What CEOs Need to Know About E-Commerce 081914

What CEOs Need to Know About E-Commerce Ray Alimurung | DCOM Summit | Aug 2014

Singapore | Thailand | Indonesia | Philippines


Agenda

Defini5on & Business Models

Market & A=tudes

Building an E-‐commerce Business

Trends

2

Definition & Business Models


Definition 4

E-‐commerce. Type of business model wherein a firm or individual trades products or services over the Internet [Addendum for emerging markets] … regardless of whether the commercial transac5on is completed online or offline


5

Rationale

To harness the power of the Internet to drive reach and the number of simultaneous transac5ons

426 Amazon transacBons per second on Cyber Monday 2013

37m Amazon items sold on Cyber Monday 2013

$5.8b Alibaba sales volume on Singles’ Day 2013


Business Models: Product Offerings

Digital Goods Digital Services Physical Services Physical Goods

B2C

B2B

C2C

6


Business Models: Revenue Streams

AdverBsing Commission SubscripBon Retail (Goods & Services)

B2C

B2B

C2C

7


Marketplace / Classifieds

Marketplace + Merchant Services

Single brand / MulB-‐brand

Retail

MulB-‐brand Private / Flash Sales

Merchant Services

C2C

B2C

B2B

Business Models: Traditional E-Commerce 8

Market & Attitudes


Attitudes Towards E-commerce 10

Why don’t you shop online (more oYen)?

Security

Payment op5ons

Payment convenience

Want to handle/view product

Speed

Source: Surveys within several top PH corpora=ons; TNS Online Shopper Study: Philippines, Feb 2013

Why didn’t you do your last non-‐necessity purchase online?

Selec5on/Availability

Payment convenience

Pricing

Want to handle/view product

Security

40% of online Filipinos who have never shopped online expect to buy online in the next 12 months


11

S.E. Asia E-commerce Market (2013E) Unit ID SG PH VN TH MY China US

PopulaBon M 248 5.2 95 88 67.5 28.9 1,350 315

# Online M 75 3.9 33 31 32 18 513 246

% Online % 30% 74% 34% 35% 46% 63% 38% 79%

# Social Media Users # 66 3.6 38 24 27 17 NA 168

# E-‐commerce Shoppers # 5.6 1.8 5.8 13.2 14.5 10.5 164 184

E-‐commerce Shoppers % 2.3% 34% 6% 15% 21% 36% 12% 58%

Retail Sales USD B 134 31 34 108 139 51 2,380 4,700

B2C E-‐commerce Market USD B 0.9 1.1 0.4 0.5 1.1 0.7 190 343

E-‐commerce % of Retail % 0.7% 3.5% 1.1% 0.5% 0.6% 1.4% 8% 9%

Annual Customer Spend USD 252 917 172 42 365 68 726 1,864

Source: UBS Research, Nielsen, Comscore, PWC HK, ATKearny, researchandmarkets.com, Dailysocial, smu.edu.sg, E-‐commerce.org.sg


US retail growth is driven mostly by e-commerce

Source: US Census, Internet Retailer, BI Intelligence es=mates

12


Amazon 15%

Rest of North America 85%

Amazon Market Share of North America E-‐commerce (2013)

13

Amazon is only 15% of North America e-commerce

Source: BI Intelligence es=mates

Building an E-commerce Business


15

E-commerce Activities

Customer Service

CopywriBng & Content

Web & Mobile Design IT Development

ProducBon & Photography

Sourcing & Merchandising Payment Processing

Business Intelligence

MarkeBng


16

Customer Ordering

Storage Packing

Order Processing

Picking

Cash on Delivery Delivering Dispatching

Inbounding

E-commerce Activities (2)


17

E-commerce Challenges for Brands & Retailers

Lack of in-‐house talent – Current organiza5on may not understand e-‐commerce complexity and may lack a leader for its strategy and execu5on

Fulfillment is not set up for single orders (B2C) – Set up to fulfill B2B bulk orders on pallets, not individual customer orders; need separate processes and systems to manage B2C handling, storage, delivery, returns.

Customer service must respond to high demands – Need phone and email team that can handle high volume and personalized service such as product ques5ons, website how-‐to’s, order status, and aYer sales

Channel conflict – Mul5 channel is not omni channel. Need a unified view on assortment, pricing, returns

E-‐commerce plaiorm implementaBon – Current technology does not support online; need new implementa5ons for order management, warehouse systems, customer service, CRM, etc.


Functional Organization

CEO

Buying & Sourcing

Store Opera5ons

Warehouse Opera5ons Marke5ng

Offline Marke5ng Digital

Online Marke5ng

E-‐Commerce Head

Online Customer Service

IT Finance Customer Service

18


Functional Organization (2)

E-‐Commerce Head

Buying & Sourcing Marke5ng IT Opera5ons Business

Intelligence Finance Product Management

19


Functional Organization (3) E-‐Commerce

Head

Buying

& Sourcing

Buying /Merchandising

Buying

Opera5ons

Inventory

Planning

Inventory Management

Pricing

Marke5ng

Online Marke5ng

SEM / Display Ads

SEO

Social Media

Email

Affiliates

Crea5ves

Design

Copywri5ng

Branding

Offline Marke5ng

Category Management

IT

Development

Network

Systems

Database

Helpdesk

20


Functional Organization (4) E-‐Commerce

Head

Opera5ons

Warehouse Opera5ons

Order Processing

Inbound

Inventory

Outbound

Logis5cs

Returns

Content & Produc5on

Content Management

Copywri5ng

Photography

& Edi5ng

Customer Service

Inbound Phone

Outbound

Phone

Email

QA / Training

Business Intelligence

Repor5ng

Marke5ng Analy5cs

CRM

Analy5cs

Finance

Payments / Fraud

Refunds

Product Management

21


22

Benefits of Outsourcing E-commerce

Go-‐to-‐market faster

Limit need to recruit and build in-‐house team

Access industry best prac5ces

Research, test, and learn before over-‐inves5ng

Lower costs due to economies of scale


23

Selecting Outsourcing Partners

One-‐stop Shop

Web Design, Devt, Maintenance

Delivery

Order & Inventory IT Systems

Copywri5ng & Produc5on

Online Marke5ng

Payment Gateway

Warehouse Storage & Fulfillment

Customer Service

Trends


25

Trends

•  Mobile is 25% of global e-‐commerce traffic… and growing

•  Marketplaces dominate Asian e-‐commerce §  Alibaba drives $157b in GMV à 43% of B2B; 50% of B2C; 95% of C2C

•  Cash on Delivery (COD) accounts for at least 50% of PH tradi5onal e-‐commerce, while escrow is preferred in China §  Alipay is used for e-‐commerce, remilance, bills payment, bus 5ckets

Source: “The Future of Retail: 2014”, BI Intelligence

Key Takeaways


27

Key Takeaways

•  The opportunity is huge and the market is ready

•  E-‐commerce is complicated; be open to outsourcing

•  Structure your opera5ons and organiza5on accordingly

•  Now is the 5me to research, test, and learn

There is so much stuff yet to be invented.

There’s so much new that’s going to happen.

People don’t have any idea how impacnul the Internet is going to be and that this is s5ll Day 1 in such a big way.

Jeff Bezos, Founder & CEO, Amazon.com

Thank You [email protected]


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What CEOs Need to Know About E-Commerce 081914