Embed Size (px)
Citation preview
Private & Confidential
How Product
Intelligence Can
Help Boost
Merchandising
Performance
Greg Girard, Program Director of Worldwide Omni-channel Retail Analytics at IDC Retail Insights
Sudhir Holla, SVP, Ugam
April 2015Webinar Series
Sponsored by
Don Davis,Editor in Chief
Internet RetailerMODERATOR
INTERNETRETAILER.COM RESEARCH | NEWS | ANALYSIS |DATA |EVENTSIR
E-commerce vs. stores in the U.S.
15%18% 18%
16% 16% 16% 16%15%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2014
YEAR-OVER-YEAR GROWTH
E-commerce Stores
Source: US Department of Commerce, Internet Retailer
INTERNETRETAILER.COM RESEARCH | NEWS | ANALYSIS |DATA |EVENTSIR
Amazon vs. e-commerce vs. stores
15.1%17.7% 17.6%
15.7% 15.5% 15.7% 15.8% 14.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2014
E-commerce Stores AmazonSource: U.S. Department of Commerce,
Amazon.com Inc., Internet Retailer
(Year-over-year growth. E-commerce and stores, U.S. data; Amazon, North America)
E-retail growth is not all about Amazon
19.8%
18.4%
18.1%
17.1%
12.3%
8.8%
Web-only w/o Amazon
Retail chains
Web-only with Amazon
Amazon
Consumer goods manufacturers
Catalog/TV/call center
Year-over-year % growth 2014 vs. 2013
16.5%15.8%
12.7%
18.5%
15.5%
1-100 101-200 201-300 301-400 401-500
Growth by Top 500 size
And it’s not all about the biggest companies
5%
41%
49%
58%
76%
85%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Other
Seek advice from store staff
More convenient to have item delivered to home
Item out of stock in store
Wanted to see/touch/try on merchandise
Better prices online
Showrooming: Price is paramount, but selection counts, too
Source: PwC
(Have you ever deliberately browsed products in a store, then bought online? Why?)
37%
48%
51%
61%
61%
65%
0% 10% 20% 30% 40% 50% 60% 70%
Item out of stock online
To read reviews online
To compare prices of competitors
Didn't want to wait to get item
Wanted to see/touch/try on merchandise
To avoid paying for delivery
Webrooming: They hate to pay for shipping
Source: PwC
(Have you ever deliberately browed products online, then bought them in a store? Why?)
Private & Confidential8 Private & Confidential
Agenda
Greg GirardProgram Director of Worldwide
Omni-channel Retail Analytics
Sudhir HollaSVP at Ugam
• What is Product Intelligence?
• Why is Product Intelligence Important?
• What is the End Result?
Speakers
What is Product Intelligence?Greg Girard
Why is product intelligence important?
IDC Retail Insights Opinion:
By the end of 2016, product intelligence will inform 80% of the top 10 ecommerce retailers' pricing decisions and drive mainstream adoption of high-velocity pricing.
It’s nascent now but by 2020 product intelligence will influence $3.7 trillion of retail spending in the U.S. alone,18% GDP.
The keenest strategic concern of pricing is competing against race-
to-the-bottom pricing wars…The fetish of price is the medieval
bloodletting of 21st century retail.
IDC Retail Insights, March 2015
Accumulating “Data Lakes”
Consumer behavioral fingerprints and feedback
Digital evidence of competitors’ strategies/tactics
Manufacturers’ product content
Publisher’s and journalists’ content
Market and economic data
Product Intelligence….Applies a range of technologies to collect, aggregate, and analyze data about products that a retailer and its competitors sell…
from a variety of online and in-store sources…
to inform pricing, merchandising, marketing, and product development decisions…
with timely, relevant insight into market conditions, competitors’ strategies and tactics, and consumer behavior and sentiment.
Product Intelligence is Useful and Actionable
Consumer Price Transparency:Periodic Search Mission
Retailer Product Intelligence: Always-On Sensing
Context: purchase decision Context: “Offer” tactics and architecture
Episodic search Continuous Web crawling discovery
Accidentally algorithmic Algorithmic by design
Occasionally alert driven Scalable, systematic, and comprehensive
Read and used by humans Consumed by rules/scientific algorithms
Millions of shoppers Hundreds of skilled merchants and pricers
Free Subscription based
Compare and Contrast
Consumer Price Transparency Vs.Retailer Product Intelligence
Product Intelligence enables Retailers to “read the cards” better than competition
An Example…Product Differentiation Market Landscape: Adjacent
market segments and key products Consideration Set: Consumer-
perceived position of products Consumer Ratings: Item vs
competition over time; buzz/chatter Purchase Patterns: Demand
transference vs net new demand► Impacts: Add/drop/modify product;
re-price; change descriptive content; adapt promotion and distribution strategies
Expert Input Plus Product Intelligence Data
Private & Confidential17 Private & Confidential
Now for a quick poll…
Do you collect, aggregate, and analyze data about
products you and your competitors sell to improve
your merchandise performance?
Private & Confidential18 Private & Confidential
Product Intelligence – The “big data” street
vendor view…
What products should
I keep?
• What is my competition carrying?
• What is the consumer need?
• How much do they need?
How should I market
and describe the
products I keep?
What price should
I sell it at?
• Am I over-sold or over-bought? What does my sell-through indicate?
• Who am I selling to? Local or Tourist?
• What is the demand loyalty of my consumer base?
Private & Confidential19 Private & Confidential
Consumers are freely and constantly telling
us what they like, what they don’t like, and
what they want …
They are also telling us why they want it, and
how much they are willing to pay for it …
Data is Democratic (But Actionable Insights Are Not)
Private & Confidential20 Private & Confidential
Which of these two blue-tooth headsets will
continue to do well?
* Later model
Manufacturer: LGPrice: $69.99
Manufacturer: PlantronicsPrice: $29.99
Private & Confidential21 Private & Confidential
Here is what some selected demand signals read for
these two products…
207,690
510,010
824,890
1,223,890
1,612,930
1,798,860
12,47040,480 64,810 84,460
118,300152,980
Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15
Search Trend
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2012 2013 2014 2015
Review TrendLG Tone HBS730
Plantronics M50
Private & Confidential22 Private & Confidential
Top 50 Bluetooth Headsets – Attribute & Sentiment Trends
The signals are not just related to the product—they
provide clues to the “need” driving the demand
Multi-point
Noise Cancellation
Stereo
Style - Earbud
Style - Over the Ear
Style - Behind the Head
Key Attributes
30%
56%
22%
6%
66%
8%
2011
32%
58%
30%
8%
64%
12%
2012
22%
58%
42%
10%
54%
24%
2013
54%
46%
56%
14%
40%
38%
2015
Private & Confidential23 Private & Confidential
It is possible to predict the top 100 in a category with
about 60% accuracy using “freely” available data
0
10
20
30
40
50
60
70
80
90
100
020406080100
Pre
dic
ted
Pro
du
ct R
ank
Actual Product Rank
58% of rank prediction within +/- 20
Private & Confidential24 Private & Confidential
Retail is still about the efficient use of assets to grow
traffic and conversion
Traffic Conversion
Title VideosImagesFeatures
& SpecsDescription
Manuals/
BrochuresMeta tags
Product Detail Page content
Backlinks
Reviews
Social
Media
Price +
Promotions
(0.35) (0.20)
(0.45)
(0.05)
(0.20)
(0.25)
(0.05)
(0.30)
Private & Confidential25 Private & Confidential
Vitamix 750 Blender – Assuming price is the same,
which of these two retailers will sell more?
Retailer 1 Retailer 2
Private & Confidential26 Private & Confidential
Content matters - it can offer a lift in margins
without dropping the price…
Retailer 1• Price: $649.95
• Reviews: 130+
• Google Rank: Page 1
• Sales: Among the top-selling
products for the entire retail chain
Retailer 2• Price: $649.95
• Reviews: 0
• Google Rank: Page 3
• Sales: Not even close to
the top-sellers
Private & Confidential27 Private & Confidential
Retailer 1• Price: $649.95
• Reviews: 130+
• Google Rank: Page 1
• Sales: Among the top-selling
products for the entire retail chain
Retailer 2• Price: $649.95
• Reviews: 50+
• Google Rank: Page 2
• Sales: Double digit increase in
sales
Consider the impact in sales with a few inexpensive
tweaks…
Private & Confidential28 Private & Confidential
Case Study: Increase in conversion despite drop in price
competitiveness
Content Intervention
Private & Confidential29 Private & Confidential
Which of these two products has higher price elasticity?
• Brand: Pacific Trail Chaski• Price: $55• Reviews: 8 Reviews (4.5 Stars)• Sales Rank: #9801 in Shoes• Cross-sell Traffic: 60%
• Brand: Keen Newport H2• Price: $99• Reviews: 2083 Reviews (4.5 Stars)• Sales Rank: #60 in Shoes• Cross-sell Traffic: 30%
Private & Confidential30 Private & Confidential
“Show-rooming” is making historical data based on price
elasticities irrelevant. There are more reliable measures…
• Brand: Pacific Trail Chaski• Price: $55• Reviews: 8 Reviews (4.5 Stars)• Sales Rank: #9801 in Shoes• Cross-sell Traffic: 60%
• Brand: Keen Newport H2• Price: $99• Reviews: 2083 Reviews (4.5 Stars)• Sales Rank: #60 in Shoes• Cross-sell Traffic: 30%
Private & Confidential31 Private & Confidential
Competitive price change should not be the trigger
for a price change. Take a look at other consumer
signals…
Conversion Increases above Upper Limit: Increase price to get conversion back into
targeted zone based on competitive elasticity
Conversion Decreases below Lower Limit: Decrease price to get conversion back into
targeted zone based on competitive elasticity
Private & Confidential32 Private & Confidential
Product Intelligence allows the use of targeted interventions across assortment, content and price to boost merchandising
performance
Are you getting a share of
that demand?
Can product content be leveraged
to improve conversion?
Can lower prices be used to improve
conversion profitably?
Can frequent price changes help
skim margins?
Is there demand for the product?
Private & Confidential33 Private & Confidential
Assortment:
Do we have the right products?
Content:
Have we described and
marketedthe product correctly?
Pricing:
Have we priced it right?
Pre-Season- Buying Cycle Pre-Season- Item Setup In-Season - Pricing
7.5% increase in top-line
for a pre-existing category at a leading retailer
21 basis points increase in
conversion without a change in price
7% increase in the “Top 20 results”
for Google search ranking
3.75% increase in margin
dollars for an existing category at a leading office supplies
retailer
Results….
Private & Confidential34 Private & Confidential
What are the primary challenges around merchandise
performance?
One last poll…
Private & Confidential35 Private & Confidential
In summary, retailers hold the key to leveraging
Product Intelligence
• Align BDA Programs with Revenue Growth Objective
• Pursue Big Data and Analytics Maturity
• Develop a Product Intelligence Strategy
• Assess Your Channel Chess and Algorithmic Pricing
Opportunities and Risks
• Prepare for the Emergence of Participatory
Commerce
Private & Confidential36 Private & Confidential
Greg GirardProgram Director of Worldwide Omni-channel Retail
Analytics
Email: [email protected]
Twitter: @gregorydgirard
Sudhir HollaSVP at Ugam
Email: [email protected]
Twitter: @sudhirholla
Contact Us
Private & Confidential
How Product
Intelligence Can
Help Boost
Merchandising
Performance
www.ugamsolutions.com
Q&A
