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2014 Key trends

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7 ecommerce trends in 2014
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2014 Key trends

  1. 1. Sean Cho shdcho@gmail.com
  2. 2. Key Trends 2014 This presentation demonstrates key trends 2014. Report contains understanding of con sumer, marketing, technology trends, and Recommendations. I. Marketing Trend II. IT Trend III. Recommendation
  3. 3. 1. Top 10 hot consumer trends City life will be transformed by 2016 Users prefer fingerprints To passwords 40% want to log their physical activities Quality of experience when using internet is falling behind that of voice The smartphone is the primary internet device The rise of streaming services allows people to view content on the movie 60% believe sensors will be commonplace by 2016 48% use apps. to check their data consumption 38% watch video clips recommended by their friends several times a week People minimize risk by being more cautious online Source : Ericsson Consumer lab
  4. 4. 2. 7 Marketing trends 2014 Trends Description The second Screen 88 % of consumers use their mobile phones while watching television*, and savvy marketers are already designing campaigns with this 2nd screen in mind. All hail the images Between Facebook’s redesigned News Feed ads and the emergence of Instagram and Pinterest ads, it’s clear that highly visual content is driving the future of digital advertising Video is the new King The # of online video watchers is expected to double to 1.5B by 2016, yet just 24 % of national brands are using video to market to consumers. The rise of the feed Social media now accounts for the majority of time spent on the internet, with 60 percent of that time being spent on mobile devices. The primary format for engaging on these social networks? The news feed. Small data is the new big data Small data is timely, meaningful, & actionable without a lot of in-depth analysis. It’s comprised of all the bits of information that consumers send out both on/off line, such as search traffic, shopping habits, and social media interactions Go Hyper-local or go home Small businesses have relied on hyper local for years to pull in traffic and consumer dollars. But with Facebook and Twitter both stepping into the game, larger companies are starting to pay attention, too. Mobile still matters The number of mobile broadband connections worldwide is expected to hit 2.1 billion in 2013, nearly three times the total of fixed-line Subscriptions
  5. 5. 3. Digital marketing trends US digital marketing spending is $50B, 28% of marketing spending. Digital marketing trends to watch in 2014…. Trends Trends Content is a king - Regular, interesting and personalized Content targeting! Video consumption will still grow thus create many for your brands. Rise of video based landing pages! Search marketing is still #1 tool to invest in (Google+ will help to get better ranking) Real-time marketing in action Social marketers must act & react according to current situations “Mobile optimized” is a must. “Designed for mobile” is trend Hashtags will become a leading search tool. Email is not dead! Email with social sharing will rock! Rise of responsive Email design Increase in geo-targeting and location based services. Push : opt-in, Pull : users interact with mobile Pictures, pictures, pictures – use everywhere! Choose different format depending on the platform. Bot traffic Bot traffic reaches 62% of all internet traffic & advertisers waste $9.5B (‘13) – 34% of online & 38% of mobile ad inventories are fraudulent (IAB1) 1. Form of metadata tag for msg., social text etc, 2. interactive advertising bureau
  6. 6. 4. 7 eCommerce trends 2014 Trends Recommendations 1 True, real-time personalization for everyone Adapting marketing campaigns, site language 2 Mobile payment gets easier ($235 → $325 38%↑,‘14) Mobile payment friendly, integrating with 3rd party apps like PayPal 3 Multi-device redefines point of sales → 32% of e-Commerce traffic by tablet in US Apply for responsive design & optimize mobile site for browsing 4 Multi-channel selling (39% of AMZ sales, merchant) → BBY & Tesco use eBay Alternative places to additionally sell your products (eBay & Amazon) 5 Data + Analytics (Walmart, Target, Amazon) → Core biz. practice & investment Customer data analytics can improve up-sell, cross-sell & retain customers 6 Shopping gets social (Tumblr, Facebook) → Content marketing is to attract & retain customers by creating & curating valuable content Use analytics to understand the ROI on social activity & the channels with highest conversion 7 Delivery 2.0 (20M Prime users spent 53% more) → Next day delivery, Amazon Prime, eBay shutl Evaluate the importance of delivery Consider outsourcing fulfilment
  7. 7. 5. US eCommerce market US eCommerce sales $265B in 2013, computer & CE is the largest category in sales ($57.4B), mobile commerce becomes 16% of retail eCommerce sales US e-Commerce Market Growth US e-Commerce forecast by category US e-Commerce sales growth (‘12 ~ ’18, CAGR) : 13.9% source: exclude travel & event tickets, eMarketer, April 2014 US retail e-Commerce sales, 2012 ~ 2018, $ billions
  8. 8. 6.US eCommerce key players (1/2) The top 10 merchants accounted for 50% of all top 500 sales. $133B out of $263B(30%↑: Walmart, Macy’s, 20%↑: Apple, Amazon Growth rate in 2013 US e-commerce sales How much the Top 500 grew in 2013 ? $216.2 B → $ 263 B Amazon’s 2013 growth rate (27.1% → 30.4%) Source : The internet Retailer 2013 top 500 guide 13.4% 21.6% 30.4% Top 10 online retailer ($ Billion) Amazon ($56.4 → $67.9) Apple [3 → 2↑] ($14.7 → $18.3) Staples [3 → 2↓] ($10.3 → $10.4) Wal-Mart ($7.7 → $10) Sears [6 → 5↑] ($4.2 → S4.9) Liberty Interactive [5 → 6↓] ($4.3 → $4.8) Netflix [10 → 7↑] ($3.6 → $4.4) Macy’s inc [14 → 8↑] ($3.2 → $4.2) Office Depot [7 → 9↓] ($4.1) Dell [8 → 10↓] ($3.9 → $3.5)
  9. 9. 6.US eCommerce key players (2/2) Retailers invest eCommerce & hire marketing/IT staffs. leaders move to mobile commerce & leveraging Omni-channel Case Description Revenue ▪ Amazon leading US e-Commerce - Digital e-Commerce innovator (Digital = Cash Flow = Low price) - Data Driven Automation, Dominates Digital goods market $67.9 B (‘13) 1st online ▪ Commerce guided by human accommodation - 800 M iTune accounts (3X amazon, 7X eBay accounts) - Integrate 2 ecommerce sites (iTunes,apple.com) and apple store $14.7 B (‘12) → $18.3B (‘13) 2nd online ▪ Digital innovation & Transformation : Walmart.com (1,600) - Build own shopping search engine “Polaris” - Build warehouse for web order, acquires 12 digital tech ventures $7.7B (‘12) → $10B (’13) 4th online ▪ 50% of total revenue generated by online - e-Commerce expert (Faisal Masud EVP), focus on ecommerce $10.4B (‘13) ▪ Macy’s (8th online) hires IT staff and invest for ecommerce - average 30% online growth past 3 years (14th → 8th) - Omni-channel success (aligning inventory offline with online) $3.2B (’12) → $4.2B (‘13) ▪ Expand sales product from PC/CE to athletic product - Own fulfillment (2013), Partnership with Puma for china - Open B2B marketplace (2014) $2.7B (‘13)
  10. 10. 7. Amazon vs. BBY history Amazon Sales surge while Best buy stalls & declines Annual* revenue, billions of dollars. BBY reaches 250 stores BestBuy.com launches BestBuy acquires Geek Squad. BestBuy opens first china store iPhone launch Circuit City closes Kindle Launches Amazon Prime Launches Amazon Web service launches 1-click shopping Fire phone Launches Buy KIVA Systems2) Kindle fire launches Price Check apps. Launches 4G LTE starts in US US Smartphone market saturates in 20151) ∙ Innovator 1st 2.5% (‘07), ∙ Early adopter 13.5% (‘10), ∙ Early majority 34% (‘12), ∙ Late majority 34% (‘15) App store Launches Instant video Launches Sell books Sell music & movie Sell HA & digital goods Sell other goods3) Sell office products & starts free shipping MP3 Launches *BBY’s 2013 revenue really represents the 12 months ending March, 2014, 1) Business Insider, Aug. ’13, 2) KIVA : Warehouse Robotics Company, 3) CE products, toys, games, SW etc.
  11. 11. 8.Amazon “show rooming” risk Male show roomers retail index : Computer & CE relevant retailers Female show roomer retail index : Home goods & clothing Amazon Show rooming – Retailer Risk Index showroom visitor index, index of 100 = average representation
  12. 12. 1. IT trend outlook 2014 Source Trend 1 Trend 2 Trend 3 Trend 4 Trend 5 Trend 6 Gartner Mobile Devices battle Mobile Apps. & application The Internet of Things (IOT) Hybrid Cloud & Personal cloud S/W defined Anything Smart Machines IDC Mobile platform /OS battle Smartphone/ Tablet vs. others Social networking/Biz. IOT (Internet of Things) Big Data Cloud Service Deloitte Cognitive Analytics Digital Engagement Social activation/ Crowd source Cloud orchestration In-memory revolution Real-time DevOps. Accenture Digital-physical blur Data supply chain Architecture Resilience Business of Application (S/W) Harnessing Hyper scale Crowd source IBM Big Data Mobility Cloud Computing Social Networks Security PWC Business Analytics Socially enabled biz. processes Mobile customer engagement Cybersecurity On-demand biz. & technology service Sensors/3D print/wearable Insights 1. Mobile computing & Service, 2. Cloud computing & on-demand service, 3. Social Network for biz. Adoption, 4. Data analytics & Big data, 5. IOT (Internet of Things), 6. Security
  13. 13. 2. IT shifts from back office to front office Moving back office to the front office lines. CIOs are focusing on technologies that support closer customer engagement. CIOs focus on customer side topics New turf: CIOs spend more time on customer-related activities Frontal assault: CIOs adopt technologies for connecting with customers CIOs, three specific issues (top of mind), are.... • Engage with digitally enfranchised customers • Excel at the basics • Boost internal and external collaboration Insight story: CIOs are shifting their focus to tools that turn data into intelligence Source : IBM CIO survey
  14. 14. 3. Case study : Walmart (1/3) Walmart invested heavily in back end systems, now focus on front end digital marketing to understand consumers Back End (~ 2010) Front End (2010 ~ ) Invested in Data driven IT & communication - Track sales and merchandise inventories in stores - Owned the largest & most sophisticated computer systems in the private sector (incl. MPP1) - All information related to sales &inventories was passed on through an satellite comm. System Key Back End Systems Retail Link System ($4 B) - Monitor the sales of goods at stores & replenish inventories of 10,000 suppliers - Details of daily transactions (10 m↑/day) were processed via this system CPFR2, TPS3 (Transaction Process System) DSS4, Satellite System, EDI5, UPC6 code, RFID7 Hub(distribution center) & Spoke(store) system Moves from Big Box retailer to e-Commerce Innovator (CEO drive) ▪ Handles consumer data - 1 million customer transaction data/hr. - 245M customers walk in store/week ▪ Walmart.com grows CAGR 30% since 2011 - 4th US online commerce in 2013 - Expecting $13B of e-Commerce in 2014 ▪ Walmart uses big data analytics - Walmart labs use social media analytic platform → taxonomy : products, people, locations, events, and interests - Halloween and black-Fridays ▪ Acquires 12 digital/analytic firms since 2011 - mobile, social, big data, e-commerce etc 1.Massive Parallel Processor, 2. Collaborative planning, forecasting & replenishment, 3. Transaction process systems, 4. Decision support system, 5. Electronic Data Exchange, 6. Universal Product Code, 7. Radio Frequency Identification
  15. 15. 3. Case study : Apple (2/3) Apple has achieved biz. Success through the use of IT & invested not only core tech., but also front end system for consumer service Product Core technology Customer-centric Front End service Invested in key technology for product differentiation1 (39 out of 61 in M & A) - Platform : iOS, iTunes, iCloud, iWork, iAd, iBook - Application : music, picture, video, voice, map, data, internet, search engine etc. - H/W : Chipset, micro LED display, Flash memory, firewiire chipset IT aligned business strategy ▪ iPod : iTunes music service platform ▪ iPad : App Store launched to support device ▪ All devices : iOS is standard OS platform ▪ iCloud : support All apple product support and web service (incl. email/file share/storage) Build up consumer service infrastructure ▪ Evolution of consumer service in apple - iTools (2000) : Internet S/W service for apple - .MAC (2002) : email, disk storage service - MobileMe (2008) : expand service to mobile - iCloud (2011) : $1B to build consumer service cloud data center ▪ Expand data center for future service (4 → 72) - Plan 3 more DCs in NC, Reno, China - Plan to buy internet infrastructure to boost performance and future TV content service ▪ Acquires 31 digital/Web tech. firms since 1988 - 513% of total M&A in apple since 1988 - 714% of total M&A in apple since 2010 1.Core technology H/W + Core technology S/W, 2. 7 Data Centers : Cupertiino, Newark, Santa Clara (CA), Maiden (NC), Reno (NV), Prineville (OR) , Beijing (China) 3. 31 out of 61, 4. 22 out of 31
  16. 16. 3. Case study : Amazon (3/3) Amazon leverages IT & digital technology to make BMI1 of online store → eMarketplace → Web service (AWS2, MT3) → Digital content service → OEM manufacturer → Logistics & distribution (1 hr. Drone delivery) 1 Great execution & business innovation by digital technology Data driven automation & digital technology provides a significant advantage to outperform one’s competitors ▪ Digital enables limitless inventory : starts 1 category (books) to 16 main categories ▪ Digital boosts customer care - Invest data & human driven customer service - Acquires Zappos (#1 customer care know-how, new audience – young women) ▪ Customer centric e-Commerce innovation (Invest IT to create seamless & integrated shopping experience) - 1-click ordering, multi-device support, price check, next day delivery for prime 2 Invest 6% of revenue focus on Distribution & Logistics Amazon’s secret recipe : Leverage its digital advantage to optimize supply chain & logistics ▪ Buy KIVA systems : Warehouse robotics & automation technology ▪ Digital driven supply chain : hires C-level from Walmart (CIO, CLO4) - Computerized supply chain, supply & distribution network (50 fulfillment centers over 8 countries) ▪ Developing Drones delivery : US delivery within 60 minutes 1. Business Model Innovation, 2 Amazon Web Service, 3. Mechanical Turk : Human Intelligent Service 4. Chief Logistics Officer
  17. 17. 4. Big Data trend 2014 1. Big Data Grows Bigger: The growth of social media, mobile devices, & machine sensors is generating a wealth of bits that either didn't exist or weren't accessible a few years ago. 2. Support for New Analytic Apps: Demand for new analytic apps (incl. automated reports, dashboards, predictive analytics, & decision support) putting on Data Scientists & Developers. 3. Hadoop Matures: With the open source projects like YARN, Hadoop functionality improves & enables new capabilities, such as real-time analysis. Now consider it for mission critical apps. 4. Security/Privacy: CEOs want security. Users want privacy. CIOs make a greater effort to build security, privacy, and governance policies into their big data systems and processes. 5. Designing for Cognitive Computing: Data Scientists begin to design for cognitive capabilities such as sense-finding, natural language, decision-automation & semantic search functions. 6. Big Data in Marketing: Marketing is a sweet spot for adoption, but CMOs and their staffs are not able to handle all the big data and analytics requirements 7. Chief Data Officer: Expect more companies focus on developing a corporate data strategy & a data-driven culture with an emphasis on data security & LOB self service capabilities. 8. Data Scientists: Big data demands a new breed of data scientists who can make sense of the data coming in from mobile, social, and sensing that require design & architecture of applications 9. Data Quality: Data quality is at the heart of all data initiatives. The old saying garbage in = garbage out still holds true today. Source : http://practicalanalytics.wordpress.com/2011/12/12/big-data-analytics-use-cases/
  18. 18. 2014 trends summary Key Trends Recommendations ▪ Personalization : content targeting, User experience, responsive design etc ▪ Marketing : email → multi media Front end investment tops for Mobile, social, big data, cloud etc 3 Marketing/Digital Marketing Trend → Digital engagement & adoption 1 ▪ Mobile/Social dominance, cloud based service ▪ Big Data : Data ↑ (social/media, mobile, IOT) ▪ Security : cyber security, security of IOT etc 1 Sell the holl, not the drill Focus on front end system for business ▪ Apple invests on cloud center ($B’s) ▪ Amazon invests on warehouse & logistics (6% of total revenue) 2 Digital marketing adoption is popular Digital Marketing practices are soaring ▪ outsourcing → in-house among leaders Ensure core competency & performance ▪ Increase bot traffic by faulty marketing 3 Set up digital transformation strategy Walmart : Bigbox retailer → ecommerce innovator Apple : Manufacturer→ retailer & content service Amazon : e-commerce (direct sales → marketplace), IT infra. Service (AWS), OME manufacturer with service (Kindle, TV, Phone) e-Commerce Trend → consumer interface & insights 2 ▪ Personalization, multi device, Social ▪ Omni channel selling, Data analytics
  19. 19. Digital marketing trend Rise of responsive email design Rise of Video based landing design SOCIAL MEDIA IS BECOMING MORE VISUAL
  20. 20. Digital marketing analysis
  21. 21. Bot traffic Global advertisers are expected to waste $9.5B on bot traffic in 2013 - Some publishers create or buy fraudulent bot traffic to increase ads revenue Bot traffic 2013 Using Data to prevent traffic fraud Collecting Metadata There are hundreds of pieces of metadata tied to every click & conversion that provide valuable information about the identity of the person behind the click Spotting Patterns Using advanced pattern recognition technology, we can analyze click lead & downstream sales data to identify trends that indicate bot traffic Sorting Traffic Traffic sources for each campaign are categorized as low intent or high intent based on the presence of bots & the likelihood of conversion Optimizing Spend Campaigns can then be optimized for hight intent traffic only. Allowing advertisers to reach real consumers with high lifetime value Theft of content/email Data(Credit cart) theft, Malware infection, site hijack Marketing intelligence gathering, Performance down Posting of irrelevant content, Search Engine blacklisting Source : Incapsula
  22. 22. Digital = Cash Flow = Low price Amazon use digital technology to leverage its high positive cash flow - Average a product stays : 70 days BBY’s shelf vs. 33 days on Amazon Average a product stays; 70 days on Best Buy’s shelf 33 days on Amazon’s one Leveraging its high positive cash flow, Amazon is able to maximize margins and beat all other retailers when it comes to pricing.
  23. 23. Amazon : Digital goods dominating underway? In each Digital market, Amazon fights for its monopoly
  24. 24. Walmart : Digital goods dominating underway? Walmart has been building an internet technology company with world-best-class ecommerce capabilities inside the world largest retailer Walmart digital technology acquisition history Kosmix : Walmart Labs Web search & data analytics OneRiot Social/mobile media campaign Grabble Mobile receipts technology Set Direction Mobile commerce app dev. Tasty Labs Social S/W incubator OneOps Cloud computing PaaS Inkiru Predictive Data Analytics Torbit Web acceleration technology 2011 2012 2013 2014 Small Society iOS mobile app development Social Calendar Facebook social reminders app. Yumprint Recipe & meal planning Adchemy ecommerce product search (12 acquisitions since 2011)
  25. 25. Apple M & A history Acquires 61 technology firms since 1988, 39(64%) are core technology for business and 22 (36%) of M&A are front end service for consumer Network Innovation Orion Network Sys. Styleware Nashoba systems NeXT Power Computing Corp. Bluefish Labs √Bluebuzz (ISP) Spruce technologies √PowerSchool √Nothing Real Zayante (Firewire) √Silicon Grail Corp. √Propel Software √Prismo Graphics √Emagic (music production S/W) √Quattro Wireless (iAd) Intrinsity (SoC) √Siri (Voice control S/W) √Poly9 (Web based map) Polar Rose IMSense √Placebase √Lala.com SnappyLabs √Burstly (app test) LuxVue technology (LED) √Spotsetter (Social Search) √Swell, √BookLamp √Beats Electronics 1988 1989 1997 1999 2000 2001 2002 2005 2006 2008 2009 2010 2011 2012 2013 2014 Coral S/W Xemplar education Raycer Graphics Schemasoft FingerWorks √NetSelector Astarte-DVD authoring SW √SoundJam (MP) P.A Semi √C3 Technology Anobit (Flash Memory) Silicon Color Proximity √Chomp (Search) √Redmatica Authen Tec √Particle (web) √Novauris Technologies √WiFiSlam (location) √Locationary (Maps) √HopStop.com (Maps) Passit Semiconductor PrimeSense (Chipset) √Matcha (Media discovery) √Embark (Maps) Algo Trim (Data Comp.) √Cue, √Topsy(Analytics) √BroadMap, √Catch.com core technology H/W (11), core technology S/W (28), Front end application/platform/service (22), √ Digital/Web tech (31)
  26. 26. Gartner IT prediction 2014
  27. 27. IDC predictions 2014 The IT Industry's 3rd Platform for Innovation & Growth Trends Mobile platform/OS battle Smartphone/tablet vs. others Social networking/Social business IOT (Internet of Things) Big Data Cloud service Data Center Transformation Innovative Industry solutions
  28. 28. Deloitte Tech. Trend 2014 Enablers Disruptors CIO as venture capitalist - CIOs should manage IT portfolio in a way that drives enterprise value and evaluate portfolio performance Social activation - The focus of social business has shifted from measurement to monitoring sentiment & perceptions Cognitive analytics -Cognitive analytics bridge the gap between the intent of big data and the decision making. Cloud orchestration - Tactical adoption of cloud is giving way to the need for a coordinated, orchestrated strategy Industrialized crowdsourcing - Enterprise adoption of the crowd allows special skills to be sourced from anyone, anywhere & anytime., In-memory revolution - Move from analytical to transactional systems, the potential to fundamentally reshape biz. processes grows Digital engagement - Enterprise core products become augmented or replaced with digital intellectual property Real-time DevOps - By standardizing & automating envr., build, release & configuration – tools like deployment mgrs, auto build etc Wearables - Wearable computing has many forms such as glasses, watches, smart badges, and bracelets
  29. 29. Accenture technology vision Description Digital-Physical Blur - Wearable devices, smart objects and machines are providing us with real-time intelligence that is changing how we live and how biz. operate From workforce to crowdsource - Using advanced digital tools and platforms, organizations can now tap into pools of people across the world (immense, agile, even for free) Data Supply Chain - Data needs to be something that is transported through a supply chain, is shared, used and repurposed – just like other products. Harnessing Hyperscale - Hardware world is now a hotbed of innovation with demand soaring for performance in storage, processors and specialized servers. Business of Applications - Software as a core competency in the digital world Architecting Resilience - “Built to survive failure” - the mantra of the nonstop business
  30. 30. PWC top 10 tech. trends for business Trends Description Trends Description Business Analytics Sensors Socially enabled business processes Robotics Mobile customer engagement Battery and power technologies Cybersecurity 3D printing On-demand business and technology services Wearable computing
  31. 31. Rise of social commerce 75% of social generated eCommerce sales came from top 3 players. Social traffic of eCommerce led to increase a revenue (17.8% 1st half, 2013) Social Media Fact in 2013 Tips to get started for Social Media Source : mobstac, Feb 2014 75% of social generated e-Commerce sales from Facebook, Twitter, Pinterest 39% of Facebook users like brand pages to research products 74% of consumers rely on social media to guide their purchases 40% of social media users have purchased an item after sharing it on Facebook, Twitter or Pinterest ▪ Build brand awareness ▪ Reply to customer queries ▪ Promote seasonal sales ▪ Drive fan engagement ▪ Create sharable hashtag ▪ Provide exclusive merchandise ▪ Organize previews
  32. 32. Consumer Journey Marketing opportunities exist in shopper’s journey through various touch points when analyzing the different phases in the MOT1 Shopper Marketing ENGAGEMENT/PLAN SHOP PURCHASES AWARENESS INFLUENCES USAGE Consumer Marketing Shopping plan Channel / Retailer choice Category conversion SKU selection Product Brand image experience Media & other influence Discover Pre-shop information Get help Trust Use Friend Evangelize Share Personalize Search Research Compare Decide Web Company website Mobile Branch/store Call center Social Purchase 1. Moment of Truth
  33. 33. IOT ecosystem and landscape

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