Prestudy USA eCommerce Growth, 27.10.2015

1. Näkymiä USAn Verkkokauppaan:
Mahdollisuudet Suomalaisille Yrityksille
Hartti Suomela
October 2015

2. 10/29/201
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5. E-commerce grows, reaching almost $500bn by 2018
5Source: Forbes; eMarketer.com.

6. Trendspotting
&
Interesting CASEs
6

7. More Information and Examples
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8. From Online to Offline &
Make People Stay
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Source: Gallivant
Source: Rent The Runway
Source: LinkedIn Pulse

9. Case: Adidas
9Source: FashionBi (2014).
Offline > online
Research > Purchases
This problem of not having enough space to
exhibit their entire product range was sensed
by Adidas, which lead to them partner with
Intel to create a virtual footwear wall,
Adiverse. Adidas has been using digital
signage in its stores for years to promote
products and show product videos but this 3D
interactive wall virtual wall is a step ahead. It
is a natural extension of their physical
product range as it showcases the virtual
product range, it allows customers to interact
with the entire footwear line available on
their website, not just what was on the
shelves.
By sensing the gender of the customer, the
virtual wall makes product recommendations
and provides all information about the
product. Products chosen on the virtual wall
can be purchased from the store just like the
products in their physical product range. This
way, an Adidas store in a small town can
seem like a flagship store as it would have all
merchandise under their roof.

10. Sephora’s Fragrance IQ
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11. Online Shopping
Simplicity, Speed, Experiences, Prices
• All about seamless user experience
–Do not lose a customer before checkout and make customers return
–Recommendations, shopping cart handling, backend processing, etc.
• Amazon Prime subscription a strong incentive to stay in Amazon
ecosystem
–Failed for Jet.com
• Rise of discount online stores
–Like Gilt, The Clymb, LeftLane Sports, etc.
• Hyper dynamic pricing
–Especially around big shopping days like Black Friday and Cyber Monday
• Easy and fast shipping
–Note: Costs are going up!
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12. AllRecipes & Instacart: Seamless Groceries
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13. Case: Tiffany
13Source: FashionBi (2014).
Online
Research
The Tiffany and Co Engagement Ring Finder
app brings the smooth and uncluttered
shopping experience of the Jeweler’s website to
smartphones. Users can browse rings by shape,
setting, metal, design and six different carat
sizes Rings are displayed true-to-size and from
multiple angles with zoom functionality.
Another interesting feature of this app is the
‘Ring Sizer’ which helps the customer find their
exact ring size by placing one of their rings on
the screen. Potential customers can also see
how it looks on their hand by placing their hand
over the screen and photos of this can be saved
and shared to get others opinions before
finalizing on an engagement ring.

14. Payments – Online and Offline
• PayPal and credit cards still rule
• Gift cards are used more than in Finland but still gift card market is only about
$130 billion (open network cards about $45 billion, retailer cards, restaurant
cards)
–Spillage decreasing (< 1%)
–E-gifting is about $6 billion
• Mobile payments only 1% of all retail transactions
–Apple Pay not growing very fast
• Limited amount of banks and retailers supported
• Adoption of Bitcoin has been slow
–Overstock.com is the best known retailer
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15. Online Commerce
Opportunities for
Technology & Tools
Providers
15

16. Opportunity matrix (“our take”) for tools and technologies
16Source: Vinna Ventures, September 2015
Opportunity*
*
Risks*
Legend:
- The above presented matrix represents a subjective version of the opportunity field for value-adding technologies in online commerce, which can be further
analyzed and “rationalized” within a more comprehensive study in the future about market sizes, competitors, margins, go to market options (e.g. partnerships
vs. M&A).
- * Risk: as perceived in terms of timing (short- vs. long-termed), competition, financial needs and uncertainty;
- ** Opportunity: in terms of potential revenues and impact (game changers).
Unmanned
vehicles
Smaller Mid-size Large
Lower
Higher
Cloud
technologies
Cross-device
marketing
Automated ad
formats
3D printing
Programmatic
buying
Re-engagement
Cost-controlling
Wearables
Predictions
Experience
sharing
Mobile payments
Augmented
reality
Security
Analytics
Interactivity
Order
customization
Curation systems
In-store
convenience
Loyalty programs
Beacon
Cross-border B2C
Digital content
enablers
Speech
recognition
Machine
learning
Gamification
Fair trade
Customer
acquisition
M-commerce
optimization

17. Most promising opportunities in e-commerce and retail
17
Enhancing Customer Experience
Solutions that makes the customer experience faster, easier or more efficient are highly
sought after in the US market.
Mobile Commerce
The customers are moving towards mobile. The use of mobile phones for comparison,
peer validation, inspiration and discounts is growing rapidly. The mobile phone is an
essential tool in the new retail landscape.
Supply chain management and logistics
Products and solutions that optimizes backend services like supply chain and logistics
and saves costs is still rather over looked, but shows great potential.
Data Analytics
Customer data has been utilized for increased sales in retail for years, but new solutions
makes analytics useful for planning and operations of stores, both online and offline.
Curation and recommendation
New technologies such as artificial intelligence (AI) and machine learning is used to
improve product recommendations in retail. The social shopping and digital influencer
phenomena is also growing stronger, particularly in the younger generation.

18. Enhancing Customer Experience
18
Besides various articles, several interview respondents mentioned products and services that
enhances the customer experience, both online and offline, as a key areas where there is a high
demand. Any solution that makes the customer experience faster, easier or more efficient are
deemed as interesting and highly sought after on the US market.
Several companies are working on various smart algorithms, AI systems and other ways to
make the experience more pleasant, but also more tailored services and systems for providing
customers really personalized offerings was mentioned. Smoother check out and payment
processes such as paying with and app for Über instead of in cash for a taxi was also an area of
particular interest that came up frequently.
Shop.co
Enhanced shopping via Machine Learning and Ai.
www.shop.co
Lowes - OSHbot
Robots for information and in-store guidance.
fellowrobots.com

19. Curation and recommendation
20
In an environment with too much information and too many options at hand, a strong trend
that is coming is curation and personalized selections. Both IRL personal shoppers and new
technologies such as AI and machine learning is used by several new companies to improve
product recommendations.
Blynk Style
“Tinder for shopping” an app for
personal styling suggestions
www.blynkstyle.com
The social media influenced shopping phenomena is
growing stronger, particularly in the younger generation.
The Millennials are getting a lot of shopping influences
from sites such as Pinterest, Instagram Youtube and
various fashion blogs. The power of the fashion
influencers is very strong and it’s starting to have a
massive impact on marketing budgets as well. There is a
bright future ahead for companies that can provide good
tools to measure influencer marketing and the ROI there
according to one of the respondants.
Limespot
Advanced Content Personalization Technology
limespot.com

20. Selling Products Online in
U.S.
21

21. Selling in U.S. – Things to Keep in Mind
• Check regulation – including import rejection laws and trade barriers
– Sources & regulatory agencies vary depending on your product (Homeland Security,
USDA, FDA, FCC, etc.)
– Brochures, sell sheets, and websites are considered part of your packaging and
subject to regulations (where applicable) – they also need to be “Americanized”
• Set-up your own business (incorporation, business licenses)
– Aspects: Exposure (accounting, taxation, liability), site selection, etc.
• Customs issues are complicated so talk to a customs lawyer first and consider using a
customs broker
– Licenses, taxes, duty fees, etc.
• Get necessary licenses (note: samples have their own processes)
• Check into local political, religious, and social issues, including action groups that could
impact your business
• Figure out distribution and sales strategy (more on the following slide)
• Prepare for customer support and handling returns
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22. Tidbits on Distribution and Sales Strategy
• Many stakeholders involved – know what each does and will not
do (for example – most retailers do not import)
–Importers, distributors, brokers, and retailers
• Margin structure different than in EU
–Reserve much more for middlemen
–Your wholesale price x 2 to 3 times is a good starting point
• Determine your competitors’ access and hold on to your
distribution and retail channels
• What is your online strategy?
–Own online store vs. Amazon (with or without Amazon
Fulfillment)
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23. CASE:
• Ambronite is a drinkable supermeal that takes hunger away for 4-5 hours
• Sales started with crowdfunding project in 2014 on Indiegogo
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24. CASE:
• Current channel: Own online store (single purchases and subscriptions) and recently
also other online retailers (single purchases)
– Why not Amazon? A: To get the customer emails from Amazon is a challenge
• Extensive payment solutions (Stripe, Braintree, PayPal)
– PayPal might help increasing mobile check-out rates?
• Sales materials were made for U.S. customers from the start
• Regulation needs: FDA registration, production facilities pre-registration, trademarks,
etc.
• Shipping & Distribution: ShipBob
– Small, nimble startup, willing and not too expensive to accommodate customization
requests (like different labeling for purchases of first-time buyers)
• Other learnings
– Make shipping effortless for the customer (e.g. very few people want to visit USPS)
• Might be different solution for different markets
– Be careful with packaging labels
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Source: Interview with Simo Suoheimo / Ambronite

25. CASE:
• A sleep sensor strip with a mobile (iOS/Android), Apple Watch and Web interface
• V1 of product was launched through a crowdfunding campaign on Indiegogo in 2013
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26. CASE: ctnd.
• Current channels:
–Own online store, Amazon (as Vendor), retail (including Apple Stores
starting Oct 2015), other online stores through the networks of their
distributors
–Distribution & export/import methods differ based on channel (for certain
cases Ex Works, for others DDP)
–Big deals sold to distributor through Beddit Finland, B2C sales through
Beddit USA
• Shipwire (part of Ingram) handles Beddit’s “own” logistics
–Works well with standard use cases, but lacks flexibility
• Payment initially through PayPal (UX issues with credit card payments), now
through Shopify Payments (Stripe)
–Beddit store built with Shopify
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© Finpro29 Source: Interview with Lasse Leppakorpi / Beddit

27. CASE: ctnd.
• All sales materials were planned initially for U.S., still continuous
improvement
–All materials also approved by lawyers (online store privacy policy,
disclaimers, sales materials)
–Materials customized for different channels
• Other learnings
–Sales and distribution from U.S. to Canada might cause issues for
customers (e.g. recipients might need to pay customs even for free
samples)
–Everything takes time – better prepare everything beforehand (e.g.
customs)
–Decrease your own headache by negotiating distributors to take care of
import / export
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© Finpro30 Source: Interview with Lasse Leppakorpi / Beddit

28. “Askelmerkkejä Joukkorahoitukseen” by
Team Finland Future Watch
• Guide launched at lunch seminar on Crowdfunding in Messukeskus on Nov 12, 12:30-
14:20 (during Slush)
• Rough agenda for the lunch seminar
– Chat: What’s behind a successful crowdfunding campaign?
• Oura Ring, Marjut Uusitalo, Marketing Communications Manager
• Ambronite, Mikko Ikola, CEO
– Launch of a Finnish crowdfunding guidebook
• Tiina Tanninen-Ahonen, Head of Office, Tekes Palo Alto
– Chat: Other types of opportunities in crowdfunding
• Beibamboo, Nina Ignatius, CEO (TBC)
• IronSky (TBC)
– Keynote: How to attract crowds in the future?
• Anastasia Emmanuel, Director, Technology and Design, Indiegogo UK
• https://tapahtumat.tekes.fi/event/building_crowdfunding_success
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29. Hartti Suomela
hartti.suomela@finpro.fi

30. Sources
• Online commerce growth program prestudy, 2015 Finpro (Vinna Ventures)
• https://www.internetretailer.com/2015/09/01/canada-gets-serious-about-e-
commerce
• https://www.cbinsights.com/blog/startups-disrupting-fedex-ups/
• http://dupress.com/articles/understanding-consumer-behavior-shopping-trends/
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