of marketing (product, price, place, and promotion), our hedgehog gives us the flexibility to collect any kind of information – so long as its “vital”.
So, please tell us what the next “vital” set of data is. Is it customer reviews? Is it inventory levels? Is it pictures from the field or number of technical support calls? If its vital information to you, gap intelligence has the means to find that data very quickly and accurately.
The second half of gap intelligence’s hedgehog is “…in actionable solutions”, which really speaks to our quest to bring our data to life. The strongest example of our ability to “bring data to life” is our analysts, who draw insights and analysis from piles of data and give them to our clients. We also have online web applications, such as datacenter.gapintelligence.com and tco.gapintelligence.com that bring life to our data and allows our clients to use our information in new and powerful ways.
Our future investments will focus on applications that make our information easier to decipher and give our clients endless ways to view, cut, combine, and create with our data. We are also dedicated to growing and educating our esteemed team of analysts, who will write more analysis, answer more inquiries, create more presentations, and visit more clients in the coming year.
Herbie the Hedgehog, gap intelligence’s mascot representing our defined business practice that has guided gap intelligence since 2009, can tell you that we are working hard on improving our hedgehog and he can’t wait to show you our new initiatives and innovations in 2014.
And he is excited to show you more of the places he will go….
Hi! I’m Melissa
Hello all! My name is Melissa and I am the latest rookie, resident whovian, and general fangirl at gap intelligence. I have been with the company just shy of a month and am part of the TCO project. “How did I find my way here to this awesome company?” you may be asking yourself. The story is quite short. I was born and raised here in San Diego, just over the hill towards Ocean Beach, not even five miles away from this very office. Not wanting to leave this awesome city, I attended San Diego State University (GO AZTECS!), graduating with my Bachelor’s in Psychology.
It has been a great first month with gap! It was a little intimidating at first, trying to break into such a close-knit group, after all it is very much a family here at gap. Thankfully everyone is extremely nice and welcoming. I was even given the job of mail-person extraordinaire my first week, which has definitely helped in learning everyone’s names as well as the layout of our labyrinth office.
Fortunately for me, there was a company wide meeting my second day here. Along with a brief and semi awkward yet painless interview session with yours truly, I was able to see what all of the different departments were up to, what their immediate goals were, and how they intended to accomplish them. There was even a safety tip for the month of November courtesy of gap’s resident hedgehog, Herbie!
All and all it was a perfect introduction to the company. gap intelligence is a values-led company, plain and simple. I am so excited to be a part of a team that is dedicated to their clients, each other and their community. I can’t wait to see what the future holds for me at gap, where it will take me, what I will learn.
With Thanksgiving fast approaching and everyone gearing up for the feast-ivites, I decided to poll the gap office on things that they are thankful for. Responses ranged from funny to family, but it seems as though everyone is getting in the holiday spirit and has a lot to be thankful for overall. Here are some of the responses from the office when asked “What are you thankful for?” :
Erin : Seth Rogan, James Franco, and 2 day work weeks
Josh : My life, family, and baby on the way
Erik : That I have things to be thankful for
Kim : Happy and healthy family
Bo & Ricky (Kim’s kids) : Electronics and a loving family!
Hayley Johnson : My job at gap
Jen : Thanksgivukkah and hot cheetos
Keenan : 3 day weeks
Laura : Starbucks being walking distance from the office
Melissa : Dr. Who and friends
Nick : Hoodies and hoodie weather
Matt : I got to tell my grandma goodbye and that I loved her
Laurel : High Tech HS is out for the week
Lisa : That I’m healthy and have great people around me
Stacey : Getting to go home and see my family for the holidays
Dr. Dre : That there are 2 grocery stores in Liberty Station that I can get lunch from
Gurpreet : Life
Sarina : That I live by the beach and my dog
Katie : The no twerking while working gap policy that I implemented earlier this year.
Val : Everything
Karen : Friends, family, a healthy baby, and dogs
Christine B : I’m thankful that I am a soon to be Auntie, the Zen Zone, and for my fellow gappers!
Gary : The great people of gap intelligence. AND that the Flyers are playing .500 hockey again!
Scott : Family, friends and health. Also, that as Americans we were able to transform Black Friday from one day of debauchery and consumerism into a full week!
As you can see, we at gap intelligence have a lot to be thankful for. I’m thankful for my family, friends, and the long weekend we at gap have coming up! Now it’s time to mash some potatoes, fry some turkeys, and enjoy some pie, or at least a pie chart!
HP Adapts with the Quest to Save Ink
Anyone who knows a thing or two about printing will be quick to tell you that inkjet-based printers are struggling to sell against their laser counterparts. It’s true. As printing shifts away from the home and more toward the office, businesses of all sizes are looking for faster devices, fewer printer interactions (large paper trays, huge supplies yields), and lower CPPs (cost-per-prints). Speed, capacities, and costs have historically been primary barriers for inkjet printers to enter the office space. Over the past several years, another concept has also gained both credibility and popularity in the office arena: Managed Print Services (MPS). Managed Print Services embrace the long-standing copier business model, where product maintenance is assumed by a service provider that frees up the in-house IT staff to work on other things. In addition to maintaining and replacing older printers, managed print service providers also maintain supplies inventories for their clients, which means that offices no longer have to rush to the local office store to buy ink or laser toner.
So what is a major inkjet manufacturer like HP to do to keep fighting these laser bias barriers? Yes, HP is a powerhouse in the laser business, but the company’s profits are also tied to growing its inkjet business and one of the biggest opportunities for ink is the Small and Medium Size Business (SMB) market.
Let me introduce HP’s Officejet Pro X and the Instant Ink program. These two recent introductions are HP’s largest and most aggressive tools to battle laser in the SMB market. So the big question is, will these two initiatives work?
Let’s start with the Officejet Pro X, which introduces HP’s new pagewide array technology that features a printhead that spans over an entire page. While the initial draw of the technology when it was first introduced by Memjet several years ago was speed, HP has identified that high yields and low CPPs are what may be the ultimate specifications that attract customers.
Looking at the technology from a supplies perspective, HP’s new Officejet Pro X brings to market the highest yield ink supplies currently available and the lowest inkjet CPPs. The hp970 and hp971 ink series is available in both standard and high capacity and offers a best CPP of $0.013 for black and $0.068 for color. HP claims that customers can save upwards of 50% against comparable lasers, a message that has been echoed from HP’s Officejet Pro lineup. What the Officejet Pro X brings aside from a considerably lower CPP than lasers though are high yields, comparably lower acquisition costs, and a lower total cost of ownership (TCO). This combination could finally be what HP’s ink division needs to begin to fight its way into a territory that has been almost exclusively laser – large capacities and low CPPs.
HP also launched its Instant Ink program, which is in its most basic form a subscription service for consumers. HP addressed consumers’ major pain points including high priced ink, environmental concerns, and convenience. HP first launched a beta version of the program last year and just last month officially launched the Instant Ink service starting with Best Buy as its first retail partner. The service offers customers an option that provides them with higher yields, lower prices, and the convenience of home delivery. With three different subscription plans, based on usage, customers can get the most value for their dollar. HP attempted to make the program a seamless transition for people who are willing to explore an alternative way of purchasing supplies.
So why should customers switch over to Instant Ink? As noted, HP identified the three largest pain points felt by consumers when purchasing ink: affordability, convenience, and environmental concerns. The program alleviates all three of these issues. The biggest concern of people when purchasing ink is affordability. There are countless stories about how expensive and unreasonable printer ink pricing is. HP addresses this concern by offering customers savings of up to 50% compared to competitors and to regularly priced cartridges. This alone will drive sales of the Instant Ink program, at least to those customers willing to switch their purchasing habits.
While reduced pricing is a driving force to gain customers, HP also had to address convenience. Going out to purchase ink when your printer unexpectedly runs out is like having to go fill up your gas tank at the worst possible time. With HP’s Instant Ink program, the manufacturer takes care of fulfilling the supply for you. The printer notifies HP when you are low on ink and a new cartridge will be shipped directly to your home. Customers simply have to send back their empties. While HP won’t reveal exact yields, the company does state that Instant Ink cartridges have higher yields compared with typical high capacity cartridges. This helps reduce the number of printer interactions, as well as the costs associated for HP.
The final area that HP looked to address with the Instant Ink program is consumers’ environmental concern. According to HP, the Instant Ink program will reduce a customer’s carbon footprint by up to 65% compared with the standard ink sales model. These savings once again come from the higher yield of the ink cartridges in the program, as well as the reduced impact of transportation typically necessary to move the inks to retail stores.
The program currently includes three of HP’s connected printers, the Envy 4500, the Envy 5300, and the Officejet 4630, but the company has plans to incorporate the program for all connected printers under $399. HP’s primary goal with the Instant Ink program is to introduce an alternative purchasing method for inks that benefits both the company and consumers. With the program including printers under the $399 price tag, HP is targeting home users as well as home office users. While MPS is only available to businesses of a certain size with a particular size printer fleet, HP’s Instant Ink program provides the major benefits of MPS to anyone including an individual or home office.
While the Officejet Pro X has a much larger and more immediate impact on the market, both the new technology and the Instant Ink program demonstrate that HP is looking for ways to make its ink business thrive. With billions of dollars of ink sold every year, the company wants to not only protect that business, but grow it. The key to a changing market is to find new ways to serve customers. If HP can successfully show that ink is a viable product and technology against laser, and provide a seamless and cost effective model for printing, it could grow share from laser will continue to lead the market for years to come.
Lamborghinis and Vans
On Friday, November 15th, I was blown away by the Make-a-Wish Foundation Greater Bay Area and the citizens of San Francisco. They managed to make a 5 year old leukemia survivor, Miles Scott, dream of being Batkid in Gotham City come true in a grand fashion. I was moved to tears at the outpouring of love and support to make one little boy’s wish come true. As I watched the day’s events unfold I was mesmerized by how many people volunteered. San Francisco practically shut down. People stopped working to cheer on Batkid. Parents let their kids play hooky because they felt having them witness Batkid was a more important lesson. As a member of gap’s 3Ts I couldn’t help but watch in awe with several tissues within an arm’s reach to dab away happy tears. To see so many give their time, talent, and treasure to make Batkid come to life gave me chills. If you missed the magic, this video sums it up: http://vimeo.com/79541124
Batkid cruised the streets of San Francisco in a Batmobile. His Batmobile was a black Lamborghini with custom Batman decals complete with a booster seat to keep the pint sized cape crusader safe as he navigated the city. I could only imagine the delight Miles’s family felt watching their son’s wish come true. Miles was diagnosed with leukemia a few months before his 2nd birthday. As Miles was going through chemo treatments his wish to be Batkid was the carrot his family dangled during his darkest hours. Part of the goal with wishes through the Make-a-Wish Foundation is having something to look forward to and hope for during the battle for their life. It had to be such a happy moment for Miles’s parents to watch their little boy, whose leukemia is in remission, live out his wildest crime fighting dreams before their very eyes.
Watching Batkid was so heartwarming it forced me to reflect on whether I knew any real life super heroes here in San Diego. I am lucky to say I do. In 2010 gap’s 3Ts were privileged to be introduced to the Emilio Nares Foundation (ENF) while we were searching for a local charity for our first ever golf tournament. After just one meeting with the founders of ENF, Richard and Diane Nares, it became clear that their small but mighty organization was the perfect fit for gap’s 3Ts and the Drives for Rides golf tournament was born soon after. While ENF offers many different support systems for low income families with children who are battling cancer their flag ship program is Ride with Emilio. Through Ride with Emilio they offer transportation services to families who otherwise would not have any way to get to their children to chemotherapy and other critical doctors’ appointments. ENF grants wishes every day through Ride with Emilio: the wish to get to the doctors and beat cancer.
Logistically it makes more sense for ENF to take kids to doctors’ appointments in vans rather than in custom Lamborghini Batmobiles. While I’m sure a Batmobile would be a tad more thrilling, the brightly colored vans offer happiness as well. I, along with most people, take having a car for granted. I drive to work and run errands daily without much thought. Imagine if you had no way to get your sick child to their appointment. What if you didn’t have a car and your only option was to take the bus? Imagine if you had to bring all of your children along to the appointment because hiring a baby sitter was not in your budget so you had to pay for bus fare for everyone. Now imagine after your child’s chemo appointment you have to then get back on the bus to start the long journey home. A bus is no place for a child who is sick. When an ENF van pulls up to deliver sick children and their families to critical doctors’ appointments they are doing more than simply giving a ride, they are delivering hope.
gap was not surprised in the slightest when Richard Nares was nominated as a top ten 2013 CNN Hero of the Year. CNN takes time out every year to recognize everyday people doing extraordinary things. When Richard and Diane lost their only son, Emilio, in 2000 they decided to turn their tragedy into hope for others. What started as giving rides in their own car gained momentum and turned into a nationally recognized 501c3 with Vans that now service both San Diego and Los Angeles. They give approximately 2500 rides a year. ENF gives kids the chance to beat cancer just like Batkid did.
Tomorrow, Richard will be attending the CNN Heroes awards show in New York honoring him and nine other everyday super heroes. gap of course has our fingers crossed for our personal favorite (Good luck, Richard!). Whether its Batkid saving a damsel in distress or Richard giving a sick child a ride to chemo, it gives me a warm fuzzy feeling all over to see so much good in the world.
Both Batkid and Richard share a story. ENF started because Richard just wanted to help. Batkid received an overwhelming amount of people that wanted to help make his wish come true. Helping others is the number one thing 3Ters at gap aim to do. We give our time, talent, and treasure because we are a values-led company first. This quote by Anne Frank seems fitting to close this blog:
“How wonderful it is that nobody need wait a single moment before starting to improve the world.”
I want to say thank you to everyday heroes like Batkid and Richard because they prove that the above is true.
HP’s New Supplies Distribution Policy Goes into Effect
There has been a lot of hype recently around HP’s supplies distribution policy change, which went into effect on November 1, 2013. Ever since the change was announced in May, many have speculated about whether it’s going to disrupt the supply chain or not be as big of deal as others are making it out to be.
So, what’s changed?
At the beginning of this month, HP changed the classification of its Inkjet, LaserJet, and large format cartridges from “open” to “authorized”. What does that mean for anyone that wants to sell them? They are now required to have an HP U.S. Partner Agreement or U.S. Consumer Reseller Agreement, otherwise distributors won’t sell to them…or at least they aren’t supposed to. The responsibility for that verification now lies with the distributor, but we’ll get to that later. Because supplies are now classified as authorized products, the other BIG part of this change is that resellers can now sell only to end-users. This contrasts with open products, which partners can sell to any customer or reseller, as long as they are not an HP partner, distributor, or authorized HP reseller.
HP cites a number of reasons for its policy change, including better relationships with resellers, improving customer satisfaction, and simplifying its distribution structure.
HP continues to reiterate that the policy change is to improve relationships with the second-tier channel for its supplies, which will allow HP to provide better support and training, and ultimately a better customer experience. It is through those improved relationships that HP hopes to maximize its opportunities to push genuine HP supplies, including through the use of rebates or other incentives. Increased focus on getting customers to use genuine supplies could also be an effort to help return positive growth to its supplies revenue, which has seen a steady decline for almost two years (with the exception of Q2 2013).
HP states that another primary goal is to simplify its distribution structure and reduce the number of exchanges between the distributors and end customers. Although not expressly stated by HP as a reason for the change, requiring resellers to only sell to end users is expected to also help control gray market activities. Gray market supplies are often sold a number of times before reaching the end user, and the more times a product is sold, the more difficult it is to track its origin. By requiring resellers to sell only to end users, aside from ensuring that a greater proportion of supplies received by customers are genuine, there is also a greater chance they will be able to trace where any gray market items originated. HP will also exercise its right to end agreements with resellers that sell to anyone but the end user.
It is expected that HP will lose a portion of its reseller base due to these changes, as it is not likely that every organization previously selling genuine HP supplies secured an agreement by November 1. However, because HP’s partner network is extremely large to begin with, the company doesn’t appear to believe that it will cause a large enough impact to be concerned about. HP might even be trying to eliminate certain resellers. Although the company’s relationship with Amazon for printers and supplies ended earlier this year*, it may be targeting other online-only merchants, or resellers that make bulk sales to sites like eBay. Online channels are growing significantly and offering lower prices or lower-priced alternatives than consumers can find in store or from a physical reseller. By reducing the overall pool of resellers, especially ones that significantly undercut prices and/or offer huge selections of even lower-priced non-OEM alternatives, HP is reducing competition for its authorized partners. As a result, those resellers will able to improve their margins, as they won’t be competing with as many other sellers. Authorized resellers may even see an increase in business from customers whose genuine HP supplies reseller elected not to become authorized.
HP’s move could also have effects on the aftermarket, though at this point it is unclear whether those effects will be more positive or negative.
On one hand, you have resellers that will choose not to sign up as an authorized reseller. For their customers that have an installed base of HP printers, they will only be able to offer non-OEM HP supplies. This may not affect the reseller to a great extent, as many already prefer to sell non-OEM supplies over OEM because they are more profitable. For the customer, if they were not previously a non-OEM user, they will now have to decide between trying non-OEM or seeking an authorized HP reseller. This could ultimately result in the conversion of more customers to non-OEM supplies, thereby positively affecting the aftermarket.
On the other hand, an auditing clause in HP’s partner agreement gives the OEM the right to audit a reseller’s performance. Many are concerned that it will limit their ability to sell third party supplies, though HP states that it can only monitor the performance of HP products. The concern is not unwarranted however, as we saw in 2007 how HP successfully convinced Staples to remove its Staples-brand HP compatibles from shelves.
Lastly, as previously mentioned, distributors will now be responsible for ensuring that resellers wanting to carry HP supplies have a valid agreement with HP, whereas before they could sell to anyone. Although this may be seen as an extra burden for some, it hasn’t stopped new distributors from partnering with HP. Last week, the OEM announced a new supplies distribution partnership with technology wholesaler, Digitek, who has decided that any additional burden created by the extra verification steps are worth what it expects to gain from the relationship.
In the end, HP is following actions long in place by other vendors, such as Epson and Lexmark, who already require resellers to sell only to end-users. That’s not to say that we aren’t going to see some impact from this. We may see some effects on the aftermarket, likely more positive than negative as resellers without agreements increase their offering of aftermarket options. It’s also expected to benefit HP resellers, or at least their margins, as well as HP, who will be putting more effort behind its overall goal of placing genuine HP supplies into its installed base. Either way, it’s something that will continue to be monitored by the channel and ultimately, something that HP has decided will be of greater benefit in the end than any negative impacts reflected in the short term.
*HP cartridges are still available from Amazon’s third party reseller network, but not directly from Amazon.com.
Market Intelligence Made Easy – Applying Wrinkle Cream
Historians will refer to 2013 as the year gap intelligence invested in ourselves. We pulled out every mirror we owned, held them up from every possible angle, and we captured all of our beauty….and lot of our wrinkles. To help with our wrinkles, we brought on board a team of cosmetic surgeons (aka Software Developers). gap intelligence now has a team developers spanning the globe and they have been diligently working to build our platforms, systems, and databases of the future. After many months, a lot of snacky foods and soft drinks, the team has made great strides towards our vision for 2014 and beyond.
We are creating a platform database (called gapPiDB) that will give our clients the ability to splice, cut, chop, map, merge, and view our data in infinite ways. We completely rebuilt our webcrawler (now simply called “ecom”) and can collect very granular details about millions of products at hundreds of different sites each week. We are refreshing our retail collection tool (called the gapApp) that will enable our nationwide army of data collectors to capture more robust data even faster. We are creating a new format to present our price & promotion market data and putting our information in API data warehouses so our clients can get a customized “all you can eat” buffet of information.
These products will be launched throughout 2014 and I’ll let you know about each one along the way.
In the meantime, the developers were able to stop just long enough to knock some easy projects out of the way.
First, in the spirit of simplicity and security, we have combined all of our various domain names to fall under the gapintelligence.com umbrella. Our datacenter is no longer gapdatacenter.com, but is rather datacenter.gapintelligence.com. Our glorious TCO calculator now resides at tco.gapintelligence.com (formerly gaptco.com). Though if you type either of these older domains you will be redirected to our new addresses, the consolidation of URLs will help simplify our product line for our clients and will reside under one bullet proof security system.
Second, we took some wrinkles out of our Market Intelligence reports with a new facelift. The new Market Intelligence reports better represent the warm and approachable feel of gap intelligence. We tried to give our Market Intelligence reports a simplistic design that is easy to read and navigate – don’t forget to reach out to our category analysts if you have a question or would like to get trained on our services!
The same new themes and styles of our Market Intelligence reports have extended to our Price & Promotions notifications. Easy to navigate and easy on the eyes, you now can download our latest data and find our market insights at the click of a button.
These two new upgrades are very minor tweaks to existing systems, but I promise many BIG things are in store for you in 2014 (double promise). In the meantime, enjoy our new URLs and especially the new format of our Market Intelligence reports.
More wrinkle cream is on the way!