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New ways of working How new business models can benefi t
Logistical mattersWhy the customer always knows best
M-commerce Take advantage of the trend
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Future trends: In the ever evolving world of e-Commerce it is so important to know how your business can thrive
E-COMMERCENo. 2 / Sept. ’12
PHOTO: SHUTTERSTOCK
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2 · SEPTEMBER 2012 AN INDEPENDENT SUPPLEMENT BY MEDIAPLANET
The importance of embracing change
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Online retail has been one of the success stories of the past decade, with the amount spent through UK e-retailers leaping from £0.8bn in 2000 to £68bn in 2011; our forecast for 2012 is 13 per cent growth to reach £77bn, says Andrew McClelland, Chief Operations and Policy Offi cer at the IMRG.
It is worth clarifying that although this report fo-cuses on online retail, the barrier between online and offl ine has blurred to the point where the idea of a shop being entirely
offl ine almost doesn’t exist.
Changes aheadTechnology has completely al-tered the retail playing fi eld,
meaning that engagement with consumers now occurs across a range of platforms and contexts. Mo-bile is the main element bridging the old divide, not just in terms of con-sumers completing actual purchas-es on them, but through the way in which brands are so much more ac-cessible through these devices.
Retailers know the importance of embracing this change, as evidenced by the roll-out of wi-fi in-store by many large retailers. The digital age is being realised in retail as in
every other area of our lives; exciting times for consumers perhaps, but the pace of change represents a real challenge to the businesses trying to capture their attention.
New opportunitiesThis report identifi es some of the key trends and develop-
ments aff ecting this rapidly evolv-ing industry, looking at a selection of the most important areas that make up the online shopping experience.
Although ostensibly this report is about retailers, really e-commerce is about the consumer. Through the data generated by site visitors, on-line retailers have an opportunity to understand how their customers in-teract with their brand in ways that have never been possible before.
Ensuring a smooth operationThe debate around online pri-vacy will continue, but at the
same time consumers expect a seamless experience across a range of diff erent channels and devices, all providing content that is rele-vant and appropriate to them.
The diffi culty for retailers is the actual provision of the back-end service. To satisfy that expectation is anything but seamless.
Andrew McClelland will be speaking at the e-Commerce expo on 2nd—3rd October. For more information visit www.ecommerceexpo.co.uk
Andrew McClelland, Chief Operations and Policy Offi cer, IMRG
E-COMMERCE2ND EDITION, SEPTEMBER 2012
Managing Director: Chris EmbersonEditorial and Production Manager: Faye GodfreyBusiness Development Manager: Dominic Webber
Responsible for this issueProject Manager: Fred GwatkinPhone: 020 7665 4410E-mail: [email protected]
Distributed with: The GuardianPrint: The Guardian Print Centre
Mediaplanet contact information: Phone: 0207 665 4400Fax: 0207 665 4419E-mail: [email protected] MediaplanetUK on:
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The future of commerce p. 4Does e-Commerce spell the death of the British High Street?
Payment solutions p. 6From security to ease of use, what can we expect for the future?
The rise of M-commerce p. 8The importance of optimised websites and trends in the market
4 · SEPTEMBER 2012 AN INDEPENDENT SUPPLEMENT BY MEDIAPLANET
Question: Does the rise in online shopping signal the death of the High Street?Answer: Both landlords and retailers need to fi nd innovative strategies in order to prosper.
The boom in online shopping could bring about the death of the British High Street as we know it.
The trend is only going one way, the doom-mongers say. Britain leads the world in e-Commerce, with 10 per cent of sales online and 55 per cent of growth in retail coming from online in the next few years. One in six shops already lies empty, but that fi gure could rise to 40 per cent.
The consequences would be far-reaching. Pension funds have in-vested heavily in the High Street and a crash in commercial property prices would force us all to work un-til we’re 80.
Thankfully, there is a more opti-mistic way of viewing the future, says Matt Clark, Director of Consu-mer at Boxwood. “If you’re smart, the-re are a shed-load of opportunities.
But if you’re not, you will go out of business,” he said. “The challenge for retailers is keeping sales produc-tivity high enough to justify a High Street presence, and the challenge for landlords is evolving new stra-tegies to cope with diff erent models on the High Street.”
Making changesMore agile landlords are moving away from fi xed long-term leases and adopting ideas such as pop-up shops on short-term leases. Brixton Village, a thriving hub of indie shops in a once run-down part of London, is one area where landlords are off e-ring fl exible business models.
Meanwhile, major retailers are experimenting. Flagship stores are opening with iPads dotted around, allowing customers to order online in the store. Ebay has trialled a pop-up store in London and Amazon has
DAVID SMITH
CHANGElaunched a pick-up service.
One intriguing innovation is Hou-se of Fraser’s stockless stores. Custo-mers can touch the goods in-store, but then order for home delivery.
“Retailers have to understand customers really well and devise propositions to diff erentiate their brand. No one knows what the answer will ultimately be, but you have to stay alert and be ready to mo-ve fast,” said Clark.
You also have to be good at delive-ring your core proposition through your core channel, which is still usu-ally the stores.
“If you spend too much time future-gazing, you will cock up your core busi-ness. Frankly, that’s the end of the world because 90 per cent of today’s money is still about the core proposition.”
INSPIRATION
New business models can revive the British High Street
‘Retailers have to understand customers better and devise something to differentiate their brand’Matt ClarkDirector of Consumer, Boxwood
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THE DEATH OF THE BRITISH HIGH STREET?Britain is leading the world in e-Commerce but companies must adapt to take advantage of new opportunitiesPHOTO: SHUTTERSTOCK
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■ After its recent introduction of ‘In-Store’ smartphone apps in four major high street chains, PayPal has predicted most shoppers will pay using their mobiles by 2016.
PayPal’s PR head Rob Skin-ner says conventional lea-ther wallets could be a thing of the past for most shop-pers by 2016.
Skinner points to research by Forrester stating: “By 2016 UK shoppers will be able to use mobile phones to pay on the high street with digital money rather than cash, che-ques or cards.”
The fi ndings were based on interviews with 10 senior executives from UK busines-ses, representing a combined turnover of £85 billion.
Skinner added: “Your mo-bile will become like a di-gital wallet. Cash won’t va-nish, but we’ll use phones and other devices to pay in-store, or online.”
Skinner said PayPal was
already available online at major retailers such as John Lewis and Boots, as well as British Airways. And it re-cently created an ‘In-Store’ app allowing its 15 million UK customers to use smartpho-nes to pay at Coast, Oasis, Wa-rehouse and Karen Millen.
Shoppers can purchase goods fast without joining long queues for cash tills. Shop assistants carry porta-ble scanners which read bar-codes anywhere in the store. Shoppers use their app to en-ter a pass code that produces a unique barcode.
“Mobile payments have grown hugely,” said Skinner. “We will handle US$10 mil-lion of mobile phone pay-ments this year, up from US$4 million last year. A lot more stores will accept PayPal’s mobile app soon.
“It’s faster, easier and safer because you don’t give away your credit card details and the app is blocked by a pin number.”
PayPal predicts demise of leather wallets
DAVID SMITH
6 · SEPTEMBER 2012 AN INDEPENDENT SUPPLEMENT BY MEDIAPLANET
Industry seeks smart ways to pay
Money has exchanged hands for thousands of years in much the same fashion. But we stand on the verge of a Brave New World of digi-tal payments and no one can pre-dict the future.
“Everyone questions it but there’s no silver bullet,” said Paul Rodgers, chairman of Vendorcom, an association that brings major industry players together. “Anyone pushing the idea there will be one solution is wrong.”
A winning formulaRodgers says success will be deter-mined by ease of use for the con-sumer and ease of deployment for the retailer, as well as cost.
“Cheap and throwaway systems will be popular because they don’t require a lot of investment in infra-structure,” he said. “Interoperabili-ty will also be key. For example, pay-ment wallets which can be used in store, online or on a mobile.”
To judge by the markets, one new method with a high chance of
success is Square, a device which plugs into smartphone head-phone jacks. It was introduced by Twitter founder Jack Dawsey, who struck a well-publicised deal with Starbucks.
“It’s an example of a disruptive influence which could transform the industry quickly,” said Rodgers. “Within three months of it being in-troduced the share price of VeriFone Systems — which makes payment terminals — fell by 50 per cent.”
The next big thing?Contactless payments have been hailed by some as the biggest break-through since the Chip and Pin rev-olution in 2004. Cards can be hov-ered over terminals without the need for a pin number. McDon-ald’s, Boots and other chains, accept them, as does the National Trust.
But Rodgers believes the mech-anism has been overhyped. “It’s been seen as the answer to life, the universe and everything, but it’s
not,” he said. “It has its place, but it’s been withdrawn from some places and many people don’t know about it. There’s also a £20 limit, which is fi ne in a National Trust shop, but no good if you want to pay to get in to a stately home.”
The mobile equivalent of con-tactless, however, has great scope for growth. NFC-enabled smart-phones can be used to make small payments through simple taps. There are specifi c apps, such as the Hailo, which is used to pay for cab journeys.
Money can also now be sent between phones. Barclays Pin-git makes instant money trans-fers to anyone with a mobile and a bank account. It’s ideal for split-ting restaurant bills, or paying small traders.
A more fundamental change, Rodgers says, is the move to link payments to banks. The UK will fol-low continental practices. In Hol-land, the iDEAL payment is respon-sible for 60 per cent of payments and in Germany, the sofortbanking (German for ‘instant banking’) sys-tem also allows consumer bank ac-counts to make payments.
DAVID SMITH
Paul RodgersChairman, Vendorcom
NEWS
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■ Question: Which methods of payment will become popular?
■ Answer: No one can predict for sure, but ease of use and interoperability will be key.
When CashFlows CEO Nick Ogden first heard about voice biometrics, he found it hard to believe the technology was as foolproof an identification method as fingerprinting.
“Research claimed no two individuals had the same voice, but I put my cynic’s hat on. I wondered if the technology could tell my wife and her identical twin sister apart, but it succeeded.
“Then we got Rory Bremner in, but even he could not get past the technology,” Ogden said.
Ogden wanted to create a guaranteed mobile payment platform for clients at CashFlows, which off ers business payment solutions. He realised voice biometrics would work on any of the seven billion mo-biles worldwide. The Eureka moment came when he fi gured out the validation method.
“When you go to the shopping cart, you enter your mobile number. The site con-fi rms by launching a call to your mobile, but only if transactions have been ap-proved for that business. It’s like an audi-ble cheque.”
CashFlows VoicePay Card is valid in thou-sands of stores and the company is working closely with the Royal Institute for the Blind, but it remains a niche product.
“It will move into the mainstream be-cause it takes fraud issues out of the equa-tion and also people are getting used to voice-recognition systems. But it will be an evolution rather than the revolution we saw with Chip and Pin.”
FUTURE OF MOBILE PAYMENTS
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■ Companies who fail to exploit the Big Data age will be left behind by more savvy competitors in a fast-moving digital marketplace. But it’s a complex technical feat to gather all the data and make sense of it.
Nick Sharp, VP of EMEA of digital analytics and optimisation com-pany Webtrends, says the impor-tance of Big Data has risen expo-nentially in the past few years.
“People have been reporting on website traffic for over a dec-ade, but there has been a para-digm shift and requirements are now much more sophisticated. It is now vital to understand online visitor behaviour over time, across
all digital channels, and to then take appropriate action to maxim-ise return. This insight is used to target individuals and segments with specific content around are-as of interest, with the aim of in-creasing conversion rates.”
Optimisation solutions mine the data by adding code to vari-ous sources, including company websites, mobile phone apps, so-cial and mobile sites.
“Every time a visitor does something, it’s recorded,” said Sharp. “The beauty from our cus-tomers’ point of view is the sim-plicity as the coding is not oner-ous and is soon up and running delivering value.”
Understanding clients through analysing data is not enough as it’s just as important to have an attractive website which draws visitors in. Optimisation solu-tions can break sites down into component parts and then make suggestions based on thousands of options — for example, chang-ing a picture, copy, or a call to ac-tion can make the world of differ-ence to your conversion rates.
International shopping habits
vary enormously and retailers may need to tweak their websites ac-cordingly. For example, the Webt-rends Optimise team advised Brit-ish clothing retailer All Saints on the optimisation of its UK website and a variation for the US market.
The new sites saw a 3-4 per cent increase in UK sales in the first four weeks, while in the US, sales in-creased by nearly 7 per cent, a huge rise in such a big country. “We’ve already seen a great uplift in sales following the Optimise implemen-tation, and hope to continue build-ing on this,” said James Wintle, All Saints Head of e-Commerce.
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UK TABLET PENETRATION
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8 · SEPTEMBER 2012 AN INDEPENDENT SUPPLEMENT BY MEDIAPLANET
DAVID SMITH
David MurphyEditor, Mobile Marketing Magazine
NEWS
‘Organisations we work with keep winning’
■ Question: How are advertisers taking advantage of the rise in M-commerce?
■ Answer: They are fi nding innovative ways to target smartphone users with ads.
It seems an age since people read newspapers on trains. Now they are more likely to be seen fi ddling with smartphones, a habit that re-tailers can exploit providing they have optimised websites.
“A typical bloke on a train might go shopping for jeans,” said Da-vid Murphy, editor of Mobile Mar-keting Magazine. “He looks at the Next site which has been nice-ly optimised, then at another site which is not optimised. He’s sure to buy his jeans on the Next site.”
Most big retailers realise the im-portance of optimisation. Growth in M-commerce has been so spectacular
that only diehard traditionalists could ignore it. Two years ago, it rep-resented 0.4 per cent of online sales, but that has multiplied 20-fold to more than 8 per cent.
“The trend is fuelled by brands saying ‘where are people spending time?’ Increasingly, it’s on their smartphones instead of their PCs,” said Murphy.
Trends in the mobile marketIn parallel, mobile advertising spend has soared. In 2008, UK ad spend in the mobile market was just £28.6m, but last year it was £203m. Specialist mobile ad networks have appeared in their dozens, including Google-owned AdMob, Millennial Media and Adphonic.
Innovative methods of on-line advertising are springing up, such as the Textlocal website, which off ers text alerts for busi-nesses. “About 70,000 businesses are signed up, ranging from Man-chester United and Google to small businesses,” said Murphy. “A small restaurant might take the mobile numbers of 500 regular customers, then text them all on quiet nights
off ering two-for-one on mains.” Businesses have also seen the po-
tential to target ads at smartphone users who are ‘second screening’. This is when people watch TV whilst using a smartphone at the same time.
The Zeebox app is designed spe-cifi cally for second screeners. It provides a stream of tags related to any TV programme. If someone is watching The Gadget Show and there’s a discussion about a new Nikon camera, one click on the smartphone screen takes them to reviews on Amazon’s website.
“Three years ago people interest-ed in the camera would have fi red up their PCs, then a year ago they would have used their smartphones to access websites, but now you go straight to the site,” said Murphy.
Mobile technology also allows mobile advertising. Advertisers can target users with adverts for special off ers at nearby shops. “If a bloke is walking through Manches-ter and checks the football scores on his phone, he could see an ad for a discount voucher at M&S, which is 300m from where’s he’s walk-ing,” said Murphy. “A mobile signal
indicates where a user is situated to within 15 metres.”
And car manufacturers can use mobile technology to promote products. A huge billboard for a new car might have an easy-to-re-member fi ve-digit mobile code at the bottom. “Text the number and you get sent a brochure or invited to a test drive,” said Murphy.
What’s to come? Murphy predicts that an app called Shazam will soon become a house-hold name. Currently, it is best known for its ability to identify songs in a pub. After listening to the music, it searches a vast database for a fi t.
But Shazam has wider potential. For example, if an advert is broadcast for an Adidas product, it’s possible to ‘Shazam’ it by holding the phone in front of the TV.
The smartphone holder might then receive a free gift, such as an Adidas app or a free ringtone. “It’s early days for this app, but Shazam will grow and grow,” said Murphy.
STRONG SIGNALS FOR M-COMMERCE
SEPTEMBER 2012 · 9AN INDEPENDENT SUPPLEMENT BY MEDIAPLANET
M-COMMERCE TAKING CENTRE STAGEAdvertising spend in the mobile market has soared since 2008 to keep up with trends towards M-commercePHOTO: SHUTTERSTOCK
■ There has been exponential growth in mobile traffic and sales over the past 18 months, but not all websites are in the best position to take advantage of the trend.
Total network traffic has risen from 2 per cent in January 2011 to around 9.5 per cent today. A signif-icant amount is on Apple devic-es, but even when that is stripped away, the fi gure is 6.9 per cent.
“There’s a huge opportunity for advertisers to capitalise on the increased number of visitors,” said Matt Swan, Client Strategist for global affi liate marketing net-work Affi liate Window. “But it’s not enough to have an optimised mobile site. Advertisers have to realise the importance of affi liate
tracking too. They need both.” Swan said an optimised mobile
site was the lynchpin of a suc-cessful strategy. It enhanced the experience of customers arriving through mobile sites and great-ly increased conversion rates to sales. It is especially vital in pick-ing up sales of traffi c from mobile handsets, which cannot navigate easily on unwieldy desktop sites.
But optimisation is not enough. Affi liate tracking is an equally important part of the equation. Without including net-work tracking on the mobile ver-sion of a site, affi liates will not earn commission for the sales they have generated through these devices.
“Advertisers who have devel-oped mobile-optimised sites could fail to take advantage of the huge opportunities that pre-sent themselves through the af-fi liate channel if they neglect the importance of adding affi liate tracking,” said Swan.
Advertisers need affi liates to stay on track
DAVID SMITH
Matt SwanClient Sßtrategist, Affi liate Window
KNOW HOW TO BENEFIT FROM M-COMMERCE
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10 · SEPTEMBER 2012 AN INDEPENDENT SUPPLEMENT BY MEDIAPLANET
■ Question: How has Royal Mail adapted to the explosion of e-Commerce?
■ Answer: The company is changing its infrastructure to cope with more parcel deliveries.
With the explosion in e-Com-merce, Royal Mail is playing an important role in the perception that consumers have of the total retail experience.
Late deliveries are usually blamed on the seller, rather than the deliverer, and can have a ma-jor bearing on whether a consum-er revisits a particular website.
As a result of public pressure to improve deliveries, Royal Mail has spent £2bn improving its in-frastructure. It has introduced trolleys for postal workers, fleets of vans and more automation at delivery offices.
“Half of our revenue in Europe comes from parcels rather than letters,” said Nick Landon, Manag-ing Director of Fulfi lment at Roy-al Mail. “We have become a par-cel company that delivers letters, rather than the other way around.”
Customers leading changeFor the most part, when online customers have pressed for chang-es, Royal Mail has obliged. When consumers wanted to be able to track parcels, Royal Mail in-troduced PDAs (handheld scan-ners) to scan at point of delivery.
Customers also place great empha-sis on the quality of a returns service.
“A lot of on-line purchases are clothes, or beauty products and they often get sent back. Most people won’t use retailers again if the re-turns service is a problem,” said Landon. “Most people re-turn unwanted goods to the nearest post offi ce.”
At Christmas, demands on Royal Mail are even greater. Last Christmas, £8bn was spent online in December alone and this year it will be an even higher sum. “Last year the highest sales were in the fi rst week in December but people are ordering later and later as they start to have faith that the parcels will arrive on time,” he said.
Royal Mail sorts out parcel predicament
DAVID SMITH
NEWS
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Demand Management Talent Management Sustainability Sales & Operations Planning Inventory Optimization Risk & Resiliency Demand Management Talent Management Sustainability Sales & Operations Planning Inventory Optim
■ How does the locker
system work?
!It can be used via integrated online retailers or directly
through mybybox.com. With in-tegrated retailers, you fi nd your nearest locker at checkout and let your parcel do the waiting for you. Once we get hold of a parcel, we deliver it overnight. The cus-tomer receives an email/SMS in-
forming them the item is in the locker with a collection code. He/she then goes to the locker to collect it.
■ Why is it important?
!It’s about convenience and being in control.
It’s the lowest cost, most convenient form of next-day delivery. There’s no waiting in, no ‘sorry we missed you’
cards, no queuing at the sort-ing offi ce or travelling for miles to the depot. It suits the con-sumers’ lifestyle.
QUESTION & ANSWER
Alexandra KordaHead of Consumer,ByBox
Nick LandonManaging Director of Fulfi lment, Royal Mail
![Lecture 1[1].Pdffuture and Challenge of Nuclear Energy](https://img.pdfslide.us/doc/110x75/577cc8241a28aba711a225b0/lecture-11pdffuture-and-challenge-of-nuclear-energy.jpg)
