Global Channel Marketing: Why E-commerce is a retail channel

Global Channel MarketingMulti-channel vs Omni-channel

Tom Fleerackers [email protected]

mailto:[email protected]

What are your expectations?

Jeff Bezos, CEO amazon.com - 1994

“You could build a store online that simply could not exist in any other way.”

http://amazon.com

1999 2007 2016201220112009

Amazon's Profitability Can Further Decline

In The Future Forbes, 12/2014

$317B market capitalization

Source: Yahoo Finance

January 2016

$317B market capitalization $319B market capitalization

Source: Yahoo Finance

January 2016

42,5%Share of online sales in the US - nov./dec. 2014

4,3% 3,1% 2,9% 2,7% 2,4% 2,2% 2,0% 1,9% 1,8%

1,0% 24,9%

€ 21,1bEurope TOP10 Internet Retailer - 2015 / Websales - 2014

€ 6,5b

€ 4,0b

€ 3,4b

€ 2,8b

€ 2,6b

€ 2,3b

€ 2,2b

High revenue doesn’t equal high

net income

+$595m

-$241m

+$1,1b

+$107b+$88,9b

+$34,2b

Evolution of net income

Evolution of net income

Evolution of net income +$88,9b +$473b

worldmap

11 global market places











109 fulfillment centers

Buying customers in

180 countries

More than 30 listing categories

Jeff Bezos carefully assessed the true advantages the internet would give him, and push them to their boundaries.


1 Limitless inventory

2 Customer care

3 High margin, low prices


2 Customer care

3 High margin, low prices low prices

customer experience large selection


Old school business model


2 Customer care

3 High margin, low prices low prices

customer experience large selection


Old school business model on steroids

1995Amazon starts with 1 product categorie, books.

1999Amazon has 3 product categories, books, music and films.


large selection over 130k collection with 280 subgenres



convenience most efficient search engine (NYT)




low prices up to 30% discount on some albums




low prices up to 30% discount on some albums

120 days to become the largest

online seller

each year Amazon introduces 2 new categories





2016Today, Amazon has 30 listed product categories

2016Primary product category Amazon seller study 2016

18%Hom

e & kit

chen

11%Toy

s & ga

mes9%

Books

8%

Health

8%

Beauty

7%

Electro

nics

7%

Clothing

6%

Sports &

outdo

or

1998“Commerce is the simple find it, buy it, ship it action.E-commerce is much more about online customer behavior”

“Be afraid of our customers, because those are the folks who have the money. Our competitors are never gonna send us money. ”

“Be afraid of our customers, because those are the folks who have the money. Our competitors are never gonna send us money. ”

“If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.”

Customer centric innovations

1995Customer centric innovations

Customer reviews

Selection proces


Recommendations & bundles

Selection proces


Look inside the book

Selection proces


Search inside the book

Selection proces


1-click ordering

Order proces

2001Customer centric innovationsReceiving proces

Where’s my stuff?

2002Customer centric innovationsReceiving proces

Free super saver shipping

Logistics are Amazon’s secret weapon

chooses the cheapest origin in real-time.

Amazon warehouses

Amazon warehouses

Third party sellers

fast moving are stored in all FChard to find in small quantities in 1 or 2 FC

easy movable are stored in highly automated FC

Drop shipping. If applicableAmazon asks supplier to ship


chooses the cheapest origin in real-time.

Amazon warehouses

Amazon warehouses

Third party sellers

fast moving are stored in all FChard to find in small quantities in 1 or 2 FC

easy movable are stored in highly automated FC

Drop shipping. If applicableAmazon asks supplier to ship

Interconnected supply chain


is a paid service ($99 per year, plus a free 30-day trial or $10.99 per month) that gives Amazon shoppers a few distinct advantages. Members of Amazon Prime are eligible for free one- or two-day shipping on most items, among several other perks.

2015Amazon opens brick & mortar



Amazon’s goal is to learn about how it can use data from its online e-commerce

operation to boost sales at a retail store.

Marketing Distribution Channels change over time chaped by the evolution of technology and distribution

Silent Generation

Silent GenerationBabyboomers



Gen X


Gen X


Gen XGen Y


Gen XGen Y

Gen X


Gen XGen Y

Gen X

1900s 1910s 1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s 2010s

E-commerce (electronic commerce or EC) is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet.

E-commerce by region

World$1.222b+17%40%

North America$419b+12%72%

Asia Pacific$388b+23%44%

Western Europe$291b+14%72%

World$1.222b+17%40%



North America$419b+12%72%

Asia Pacific$388b+23%44%

Western Europe$291b+14%72%

Eastern Europe$48,5b+21%41%

Latin America $46b+22%33%

Middle East & Africa$27b+31%31%

World$1.222b+17%40%

E-commerce - The big countries

World$1.222b+17%40%

#1China$562b

Shopping is fastest growing online activity

Average internet user is over 25y

World$1.222b+17%40%

#1China$562b

More purchases on desktop then mobile

72% of small & medium business aren’t selling online

#2 US$349b

World$1.222b+17%40%

#1China$562b

Online sales represent 30% of the economy

33% of all online sales happen after 6PM

#2 US$349b

#3 UK$93b

World$1.222b+17%40%

#1China$562b

Favorite online activity is reading e-mail

97% of internet users shop online

#2 US$349b

#3 UK$93b

#4Japan$79b

World$1.222b+17%40%

#1China$562b

Amazon & Otto represent 50% of all online sales

Highest open rates occur in the morning

#2 US$349b

#3 UK$93b

#4Japan$79b

#5 Germany$74b

World$1.222b+17%40%

#1China$562b

19% of online sales happen on non-french sites

Only 68% of the French use the internet

#2 US$349b

#3 UK$93b

#4Japan$79b

#5 Germany$74b

#6France$42b

World$1.222b+17%40%

#1China$562b

Most online shoppers shop between 10pm and 12pm

Fastest internet speed in the world

#2 US$349b

#3 UK$93b

#4Japan$79b

#5 Germany$74b

#6France$42b

#7 SouthKorea

$36b

World$1.222b+17%40%

#1China$562b

Nearly 70% of smart-phone users shop online

45% of online purchases happen on non Canadian sites

#2 US$349b

#3 UK$93b

#4Japan$79b

#5 Germany$74b

#6France$42b

#7 SouthKorea

$36b

#8Canada$29b

World$1.222b+17%40%

#1China$562b

Most common form of payment is COD

13% of Russians shop online

#2 US$349b

#3 UK$93b

#4Japan$79b

#5 Germany$74b

#6France$42b

#7 SouthKorea

$36b

#8Canada$29b #9 Russia

$20b

World$1.222b+17%40%

#1China$562b

Only 7% of purchases are made on a smart-phone

18% of all online sales are fashion (related)

#2 US$349b

#3 UK$93b

#4Japan$79b

#5 Germany$74b

#6France$42b

#7 SouthKorea

$36b

#8Canada$29b #9 Russia

$20b

#10Brazil$19b

18% of all online sales are fashion (related)E-commerce - The big sites


1 601m


1 601m

2 524m


1 601m

2 524m

3 268m


1 601m

2 524m

3 268m

4 104m


1 601m

2 524m

3 268m

4 106m

5 104m


1 601m

2 524m

3 268m

4 106m

5 104m 6 65m


1 601m

2 524m

3 268m

4 106m

5 104m 6 65m

7 65m


1 601m

2 524m

3 268m

4 106m

5 104m 6 65m

8 56m

7 65m


1 601m

2 524m

3 268m

4 106m

5 104m 6 65m

9 44m

8 56m

7 65m


1 601m

2 524m

3 268m

4 106m

5 104m 6 65m

7 65m

9 44m

8 53m

10 30m

€2386 average online spending

€11,6b online sales

8% growth Y/Y

80% bought abroad at least once

E-commerce - TOP 10 of Austrian online shops

342,6m

107,5m72,5m

64,1m

41,5m

40,0m

37,7m35,8m

34,8m

32,6m

28

70% of e-buyers reported to have no problem when purchasing online

28

28

28

E-commerce - Why are people buying online?

38% 35% 33% 31% 30% 29% 17%

Low Prices

Shopping Convenience

Easy to Compare

Free Shipping

Time Saving

Easy to Buy

Range of Products

E-commerce - What makes you more likely to buy online?

80%

66% 64%

48%42% 42% 41% 39% 37%

Free Shipping

1-day Shipping

Free Exchange

Easier Online

ReturnsPayment Security

Multiple Shipments

Same dayShipping

EasierIn-store Returns

VisualTry-on

Capabilities

E-commerce - What are barriers to buy online?

60%

See, Touch & Feel


60%53%

33%

25% 22% 20% 13% 13% 12%

See, Touch & Feel

Get Product

Immediatly

Certain AboutThe Fit

More Comfortable

More Easy

ReturnsQuicker Delivery

Support Local Retail

Enjoy Shopping

Experience

Get Lowest Price


60%53%

33%

25% 22% 20% 13% 13% 12%

See, Touch & Feel

Get Product

Immediatly

Certain AboutThe Fit

More Comfortable

More Easy

ReturnsQuicker Delivery

Support Local Retail

Enjoy Shopping

Experience

Get Lowest Price

c

c

cc

c

E-commerce - The end of brick & mortar?

E-commerce - The end of brick & mortar? NO




Gen XGen Y

Gen X

1900s 1910s 1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s 2010s

Many touchpoints, same great experience

E-commerce - A challenge for brick & mortar

Browse online

Buy in-store

Webrooming

Browse in-store

Buy online

showrooming

Browse online

Buy in-store

Browse in-store

Buy online

Webrooming

Webrooming

Browse online

Buy in-store

Browse in-store

Buy online

73%

Webrooming

showrooming

Browse online

Buy in-store

Browse in-store

Buy online

73%

Webrooming

88%

showrooming

73%showrooming

33% check for competitor pricing in store

31% check for product reviews in store

71% purchase form a different companywhen they return home

73%showrooming

33% check for competitor pricing in store

31% check for product reviews in store

71% purchase form a different companywhen they return home

Webrooming

88%

47% wants to avoid shipping costs

46% wants to touch & feel the product

Why are we showrooming? Lost of trust in the dealership or sales experience due to previous experiences

Why are we showrooming? Lost of trust in the dealership or sales experience due to previous experiences

Conversion rate is a ratio between number of website visitors who made a purchase and total number of website visitors. So if you had 100 in total and 2 of them made a purchase, the conversion rate is 2%.

So what is an average conversion rate in 2016? It is around 1.3-1.4%.

Average Conversion Rate was 1.12% for multi-channel retailers and 2.00% for pure-play online retailers according

Conversion rate differs per medium used! Desktop still has the highest conversion rate.

Conversion rate differs per medium used! Desktop still has the highest conversion rate.

How does load-time affect conversion rate

Customer journey in e-commerce

Customer journey in e-commerce5 key stages of the buying process and main drivers






User Experience FAILS which impact conversions


Absence of Product Page VideosThe average time spent by a user on a particular site is just 6 seconds. Your UX must therefore be designed to convince users they need to spend more time on the site. This is why using a video is absolutely crucial for your efforts


Insufficient Product Information42% shoppers’ abandon an online purchase because of limited product information


Product ImagesProduct pages offering tons of information about the product. A user can also click on the product image to view a larger version of the image; coupled with all other information on the page.


Product ImagesThe use of responsive web design is also becoming prevalent, which ensures a website renders effectively on all screen sizes.


Product ImagesThe use of responsive web design is also becoming prevalent, which ensures a website renders effectively on all screen sizes.


Poor customer service pagesThis is another huge mistake made by e-commerce merchants. The customer service area of their site is either non-existent; even if it is there; it gives out a feeling that the merchant couldn’t be bothered about customer service.

User Experiences which have a positive impact conversions

Mobile responsivenessPeople want to shop while they are on the go, it’s been proven time and time again, if your website is not compatible for mobile, you will have a hard time pleasing your customers. This is an investment that you absolutely must make when starting an ecommerce website.


SecurityAs people shop online, they will want to know that their personal information is secure. The data that is collected through your website should definitely not be disclosed to any unauthorized personnel, and you should take measures to demonstrate to visitors you’re your website is secure and legit.


SimplicityNo one wants to read a manual to be able to use your website. The design should be simple and very straightforward. The login and sign up options should be very evident, and when someone presses buy they shouldn’t have to jump through hoops to get down the funnel.


Product information and images The design of your website should accommodate lots of product pictures and descriptive information. No one wants to buy something that they cannot see or they have no information about. The goal is to make sure that the customers are better informed when they are doing their shopping.


Search Make sure that your have a convenient search tool. The first time visitor is likely looking for one particular thing. They do not want to spend the whole day sifting through items that they do not need.


Colours No one wants to have their senses assaulted by a cocktail of strange colors. One very common mistake many people make with ecommerce websites is setting white text on a black background. Make it easy to see text and images, and find colors that complement each other.


Recommendations When you provide your customers with links to recommended products they might like, then you are going to make shopping easier on your site and promote additional sales. At least six links will make for an easier shopping experience that encourages extra additions to their cart.

Let’s go to workSouth Africa

Malaysia

Australia

Argentina

South Korea

MexicoPeru

Let’s go to work

Which online competitors are available to your consumersin your targeted country?

Pick 2 - one marketplace & one direct competitor Make an analysis of their e-commerce website.

Education

Global Channel Marketing: Why E-commerce is a retail channel