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Ecom 2014

  1. 1. (c) Umbrella 2014 All rights reserved
  2. 2. (c) Umbrella 2014 All rights reserved Global e-commerce sales will exceed 1.5 Trillion USD this year, global growth rate is over 20%, driven by mobile Disparity of data usage compliance legislation will slow the global growth China leads the growth with 24% while Europe (10%) and the US (2%) lag There will be a shift from marketplaces (Amazon, Ebay) to curated, brand driven platforms (Zalando, Yoox, Fab) PREDICTIONS FOR THE NEXT 12 MONTHS
  3. 3. (c) Umbrella 2014 All rights reserved An interesting recap on last 6 months in commerce – we serve interesting and groundbreaking concepts, technologies and companies with a focus on the global marketplace, not Finland. We dig out themes, companies and concepts worth having an eye on as the business evolves. This report is meant to inspire, share insights and serve as a discussion basis in your organisation. PERSPECTIVES PROMISE
  4. 4. (c) Umbrella 2014 All rights reserved • We survey the market continuously to be able to help companies navigate the fast changing global marketplace. • We don’t go too deep in our analysis, but do point in directions worth studying further. • As a frame we use our four-field analysis method – strategy, monetization, customer and product, people, processes and technology. (TM Umbrella) STARTING POINT (disclamer)
  5. 5. (c) Umbrella 2014 All rights reserved What we look for is fresh and groundbreaking ideas as well as changes and innovative ideas implemented by existing players. This report is meant as a tool to keep updated and inspired by the developments. HOW YOU CAN USE IT?
  6. 6. (c) Umbrella 2014 All rights reserved BASIC: • Where do established players head? • Who has launched disruptive concepts during the last season and what is their strategy? • How do they change the marketplace? SPECIFIC: • Expansion into new markets/areas/categories? • Monetization of new commerce concepts? • What groundbreaking technology is being developed to support commerce players? • How does customer purchasing power develop? KEY QUESTIONS FOR COMMERCE
  8. 8. (c) Umbrella 2014 All rights reserved THE NEW RETAIL VALUE CHAIN Precommerce Planning Manufacturing Premarketing LogisticsServicing OmnichannelRemarketing
  9. 9. (c) Umbrella 2014 All rights reserved WHAT DRIVES RETAIL NEXT? We are able to pinpoint a selection of key trends which drive the evolution of retail in the last 12 months. How these trends are emphasised in the retail strategy vary according to the different needs of the actor but all in all they form an extremely solid base for being successful far into the future.
  10. 10. (c) Umbrella 2014 All rights reserved Consumers want to participate more and more into how their products or services are created and so tapping to this movement is essential. What begun as a niche culture based on gaming and content has exploded to cover all the areas of production and service creation. Both large companies and small startups utilise this phenomenon to both gauge and reach the audience better. PRE-TAIL/PRECOMMERCE (c) Umbrella 2014 All rights reserved
  11. 11. (c) Umbrella 2014 All rights reserved SHARING ECONOMY WALLET Estimated size of the sharing economy sector 2013: 110BN MEANWHILE: SHARING ECONOMY IS BOOMING GROUP FUNDING TOOL Total size of the crowdfunding market 2013: 5.1BN Global growth of the crowdfunding market: 81% (2012-2013)
  12. 12. (c) Umbrella 2014 All rights reserved Unlike Kickstarter, Crowdsupply handles the total value chain from inception to funding, to matching manufacturers and after the product becomes reality it becomes a storefront. The average size of funding is 43K USD, making it double of what Kickstarter provides. COVERING THE WHOLE VALUE CHAIN CROWDFUNDING DISTILLED IDEA FUND DESIGN BUILD LOGISTICS SELL Market size in 2013: 5.1 BN Average size of commission: 6% The 2013 World Bank study prediction of CF market size in 2025: 93 BN Largest platforms:
  13. 13. (c) Umbrella 2014 All rights reserved Collaborative and crowd driven commerce platforms such as Etsy and Kickstarter will continue to influence the way etailers conduct business. KEY BENEFITS: • Instant trust • Perfect market fit • Increased engagement • Collaborative assets PRE-TAIL Crowdsupply is one of the leading pre-tail platforms focusing on product development. 
  14. 14. The audience wants variety but needs and desires selections and recommendations from someone they trust. Curated and personalised product feeds combined with inspiring content and fast changing offerings are key to induce flash sales and also - retention. Constantly updating and inspiring the customer are replacing the old catalogue format etail concepts rapidly. CURATION  (c) Umbrella 2014 All rights reserved
  15. 15. (c) Umbrella 2014 All rights reserved Refinery29 is the world’s fastest growing lifestyle media for women. It combines several curated content channels and combines these with direct pathways to sales. It does not act as a etailer, instead it aggregates the products which are given exposure in the content by linking to third party storefronts. R29 growth: 340% in first half of 2014 Extra capital from the VC market in late 2013: €20M Revenue in 2013: €16.6M KEY BENEFITS: • Flash sales and always changing offering • Authorship • Experiential storefront
  16. 16. (c) Umbrella 2014 All rights reserved CURATED  EXPERIENCES Rapidly renewing brand selections, flash sales, micro targeted catalogues will begin to surpass the marketplace concept. KEY BENEFITS: • Time critical buyer experience • Shift from catalogue format • Feels personal and inspires R29 is one of the leading content and curation based e-commerce hybrids.
  17. 17. Since the consumer is 70% more likely to make an etail purchase decision based on peer opinion, the power of the crowd is essential to harvest into use. Social networks are amalgamating with storefronts and both fields are swapping concepts and interaction mechanics. SOCIAL COMMERCE (c) Umbrella 2014 All rights reserved
  18. 18. (c) Umbrella 2014 All rights reserved COMPONENTS: • Recommendations • Product reviews • Social marketplaces KEY BENEFITS: • P2P interactions • Trust (if transparent) • Virality SOCIAL SALES ARE BOOMING US social driven sales growth 2012-2013: +357% CAR increase in etailers with social dynamics: x2.5 Revenue uplift with socially powered etailers: 17.3%
  19. 19. (c) Umbrella 2014 All rights reserved Motilo was founded in 2011 to broadcast the opinions of women on what to wear and combining them with direct sales.- in other words… crowd powers sales. It is based on a strong international community who inspire each other and create accessible but highly fashionable looks. The content is both community and Motilo driven and is always fresh, inspiring and community approved - if not, adjustments are made in real time. In the beginning of the year Motilo grabbed 2.5M of VC money to accelerate expansion and marketing Motilo has 65 fashion brand companions at the moment, aim is to double that by Q1 2015 RECENT NEWS Monthly growth rate is +30% and holds steady Motilo launched a P2P commerce feature and wants to start competing with the likes of Etsy, Pinterest and Instagram KEY FINDINGS Motilo combines real time, user created content and advice with commerce.
  20. 20. Most current data driven etailers focus on measuring customer interactions and purchase dynamics after the fact. However, this will be revolutionised with analytics which combine predictivity and social data and are able to tell when the customer needs something, is he/she inclined to upgrade - basically how to pre-empt the needs and how to target with never seen before accuracy. SMART, PREDICTIVE ANALYTICS (c) Umbrella 2014 All rights reserved
  21. 21. (c) Umbrella 2014 All rights reserved SMART DATA Intelligent and predictive analytics vastly improve traction and reduce losses. KEY BENEFITS: • Hypertargeting • Pre purchase engagement • Minimises returns Neiman Marcus utilises a predictive search on their store which learns and recommends great fits.
  22. 22. Neiman Marcus has one of the most refined data models among etailers. They also combine the online data with in store gathered insights. Their search for instance constantly predicts what the user might want and is customised with each usage session. What whole data model is designed to be elastic and they use a combination of machine intelligence and classic analysts to profile the customer user journeys. NEXT GEN ANALYTICS THE NEW GOLDMINE Sentiment analysis added value in Twitter positives with 007 Skyfall : x9 % of companies who utilise smart analytics with added revenues: %69 Projected growth of etailers which utilise smart analytics: 40% SAP, Mashable, Deadline (c) Umbrella 2014 All rights reserved
  23. 23. Mobile is essential in successful etail - but it also can be said that the remaining power of the desktop and the emerging new browsing methods have been overshadowed by the mobile silo. Creating seamless, contextual omnichannel experiences is the key to better reach, user experience and monetisation. ”NEVER MOBILE FIRST” (c) Umbrella 2014 All rights reserved
  24. 24. (c) Umbrella 2014 All rights reserved DEVICE  AGNOSTICISM The etailer must be fluidly relevant across devices and platforms - each providing a contextually aware experience. KEY BENEFITS: • Not dependent on a platform • Holistic user experience • Better monetisation Topshop has created a fluid and elastic user experience across platforms and devices.
  25. 25. (c) Umbrella 2014 All rights reserved DEVICE AGNOSTICISM TopShop has been extremely successful in creating a digital ecosystem that provides experiences, content, interaction, mix and match capabilities and of course in the end - sales It also integrates the in store experience to the digital ecosystem and was chosen in 2013 as the best online retailer in the UK. SALES BREAKDOWN Mobile and tablet sales of total ecommerce: 28% Mobile and tablet visits of total visits: 38% Yearly growth of online sales: 36% Yearly growth of brick and mortar sales: -4.6%
  26. 26. (c) Umbrella 2014 All rights reserved While the app stores still offer a crucial marketplace and distribution point the trend is going towards creating either hybrid HTML5/app toolsets or to pure HTML5 services. The development time, costs and the monetisation issues arising from creating native apps are significantly higher than when creating HTML5 ones. Also, the app bloat is becoming an issue with smartphone users and sharing, social features which integrate to the users networks and data ownership are problems with native apps that will not go away. THE BROWSER RETURNS Market share of HTML5 in etailing in 2014: %26 Yearly growth of HTML5 in etailing : +79% Time spent in designing HTML5 apps compared to native: 39% SAP, Mashable, Deadline
  27. 27. The audience must be kept coming in between purchase intervals, content is a great way to achieve this. However, without a well strategised and unique content concept this is extremely hard. Media and content departments are replacing marketing departments and the role of an editor is replacing the mechanical marketing distribution role. CONTENT WARS (c) Umbrella 2014 All rights reserved
  28. 28. (c) Umbrella 2014 All rights reserved CONTENT CREATION Creating relevant content and integrating experiential strategies to product lines is essential in gaining impact. KEY BENEFITS: • Virality • Soft sales • Pull instead of push Reebok Bacon is one of the most viral big brand content/product integration concepts of 2014.
  29. 29. (c) Umbrella 2014 All rights reserved The aim of the product is extremely niche, the paleo diet following crossfit practitioners - but the reach of the concept has been hugely more widespread. Reebok succeeded in creating content which ties to it’s core products and their use and in addition the Reebok Bacon concept is tied to a hugely popular Internet meme culture - the reverence towards bacon. Not all big things online are about cats. “I DON’T LIKE BACON - SAID NO ONE” THE CM REALM IS STILL GROWING Estimated growth of CM budgets in Forbes 500 companies 2015: %51 Amount of added visits of sites using CM strategy : +55% Amount of increased sales in etailers using CM: 33% CMI, Brightcove, Mashable
  30. 30. The first wave of etailers concentrated on creating own storefronts and marketing them to a as wide of an audience as possible. However, while the marketplaces are dropping in relevance - there are multiple working and emerging touch points for sales where the audience already exists. Etailers are also integrating the physical point of sales more and more into their overall experience. It is an essential part of the experiential mix to the audience. SELL EVERYWHERE (c) Umbrella 2014 All rights reserved
  31. 31. (c) Umbrella 2014 All rights reserved MULTI PLATFORM Integrating both own and third party digital and physical points of sale is crucial. KEY BENEFITS: • Exponential reach • Partnerships • Access to data and processes Alibaba’s Tmall and Taobao allowed the customers to scan products on their smartphones in over 30.000 locations on 2013 Singles Day resulting in 4.7Bn sales.
  32. 32. (c) Umbrella 2014 All rights reserved Alibaba has invested heavily in both single day logistics and into having a widespread presence in the brick and mortar retail world. They have created a “reverse showrooming” concept in where the initial inspiration, selection and ordering of the products are done online resulting in the pickup, tryout, returning and upselling happening in retail locations FROM CLICKS TO BRICKS THE CM REALM IS STILL GROWING Percentage of online sales via Amazon in the US: %26 Percentage of online sales via Alibaba in China : +80% Facebook is the worlds biggest referrer of traffic to etail: 64% of total referrals Shopify, Paymill, Alibaba
  33. 33. Engaging the audience with content is one of the main focus areas in modern e-commerce. The customers are provided with a reason to interact with the brand between purchase impulses and the brand essence is communicated with something people want to identify with. The best content focused etailers are able to elevate their own presences to true destinations which allow for interactions between both the brand and the consumer and the consumer to consumer areas. (c) Umbrella 2014 All rights reserved CONTENT WARS
  34. 34. IWC leads the luxury watch segment with 39% of all engagement on Facebook compared to Rolex at second place with 17% Their social content engagement has grown with 90% on both 2013 and 2014 Q1/Q2 97% of all interactions have been registered as positive in Q1/Q2 2014, making moderation easy Creating relevant content and integrating experiential strategies to product lines is essential in gaining impact. KEY BENEFITS: • Virality • Soft sales • Pull instead of push (c) Umbrella 2014 All rights reserved
  35. 35. Their new e-commerce platform integrates custom content with community created and content curated from social media. IWC ENGAGES AND CURATES IWC created unique content: Hundreds of articles and videos IWC collectors forum: Over 55K posts, hundreds of thousands of replies IWC on Facebook: 1M likes and millions of interactions IWC social stream: Tens of curated articles aggregated daily IWC Globetrotter style icon content: Tens of icons and content from tens of cities The company runs the website and eight different social media channels with a small team, consisting of 8 people (not including Chinese localisation team). They also run several simultaneous activities on various watch blogs and forums - this is made possible by using the latest social publishing tools such as Falcon, Tweetdeck etc. CONTENT TEAM IS COMPACT (c) Umbrella 2014 All rights reserved
  36. 36. (c) Umbrella 2014 All rights reserved