ecommerce landscape and trends 12.17.15
TRANSCRIPT
@pesmou
Ecommerce Landscape and Trends
Maria ThomasDecember 17, 2015
@pesmou
@pesmou
Today’s Presenter
MARIA THOMAS@pesmou
@pesmou
Today’s Agenda
A Quick Look Back
The Big [Macro] Picture
The Big [Industry] Picture
Trends and Sectors to Watch
@pesmou 4
The Early Days….
In 1979 Michael Aldrich connected a domestic television by telephone line to a real-time transaction processing computer and invented what he called TELESHOPPING.
AOL in the early 1990s.
@pesmou 5
E-Commerce As We Know It Is 20 Years Old
First Homepage - 1995 First Homepage - 1995
@pesmou 6
Casualties of Phase I of E-commerce
Fashion retail web site Boo.com launched in 1999. The company burned $135 million of venture capital in 18 months, and went bankrupt in 2000.
Malmsten re-emerged in 2011 as CEO of luxury goods company Lara Bohinc.
Founded in 1994, TheGlobe.com was a social network before social networks existed, and offered essentially the same things that Facebook would later. But it made no money.
Pets.com launched in August 1998. It became famous for the millions it spent on TV advertising with the Pets.com sock puppet. The company IPO-ed in February 2000 but was liquidated 268 days later.
When eToys.com shares hit a high of $84.35 in October 1999, who could have guessed that just 16 months later, the company would warn investors that its stock was "worthless?"
@pesmou 7
Ecommerce Companies by 2013 Revenue
Source: Statista http://www.statista.com/statistics/287950/leading-e-retailers-worldwide-based-on-revenue/
@pesmou 8
Top 10 Chinese E-tailers by GMV/Revenue
https://doc.research-and-analytics.csfb.com/docView?language=ENG&source=ulg&format=PDF&document_id=1042623391&serialid=f0GXsvM2pz8e1L0JM%2Bip6oRgNHFWbrq0e502nHRhff8%3D
@pesmou 9
The Big [Macro]Picture
@pesmou 10
WorldwideRetail Sales
~US $22.5 Trillion in 2014
http://www.emarketer.com/Article/Retail-Sales-Worldwide-Will-Top-22-Trillion-This-Year/1011765
@pesmou 11
Global Ecommerce Estimated to Account for
~6.7% of Retail Sales (US$1.6T) in 2015
http://www.emarketer.com/Article/Retail-Sales-Worldwide-Will-Top-22-Trillion-This-Year/1011765
ABI Research predicts that globally about 8% in ecommerce will be transacted via amobile phone in 2015.
@pesmou 12
China and U.S. are, by far, the World’s Leading E-commerce Markets, combining for More Than 55% of Global Retail Ecommerce Sales in 2014
http://www.emarketer.com/Article/Retail-Sales-Worldwide-Will-Top-22-Trillion-This-Year/1011765
@pesmou 13
But, absolute numbers can be misleading…Ecommerce as a % of Total Retail Varies by Country
http://www.emarketer.com/Article/Retail-Sales-Worldwide-Will-Top-22-Trillion-This-Year/1011765
@pesmou 14
Factors Influencing Ecommerce Penetration By Country
SMARTPHONES/DATAPenetration
POPULATION and % of Population Online
OFFLINE RETAILOptions / Urbanization
PAYMENTS% non-cash transactions
SOCIAL MEDIAPenetration
@pesmou 15
POPULATION AND % OF POPULATION ONLINE
@pesmou 16
World Internet Usage & Population Statistics (Nov 2015)
World Religions Population (2015 Est.)
Population % of World
Internet Users Latest Data
Penetration (% Population)
Growth 2000-2015
Users % of Table
Africa 1,158,355,663 16.0% 327,145,889 28.2% 7,146.7% 9.8%
Asia 4,032,466,882 55.5% 1,611,048,215 40.0% 1,309.4% 48.1%
Europe 821,555,904 11.3% 604,147,280 73.5% 474.9% 18.1%
Middle East 236,137,235 3.3% 123,172,132 52.2% 3,649.8% 3.7%
North America 357,178,284 4.9% 313,867,363 87.9% 190.4% 9.4%
Latin America / Caribbean 617,049,712 8.5% 339,251,363 55.0% 1,777.5% 10.1%
Oceania / Australia 37,158,563 0.5% 27,200,530 73.2% 256.9% 0.8%
World Total 7,259,902,243 100.0% 3,345,832,772 46.1% 826.9% 100.0%
http://www.internetworldstats.com/stats.htm
@pesmou 17
World Internet Usage Statistics (2014 estimate)
Rank Country Internet Users (M)
1 China 626.6
2 European Union 398.1
3 United States 276.6
4 India 237.3
5 Japan 109.3
6 Brazil 108.2
7 Russia 84.4
8 Germany 70.3
9 Nigeria 66.6
10 United Kingdom 57.3
Rank Country Internet Users (M)
11 France 56.8
12 Mexico 49.5
13 Korea, South 44.9
14 Indonesia 42.4
15 Egypt 42.0
16 Vietnam 40.1
17 Philippines 39.2
18 Italy 37.0
19 Turkey 36.6
20 Spain 35.5
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2153rank.html
@pesmou 18
Top 10 Global Markets by Retail E-Commerce Attractiveness
https://www.atkearney.com/consumer-products-retail/e-commerce-index/full-report/-/asset_publisher/87xbENNHPZ3D/content/global-retail-e-commerce-keeps-on-clicking/10192?_101_INSTANCE_87xbENNHPZ3D_redirect=%2Fconsumer-products-retail%2Fe-commerce-index
Based on the A.T. Kearney 2015 Global Retail E-Commerce Index (April 2015)
@pesmou 19
Pick Your Country: Google’s Consumer Barometer
https://www.consumerbarometer.com/en/
QUESTION ASKED: How often do you access the Internet for personal reasons, i.e. all non-business or work related purposes? Please think about your usage habits during the last month.
@pesmou 20
CROSS-BORDER E-COMMERCE IS A HUGE OPPORTUNITY BUT PAYMENT PREFERENCES VARY BY COUNTRY
@pesmou 21https://www.paypalobjects.com/digitalassets/c/website/marketing/global/pages/jobs/paypal-insights-2015-global-report-appendix-added.pdf
Half of All Online Shoppers Have Made a Purchase From a Website in Another Country, Though the Popularity of Cross-Border Ecommerce Varies Greatly by Country
@pesmou 22
https://www.paypalobjects.com/digitalassets/c/website/marketing/global/pages/jobs/paypal-insights-2015-global-report-appendix-added.pdf
US contrasts with China as a market for international vendors as only online shoppers in Japan (12%) are less likely to have bought something online from another country than Americans (22%)
@pesmou 23
https://www.paypalobjects.com/digitalassets/c/website/marketing/global/pages/jobs/paypal-insights-2015-global-report-appendix-added.pdf
Pay Attention to Shipping: Cost and Options
@pesmou
https://www.internetretailer.com/static/uploads/071114_Blog_GlobalSales_Chart2.jpg
Consumer Payment Preferences Vary Across Regions
24
@pesmou 25
• Growing interest in cross-border transactions, especially from consumers in emerging markets
• Burgeoning Chinese middle class may be a much larger market for international etailers in the future than it has been so far
• US etailers are selling a lot of goods via cross border trade, but US consumers tend to focus on US sites
• Smart ecommerce companies invest in SEO (discoverability)
Cross Border Take-Aways
Payments Take-Aways
• Supporting local payment methods is a tremendous asset in improving sales
• Offering culturally appropriate payment options will reduce abandoned check out carts
@pesmou 26
SMARTPHONE PENETRATION IS
IMPACTING ECOMMERCE
@pesmou 27
By 2020, 80% of Adults on Earth Will Have a Smartphone
http://www.slideshare.net/a16z/mew-a16z/5-50123451995_2000_2014_2020Billion_people 2014 Growth to 2020
Global Population (bn)
Population Adults Mobile Online population
5
4
3
2
1
0
8
7
6
Smartphones PCs
@pesmou 28
From this….
@pesmou 29
To this….
http://www.businesstoday.in/magazine/features/second-green-revolution-likely-innovation-in-information-tech/story/222535.html
@pesmou 30
Implications on Ecommerce of Growing Smartphone Penetration
DEVELOPING WORLD: “mobile internet” is the internet.
DEVELOPED MARKETS: mobile commerce is all about convenience.
CONSUMERS can do more than make a purchase.
They are using their phones to compare prices, find retail locations, read reviews and find coupons.
It is increasingly a COMPETITIVE ADVANTAGE for mobile sites to upload quickly and be easy to navigate as consumers weigh their options.
@pesmou 31
https://www.paypal.com/stories/us/the-three-keys-to-going-global-seo-shipping-and-smartphones
@pesmou 32
Social Media Penetration
@pesmou 33
http://www.nielsen.com/us/en/insights/reports/2015/global-trust-in-advertising-2015.html
Why Is Social Media Important?Earned and Owned Media Remain the Most Trusted Ad Formats Globally
@pesmou 34
http://www.nielsen.com/us/en/insights/reports/2015/global-trust-in-advertising-2015.html
% of Respondents Who Completely or Somewhat Trust Advertising Format by Region
@pesmou 35
Visitors to Top Social Platforms By Country -% Internet Users Who Have Used Service in Last Month
http://www.smartinsights.com/social-media-marketing/social-media-strategy/new-global-social-media-research/attachment/2015-social-network-popularity-by-country/
@pesmou 36
@pesmou 37
The Big [Industry] Picture
@pesmou 38
Think of Ecommerce As Part of a Larger Digital Strategy
Commerce platform
@pesmou 39
Ecommerce Comes in Many Flavors
B2C EcommerceCUSTOMER TYPES
G2C: Government to Consumer
B2B: Business to Business
C2C: Consumer to Consumer
C2B: Consumer to Business
PRODUCTS TYPES
Physical Goods Digital Goods
Services MERCHANDISE ACQUISITION
Make Manufacture
Consigned Goods
Wholesale
SHIPPING/DELIVERY TYPES
Direct from Warehouse
Drop Ship“Click and Collect”
(Pickup)
BUSINESS MODELS
Retailer
MarketplaceHybrids
Subscription
Private Sale / Flash Sale
REVENUE STREAMS Commissions on
Transactions
Listing Fees
Shipping Margins
Advertising
Subscriptions
Retail Margins
@pesmou
Selected Ecommerce Companies by Products Sold
40
Digital Goods Digital Services Physical Goods Physical Services
@pesmou 41
RetailSingle/Multi-brand
Classified Marketplace
Merchant Services Marketplace Private/Flash Sale Subscription
Single Brand
Multi-Brand
Selected Ecommerce Companies by Model
@pesmou 42
@pesmou 43
Know Your Competitive Advantage: Hard to Compete With Amazon in Many Markets
@pesmou 44
Ecommerce Is Hard
@pesmou 45
Multiple Platforms Competition for Tech/Design/Mkting Talent
Last Mile Distributions Options Warehousing, Inventory Management
Marketing is Increasingly Driven byData/Technology
@pesmou 46
Ecommerce Companies Can “Fail” for Different Reasons
Red-hot startup Fab raised $330 million (valued at nearly $US$1 billion) and then went bust. “We spent $200M and we have not proven out our business model. “ – former CEO, Jason Goldberg
Karmaloop was considered a success story and became a go-to website for streetwear — a mix of skate, surf, hip-hop and other fashions. Success was followed by poor business decisions and shrinking sales in recent years. Founder/CEO launched a series of failed e-commerce sites and a $14 million bid to launch a television channel that never materialized.
Many of Quirky's products had thin to non-existent margins.
Its Wink unit also faced distress, and a botched security update meant the company had to do a nationwide recall in spring of 2015 its smart home hubs.
Homejoy CEO Adora Cheung blamed the worker-misclassification lawsuits the company faced. It had failed to raise enough funding to grow the company as big as they wanted, she said, so it decided to shutter its doors in July. Like Groupon, the company had struggled to entice repeat customers when it offered a cheap initial cleaning and then later raised the price.
@pesmou 47
Sometimes Models Work in One Country But Not Another
Groupon IPO – Nov 2011Raising $700 million for the company, Groupon's IPO was the second-biggest tech IPO in history, behind the $1.7 billion Google raised in 2004. Groupon ‘s IPO valued the company at > $16 billion. Market cap 12/15/15 =$1.91 billion.
Works in Europe (mostly in France) due to nature of retail industry there. In 2007, Summit Partners bought a 20% stake for €108 million. Vente-privee revenue estimated $2 billion.
Meituan.com received US$12 million series A financing from Sequoia Capital in 2010. It received US$50 million series B from Alibaba and Sequoia in 2011. General Atlantic provided a $300 million Series C in 2014.
@pesmou 48
For Traditional Ecommerce, Online Sales Volume is a Product of Three Key Components
Online store traffic/sessions in number of sessions per time period
Conversion % rate (total buyers divided by total sessions for the same time period)
Average order value (AOV) for same time period
@pesmou 49
In Many, But Not All (e.g. Turkey and Other Emerging Markets),
Amazon.com Is a Dominant and Ruthless Player; Alibaba Is Also a Global
Powerhouse
Many Companies Are Also Establishing Marketplaces, So Competition Is
Increasingly Global
@pesmou 50
Amazon.com has global reach & local presence in Canada, Europe, Japan and India
Amazon.com’s Dominance
@pesmou 51
Amazon.com’s Dominance
Amazon.com is a multi-brand retailer and a huge marketplace of third party sellers.
@pesmou 52
Other Large Retailers Have Established Marketplaces
@pesmou 53
If You’re Not Yet Set Selling Online, There is Some Good News
@pesmou 54
Disaggregation of E-commerce: Making It Easier for SMBs to Move Online
Payments Warehousing andShipping - “3PLs”
Delivery
New Ecommerce Platforms
Cloud Computing
Analytics Translation Services
Marketing & Content
Distribution
@pesmou 55
Develop a new proposition / model
Build communities among customers
Use algorithms to hyper-personalize
Hyper-serve a single category with distinctive characteristics
Specialty Retailers Are Competing in Several Ways
Loyalty Programs Are Also Effective, Especially for SMBs
@pesmou 56
Build vs. Buy Case Study: FragranceNet.com is dedicated to creating its own fulfillment and other e-commerce technology. https://www.internetretailer.com/2015/06/02/build-or-buy
But, a growing number of e-retailers are relying on the expertise of vendors.https://wappalyzer.com/categories/ecommerce
@pesmou 57
Buy BuildA licensed or hosted e-commerce solution when your company: Lacks the internal technical and
management resources required to build, deploy, and support an e-commerce system;
Cannot keep up with the pace of innovation in e-commerce, particularly in areas such as mobile and tablet support, integration with social software, or managing billing and payments processing in-house;
Competes in a market that requires rapid response to market changes and has short “time to productivity” requirements that cannot be met with in-house development.
An e-commerce solution when your company: Has a complex product, a broad and complex
distribution chain, or unique market requirements that can be addressed only by with a custom-built application;
Believes that its own e-commerce design will provide a unique competitive advantage;
Has made a large investment in e-commerce early on, and now finds converting to a licensed or hosted solution too costly or too disruptive to their business;
Has depreciated much of its investment in its e-commerce environment, and the incremental investment required for innovation and ongoing support is less costly than starting over with a licensed or SaaS alternative;
Has built up a large IT organization and has legal, financial, or organizational limitations on how quickly it can reduce the size of that staff.
http://blogs.gartner.com/chris-fletcher/build-vs-buy-in-e-commerce-is-it-a-lobster-trap/
Build vs. Buy
@pesmou 58
Trends to Watch
ChinaGrowing consumer class buying power
Recent Paypal survey: support the growth trend: 35% of online shoppers claim to have shopped cross-border in 2015 vs. 26% in 2014
Payment technologies captive to ecommerce companies (Alipay, WeChat)
IndiaMajor opportunity unfolding in India: battle between Flipkart and Amazon India
@pesmou 59
INDIA: Quite early, local players following Amazon India (partnering with Indian postal office and offering same day delivery), smart phone is the eco-system, but mobile data plans are constrained; infrastructure can constrain design
PAYMENTS:
INDIA: Cash on delivery is still dominant (Ola; Uber started offering that); fraud really high; how to get cash back to market; credit card penetration low; two factor authentication imposed by Indian govt impacts conversion rate
Designing for Local Market: Chinese apps tend to be more complex
https://soundcloud.com/a16z/india-china
CHINA: More advanced – AliPay; WeChat; you can pay with phone by showing QR codes; AliPay is more than a payments app (investment in stocks, get credit score; order food; get coupons it’s about wealth generation)
TRANSACTIONS: Critical; chip away at friction to get more transactions
@pesmou 60
• Everything is becoming: connected, intelligent, real-time, multi-platform – DATA!
• Internet of Things (products-as-a-service)
• #Vcommerce (virtual reality is real)
• Re-urbanization in developed countries / urbanization China, India and beyond
• Rising consumer desire for individualization
• Social media moving further down the purchase funnel – share experiences (Asos); customer service
• Last mile logistics – sell anything, anywhere
• Brands still matter but can be created (and die) quickly
Trends to Watch (con’t)
@pesmou 61
Asos Is On Trend
Private Label (Asos brand) Retailer
Multi-brand Retailer
Global Appeal; Free Delivery
Marketplace Platform
Content Marketing
Staff as Curators
User Generated Content
@pesmou 62
Sectors to Watch
• Ride sharing companies moving into food delivery and other adjacent business
• Food and food delivery (Ele.me - China)
• Health care & aging populations (Yao Xin - China)
• Work marketplaces
• Hard goods where economics are out of balance or unevenly distributed: eyeglasses, matress (Casper – U.S.)
@pesmou 63
• Ecommerce is hard: led by tech and design
• Long-term perspective required
• Valuations not great in developed markets
• Most successful ecommerce companies (the three AAAs: Amazon, Alibaba, Apple) offer a lot more than ecommerce
• Ecommerce and payments inextricably linked
• Mobile is eating the world
• Channels converging: omni-channel will win
• World shrinking: cross-border commerce is growing
Final Thoughts
@pesmou 64
Good Data Sources
https://www.consumerbarometer.com/en/insights/?countryCode=GL
http://mobilereadiness.mastercard.com/the-index/
http://ben-evans.com/
1 2 3