Planning for new markets_Javelin Group

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Ecommerce Futures: New Territories

Planning for new markets Matt Jeffers, Associate Director, Javelin Group

www.javelingroup.com

Javelin Group: planning & implementing omni-channel transformation 2


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180+ people focused on omni-channel strategies and transformation

Vertical specialists combining skills in Strategy, Operations, Technology

50% of our work is outside the UK, especially DE, FR, NL and DK

Plan & help execute omni-channel retail…

Jave

lin G

roup

sco

peStrategy & org.

Operations

Technology

Stores eCom.MCR

Centre

RETAIL CHALLENGES

3International expansion strategic priority for retailers

Fast ecommerce growth in the UK…

…But no top-line retail growth

Retailers looking internationally for growth opportunities…


SixStrategic Priorities

Invest in ecommerce &multi-channel

1.

Invest in own labels

2.Expand

internationally

6.

Re-shape the estate

4.Redefine storeroles & formats

3.Consolidate

and build scale

5.

JAV INTERNATIONAL PROJECTS

Javelin Group helps retailers with all stages of international expansion 4

Phase 1:Strategic Planning

Phase 2:Implementation

Phase 3:Existing Performance

Optimisation

Multi-Channel Entry Strategies

Strategic Market Selection Operational & Merchandising Strategies

International Store Locations & Formats

Performance Improvement

International Due Diligence

www.javelingroup.comINTERNATIONAL ECOMMERCE GROWTH

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ecommerce revenues for UK-based retailers, £bn

UK retailers ecommerce revenue to be increasingly International

Source: Google analysis, revised Javelin Group forecasts


£bn

£29bn

£28bn

35%

£81bn

£25bn

£53bn

£4bn

14%

AMAZON & ASOS

International 43% of Amazon’s revenues, 59% of ASOS’s sales 6

£0

£100

£200

£300

£400

£500

£600

2004 2005 2006 2007 2008 2009 2010 2011 2012

AS

OS

Ret

ail s

ales

(£m

)

$0

$10

$20

$30

$40

$50

$60

$70

2004 2005 2006 2007 2008 2009 2010 2011 2012

Tota

l Am

azon

rev

enue

($bn

)

International43%

North America57%

Eight localised sites(UK, DE, FR, JP, CN, CA, IT, ES)

International59%

UK41%

Seven localised sites(FRA, DEU, ITA, ESP, USA, AUS,

RUS)plus “ship anywhere”

“When we said we wanted to be ‘truly global’, we meant it”

www.javelingroup.comASOS INTERNATIONAL STRATEGY

ASOS international strategy 7

1. Delivery options / payment solutions1. Delivery options / payment solutions

2. Payment methods2. Payment methods

3. PR / Online digital marketing3. PR / Online digital marketing

4. Re-invest in lowering cost of delivery and returns

4. Re-invest in lowering cost of delivery and returns

5. In-country returns5. In-country returns

6. Customer care in local language6. Customer care in local language

7. Local language sites7. Local language sites

8. Offline marketing8. Offline marketing

9. Dedicated product9. Dedicated product

10. Mobile language site10. Mobile language site

11. Local language Fashion Finder / Market- Place

11. Local language Fashion Finder / Market- Place

Strategic

Tactical

Rest of the World

UKUSA

FranceGermany

Australia, Brazil, China, Denmark, India, Ireland,

Italy, Japan, Netherlands, Norway, Russia, South Korea,

Spain, Sweden

Step 1: Strategic prioritisation of international markets

Step 2: Adopt appropriate tactics across each of the markets

www.javelingroup.comUK RETAILERS SLOW

51

37

26

40

52

8 8

3

7 8 7

Store retailers have been slow to adopt localised ecommerce 8

Number ofcountries

# of foreign countries present with stores &/or localised ecommerce

Stores

eCom

Source: Javelin Group analysis


M&S Arcadia Debs Next H&M ASOS

WORLD MAP

Key questions for retailers 9

?

• Where should we go first?

• What should the proposition be?

• What mix of bricks and clicks?

• How should we implement?

www.javelingroup.comBRICKS vs CLICKS

Bricks vs. clicks 10

eCommerce Only Stores Only

• Opportunity to test market & optimise proposition

• Leverage existing ecommerce

• eCommerce experiencing strong growth

• Range size & availability can be maximised online

• Low risk / low cost

FOCUS OF TODAY’S SESSION

• In many emerging markets, shopping in store important part of social culture

• Superior experience to ecommerce - customers can touch, feel and try products

• Customers can interact with brand and develop a stronger relationship

• CAPEX can be shared by partners

• Strongest presence in new market, generates fastest brand awareness

• Enables multi- channel services from launch e.g. click & collect

• eCommerce can offer extended range to support store range

• Enables ROPO – research online purchase offline

Multi-Channel


Low Risk, Low Penetration

High Risk, High Penetration

COUNTRY ECOM PENETRATION

Ecommerce market size, growth and penetration integral to decision

B2C e-retail penetration (% share of retail sales) excl. tickets, travel & C2C (2012-17)

Source: Javelin Group, eMarketer, Forrester


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BRIC, Turkey etc.N. America &N.W. Europe

5-10%today

Central/Southern Europe& “developed” Far East

2-5%

<2%

10%

CHN

WORLD MAP REVENUES

Growing Chinese eCommerce market attractive prospect 12

Internet retailing market size 2012 (£bn value)

Note: Excludes sales taxSource: Javelin Group, Euromonitor

www.javelingroup.comCHINA SINGLES DAY

…but not without challenges

• $3.06 billion USD in sales• Tmall had more than $2.1 billion in sales

• 109 stores with more than $1.6 million USD in sales within 12 hours

• 213 million active accounts• 105 million orders


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FRENCH CLOTHING MARKET DYNAMICS

36.3%

14.7%

13.7%

12.6%

5.8%3.4%2.7%2.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%O

nlin

e cl

oth

ing

an

d f

oo

twea

r m

arke

t sh

are

(%)

Category dynamics must also be understood in target country 14

Clothing and footwear eCommerce market map - France

Others

www.javelingroup.comOTHER FACTORS

Factors beyond market dynamics also important 15


Competitive environment

Payment preferences

Smartphone/tabl et penetration

Disposable income

Population characteristics

Broadband penetration

International brand presence

Geography: urban vs. rural

Government regulations &

taxes

Logistics / fulfilment

JAVELIN SCORECARDING

Javelin Group scorecard can help make strategic assessment 16

A Multi-Layered opportunity scorecard can be used to evaluate market attractiveness

Score attributed to each criteria by market to determine level of eCommerce attractiveness

Online market maturityOnline market maturity

Fulfilment complexityFulfilment complexity

Ease of implementationEase of implementation

Macro-economyMacro-economyEcommerce/ broadband

growth Ecommerce/ broadband

growthCultural and retailer brand fitCultural and retailer brand fit

PopulationPopulation

51

CategoryCategory Example factorsExample factors

Total eCommerce salesTotal eCommerce sales

Customs regulationsCustoms regulations

Language barrierLanguage barrier

GDP per capita 2013 & 2017GDP per capita 2013 & 2017

eCommerce sales 2017eCommerce sales 2017

Acceptance of foreign retailersAcceptance of foreign retailers

Population 2013Population 2013

HighLo w

www.javelingroup.comEASE OF IMPLEMENTATION

Balancing opportunity and implementation practicality 17

Long term size of opportunity

CHN

SGPTHA

IDN

IND

BRA

UKRMY S

USA

FR A

DE U

ESPITATW N

KO R JAP

AUSCZE

SWEDNKPOL

CAN

CHETUR

AUT

CYPGRE

RUS

UAEEGY

SAU

Early entry

Follow-through

Big long term opp’ties

NLD

Asia/Australia

Europe

Russia/Ukrai ne

Middle EastAmericas

Ease of entry vs. size of opportunity (for UK retailers)

Leave for later

Large

Small

Hard Easy

IRE

Ease of entry

www.javelingroup.comMULTICHANNEL

18Opportunities for multi‐channel?

Developing

Developed

USA

FRADEU

ESPITA

AUS

SWEDNK

POL

AUT

NLD

THA

IDN

IND

BRA

UKRTWN

KOR

JAP

RUS

MYS

CANTUR

UAEEGY

SAU

CHN

eCom

merce

Stores

Moreattractive

Lessattractive

Less attractive More attractive

Best for multi‐channel

Best for ecommerce alone

Best for stores alone

Leading strategic multi-channel opportunities

Second fast growing wave

1

2

www.javelingroup.comRETAILER EXAMPLE

Javelin Group recently helped C&A with international eCom strategy 19

• Analysed ecommerce opportunity in 13 markets

• Detailed scorecard analysis (clothing & footwear market)

- Ranked counties based on attractiveness

International ecommerce strategy

Country Online market maturity

Fulfilment complexity

Ease of implementation

Macro-economy

Ecommerce/ broadband

growth

Current C&A performance/

brand fitPopulation

Overall attractiveness

score

Weighting 23% 20% 17% 13% 11% 11% 5% 100%

United Kingdom 3.7 4.9 4.1 3.6 3.8 1.8 4.6 3.8

Sweden 2.6 5.0 4.1 4.5 2.5 2.7 3.2 3.6

Denmark 2.7 4.9 4.5 4.0 2.0 1.7 2.7 3.4

Finland 2.5 4.9 3.7 3.7 2.0 2.7 2.4 3.3

Czech Republic 1.8 4.9 2.0 3.0 2.1 4.1 2.5 2.9

Norway 2.4 1.9 4.1 4.4 2.2 2.7 2.4 2.9

Turkey 2.5 1.0 3.4 2.4 3.1 2.5 5.0 2.5

• Identified 5 priority markets - Market share and sales potential

estimated

• Advised on key considerations for launch in these markets

EXAMPLE OUTPUT

www.javelingroup.comHURDLES

Hurdles 20

• Financial returns not coming quick enough

• Overly ambitious business plan

• Marketing in the wrong areas

• Not enough ‘on the ground’ research

• Poor partner selection process

• Weak brand recognition

• Insufficient senior management time

• Lack of buy in at all levels

• Export / import requirements

• Lack of planning

www.javelingroup.comQUESTIONS

Questions?

[email protected]: 020 7961 3200

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Planning for new markets_Javelin Group