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Prestudy USA eCommerce Growth, 27.10.2015

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Prestudy USA eCommerce Growth, 27.10.2015

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Prestudy USA eCommerce Growth, 27.10.2015

  1. 1. Näkymiä USAn Verkkokauppaan: Mahdollisuudet Suomalaisille Yrityksille Hartti Suomela October 2015
  2. 2. 10/29/201 5 © Finpro2
  3. 3. 10/29/201 5 © Finpro3
  4. 4. 10/29/201 5 © Finpro4
  5. 5. E-commerce grows, reaching almost $500bn by 2018 5Source: Forbes; eMarketer.com.
  6. 6. Trendspotting & Interesting CASEs 6
  7. 7. More Information and Examples 10/29/201 5 © Finpro7
  8. 8. From Online to Offline & Make People Stay 10/29/201 5 © Finpro8 Source: Gallivant Source: Rent The Runway Source: LinkedIn Pulse
  9. 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. 10. Sephora’s Fragrance IQ 10/29/201 5 © Finpro10
  11. 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! 10/29/201 5 © Finpro11
  12. 12. AllRecipes & Instacart: Seamless Groceries 10/29/201 5 © Finpro12
  13. 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. 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 10/29/201 5 © Finpro14
  15. 15. Online Commerce Opportunities for Technology & Tools Providers 15
  16. 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. 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. 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. 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. 20. Selling Products Online in U.S. 21
  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 10/29/201 5 © Finpro23
  22. 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) 10/29/201 5 © Finpro25
  23. 23. CASE: • Ambronite is a drinkable supermeal that takes hunger away for 4-5 hours • Sales started with crowdfunding project in 2014 on Indiegogo 10/29/201 5 © Finpro26
  24. 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 10/29/201 5 © Finpro27 Source: Interview with Simo Suoheimo / Ambronite
  25. 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 10/29/201 5 © Finpro28
  26. 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 10/29/201 5 © Finpro29 Source: Interview with Lasse Leppakorpi / Beddit
  27. 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 10/29/201 5 © Finpro30 Source: Interview with Lasse Leppakorpi / Beddit
  28. 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 10/29/201 5 © Finpro31
  29. 29. Hartti Suomela hartti.suomela@finpro.fi
  30. 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/ 10/29/201 5 © Finpro33

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