1

Ecommerce Futures: New Territories
Planning for new markets
Matt Jeffers, Associate Director, Javelin Group

www.javeli...
Javelin Group: planning & implementing omni-channel transformation
180+ people focused on omni-channel strategies and tran...
International expansion strategic priority for retailers

3

1.

Fast ecommerce
growth in the UK…

Invest in
ecommerce &
m...
Javelin Group helps retailers with all stages of international expansion

Phase 1:
Strategic Planning
Strategic Market
Sel...
UK retailers ecommerce revenue to be increasingly International

5

ecommerce revenues for UK-based retailers, £bn

£81bn
...
International 43% of Amazon’s revenues, 59% of ASOS’s sales

6

“When we said we
wanted to be ‘truly
global’, we meant it”...
ASOS international strategy
Step 1: Strategic prioritisation of
international markets

Strategic
UK
USA
France
Germany

7
...
Store retailers have been slow to adopt localised ecommerce

8

# of foreign countries present with stores &/or localised ...
Key questions for retailers

9

• Where should we go first?

?

• What should the proposition
be?
• What mix of bricks and...
Bricks vs. clicks

10

Low Risk,
Low Penetration

High Risk,
High Penetration

eCommerce Only

Stores Only

Multi-Channel
...
Ecommerce market size, growth and penetration integral to decision

11

B2C e-retail penetration (% share of retail sales)...
Growing Chinese eCommerce market attractive prospect

12

Internet retailing market size 2012 (£bn value)

Note: Excludes ...
…but not without challenges

•

$3.06 billion USD in sales
•

•
•
•

Tmall had more than $2.1 billion in sales

109 stores...
Category dynamics must also be understood in target country
Clothing and footwear eCommerce market map - France

Online cl...
Factors beyond market dynamics also important

Population
characteristics

Government
regulations &
taxes

Disposable
inco...
Javelin Group scorecard can help make strategic assessment

16

A Multi-Layered opportunity scorecard can be used to evalu...
Balancing opportunity and implementation practicality

17

Ease of entry vs. size of opportunity (for UK retailers)
Large
...
Opportunities for multi‐channel?

18

Best for ecommerce alone

Best for 
multi‐channel

More
attractive

BRA
RUS

AUS
ITA...
Javelin Group recently helped C&A with international eCom strategy

19

International ecommerce strategy
• Analysed ecomme...
Hurdles
•

Financial returns not coming quick enough

•

Overly ambitious business plan

•

Marketing in the wrong areas

...
21

Questions?
matt.jeffers@javelingroup.com
Tel: 020 7961 3200

www.javelingroup.com
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Planning for new markets_Javelin Group

  1. 1. 1 Ecommerce Futures: New Territories Planning for new markets Matt Jeffers, Associate Director, Javelin Group www.javelingroup.com
  2. 2. Javelin Group: planning & implementing omni-channel transformation 180+ people focused on omni-channel strategies and transformation Vertical specialists combining skills in Strategy, Operations, Technology 50% of our work is outside the UK, especially DE, FR, NL and DK Jav elin Gro up sco pe Plan & help execute omni-channel retail… Strategy & org. Operations Technology StoresMCR eCom. Centre www.javelingroup.com RETAIL CHALLENGES 2
  3. 3. International expansion strategic priority for retailers 3 1. Fast ecommerce growth in the UK… Invest in ecommerce & multi-channel 6. 2. …But no top-line retail growth Expand internationally Invest in own labels Retailers looking internationally for growth opportunities… 5. 3. Consolidate and build scale Redefine store roles & formats Six Strategic Priorities 4. Re-shape the estate www.javelingroup.com JAV INTERNATIONAL PROJECTS
  4. 4. Javelin Group helps retailers with all stages of international expansion Phase 1: Strategic Planning Strategic Market Selection Phase 2: Implementation Phase 3: Existing Performance Optimisation Operational & Merchandising Strategies Multi-Channel Entry Strategies International Store Locations & Formats International Due Diligence www.javelingroup.com INTERNATIONAL ECOMMERCE GROWTH 4 Performance Improvement
  5. 5. UK retailers ecommerce revenue to be increasingly International 5 ecommerce revenues for UK-based retailers, £bn £81bn £28bn 35% £bn £53bn £29bn £4bn 14% £25bn Source: Google analysis, revised Javelin Group forecasts www.javelingroup.com AMAZON & ASOS
  6. 6. International 43% of Amazon’s revenues, 59% of ASOS’s sales 6 “When we said we wanted to be ‘truly global’, we meant it” £600 $70 Eight localised sites (UK, DE, FR, JP, CN, CA, IT, ES) £500 $50 $40 International 43% $30 ASOS Retail sales (£m) Total Amazon revenue ($bn) $60 Seven localised sites (FRA, DEU, ITA, ESP, USA, AUS, RUS) plus “ship anywhere” £400 International 59% £300 £200 $20 North America 57% $10 $0 2004 2005 2006 2007 www.javelingroup.com ASOS INTERNATIONAL STRATEGY 2008 2009 2010 2011 2012 £100 £0 2004 UK 41% 2005 2006 2007 2008 2009 2010 2011 2012
  7. 7. ASOS international strategy Step 1: Strategic prioritisation of international markets Strategic UK USA France Germany 7 Step 2: Adopt appropriate tactics across each of the markets 11. Local language Fashion Finder // Market11. Local language Fashion Finder MarketPlace Place 10. Mobile language site 10. Mobile language site 9. Dedicated product 9. Dedicated product 8. Offline marketing 8. Offline marketing 7. Local language sites 7. Local language sites Tactical Australia, Brazil, China, Denmark, India, Ireland, Italy, Japan, Netherlands, Norway, Russia, South Korea, Spain, Sweden Rest of the World 6. Customer care in local language 6. Customer care in local language 5. In-country returns 5. In-country returns 4. Re-invest in lowering cost of delivery and 4. Re-invest in lowering cost of delivery and returns returns 3. PR // Online digital marketing 3. PR Online digital marketing 2. Payment methods 2. Payment methods 1. Delivery options // payment solutions 1. Delivery options payment solutions www.javelingroup.com UK RETAILERS SLOW
  8. 8. Store retailers have been slow to adopt localised ecommerce 8 # of foreign countries present with stores &/or localised ecommerce Stores 52 51 eCom 40 37 Number of countries 26 8 8 7 8 7 H&M ASOS 3 M&S Arcadia Debs Next Source: Javelin Group analysis www.javelingroup.com WORLD MAP
  9. 9. Key questions for retailers 9 • Where should we go first? ? • What should the proposition be? • What mix of bricks and clicks? • How should we implement? www.javelingroup.com BRICKS vs CLICKS
  10. 10. Bricks vs. clicks 10 Low Risk, Low Penetration High Risk, High Penetration eCommerce Only Stores Only Multi-Channel Opportunity to test market & optimise proposition • Leverage existing ecommerce • • In many emerging markets, shopping in store important part of social culture • Strongest presence in new market, generates fastest brand awareness • Superior experience to ecommerce - customers can touch, feel and try products • Enables multichannel services from launch e.g. click & collect • • Customers can interact with brand and develop a stronger relationship • eCommerce can offer extended range to support store range • CAPEX can be shared by partners • Enables ROPO – research online purchase offline eCommerce experiencing strong growth • Range size & availability can be maximised online • Low risk / low cost FOCUS OF TODAY’S SESSION www.javelingroup.com COUNTRY ECOM PENETRATION
  11. 11. Ecommerce market size, growth and penetration integral to decision 11 B2C e-retail penetration (% share of retail sales) excl. tickets, travel & C2C (2012-17) 5-10% today 2-5% 10% C H N <2% N. America & N.W. Europe www.javelingroup.com WORLD MAP REVENUES Central/Southern Europe & “developed” Far East BRIC, Turkey etc. Source: Javelin Group, eMarketer, Forrester
  12. 12. Growing Chinese eCommerce market attractive prospect 12 Internet retailing market size 2012 (£bn value) Note: Excludes sales tax Source: Javelin Group, Euromonitor www.javelingroup.com CHINA SINGLES DAY
  13. 13. …but not without challenges • $3.06 billion USD in sales • • • • Tmall had more than $2.1 billion in sales 109 stores with more than $1.6 million USD in sales within 12 hours 213 million active accounts 105 million orders www.javelingroup.com FRENCH CLOTHING MARKET DYNAMICS 13
  14. 14. Category dynamics must also be understood in target country Clothing and footwear eCommerce market map - France Online clothing and footwear market share (%) 100% 80% 2.6% 2.7% 3.4% 5.8% 70% 12.6% 90% 60% 50% 40% 14.7% 30% 20% 10% 0% www.javelingroup.com OTHER FACTORS 13.7% Others 36.3% 14
  15. 15. Factors beyond market dynamics also important Population characteristics Government regulations & taxes Disposable income Geography: urban vs. rural www.javelingroup.com JAVELIN SCORECARDING Broadband penetration Logistics / fulfilment Competitive environment 15 International brand presence Payment preferences Smartphone/tabl et penetration
  16. 16. Javelin Group scorecard can help make strategic assessment 16 A Multi-Layered opportunity scorecard can be used to evaluate market attractiveness Category Example factors Category Example factors Online market maturity Online market maturity Total eCommerce sales Total eCommerce sales Fulfilment complexity Fulfilment complexity Customs regulations Customs regulations Ease of implementation Ease of implementation Language barrier Language barrier Macro-economy Macro-economy Ecommerce/ broadband Ecommerce/ broadband growth growth Cultural and retailer brand fit Cultural and retailer brand fit GDP per capita 2013 & 2017 GDP per capita 2013 & 2017 Acceptance of foreign retailers Acceptance of foreign retailers Population Population Population 2013 Population 2013 Lo w 1 www.javelingroup.com EASE OF IMPLEMENTATION eCommerce sales 2017 eCommerce sales 2017 Score attributed to each criteria by market to determine level of eCommerce attractiveness High 5
  17. 17. Balancing opportunity and implementation practicality 17 Ease of entry vs. size of opportunity (for UK retailers) Large Long term size of opportunity Small CHN www.javelingroup.com DE U FR A Early entry CAN SWE DNK AUS POL ITA CZE ESP NLD AUT TUR CHE SGP IND SAU Leave for later GRE CYPEGYUAE Hard MULTICHANNEL USA Big long RUS term opp’ties KO BRA JAP R UKR IDN MY TW N S THA Europe Americas Middle East Asia/Australia Russia/Ukrai ne Ease of entry IRE Follow-through Easy
  18. 18. Opportunities for multi‐channel? 18 Best for ecommerce alone Best for  multi‐channel More attractive BRA RUS AUS ITA CAN ESP NLD DNK SWE AUT 2 TUR TWN UKR UAE Less attractive POL MYS SAU Second fast growing wave THA Developed EGY Less attractive IDN Developing More attractive Stores www.javelingroup.com IND Best for  stores alone eCommerce CHN Leading strategic multi-channel opportunities JAP DEU FRA KOR RETAILER EXAMPLE 1 USA
  19. 19. Javelin Group recently helped C&A with international eCom strategy 19 International ecommerce strategy • Analysed ecommerce opportunity in 13 markets • Identified 5 priority markets - Market share and sales potential estimated • Detailed scorecard analysis (clothing & footwear market) • - Ranked counties based on attractiveness Advised on key considerations for launch in these markets Country Online market maturity Fulfilment complexity Ease of implementation Macroeconomy Ecommerce/ broadband growth Current C&A performance/ brand fit Population Overall attractiveness score Weighting 23% 20% 17% 13% 11% 11% 5% 100% United Kingdom 3.7 4.9 4.1 3.6 3.8 1.8 4.6 3.8 Sweden 2.6 5.0 4.1 4.5 2.5 2.7 3.2 3.6 Denmark 2.7 4.9 4.5 1.7 2.7 3.4 Finland 2.5 4.9 3.7 Czech Republic 1.8 4.9 2.0 Norway 2.4 1.9 Turkey 2.5 1.0 www.javelingroup.com HURDLES TP OU E UT 4.0 2.0 3.7 2.0 2.7 2.4 3.3 3.0 2.1 4.1 2.5 2.9 4.1 4.4 2.2 2.7 2.4 2.9 3.4 2.4 3.1 2.5 5.0 2.5 AM EX PL
  20. 20. Hurdles • Financial returns not coming quick enough • Overly ambitious business plan • Marketing in the wrong areas • Not enough ‘on the ground’ research • Poor partner selection process • Weak brand recognition • Insufficient senior management time • Lack of buy in at all levels • Export / import requirements • Lack of planning www.javelingroup.com QUESTIONS 20
  21. 21. 21 Questions? matt.jeffers@javelingroup.com Tel: 020 7961 3200 www.javelingroup.com
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