6 March 2014 Digital Commerce MIS 310 Class Lecture

6 March 2014

Digital Commerce MIS 310 Class Lecture

Kyle O’Connor, Manager - Deloitte Digital

• Road Warrior• Deloitte Digital out of the LA Office• Specialize in Consumer Retail

• MSIS, Kelly School of Business (Indiana University), 2005

• BS Informatics, Indiana University, 2004

• Recently married to high school sweetheart Lindsey• Avid hiker, biker and kayaker• Two rescue dogs – June and Tessa

• Eight years of consulting experience

Jul ‘06 – Mar ’07 Analyst

Apr ’07 – Mar’09 Consultant

Apr ‘09 – Aug ’11Sr. Consultant

TodayManager

Prior Deloitte

Internships – GE Insurance and Accenture

Client Experience and Background

BTA and Consultant

Senior Consultant

ManagerConsultant

2006

2014

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Creative

• Visual design

• Front-end development

• Graphic design

• Illustration

• Creative and experience strategy

User experience

• User research

• Content strategy

• Information architecture

• Interaction design

• Usability and analytics

Our teams are all about creating

digital experiences that make

sense for our clients’ businesses

and keeping their users coming

back for more. We bring together

the best parts of a small creative

agency and a large IT consultancy

to offer end-to-end solutions

grounded in our core capabilities.

Our breadth and depth of

capabilities ensure that we deliver

beautifully designed and cutting-

edge technology solutions paired

with real business value.

Strategy

• Mobile strategy• Visioning workshops and roadmaps• Web and eCommerce strategy• DCM strategy• Concepts and prototypes

Quality assurance

• Business and risk analysis

• Testing strategy development

• Automated and manual testing

• 3rd party service validation

• 3rd party test management

Engineering

• iOS app engineering

• Android app engineering

• JEE, Jave, ObjC, Ruby, etc.

• Oracle, SQL, MySQL, etc.

Management

• Engagement management

• Project management

• Large scale transformation

Global

• Global presence around tax, enterprise risk, and consulting services

Deloitte Digital

Agenda

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Deloitte Digital Overview

What is Digital Commerce?

What are the major consumer trends?

What are the challenges?

How can businesses be successful?

What is an eCommerce Platform and who are the major players/vendors?

Bonus Round: Stuff I think is Cool

Q & A

Learning Objectives

A high-level lecture that introduces MIS 310 students to the trends in

digital commerce. The lecture will discuss the components of digital

commerce and how they fit together to drive shareholder value and

meet customer expectations. Participants will be introduced to digital

commerce vendors, trends and an overview of Consulting

Purpose

• Describe what Digital Commerce is and the industry trends impacting Digital Commerce

• Explain the challenges organizations are facing in digital Commerce

• List the leading solution providers (vendors)

By the end of the lecture, practitioners will be able to:

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Polling Question: Shopping Behavior

How do you primarily shop?

a) Storesa) Stores

b) Onlineb) Online

c) Mobilec) Mobile

d) Alld) All

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Dropping the E in eCommerce - The Retail Commerce Transformation

The PastPhysical Store

The Recent PasteCommerce

The PresentCross-Channel

The Future Commerce

Increasing technical, social, and behavioral connectivity is changing

the way consumers interact with enterprises, channels and each other. Tomorrow’s connected

consumers will expect functionality at the point of need.

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Refers to activities in which businesses or consumers – use digital channels to identify

supplies, purchase products, complete financial transactions, and/or obtain services.

As commerce evolves, the lines between digital and physical channels are blurring and the ‘connected consumer’ is no longer a futuristic view of the retail shopper. The goal for businesses is to bring a seamless shopping experience to customers regardless of the touch point or channel.


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What consumer trends have you observed?

Polling Question: Consumer Trends

Major consumer trends

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Changing customer expectations are forcing businesses to develop new capabilities

1. Ship to Store

2. Buy Online, Pickup in Store

3. Endless Aisle

4. Seamless Customer Service

5. Advanced Delivery Options

Key Capabilities Required* 1 2

1 3

2 4

3

3

* Sample customer facing capabilities to enable Digital Commerce

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Ship to Store

Example•Wal-Mart - Site to Store

•Site to Store is a free service that lets you ship your online order to any Wal-Mart store in the contiguous United States.

What it is•Basic step in enabling Digital Commerce•Allows businesses to ship a customer’s online order to a participating store location•Offers customers the convenience of picking up their online/ digital order in a store without paying for shipping.

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Ship to Store

Why it is important•Provides “free” shipping options to customers•Easiest capability to implement since businesses can modify existing supply chain processes to include customer orders with store replenishment deliveries•Drives traffic to the store. Customers who go to pick up their shipment can be enticed to make additional purchases in store•Reduces additional shipping and handling costs for businesses

Challenges•Long delivery time for customers since customer orders are packaged along with scheduled replenishments•Does not leverage inventory that may be available in stores

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Buy Online, Pickup in Store

What it is•Advanced capability in enabling digital commerce•Allows customers to place an online order and find a participating store location where they can pick up their order•Offers customers the instant gratification of picking up their online/ digital order the same day without paying for shipping

Example•Best Buy –BestBuuy.com In-store Pickup•The Container Store – Click & Pickup•Wal-Mart – pick up today

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Buy Online, Pickup in Store

Why it is important•Provides “free” shipping option to customers•Supports “instant gratification” for customers who do not want to wait for their order to ship•Takes advantage of inventory in a store to fulfil a customer order•Drives traffic to the store. Customers who go to pick up their shipment can be enticed to make additional purchases in store•Businesses achieve a view of inventory across all locations and can start to move product to locations that sell products faster

Challenges•More complex implementation than simply shipping to a store•Requires visibility to and confidence in inventory positions in stores•Requires confidence in ability to reserve and promise inventory in stores to customers

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Have you ever picked a product up at a store that you bought online? (What was the process?)

YesYes

NoNo

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Endless Aisle – The Long Tail

What it is•Most advanced capability in enabling Digital Commerce•Allows businesses to offer the entire assortment of products to a customer regardless of where the customer is shopping (digital or physical)•Leverages kiosks, mobile devices for associates and enhanced POS devices to “bring digital inside the store”•Offers customers the convenience of shopping at any “touch point” or channel

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Example•Nordstrom – Endless Aisle•Home Depot– Endless Aisle•Kmart – Store to Home and availability check

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Endless Aisle

Why it is important•Provide customers ability to purchase anything a company offers regardless of physical location•Businesses can make their entire assortment available and can manage inventory effectively•Businesses have the ability to fulfill from the most cost effective and efficient location based on customer need

Challenges•Significant complexity•Requires visibility to and confidence in inventory positions in stores, warehouses and inventory nodes (vendor managed, etc.)•Requires confidence in ability to reserve and promise inventory to customers regardless of inventory node•Requires enterprise-wide alignment on inventory allocation and management•Requires anyone interacting with customers (store associate, call center, etc.) to be familiar with more products

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Fulfillment Centers

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Seamless Customer Service

What it is•Ability to provide real-time access to customer service regardless of channel•Ability to provide consistent and seamless service experience to customers across all “channels”•Ability to provide visibility to customer order history to associates and empowering associates to address a customer’s questions regardless of channel

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Example•J.Crew - Click-to-Chat, Self service•Nordstrom – LiveChat, Self service•Burberry – Clienteling iPad app•Chicos – personalized campaigns

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Seamless Customer Service

Why it is important•Improves customer retention and reduces lost sales due to unsatisfactory customer service•Builds loyalty with customers by supporting a superior and more efficient resolution to issues or questions•Consistent and effective self-service options can lower cost to serve per customer and streamline the customer experience (no more waiting in line or on the phone)•Reduces costs by using more effective customer appeasement e.g. not offering a flat $10 off next purchase to every customer who calls with an issue

Challenges•Lack of consolidated customer and order data•Providing consistent information to associates across all channels•Need appropriate training and incentives for sales associates to gain customer knowledge

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Advanced Delivery Options

What it is•Ability to support a range of options pertaining to the method, speed, and location of delivering a product•Providing customers with the ability to customize their delivery to fit their current needs from a physical and geographical stand point•Options offered and certain ones incentivized

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Example•Amazon – Amazon Locker, Release-Date Delivery, Local Express Shipping•Nordstrom – Same Day Delivery

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Advanced Delivery Options

Why it is important•Offers customers flexibility to choose a delivery option or location provides an improved customer experience•Convenience and flexibility can be competitive differentiator in attracting new customers who may not traditionally have made the purchase

Note: With Amazon expanding “Same Day Delivery” services, retailers will face tremendous pressure to match the service

Challenges•Expensive•Robust supply chain to ensure products can be delivered to desired location•Likely need partnerships with external service providers to ensure an easy pickup process

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Which of the following was NOT a consumer trend discussed?

a) Advanced Delivery Options

a) Advanced Delivery Options

b) Couponingb) Couponing

c) Seamless Customer Service

c) Seamless Customer Service

d) Shop to Store

d) Shop to Store

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Learning Objectives Check

Describe what Digital Commerce is and the industry trends impacting Digital Commerce

• Explain the challenges organizations are facing in Commerce Enablement

• Discuss how businesses can succeed• Describe eCommerce platforms and major vendors• Talk about cool stuff

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Why is it so difficult?

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Meeting the demands of today’s consumer is very challengingTo provide Omnichannel experience, retailers must meet consumers’ demands at the point of need, through the most conveniently accessible channel, in the most cost efficient manner and yet provide consistent brand experience across channels.

Customer

Today customer’s use all channels simultaneously and want to buy anywhere and return anywhere

In order remain competitive in the marketplace, retailers must optimize and rationalize their supply chain commerce processes

and platforms

Omnichannel RetailBuy Anywhere, Return Anywhere

Efficient Inventory Management

Order Visibility Across Channels

Fulfill Anywhere

Optimized Logistics

Needs

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Typical Business ChallengesTo Implement “Digital” Commerce companies have to not only deal with technology challenges but also with people and process challenges

• Are the business processes consistent across channels?

• Is there cross channel visibility?

• Has your technology kept pace

with changing business needs and the competition?

• Is your technology well integrated?

• Are your people trained well to use new technology?

• Does the organization have strong change management?

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Typical Process Challenges

• Setting up products separately by channel complicates selling of the full assortment

• Buying inventory by channel can lead to overbuying and does not leverage economies of scale

• Inability to offer standard self-service features across channels

• Inability to offer a seamless and consistent experience to the customer across channels

• Inability to consistently implement business capabilities to support fulfillment of customer orders

• Inability to see incoming inventory and stage it at the appropriate location to meet demand

Lack of standardized

processes across channels

Lack of visibility into orders

across channels

Lack of visibility into inventory

across channels

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Typical Technology Challenges

• Inability to share data across channels and touch points prevents customers and associates do not have visibility to information

• Inability to share capabilities leads to duplication of capabilities across channels

• Old or inflexible framework complicates implementation of new technology and processes

• Lack of robust systems hinders the creation of a consistent and seamless customer experience

• Systems and technology implemented without focusing on business value leads to missed requirements

• Inability to implement business capabilities consistently across channels prevents a seamless customer experience

Lack of Integrated Systems

Antiquated Systems and Architecture

Technology Strategy not Aligned with

Business Needs

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Typical People Challenges

• Inadequately trained associates prevents the adoption of standard processes and leads to an inconsistent experience

• Unwillingness of older staff to adopt new processes leads to inconsistent implementation of capabilities and an inconsistent brand experience

• Lack of timely communication across the organization leads to inconsistent implementation of business capabilities

• Lack of consistency across channels leads to inconsistent information to the customer and a poor customer experience

• Channel-specific, “siloed” incentives and reporting inhibit consistent measurement of business capabilities

• Lack of alignment leads to inconsistent implementation of business processes and capabilities

• Duplication of activities across channels leads to higher costs

Lack of Change Management

Communication Challenges

Lack of Top Level Alignment

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Polling Question: Challenges

Which of the following challenges do you think companies struggle with the most?

a) Processa) Process

b) Technologyb) Technology

c) Peoplec) People

d) Depends on the Company

d) Depends on the Company

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Explain the challenges organizations are facing in Commerce Enablement

• Discuss how businesses can succeed• Describe eCommerce platforms and major vendors• Talk about cool stuff

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How can businesses succeed?

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Focus on the future to ensure success

“I skate to where the puck is going to be, not where it has been”

- Wayne Gretzky

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Focusing on the future requires a fine balance

1. Near-term Requirements

2.

Str

ate

gic

l C

ap

ab

ilit

ies

Businesses must balance investment in near-term requirements, with investments required to develop strategic capabilities to

position for long-term trends and business pressures

Strategic focus on positioning for future

Tactical focus onbusiness requirements

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End-to-end commerce enablement

Partner System(s)

Direct Platform

Inventory

Distributed Order Management (DOM)

Retail/Wholesale Fulfillment

Direct Fulfillment

POS System(s) Store Fulfillment

Mobile

Website

Stores

Contact Center

Enterprise Inventory Management

• Central view of Inventory and Availability

• Flexible inventory availability rules

Wholesale1

Wholesale1

Orders Order Lines

Inventory

Order Lines

Inventory

Order Line

Orders

Orders

Order Capture Channels

Order Fulfillment & Logistics

Inventory

Inventory

Inventory

US Stores

3PL

Order Line

Inventory

Planning & AllocationEnterprise Operations

• Cross channel view of demand and fulfillment

• Enterprise planning and allocation

Transactional Messages to

Customer

Drop ship Fulfillment1

Inventory

Order Line

Enterprise Order Management

• Central order history and status• Pricing and promotions• Product catalog / items• Flexible fulfillment rules and

assignments• Payment settlement

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Digital Platforms

Contact Center

Mobile

Website

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Discuss how businesses can succeed• Describe eCommerce platforms and major vendors• Talk about cool stuff

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What is an eCommerce Platform and who are the major players/vendors?

The eCommerce platform vendor landscape

Source: 2013 Internet Retailer’s Top 500 Guide

IBM Websphere Market Presence # of 2013 Top US 100 retailer clients: 17 Representative clients:

Oracle Commerce Market Presence # of 2013 Top 100 US retailer clients: 19 Representative clients:

48% of the Top 50 Internet Retailers use IBM Websphere,

Hybris (SAP) or Oracle Commerce as their base

eCommerce Platform to build their digital experience

Hybris (SAP) Market Presence # of 2013 Top US 100 retailer clients: 1 Representative clients:

eCommerce Platform Analogy

Base Platform consists of core components (e.g. Engine and Frame) that allow you to customize the look and feel of your eCommerce site and build new options into the customer experience.

eCommerce platform overview – A Car analogyAn eCommerce platform is a technology that organizations leverage to build virtual storefronts, both websites and mobile applications that are used to sell products and services.

Customized Unique Look and Feel

Enterprise Global eCommerce Platform

Enterprise grade global eCommerce platform overviewAn eCommerce platform consists of a set of core capabilities, tools and frameworks that allow a company to create their unique branded look, feel and online customer experience.

Platform Development Toolkit

Core Platform Business Capabilities

Development Environment

IntegrationBusiness Logic

API’s

Frameworks

Data Models

Product Management

Promotions

Pricing

Search

Service

Order Management

Global multi-sites

Security and Compliance

Personalization

Shopping cart

Tax and Order Calculation

Customer Master

3rd Party integrations

Promotions Engine

Email Marketing

Point of Sale

Enterprise Back-office

Social

Products and Reviews

Payment Processing

Custom Code and Integrations

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Polling Question: Vendors

Which of the following is NOT a vendor that has a software solution in this space?

a) IBMa) IBM

b) Oracleb) Oracle

c) SAPc) SAP

d) Appled) Apple

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Discuss how businesses can succeed Describe eCommerce platforms and major vendors• Talk about cool stuff

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Bonus Round: Stuff I think is Cool

In 1984, we thought this is what 2029 would look like

The future arrived a few years earlier

Smart Glass Capabilities

Wearable TechnologyTechnology advances have created a new class of small, mobile and networked devices – e.g. smart glasses, smart watches, fitness sensors, health monitors.

Source: 1. Senior Analyst, IMS Research

$6B market in 20161

Wave of wearable products

Visualization capability + hands-free

Smart glasses are a powerful platform

Key Opportunity in Enterprise – Empower “deskless workers”

Enterprise adoption is now viable

Clear use cases and ROI

Enabling technology available

Lowering device costs

Accelerating media attention

1 Smart glasses are the right technology

Workers need to work hands-free

Jobs require real-time data

Managers need real-time intelligence

Phones / tablets / shared kiosks are inefficient and error-prone

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Maker Movement

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Drones, Drones, Drones

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Summary

Learning Objectives

• Describe what Digital Commerce is and the industry trends impacting Digital Commerce

• Explain the challenges organizations are facing in digital Commerce

• List the leading solution providers (vendors)

You should now be able to…

Deloitte Digital

Thank you.

Kyle O’[email protected]/pub/kyle-o-connor/0/a93/101/https://twitter.com/kpoconno

Documents

6 March 2014 Digital Commerce MIS 310 Class Lecture