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Online markets in the world of retailing
Alan Giles, Associate Fellow
Trends in Retail Competition, 10 June 2016
Agenda
Challenges for retailersRetailer responses
MultichannelInternationalisationServicesPersonalisationInnovation
Challenges for regulators
2
Agenda
Challenges for retailersRetailer responses
MultichannelInternationalisationServicesPersonalisationInnovation
Challenges for regulators
9
The UK is the world’s e-commerce leader
e-commerce Spend / Connected Consumer, 2013£
e-commerce Share of Retail Market, 2013% Sales
0%1%1%
2%2%
3%3%3%3%
5%5%5%
6%6%6%
7%7%7%7%7%
8%9%9%9%
14%
Turkey
South Korea
India
AustraliaNetherlands
Czech RepublicAustria
Canada
Norway
Japan
Germany
Spain
France
Denmark
ChinaIreland
Sweden
Poland
Brazil
Belgium
Italy
Russia
FinlandUSUK
940
6882
98108
151181188188
237253
299309312
339364
420432443447
525556
616662
Belgium
ItalySpain
CanadaCzech Republic
NetherlandsJapan
France
India
AustraliaDenmark
Austria
Finland
Germany
BrazilRussiaPoland
Turkey
china
South Korea
Sweden
Norway
Ireland
USUK
Source: World Bank, Eurostat, OC&C analysis, 2014
2611
2_R
ET
Successful multichannel competitors are narrowing the gap on pureplay competitors
Evolution of Proposition Rating – Pureplay vs MultichannelRating Out of 100
20152011
40
60
80
100
TrustProducts that Suit
Me
Wide Product Choice
Store Look
& Feel
Quality of
Products
Value for
Money
ServiceLow Prices
Online Rating
40
60
80
100
Quality of
Products
Wide Product Choice
Online Rating
ServiceProducts that Suit
Me
Low Prices
Store Look
& Feel
Value for
Money
Trust
John LewisAmazon (UK)
Rating
Delta -8.1 -9.9 -34.7 -11.9 1.8 0.8 -21.3 -3.5 -1.5 -5.5 -8.2 -22.4 -6.1 4.2 7.3 -9.9 1.4 3.9
2611
2_R
ETSource: OC&C, 2015
Agenda
Challenges for retailersRetailer responses
MultichannelInternationalisationServicesPersonalisationInnovation
Challenges for regulators
19
Digital businesses internationalise faster
2
1
6
6
332
41
32
24
16
WalmartAmazon
News CorpHuffington Post
HertzZip Car
Hilton HotelsAirbnb
Visa
PayPal
Retail
News
Car Rental
Travel
Payments
x 2.6
Top 6 US Digital / Technology Businesses2
$1.2tr
$0.5tr
Top 6 US Traditional Businesses1
CAGR
2005-14 3% 11%
Market Capitalisation, Traditional vs Digital Cos $ Trillion
Time Taken to Establish First International PresenceYears
1. Based on market cap Oct 2014. Excluding banking & finance stocks & companies where data not available to 2005. Companies included: Exxon, Walmart, General Electric, Chevron, Johnson & Johnson, Procter & Gamble
2. Based on market cap Oct 2014, companies included: Apple, Google, Microsoft, IBM, Oracle, Amazon
Source: Press Search, Company Websites, BvD, Google Finance, OC&C analysis
# Countries Enteredin First 10 Years
1
4
1
11
1
4
1190
1
>100
2611
2_R
ET
Agenda
Challenges for retailersRetailer responses
MultichannelInternationalisationServicesPersonalisationInnovation
Challenges for regulators
22
Agenda
Challenges for retailersRetailer responses
MultichannelInternationalisationServicesPersonalisationInnovation
Challenges for regulators
25
Case Study: WeChat in ChinaTop 5 Social Media Platforms% of Population Using
Who are the competitors? Social Shopping
43%FacebookFB Messenger 23%
Whatsapp19%Twitter18%
Skype 13%
Social NetworkChat App
Google+ 14%
42%
PinterestTwitter
FacebookFB Messenger 20%
17%19%
25%Sina Weibo25%Qzone
21%
Wechat 30%
Youku 19%Tencent Weibo
Source: Global web index, company website / apps, OC&C analysis, 2015
Restaurant
Movies
Taxi
c.600mn users on WeChat (10mn investment fund
users), having grown 145%pa 2012-14
Brands can create “official accounts” on WeChat to send targeted messages
and deals to followers
2611
2_R
ET
Agenda
Challenges for retailersRetailer responses
MultichannelInternationalisationServicesPersonalisationInnovation
Challenges for regulators
30
Content and commerce
‘Consumers now seek a shopping experience online just as they do offline, especially in fashion. They want inspiration and sexiness to seep through their shopping journey. Which is why Robertson believes Elle magazine launching online is far more a threat to him than the mighty Amazon’s recent push into fashion. Amazon is not cool, it’s functional and fashion ecommerce needs more than just functionality; which is why Asos, with its cutting edge editorial, sexy imagery and style advice, continues to be the reigning king of fashion etail.’ Gemma Goldfingle, Retail Week, May 2013
But in 2015 Amazon spent $10bn on R&D (10% of revenues), and has bought 100 companies since October 2010
37Source: CB Insights, 2016
Agenda
Challenges for retailersRetailer responses
MultichannelInternationalisationServicesPersonalisationInnovation
Challenges for regulators
38
Pureplay retail: does the winner take all?
Source: L2 Intelligence from Internet Retailer and US Commerce Department, 2015