"The Changing Dynamics of Retail - MultiSupplier Marketplaces"


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Presentation performed on July 12, 2011 at 1pm EST with Ixtens, Inc and Guest Speaker Sucharita Mulpuru.

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"The Changing Dynamics of Retail - MultiSupplier Marketplaces"

  1. 1. The Changing Dynamics of Retail -- Multi-Supplier Marketplaces Special Guest Speaker Presenters Paul Kogan, SVP Business Development, IxtensSucharita Mulpuru, VP and Principal Analyst, Forrester Research Eugene Nikiforov, CPO and Founder, Ixtens To Join The Teleconference: Toll: +1 (909) 259-0012 Access Code: 515-292-310 Presentation Content: Will be made available for download at www.ixtens.com Email will be sent to notify you of availability Questions: Please ask questions via Twitter #IXWebinar or through the Q&A function
  2. 2. AgendaBrief Introduction of IxtensWhat You Need To Know About Marketplaces with Sucharita MulpuruHow Marketplaces WorkMarketplaces in Action with Eugene NikiforovQ&A with Eugene and Sucharita Copyright Ixtens, Inc. © 2011
  3. 3. Ixtens Mission Copyright Ixtens, Inc. © 2011
  4. 4. Ixtens Company Overview!   A group of e-commerce veterans who helped Amazon build their Enterprise Webstore.!   7+ years of expertise in e- commerce and online marketplaces!   Global reach with offices in New York, London, Russia!   80+ employees Copyright Ixtens, Inc. © 2011
  5. 5. Some of Our Clients Copyright Ixtens, Inc. © 2011
  6. 6. Ixtens ProductsIxtens Connect•  SaaS solution that powers online multi-channel ecommerce Ixtens Central •  Normalization platform, optimizing data flows in real timeIxtens Marketplace•  Backend platform managing third party supplier ecommerce Copyright Ixtens, Inc. © 2011
  7. 7. Sucharita Mulpuru, Principal Analyst, ForresterResearch• At Forrester, Sucharita serves eBusiness & Channel Strategy Professionals• Leading expert on eCommerce, multichannel retail, consumer behavior, andtrends in the online space.• Authored joint study Top 5 eCommerce Trends 2011Previous Work:• Saks Fifth Avenue• Toys R Us• Walt Disney CompanyEducation:• B.A. Economics from Harvard• M.B.A Stanford Graduate School of Business Copyright Ixtens, Inc. © 2011
  8. 8. 8 © 2011 Forrester Research, Inc. Reproduction Prohibited
  9. 9. What Every Large Retailer Or Media CompanyNeeds To Know About MarketplacesSucharita Mulpuru, VP and Principal AnalystJuly 12, 20119 © 2011 Forrester Research, Inc. Reproduction Prohibited 2009
  10. 10. Amazon is the new Walmart10 © 2011 Forrester Research, Inc. Reproduction Prohibited
  11. 11. Trend 3: Investment in online marketplaces “One of the most significant facts regarding eCommerce in recent years is how Amazon.com is growing faster than the rest of the eCommerce industry…. Retailers that compete with Amazon have come to discover that offering marketplaces on their own sites is critical to driving margins and remaining competitive on the prices and the shipping fees of the items they do stock in inventory. “11 © 2011 Forrester Research, Inc. Reproduction Prohibited
  12. 12. Two key facts: consumers don’t really shop around… “Thinking about your most recent online purchase, approximately how many online retailers did you visit during the purchase process?” Base, 3,179 US online adults Source: Q2 2010 Forrester Consumer Technographics Online Retail Survey12 © 2011 Forrester Research, Inc. Reproduction Prohibited
  13. 13. …and they seek selection and variety online Percent agreeing with statement Base: 4,114 US online adults Source: Q2 2010 Forrester Consumer Technographics Online Retail Survey13 © 2011 Forrester Research, Inc. Reproduction Prohibited
  14. 14. Agenda Lessons from Amazon’s marketplace Key considerations14 © 2011 Forrester Research, Inc. Reproduction Prohibited
  15. 15. Companies cannot ignore Amazon15 © 2011 Forrester Research, Inc. Reproduction Prohibited
  16. 16. Amazon has gradually earned more profit Profitable Small and erratic!Profit asa % ofsales NA NA NA 1% 8% 4% 2% 3% 3% 4% 3%Source: Amazon annual reports 2000-201016 © 2011 Forrester Research, Inc. Reproduction Prohibited
  17. 17. What is the marketplace? A product offered for sale by Amazon.com The same product on the same product detail page offered by other sellers17 © 2011 Forrester Research, Inc. Reproduction Prohibited
  18. 18. Some Amazon marketplace highlights •  Marketplace has many pros: wider product & brand selection, no costs for storage and distribution, content costs borne by sellers/ merchants •  Sales from marketplace sellers represented 31% of unit sales in 2010 (up by 3% compared to 2005) •  Given that Amazon makes up to 15% (in revenue share) from any sales on marketplace and that 31% of unit sales is sales from marketplace and assuming that units had the same average price from Amazon and marketplace, Forrester estimates that marketplace sales account for 6% of total sales.18 © 2011 Forrester Research, Inc. Reproduction Prohibited
  19. 19. The Amazon marketplace is a significant driver of the company’s profit US Marketplace revenue and GMV ($B) US Marketplace Revenue as a profit driver Source: Amazon SEC filings; Forrester analysis19 © 2011 Forrester Research, Inc. Reproduction Prohibited
  20. 20. Some retailers have learned this the hard way, and others likely will follow20 © 2011 Forrester Research, Inc. Reproduction Prohibited
  21. 21. The implications of this business model are transformational Retailer 1 Retailer 2 Retailer 3 Consumer electronics 5% 10% 15% sales Est. margin 0.5% 1% 1.5% from CE sales Other 95% 90% 85% categories Old profit 1% 2% 4% New profit 0.5% 1% 2.5% % decline in -50% -50% -38% profit21 © 2011 Forrester Research, Inc. Reproduction Prohibited
  22. 22. Agenda Lessons from Amazon’s marketplace Key considerations22 © 2011 Forrester Research, Inc. Reproduction Prohibited
  23. 23. If I already offer drop shipping on my site, is this different? §  Not necessarily, drop shipping can be one type of a marketplace §  The common link is shifting inventory ownership §  Marketplaces can be “white labeled” products or explicitly branded as marketplace offers §  There is one single shopping cart that captures transactions23 © 2011 Forrester Research, Inc. Reproduction Prohibited
  24. 24. Important facts to know about launching a marketplace §  Your brand equity is reliant on a 3rd party; invariably, lapses occur with marketplace partners §  It takes many years to build up appropriate partnerships and business processes (e.g. escalation, order swat teams) to ensure that marketplaces operate with minimal problems §  Companies (that sell into marketplaces) may be reluctant to share the keys to their kingdom (sales, velocity, price elasticity) with potentially competitors; finding effective partners can be a challenge §  Competition is more difficult because product assortments may be less differentiated; your marketplace partners may be the same partners of others §  The ability to capitalize on a marketplace depends on a unique, differentiated asset that your site delivers to shoppers (e.g. one-stop shop, superior service, name recognition) But if executed effectively, marketplaces can be extremely lucrative24 © 2011 Forrester Research, Inc. Reproduction Prohibited
  25. 25. Key success factors of marketplaces Requirement What It Means Breadth of merchandise • Overlap with current merchandise assortment and an extension of it Extensive presentation of • Design support to ensure that marketplace merchandise is well- merchandise presented • Feedback from shoppers on accuracy and timeliness of order Merchant performance audits processing and monitoring • Consistency of product details and imagery • Enables merchants to set up items Self-service merchant tools • Links to items in your inventory(if relevant, similar to Amazon) Reporting for merchants on sales, impressions, etc. Merchant accounting and • Bulk of IT development costs and time payment mechanisms • “Affiliate-like” payment structure in place Dedicated team members for • Merchant solicitation and ongoing account support marketplace growth and • Assistance in features like SEO success25 © 2011 Forrester Research, Inc. Reproduction Prohibited
  26. 26. Thank youSucharita Mulpurusmulpuru@forrester.com © 2009 Forrester Research, Inc. Reproduction Prohibited
  27. 27. Q&A Q&AQuestions from Sucharita s presentation Copyright Ixtens, Inc. © 2011
  28. 28. Marketplace OriginsConcept Throughout History In the Age of eCommerceBuyers! + +Marketplace!Sellers
  29. 29. Amazon has proven the marketplace concept $34.20 $6.92 Billion $3.12 Billion Billion $610 Million $16 2010 40+ productMillion 2004 categories Launch Webstore Marketplace 2002 Services Sales are > 30% Launch Amazon Marketplace (3rd of Total party sellers) 1998-99 music, DVDs, toys, electronics, tools, and hardware 1995 only books Copyright Ixtens, Inc. © 2011
  30. 30. Marketplace Trends!  A major trend for 2011!  Have built their own marketplace platforms.!   Launching a marketplace in the U.K. (RetailWeek/BBC News)!  eBay is shifting toward a more Amazon-likeexperience. Copyright Ixtens, Inc. © 2011
  31. 31. Marketplace Definition!   Unified Catalog!   Third Party Suppliers!   Merchant of Record!   Single Basket Copyright Ixtens, Inc. © 2011
  32. 32. Marketplace BenefitsBENEFITS RETAILER MEDIAExpand eCommerce offering ✔ ✔Outsource inventory risk and reduce investment ✔ ✔One-time onboarding of multiple suppliers ✔ ✔Gain new float revenue ✔ ✔Transform readers into buyers ✔Own the customer and the data ✔ Copyright Ixtens, Inc. © 2011
  33. 33. Eugene Nikiforov, Co-Founder / CPOHistory•  Founder of Ixtens in 2004•  Working in electronic commerce since 1996Previous Work:•  Co-Founder Quantum Art (CMS Systems)•  Intershop•  Simon & Schuster•  Cannon USA•  CBS Sportsline•  Tesco•  Marks & Spencer Copyright Ixtens, Inc. © 2011
  34. 34. The Marketplace Platform Copyright Ixtens, Inc. © 2011
  35. 35. Marketplace Fulfillment ItemsCustomer Marketplace Operator SuppliersCustomer browses Single-Cart shopping experience Each Supplier responsible forcatalog fulfillment Marketplace Supplier A Routes Order-Items Supplier B to Each Supplier Supplier C
  36. 36. Marketplace Payments PaymentsCustomer Marketplace Operator Suppliers Merchant A Marketplace Marketplace collects settles with payment Merchants Merchant B Merchant C Holds float up to Minus 30 Days 8-20% Marketplace fee
  37. 37. Marketplace! Copyright Ixtens, Inc. © 2011
  38. 38. User Case Studies: Ixtens MarketplaceIxtens Assembles OneStop Shopping Formydeco.com !   Mydeco reached out to Ixtens with a desireName: mydeco.com to create a marketplace that would enable them to increase the number of itemsSales Channels: mydeco.com available on mydeco.comSKU s: 2,500+Launch Date: Q4 2010 !   Wanted to increase their market beyond furniture to include kitchenware !   Needed a solution that would enable them to offer a web portal to their suppliers and merchants for managing data and inventory !   Within a couple of months, they ve launched with 10 manufacturers offering 2500+ products, !   Maintain an automated, central repository for managing merchants and data feeds Copyright Ixtens, Inc. © 2011
  39. 39. User Case Studies: Ixtens CentralIxtens Makes a Happy HomeOnline For Lifetime Brands !   Lifetime Brands had an extensive number of back-end systems that they need to automate the sharing of information across. !   Had to choose a solution that did not interrupt core operations and workflows that were vital to their business. !   Lifetime selected Ixtens Central to provide data automation and integration across their systems and sales channels. !   Company no longer wastes valuable time and resources manually entering data and synchronizing updates across multiple channels. Copyright Ixtens, Inc. © 2011
  40. 40. Q&A Q&A Questions forSucharita and Eugene Twitter: #IXwebinar Copyright Ixtens, Inc. © 2011
  41. 41. Thank you!Paul Kogan, VP Business Development, IxtensSucharita Mulpuru, VP and Principal Analyst, ForresterEugene Nikiforov, CPO and Co-Founder, Ixtens info@ixtens.com