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JULY28,2016

DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

• Fung Global Retail & Technology attended the second annualGrowCommerce conference in New York on July 27. The eventfocusedone-commerceandtheissuesretailexecutivesarefacingas they adapt to and compete within this fast-growing channel.This year, the conference centered on customer acquisition andgrowth. Panel topics covered customer acquisition andengagement, omni-channel marketing strategies, big data,marketingtomillennials,andsellingonAmazon.

• Customeracquisitioncosts,engagement,conversionandretentionrates show that it pays to know and keep customers. JonathanPelosi,Headof IndustryMobileApps forGooglesaidthat17%ofapp users provide 85% of app revenue. Dennis Mink, VicePresidentofMarketingatLiftoffsaidthatthecustomeracquisitioncost for a mobile app averages $113.74, and that 90% of usersdelete apps within the first 90 days. Retention, therefore,representsabigopportunity.

• Consumers are interested in a total authentic brand experience,and successful brands use data insights to understand theircustomers at themicrosegment level in order to optimize brandcontent,strategyandengagementatthatlevel.

• Panelists said that future technology initiatives should includeprogressive web apps, conversational commerce apps and socialbuybuttons.

Fung Global Retail & Technology attended the second annualGrowCommerceconference inNewYorkonJuly27.Theevent focusedone-commerceandtheissuesretailexecutivesarefacing.Thisyear,theconferencecenteredoncustomeracquisitionandgrowth,andincludedsessionssuchas“MarketingTrendsthatMatter”and“DisruptiveForcesto Watch.” The panelists included senior executives, managers andconsultantswhodiscussedcustomeracquisitionandengagement,omni-channel marketing strategies, big data, marketing to millennials, andselling on Amazon. Scott Silverman, the former Executive Director ofShop.org and the co-founder of GrowCommerce, welcomedapproximately 300 attendees andmore than 30 sponsors. Threemaintakeawaysemergedfromtheday’spanelsessions:customerretentioniscrucial, consumers want a total brand experience and retailers mustkeepupwithtechnology.

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JULY28,2016

DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

RetentionRepresentsanOpportunity

Customeracquisitioncosts,engagement,conversionandretentionratesshowthat itpaystoknowandkeepone’scustomers. JonathanPelosi,Head of Industry Mobile Apps for Google said that 17% of app usersprovide85%ofapp revenue.According toDennisMink,VicePresidentof Marketing at Liftoff, customer acquisition cost for a mobile appaverages$113.74,andthat90%ofusersdeleteappswithinthefirst90days.So,retentionrepresentsabigopportunityforretailersandbrands,and they are continually thinking about how to engage and retaincurrentcustomerswhiletryingtoacquirenewones.

Customer acquisition and conversion: The average cost of acquiring anewcustomer is$113.74according toMink fromLiftoff. RyanGibson,EVPofMarketingStrategyatMerkle, talkedabout socialpresenceandhowconsumersreactandfeelwhentheyengagewithabrand,makingthe point that trust correlates directly with sales. Gibson noted thatmen’sfashionbrandJackThreads includesasocialmeteron itswebsitethatletscustomersknowhowmanyothercustomersareonthesiteandsearching for products at the same time. This strategy highlights thepower of understandingwhat consumers are doing, being sensitive tohow they feel in a given digital space and doing whatever it takes toconvert them if they are not current customers. It is important forretailerstoseethewholepicture,Gibsonnoted,asROInumbersdonotincludemicroconversionsofcustomerswhovisitedasite.Theprocessofbuildingabrand,andbuildingtrustinthatbrand,isanincrementalonethatoccursovertime,hesaid.

Loyalusers:AccordingtoPelosiofGoogle,17%ofappusersaccountfor85% of app revenue. Retailers that maintain relationships with thesepower users, and understand everything about them, have an edgewhen it comes to converting more users who share similarcharacteristics, Mink said. Jonathan Pelosi, Google’s Head of Industry,MobileApps, Americas, provided examples of four company apps thathave targetedcustomerneedsandquantified the results.According toPelosi:

Source:Google

• Walgreens has improved its customer pharmacy experience byimplementing a prescription app to scan prescriptions. Customerswhousethecompany’sappsspendsixtimesmorethancustomerswhodonotusethem.

JonathanPelosi,HeadofIndustryMobileAppsforGooglesaidthat17%ofappusersprovide85%ofapprevenue.AccordingtoDennisMink,VicePresidentofMarketingatLiftoff,customeracquisitioncostforamobileappaverages$113.74,andthat90%ofusersdeleteappswithinthefirst90days.

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JULY28,2016

DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

• UsersofWalmart’sSavingsCatcherappmake twiceasmanystorevisitsasregularcustomersandspend40%more.

• In the US, 21% of all Starbucks transactions come from thecompany’smobileapp,andappusersspendthreetimesmorethancustomerswhodonotusetheapp.

• Everyfiveminutes,acarortruckisboughtviatheeBaymobileapp.

Retention:Retentionisthebiggestchallengeonapps.AccordingtoMinkfromLiftoff,theaverageapploses90%ofuserswithin90daysfollowingdownload.BrianBerger,CEOofmen’sunderweare-tailerMackWeldon,emphasizedthat it isvery important tocreateaproduct that isuniqueanddifferentiated,andtobuildthecustomerexperienceandlong-termcustomer relationships in order to retain customers. He said that it isimportant totell thebrandstoryaspartof theexperience,notingthatMack Weldon had implemented a marketing strategy that relied onpodcasts. Berger said the strategy was successful because it used atrusted and authentic voice to represent the brand. The companyachievedareturnoffivetimesonitsinvestmentbyusingpodcastsandwas able to track their podcast's return on investment because thepodcastwaslinkedtoapromocode.

ConsumersWantaTotalBrandExperience

Thepaneliststalkedaboutconsumerswantingatotalbrandexperience.Jim Hilt, EVP, Chief Marketing Officer and E-Commerce at ExpressConsumers said that are interested in a total, authentic, omni-channelbrand experience, and many retailers and brands are using data tounderstand their customers at the microsegment level in order tooptimize content, strategy and engagement at that level. Shoppers’interest in total brand content is driving the use of brand-relatedentertainment,musicandvideos,becausecustomerswanttobuyatotalexperience, not just a product. Retailers can engage with consumerswho browse Pinterest or BuzzFeed for hours by ensuring that theirmarketing and digital experiences reflect those consumers’ interestsacrossthephysicalanddigitalretailplatforms.

IntheUS,21%ofallStarbuckstransactionscomefromthecompany’smobileapp,andappusersspendthreetimesmorethancustomerswhodonotusetheapp.

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JULY28,2016

DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

PiniYakuel,ChiefOfficerofOptimovesaidthatretailershaveaccesstoagreat deal of data, and many companies get an overload ofinformation—dashboards of dashboards. The volume of data canparalyze decisionmakers if they do not knowwhat to dowith it. HiltfromExpresstalkedabouthowtousedata,andspecifically,howtoturndata into actionable insights.He said that companiesmustbe learningorganizationsthattestinsightsandpropositionsandmustnotbeafraidCharlietofail.Makingchoices,eliminatingprojectsthatarenotworkingand redirecting resources into what is engaging customers will drivesales

Hiltsaidthatretailershavetotakeastepbackandlookatwhatinsightsthey are getting from data. Retailersmust understand how customersbehave with digital experiences because it will impact strategy andengagement choices, he said. Express turned data into actionableinsights in four areas based on understanding its customers. First, thecompanydecidedthatprintwasnolongeraprioritybecausecustomerswerenotengagedwithprint.Expressreprioritizedtheprintbudget,andbecame a strategic partner of Snapchat because 41% of people underage34consumealmostalloftheirdigitalmediahoursthroughSnapchat.By harvesting data insights, Express learned that Snapchat is a veryeffectivetoolforreachingitsaudience.Inoneweek,Expressgainsmorebrand impressionsonSnapchat than itdoeson Instagram in12weeks.Express also invested in content creation on YouTube, since 92% ofExpress customers use YouTube as their primary source for videocontent. Hilt said that Express has also invested in paid and organiccontentcreationonInstagram.

OlgaKay,CEOofsockbrandMooshWalks,saidhercompanycontinuestousecustomerinsightsatthemicrosegmentlevelinordertokeepthebrandauthenticandrelevant.PriortolaunchingMooshWalks,Kayhadarobust social media following, with 1.3 million followers on YouTube,TwitterandFacebook.Datainsightssuggestedthatherlargestfollowingonsocialmediawasteenagegirls.Shewantedtocreateaproductthatspoke to them, and so shared the process of creating socks with heronline audience, including showing them all of her sketches. She saidthatshehadmanypreordersbecauseheraudiencewassoengagedwiththe process. She also said that the socks are personalized, and thatcustomers “adopt” them. She includes a handwritten note with eachpurchase. For Kay, understanding the data was the first step tounderstandinghowtoengageanddeliverspecializedcontent.

RetailersMustKeepUpwithTechnology

VariouspanelistsatGrowCommercenotedthatretailersmustgetsmartabout progressive mobile web apps, conversational commerce apps,chatbots and social buy buttons. Progressive web apps use newtechnologiestobringthebestofmobilesitesandnativeapplicationstousers. Google’s Pelosi referred to these apps as “mobile sites onsteroids.”Theyarefast, installable, integratedandengaging,theyworkoffline, and they can be used to push notifications to users. They arenewandupcoming.

Retailershaveaccesstoagreatdealofdata,andmanycompaniesgetanoverloadofinformation—dashboardsofdashboards.Thevolumeofdatacanparalyzedecisionmakersiftheydonotknowwhattodowithit.

KenSeiff,ManagingPartneratBeanstalkVentures,estimatedthatinfiveyears,20%–25%ofalle-commercesaleswillgothroughdistributedcommerce,whichwillincludebuybuttonsandcustomerservicechannels.

Expressreprioritizedtheprintbudget,andbecameastrategicpartnerofSnapchatbecause41%ofpeopleunderage34consumealmostalloftheirdigitalmediahoursthroughSnapchat.

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JULY28,2016

DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

Distributed commerce is gaining momentum, and it includesconversational commerce apps such as chatbots and messengerfunctions.KenSeiff,ManagingPartneratBeanstalkVentures,estimatedthat in five years, 20%–25% of all e-commerce sales will go throughdistributed commerce, which will include buy buttons and customerservice channels.CarlaDunham,VicePresident,GlobalBrandStrategy,Kate Spade & Company noted that chat dialogue provides anopportunity to deliver an exceptional, personalized brand experience,particularly for experiential brands. The messenger channels allowbrandstoconnect,delightandexcitecustomers inanunexpectedway,Dunhamsaid.

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JULY28,2016

DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comErinShimdtResearchAssociate

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