5. InsightOn: Editorial – Bill Meahl 05
Dear Reader,
With the growth of e-commerce, the way people consume is changing rapid-
ly, with strong impact on the way many companies do business and on their
supply chains and logistics.
There’s no doubt that e-commerce empowers consumers through ease of use
and broadening product choice. Plus, for logistics providers, it opens up a
whole new area of potential, because, of course, products ordered online need
to be delivered to doorsteps. Those doorsteps might be in the next town; but
they might also be on the other side of the world. For every opportunity, there’s
a challenge. How can good delivery performance be achieved cost-effectively
in an era of higher fuel prices and higher volumes, for example?
Collaboration may be one part of the solution. Collaboration is frequently
discussed in business, yet not always fully understood in its entire scope and
potential.
Most commonly, companies think of collaboration as what happens at a con-
solidation center, when manufacturers and retailers work to share warehouses,
transport infrastructure and information. Some people call this ‘horizontal
collaboration’, and it is indeed an option that many companies are pursuing as
higher e-commerce volumes change the equation on the market.
Then there’s ‘vertical collaboration’ in which suppliers in a single industry, such
as the semiconductor industry, consolidate goods and share transport, since
they are often retracing each other’s steps and sharing the same customers
from a logistics point of view.
True collaboration is hard to achieve, of course, as you’ll read in the second
half of this report. Luckily, it’s also a topic that inspires a great deal of ‘thought
leadership’, some of which is highlighted in the following pages.
I invite you to enjoy our take on e-commerce and collaboration and to find out
more about what experts from around the world have to say about both.
Best regards,
Bill Meahl
Chief Commercial Officer at DHL
7. InsightOn: Contents 07
Contents
Editorial – Bill Meahl Page 05
Contents Page 07
Editorial – Ken Allen Page 09
Facts & Figures Page 10
The Game Changer Page 13
Life – Plugged In Page 14
Consumption 3.0 Page 20
The Expert View – Johan Paludan Page 25
Reaching Customers – Globally and Locally Page 26
Perfection: What Customers Expect with Online Shopping Page 34
The Ripple Effect of Online Purchases Page 38
Global E-Facts Page 42
E-Commerce: The Growing Pains Page 44
The Expert View – Christoph Wenk-Fischer Page 50
E-Commerce and Collaboration Page 53
An Evolution of Collaboration Page 55
Collaboration – The Human Factor Page 58
Collaboration: A Foundation for Supply Chain Innovation Page 65
The Expert View – John Gattorna Page 70
Orchestration: The New Form of Collaboration Page 74
The Foundation of Future Business Page 76
DHL Case Studies Page 78
Background and Bibliography Page 90
9. InsightOn: Editorial – Ken Allen 09
E-commerce revenues worldwide are expected to reach 1 trillion US dollars
this year. By 2015, the world will have 3.7 billion internet users. Already, the
number of internet users in Asia is double that of Europe, even though pen-
etration rates in Asia are still low.
The numbers are staggering. And, as e-commerce flourishes, they are only set
to rise. For retailers with an online offer, then, the international opportunities
are both hugely exciting and there for the taking. The phenomenon of online
shopping (and it is a phenomenon, touching everyone wherever they are in
the world) allows enterprise the chance to break into new markets – particu-
larly lucrative developing ones. It also allows them to build a prosperous and
truly global customer base.
There is, of course, a ‘however’ – and it’s this. Successful product shipment is
going to become more critical than ever for retailers who want a slice of the
e-commerce pie. You might have developed a truly groundbreaking product,
but if you can’t transfer it easily from your website into the hands of your
customers, your business will never succeed.
Studies have shown that effective logistics – particularly in the retail e-com-
merce sector – are a competitive differentiator for merchants. If you can offer
the items that people want or need and ship them more efficiently than your
competitors, you offer something of real value. Your business is duly marked
as a cut above the rest.
For those who recognize this, online is a real growth opportunity, a point
made in the first half of this InsightOn: report which explores the trends,
prospects and challenges of e-commerce. The second half of the report looks
at collaboration as a means to tackle some of the more taxing problems and
complexities of e-retail.
Collaboration is a word we know well at DHL. We believe in close collabor tion
a
with businesses in order to drive sustainability initiatives, reduce costs and
implement the best, most efficient integrated solutions for their individual needs.
Of course, we are well known for providing critical services that enable the
vast flow of goods around the world, and for our ability to move high volumes
from one corner of the world to another on time and within budget. But we
also do far more to support our customers who run businesses online. For
example, we provide software products that make it easy for merchants to ship
and track their packages and manage their returns – a facet of e-commerce
highlighted in this report.
Whatever viewpoint you are reading from, e-commerce isn’t a subject any of us can
choose to ignore. Online retail, with all its multi-faceted challenges, is here to stay.
With that, I’ll leave you to explore our latest InsightOn:. Enjoy your read.
Best regards,
Ken Allen
CEO, DHL Express
10. 10
S AL E
68%
of American retailers polled expected 2011 online
holiday sales to increase by at least 15% from 2010
26%
projected annual growth of e-commerce
in countries such as Spain, Brazil, China, Russia
and Mexico through 2015
More than 1000 16 – number of top 50 online retailers
101 to 1000 7 that featured more than 1,000
videos on their site in Q1 2011.
11 to 100 9
Under 10 18
11. InsightOn: Facts & Figures 11
48%
2/3
– fraction of
smartphone users
of monthly retail who shopped
budget that U.K. shoppers by phone in
spend online September 2011
$ 1 400 000 000 000
2015 – the year that global e-commerce, including travel and auto purchases
as well as online retail sales, will reach an estimated
26 – average
number of
hours internet
users in Europe
75%
spent online
in March, 2011
224 000 000
‘mobile commerce’ grew
between 2010 and 2011,
as measured in the e-tailing
group’s 14th Annual Mystery
Shopping Study – number of ebay’s unique visitors per month
13. InsightOn: The Game Changer 13
The Game Changer
E-commerce once described how companies operating in the B2B sector conducted business by
sharing information electronically. Nowadays, it has a completely different meaning: e-commerce
is ‘online shopping’ and all that comes with it, such as social shopping, multimedia entertainment,
immediacy and, of course, ease.
E-commerce is a truly ground-breaking inter travel to the end user. There are human factors
national phenomenon — a consumer in Madrid, to consider, too: Collaboration between internal
say, can order goods from a seller in Missouri. team members and their managers, for example,
Yet, from a logistics perspective, this involves a and cross-collaboration between their opposite
long supply chain that crosses borders, curren- numbers in external (and sometimes competing)
cies and customs regimes and requires a cost- organizations. For this to be successful, a com-
effective and consistent solution. The consumer’s mon focus and open communication is needed;
repeat business depends on it. plus an understanding of the end goal by staff at
many different levels within a business.
Returns is another conundrum. How does a
faulty or unwanted product go back through the So how do companies collaborate successfully?
supply chain in a way that serves and satisfies the What challenges and barriers must they over-
customer, but doesn’t squeeze the margins of the come to do it effectively, what is its true cost and
e-retailer or the logistics provider? It’s a question how can it be encouraged? In the second half
that the logistics industry is still grappling with. of this report, leading international academ-
ics and logistics experts (including author and
There’s no doubt, however, that e-commerce is consultant John Gattorna, and Richard Wilding,
a game changer for the retail industry. It’s also a professor of supply chain strategy at Cranfield
growing exponentially. Online companies who School of Management) offer the latest thinking
want growth – and what ones don’t? – know and strategies on collaboration.
they need to set up their businesses and sup-
ply chains to take advantage of a new shopping Could it be a turning point for e-commerce?
reality. The ones who don’t won’t be around to
tell the tale about how they tried to turn back
the e-commerce tide. So, in the first part of this
edition of InsightOn:, we look at the continually
evolving e-commerce landscape and investigate
its trends, opportunities and challenges from the
viewpoints of the consumer, enterprise and the
logistics operator.
If retailers are going to thrive in the age of e-com-
merce, then collaboration could offer a way to
implement greater competencies in logistics
planning and execution. At its simplest level,
collaboration is about the sharing of equipment,
vehicles and carriers; but it’s also about sharing
critical data on the movement of goods as they
14. 14
Life – Plugged In
The digital world – with its always-on, 24-hour cycle of information, communication and media –
ermeates lifestyles, shaping the way people interact, consume and make sense of the world we live in.
p
The changes are well documented. Anthropologists
Futurists predict that our electronic connect-
have shown how text messaging – expected to top edness will continue to impact daily lives in
9.4 trillion messages by 2016 (Informa Telecoms
profound ways, including the way we consume.
and Media, May 2012) – has transformed language; It may seem far-fetched now, but some futur-
how instant messaging has shortened attention ists can see the day when you might not have to
spans, and how consumers are collaborating and shop for yourself because your fridge will do it
sharing in new-found communities that are no for you. It will be intelligent and, knowing when
longer restricted by physical boundaries. it is getting empty, able to initiate an order from
an online shop – thus taking you, the consumer,
These communities often pursue a greater good, out of the equation.
such as reducing their carbon footprint or help-
ing others with practical information on things Your bathroom mirror, meanwhile, could have
as diverse as home health remedies, fashion a dual role as a message centre, reminding you
trends and where to spot a shopping bargain. about your schedule as you get ready for the
day, and/or summarizing your home’s energy
From a consumer perspective, computer technol- consumption and production. By tapping your
ogy has had the greatest impact of all by revolu- mirror you post these results on a social net-
tionizing the way people shop. Now everything working site, where you are challenging friends
from groceries and home furnishings to cars and to earn the most points to exchange for games
holidays can be bought over the internet. More and prizes to be collected online.
than this, however, consumers can collaborate
and share information, write reviews and impart If all this sounds outlandish, scroll back to the
tips in new-found online communities. Shoppers world today and notice that what was considered
are no longer restricted by physical boundaries. science fiction two decades ago is not only part
Technology has empowered them. of the new reality – it is driving expectations
15. InsightOn: Life – Plugged In 15
for consumers. For instance, between meetings It’s no wonder then that retail e-commerce is
DELPHI THESIS 46
at work, the busy consumer can now place an booming. For several years now, it has been
online order for a dinner to be delivered to their steadily taking market share away from tradi- IN FUTURE …
home at a time of their choosing. All they need tional bricks-and-mortar retailers. In the US, for … the internet connects
to make this happen is two minutes’ access to example, e-commerce reached 8 percent of over- 100% of the world’s
a PC, laptop, mobile or tablet – and a reliable all retail sales in 2011, compared with roughly 4 population, based on a
delivery service, of course percent in 2004. new infrastructure (e.g.
glass fiber, satellite, mobile
With reliable delivery and plenty of choice, devices).
consumers have discovered that click-and-ship
“With reliable delivery is in many ways more gratifying than traditional
PROBABILITY
Definitely not: Definitely:
shopping. People find that it fits into their lives 13 % 12 %
and plenty of choice, much more easily than a trip to the store, where Unlikely:
25 %
selection may be limited and comparing prices is
c
onsumers have discovered done the old-fashioned way: Manually.
that click-and-ship is in And that’s not to mention the benefits for life- Probably:
logistics: No more vying for a parking spot at a 31 %
many ways more gratify- shopping area, waiting in line to try on clothes,
Possibly:
19 %
waiting in line again to pay and then fighting
ing than traditional traffic or crowds on the subway on the way Delivering Tomorrow: Customer Needs in
2020 and Beyond. A Global Delphi Study (see
home.
shopping.”
p. 113 for details)
Governments, too, are keenly aware of the
advantages that come with e-commerce, and
they’re keen to boost computer and internet
Multiple means of communication – or hyper- usage to keep their economies and workforces
connectivity – is the new normal. According to competitive.
Robert Greenhill, the chief business officer of
the World Economic Forum, hyperconnectivity As part of its Digital Agenda for Europe, the
is redefining relationships between individuals, European Commission has set a target of en
between consumers and enterprises and between abling 75 percent of the population to be regular
citizens and state. He has said, “We are begin- internet users by 2015, with the proportion of
ning to see fundamental transformations in all the population that has never used the inter-
areas of the economy and society.” net decreasing to 15 percent. Within the same
period, 50 percent of the population should be
Most experts believe that e-commerce is not buying online and 20 percent of the population
the driving force, but rather e-connectedness. should buy cross-border online.
Once connected, people then transfer their
experience of instant information gratification For businesses and consumers alike, this trend
and empowerment to the realm of e-commerce. opens up whole new worlds of opportunity.
In other words, e-connectedness means con-
sumers want their products fast, easy and on
their own terms.
16. 16
E-commerce trends
SoLoMo Many people use social networks to research pur-
chases and learn about products. For example,
We are perpetually in motion. Thanks to online Mumsnet in the UK, a place where mothers compare
technology, we can now all have a home and office notes and collaborate, has built up such a following
on the move. With our mobile phones and tablets, that is considered crucial for influencing product
we can field business queries, monitor our Facebook choices – and even elections. In India, India Con-
pages, send a Tweet, add to a blog and book a table sumer Forum is an online platform giving consumers
for dinner while we’re, say, sitting on a train or re- the chance to share information about goods and
laxing at a café table. services, post grievances and give helpful consumer-
related tips and advice. Then there is US site Pinter-
Internet trend watchers have come up with a new est, which invites visitors to share their favorite
acronym that could describe this behavior as well things on ‘pinboards’ and follow collections created
as one of the main trends on the world wide web: by others, and has over 12 million users a month.
SoLoMo, short for social-local-mobile. Plus, many retail sites have developed a sellers and
buyers community forum – discussion pages where
The term conjures up a world dominated by social potential consumers can read comments and re-
networks (So), in which local (Lo) commerce and views by posters who have already bought a partic-
communities thrive while people interact and ular product. US retail giant Amazon, for example,
transact from their mobile (Mo) devices. launched its customer discussion board in 2007.
“The Social, Local, Mobile (SoLoMo) revolution is Christoph Schwarzl, a Kurt Salmon partner and the
here,” says Daniel Laury, the CEO of LSF Network, a author of the book New Online Retailing, said,
US-headquartered global digital marketing company “Many shoppers now consult their peers online be-
offering digital advertising and performance marketing. fore they make major purchases. For them, other
“With rapid rates of smartphone and tablet adoption, consumers are considered more reliable and trust-
consumers are on the move, looking for information worthy than advertisers.”
quickly and expecting relevant results on the go.”
Going Local
Already in 2007, social networking surpassed email
in terms of time spent online. By 2011, users in Next comes business, with a definitive local twist,
I
srael, Argentina, Turkey and Chile all spent more driven by social media users on mobile devices.
than 10 hours a month on social networking sites. While business may be global in many ways, com-
They were most likely sharing and commenting on panies like Groupon and LivingSocial help generate
photos of friends and family, swapping recipes or demand for products and services locally. And
comparing their opinions on films, books and cur- check-in services like shopkick drive foot traffic
rent events. into retail outlets.
17. InsightOn: Life – Plugged In 17
DELPHI THESIS 48
IN FUTURE …
… all across the world,
communication costs
decrease extremely –
information and telecom-
munications are available
to everyone at any time
and almost for free.
PROBABILITY
Definitely not: Definitely:
2% 12 %
Unlikely:
19 %
Possibly:
Indeed, a survey by comScore in 2011 showed that smart-phone or tablet. The device will be the cen- 27 % Probably:
40 %
local listings are among the most relevant and trust- tral nervous system of their lives and the place
ed search results for consumers. Some 61 percent of where they conduct their affairs, relying on the Delivering Tomorrow: Customer Needs in
2020 and Beyond. A Global Delphi Study (see
online searchers consider local search results to be opinions of people in their social networks and ser- p. 115 for details)
more relevant, and 58 percent consider local search vices provided locally.
results to be most trustworthy than others, it said.
In South Africa, for instance, internet use grew
Relevancy typically means that users recognize the 25 percent in 2011, mostly due to access via mo-
name or address of a business that has the products or bile phones. And India may be raising a “mobile-
services they want in a specific location. For business- only” generation, according to one study. It found
es, it translates to a more targeted readership for ads. that 49 percent of people who are using the mobile
internet either never or infrequently use it from a
“For a local company looking for local customers or desktop.
a national company steering customers to local
storefronts, local search provides targeted messages Essentially, the SoLoMo trend is another example
to the consumer searching for a product or service in of how electronic connectedness and new consumer
a particular area,” Laury said. The “Mo” trend in technologies have eliminated information asym-
SoLoMo is also moving forward at full speed. metries from the consumer‘s shopping experience –
and put power into the consumer’s hands.
Almost shockingly, more people on this planet
could access a mobile phone network than electric-
ity, if cost were no factor. According to the GSM As-
sociation and the United Nations, commercial wire-
less networks can reach 85 percent of the world’s
population while the electrical grid can reach only
80 percent of the world population.
With wireless access widely available and mobile
handsets far cheaper than desktop PCs, it’s clear
that users of the mobile internet will far outnumber
their fixed-line brethren. At the time of writing,
PCs are still the preferred way of connecting to the
internet; but a new study by NPD DisplaySearch
predicts that tablets will overtake PCs by 2016.
Indeed, experts say that most of the mass market
consumer world will never have a PC, but only a
18. 18
The Internet and the Developing World exponentially: 2011 saw 25 percent growth in Indian
internet users over just 12 months.
The internet may have its roots in Silicon Valley, but
statistics show that its future will be decidedly in- The future of the internet in India looks set to be
ternational. driven by mobile devices. Figures from wearesocial.
net highlight that 59 percent of all Indians only
Already, the strongest growth in number of users – a
ccess the internet via mobile technology. With an
and the sheer largest number of users overall – is increase in 3G and 2G services, and an Indian
in developing countries. Europe and North America G
overnment roll-out of low-cost tablet devices
now have the highest proportion of internet users across schools nationwide, internet use is going to
among their entire populations, but the overall get much higher, very soon.
number of users is dwarfed by countries in the de-
veloping world. With more and more citizens online, e-commerce in
India is on the rise. In 2011, it was estimated that
China, for instance, added more internet users in the value of online business in India had reached
three years than all the internet users combined US$10 billion. Popular sites in India include
that exist in the US, according to Mary Meeker, an 20North.com, offering electronics, books, music
analyst at venture capital firm Kleiner Perkins Cau- and movies; the fashion site 99labels.com; and
field & Byers and a recognized expert on internet Dealsandyou.com, which features deals and dis-
trends and business. counts on a variety of products.
China had a population penetration of internet us- The same story is being repeated in parts of Africa,
ers of only 34 percent in 2010, but that rate was where undersea cables have opened up high-speed
growing at 20 percent per year, according to the In- online access and dramatically increased business
ternational Telecommunications Union and the opportunities. Mobile is big news here: By 2015,
United Nations. What’s more, the total number of mobile phone subscribers are expected to reach
internet users in China in 2010 – some 459 million 850 million — of which 250 million will have mobile
– was already nearly double that of the US, where broadband subscriptions. In Nigeria, according to
244 million people were accessing the internet. statistics from the ITU (International Telecommuni-
cations Unions), 35 million new internet users
Popular sites in China include the marketplaces came online during 2007 and 2010. Mobile use is
Tao ao and 360buy.com, which had more than
b high in the country, with over 95 million mobile sub-
40 million registered users in early 2012 and pro- scribers (Nigerian Communications Commission).
cessed 400,000 orders a month.
In South Africa, smartphone users also represent
In 2011 in India, 121 million people were estimated the future potential of internet growth. At the end
to be internet users. If that sounds like a lot, then it’s of 2010, 6.8 million South Africans were using the
nothing compared to the overall Indian population, internet; but by the end of 2011, that figure had in-
which stands at 1.2 billion. In such a big country, then, creased to 8.5 million; and by the end of 2012 it is
121 million is a low figure; and, if internet growth was estimated to topple the 10-million mark.
standing still, it would be unremarkable. But internet
growth in India isn’t standing still. According to re-
search aggregated by wearesocial.net, it is growing
19. InsightOn: Life – Plugged In 19
E-commerce in South Africa is growing accordingly, as are used by far more non-Americans than Americans.
noted in an Internet Economic Impact Study survey by For instance, more than half of Google’s traffic
independent technology research and strategy organi comes from outside the US. And the market valua-
zation, World Wide Worx, published in May 2012. tion of Chinese and Russian internet companies
“The study… indicates that e-commerce is growing has been rising quickly, according to Meeker. As of
at a rate of around 30 percent a year, and is showing late 2011, Chinese companies like the search-engine
no signs of slowing down,” said Managing Director of giant Baidu and the online service provider Tencent
World Wide Worx, Arthur Goldstuck. “In fact, taking were valued at more than US companies such as
into account the fact that a number of major consumer priceline.com and Yahoo!
brands and chains have not yet devised comprehensive
online retail strategies, the scope for future growth is These rising figures have real implications for com-
even greater.” The result, says Goldstuck, is that an panies’ logistics operations. If businesses are not
internet economy worth R59 billion in 2011 and making already shipping to developing markets, then they
up 2 percent of the SA economy could grow to as much had better prepare to seize the opportunity in the
as 2.5 percent of the economy by 2016. coming years. A rising, internet-savvy middle class
in the developing world is busy writing the next
Other points in case: the world’s largest internet chapter of the e-commerce story.
properties may be American companies, but they
Sale, Sale, Cyber Sale Often, stores stay open until midnight to attract as
many shoppers as possible.
Black Friday, the day after the Thanksgiving celebra-
tion in the US, consumers typically begin their Christ- In recent years, however, Cyber Monday, the first
mas shopping. It has become a discount shopping Monday after Thanksgiving, has become almost as
day when millions of US shoppers hope for massive important to retailers. It’s the day online shopping is
savings. The term Black riday illustrates the point
F gauged to predict how strong the holiday shopping
at which stores start to make a profit, or go "into the season will be for retailers overall. With full stores and
black." The holiday shopping season is important rising gas prices, online shopping is gaining ground as
for the economy because 19 percent of retail sales people simply do the job from their desktops or hand-
occur between Black Friday and Christmas. For helds. During the 2011 post-Thanksgiving weekend,
some retailers, such as jewelers, the period may Cyber Monday sales alone hit US$1.2 billion, making it
bring in nearly 40 percent of their annual revenue. the heaviest US online spending day in history.
20. 20
Consumption 3.0
Once, the mantra for successful retailing was “location, location, location.” Now, e-commerce is re-
defining the concept of place, allowing companies to create a virtual identity that can be marketed
just like a physical one and enabling people to travel between both worlds.
Take the phenomenon of pop-up retail. In draw large groups of people; typically, they work
DELPHI THESIS 56
New York, Paris and Berlin, shops can appear through social networks and rely on social
IN FUTURE … quickly – and be gone a few days later. m
edia to spread the word about deals at shops.
… Web-connected inter-
faces make private homes The idea is to create a buzz online that trans-
intelligent environments, fers back to the physical world, enticing people
where temperature, aroma, to partake in short-term, limited offerings at “Digital natives don’t
personalized broadcasts, frequently changing locations in city centers –
and information are i.e. pop-up locales. want to waste their time.
automatically adjusted to
the preferences of the Over the past few years, Toys ‘R Us has They will only go shopping
inhabitants, at all times. opened hundreds of holiday pop-up retail
PROBABILITY shops using otherwise vacant retail space, for one reason: To have fun.”
Definitely not: Vogue magazine has rolled out temporary
Unlikely: 8 %
2% Definitely: stores for teens that don’t sell any items but
13 %
offer makeovers and model castings, and
US retailer Target offered New Yorkers two The Psychology of Shopping
weeks to buy regular store items onboard Over the course of time, shopping has always
a 220-foot long glass-topped boat that it been about more than just meeting the daily
m
otored into Chelsea harbor. needs of life. The acquisition of certain goods re-
Possibly: mains a central way for people to distinguish
36 %
Probably:
Johan Paludan, a futurist who has worked at themselves socially and economically from oth-
41 % the Copenhagen Institute for Future Studies ers. And marketplaces have historically offered
since 1976, says the pop-up retail trend is part an important space for social interaction, the ex-
Delivering Tomorrow: Customer Needs in
2020 and Beyond. A Global Delphi Study (see of a wider ongoing transformation of retail change of information and spectacle.
p. 123 for details)
space to event space.
According to Paludan, the future of “live” shop-
“Bricks-and-mortar shops are quickly finding ping may hinge on its ability to continue to meet
out that they must offer something special to these key needs as it adapts to changes in the
compete with the benefits of buying online. It way we peruse and pursue goods.
won’t be long before people head to shopping
areas not to buy things – but to seek entertain- For hundreds of years, people visited ancient ba-
ment,” Paludan said. zaars, seaport commercial districts and general
stores to select the things they needed. Then
“Digital natives don’t want to waste their time. came downtown department stores and sub
They will only go shopping for one reason: To urban shopping malls.
have fun.”
But all this was before e-commerce was a force
Those retailers who are successful in pop-up to be reckoned with, with its 470 billion US dol-
selling often use the techniques employed by the lars in sales that are expected to exceed 1 trillion
flash mob performance art movement to quickly US dollars worldwide by 2012.
21. InsightOn: Consumption 3.0 21
Despite its tremendous size, the experience of CBRE Group, Inc, it was reported that e-commerce
e
-commerce is not even fully evolved yet, says had seen its share of core retail sales captured rise
Paludan. Right now, popular shopping sites in- from 3 to 6 percent during the past six years; while
clude large marketplaces that aggregate the goods the majority of bricks-and-mortar retailers’ shares
of thousands of sellers, such as Amazon.com and declined during the same period. Jeffrey B Edelman,
Alibaba.com, or giant retailers with a large web Director of the assurance, tax and consulting firm
footprint such as Walmart.com. McGladrey & Pullen, LLP, believes that “2012 will
be another year of lethargic growth, store closings
In the future, we may shop in 3D virtual malls that and increased focus on everyday low prices by
are architectural masterpieces and, at some point, s
everal major retailers, all of which will have a
we may even be able to have sensory and tactile s
ignificant impact on the entire retail landscape.”
experiences while shopping online. “Merchants He adds that multichannel is key to survival for
may be able to pipe the smell of bread into your many; and that online retailing also threatens
own home, or you may be able to print out sample e
xisting store economics, measurement systems
fabrics to explore their feel,” said Paludan. and incentives.
With the fast uptake of e-commerce, and such fan- According to a UK-government backed report by
ciful developments on the horizon, some experts Mary Portas, a retail marketing expert, TV person-
are already predicting the death of the shopping ality and fashion designer known as The Queen of
mall. They say that e-commerce could leave shop- Shops, town center vacancy rates have doubled
ping malls in a bind, just as those very malls and over the past two years, and 50 percent of consumer
hypermarkets have played a part in high vacancy spending takes place off the high streets. Portas
rates in downtown shopping districts. In the US, in a
dvocates turning the country’s town centers into
a May 2012 report from real estate services firm cultural and social meccas. She says, “I fundamentally
BUY
22. 22
believe that once we invest in and create social expect to find there. It’s a bridge between event
capital in the heart of our communities, the eco- shopping and old shopping – as consumers go back
nomic capital will follow. and forth between the worlds,” said Paludan. This is
omni-channel retail – the ideal aim for many e-re-
Others don’t see e-commerce as such a threat. tailers and the ultimate evolution of ‘multi-channel’
Paludan, for instance, believes it and real-world and cross-channel retail. The idea of omni-channel
shopping can co-exist and be mutually beneficial. retail is that consumers will be able to access the
He says the most successful real-life shopping retailer from whatever platform is available to them
venues will actually be a blend of both – offering in whatever part of the retail process they are, and
interaction between the virtual and real worlds and enjoy a co-ordinated and cohesive experience.
striking the right mix of entertainment and shopping.
Already, people and merchants connect the two
worlds. Users do so when they redeem electronic “The idea of omni-channel
coupons for real-world goods in stores or follow
the recommendation given on their handset to retail is that consumers are
walk into a particular store and interact with
products. There’s also the trend of sharing your able to access the retailer
location with friends by checking into physical
spaces – like a Starbucks – using a smartphone from whatever platform
and services such as foursquare or Facebook’s
location-sharing feature. Often companies will is available to them in
reward users with discounts for checking in.
whatever part of the retail
Companies, too, are transcending cyberspace.
The auction site eBay did so by setting up a process they are.”
pop-up shop in central London for wares avail-
able only online. And the carmaker Renault has
plugged the virtual into the physical world by
erecting an information kiosk at a car show in To this end, one company has even reproduced
Holland and enabling visitors to “like” particular the image of a grocery store on a poster – just
models on their Facebook pages. like a Potemkin village – and is giving people the
chance to buy items in what appears to be a typi-
“I see companies combining real-world locations cal store. Hung in subways by a Korean division of
with digital messages of what the consumer can the UK grocer Tesco, users approach the posters
23. InsightOn: Consumption 3.0 23
and place orders for home delivery with their working to make target marketing enhance the
DELPHI THESIS 57
smartphones while they’re waiting for their train. shopping experience. The profiles generated from
collected data also help companies interact with IN FUTURE …
Though some companies like Tesco seem to be consumers, offering them more chances to be a … purchasing decisions
embracing these types of new marketing op- part of the design and production process. A UK are based on peer-to-peer
portunities and creative ways to position their furniture company, for instance, offers “democrat- advice (e.g. via the internet);
brands, others still see altered buying behavior ic” designs by asking its customers to vote online classical advertising is dead.
as a threat, says Paludan. about which pieces it should manufacture, and PROBABILITY
wearers of Nike shoes can now design their own Definitely not: Definitely:
styles and colors, complete with their own initials. 8% 5%
Probably:
16 %
“In the end, shopping will Other campaigns are even more ambitious in their
Unlikely:
45 %
size and scope and don’t even involve the product
become much more itself. In 2011, Johnnie Walker, the blended Scotch
whisky, launched its Keep Walking campaign to
individual, as merchants galvanize support for three innovative initiatives Possibly:
in the fields of the arts, technology and business 26 %
collect intricate data in a number of markets, for example Brazil and
Delivering Tomorrow: Customer Needs in
Thailand. The Johnnie Walker consumers in each
about our preferences.”
2020 and Beyond. A Global Delphi Study (see
p. 124 for details)
market were urged to debate, over Facebook,
which initiative they thought had the most poten-
tial to shape the future in their country.
At present, many retailers are working through This offered consumers “a collective sense of
their policy for dealing with shoppers who participation and achievement and (will) hope-
compare prices online for items they see while fully spark new thinking about what can be
standing in a store. Some retailers may conclude achieved by working together,” said Gavin Pike,
that it’s best to forbid the use of virtual shopping Global Brand Director for Johnnie Walker. “By
assistant applications, while others have already using our communications to encourage like-
accepted the writing on the wall and are actually minded consumers to connect, collaborate and
facilitating customers as they make purchases via champion causes that inspire them we will deliv-
the web or phone – while visiting an actual store. er a deeper engagement with our brand as well
as showcasing some of the pioneering thinking
The way consumers shop may be shifting, but it’s that could lead us towards a better future.”
a slow metamorphosis. Yet some things never
change: Currently, whether consumers purchase “Whether online or in a store, we’re seeing grow-
in store or online, goods need to reach them as ing interaction between the consumer and the
quickly and as effectively as possible – other- producer,” said Paludan. “Call it collaborative
wise their custom will go elsewhere. Retailers consumption if you will.”
are urrently facing the twin-pronged reality of
c
bricks and mortar and e-commerce and realiz
ing the key role that logistics has to play in both.
They are understanding the importance of a
smoothly operating supply chain. Poor delivery
service in either area may have a long-term
negative impact on their entire brand, after all.
Collaborative Design
In the end, shopping will become much more
individual, as merchants collect intricate data
about our preferences, Paludan says. That data is
already being used for target marketing cam-
paigns i.e., a strategy whereby retailers focus on a
group of potential customers in specific locations
or demographic groups; or even shoppers with
similar attitudes, tastes and lifestyles. Sellers are
24. 24
Try This on For Size – actually available to shoppers around the physical
Shape-Fitting Technologies and digital worlds.
Walk into some stores these days and the sales In the UK, shoppers at Selfridges and New Look
clerk may call your attention to the screen on the can have their bodies mapped by BodyMetrics, and
back wall instead of the coat on the rack. online shoppers can do the same with home-based
camera technology. After the profile is made, it be-
There you can position yourself to play a game of comes a tool for trying on garments across multiple
shopping in a Wii-like way. The program will react stores on the web. Shoppers will try on clothes via
when you raise your arms and move your body to a personal avatar that is an interpretation of their
signal which items you like and dislike. shape.
You may motion to remove an item you’re viewing If body measuring technology became the basis for
that has been fitted to your personal avatar, or you online shopping, it could do even more by helping
may swipe wide and twist to have it returned to retailers improve their manufacturing, warehous-
center-screen for your inspection. ing and stocking processes because of the ability
to predict demand more precisely for particularly-
What you’re doing is interacting with a computer- sized items.
ized personal shopping assistant. Such technolo-
gies are no longer the realm of futuristic films but Now that’s a good fit for retailers.
25. InsightOn: The Expert View – Johan Paludan 25
The Expert View –
Johan Paludan
Many people shop online in marketplaces (like Which products will disappear from the traditional
eBay), but the experience doesn’t feel like that of retail trade as consumers shift to online buying?
v
isiting a mall. Why not?
Johan Paludan: The current situation gives the
Johan Paludan: Online shopping is fundamen- answer: Those products where it is not impor-
tally different from traditional shops. A traditional tant to feel, taste and smell were among the first
shop has a general display, where the shopper has to be popular online, such as books and music.
to find what she wants. Online shopping will in- Ultimately, all products could disappear from
creasingly be based on the supplier knowing more the traditional retail trade once the digitalization
and more about the individual shopper. Online of taste and smell has been accomplished. Right
shopping is therefore much more based on the in- now, that process is still in the lab. Traditional
dividual displaying what she or he is known to like. retail will have to survive on the social needs of Johan Peter Paludan serves
What online shopping misses is the social dimen- people and location-based marketing. When you as the Director Emeritus at
sion. Man being a social animal, I expect we will walk in the city you – or rather your smartphone the Copenhagen Institute for
continue to go to traditional shops to experience – will be bombarded with messages about what Futures Studies (CIFS). He
other people. you could get just round the corner. Instant grat- is widely known as a crea-
ification is always tempting. tive thinker on social trends,
That brings up privacy concerns. education, business and
What is the role of logistics in this picture? the popular imagination. A
Johan Paludan: The basic situation is that sup- privately funded, non-profit
pliers will know more and more about the individ- Johan Paludan: In traditional retail, the con- think tank, CIFS provides in-
ual consumer. The talk is about “big data” and sumer takes care of the last leg of transport from terdisciplinary statistics-based
about how to exploit it. People know that the ad- shop to home. In online shopping the retailer has and subjective research on a
vantage is that they will only get information they to take care of the last leg, hence this becomes an variety of topics.
find interesting and spam becomes truly a sin. The important element in the competition with thers.
o
other side of the coin is that this development will People are often away and can't receive their goods. Paludan earned a master’s
indeed negatively affect privacy. As somebody said, My vision is that every home will have an installa- degree in political science from
“Privacy is gone – get over it.” It does, however, only tion like the trap door some people have for letting Aarhus University and worked
take a couple of scandals of somebody misusing their cat go in and out. For goods, it would have to as a high school teacher before
the data before we have a new situation. It is basi- be a one-way mechanism with built-in cooling/ joining CIFS in 1976. His pub-
cally a matter of trust, and trust takes a long time to freezing facilities. lications include ‘The Nordic
build and a short time to demolish. Welfare State’ as well as ‘The
Strategy of Corporations: The
most Likely Future and the
Wilder Alternatives.’ He also
contributed to the production
of ‘The Dream Society – From
Information to Imagination.’
26. 26
Reaching Customers –
Globally and Locally
When surfing and shopping the Web, national frontiers are hard to spot. One click leads to another,
and the product is suddenly in your shopping basket. For the consumer, it is of little concern that the
website is based outside their country of residence.
For the merchant behind the website, the shop- Yet a retailer’s ability to serve customers abroad
per’s physical location is far from irrelevant. may make or break a business, especially during
L
ogistically speaking, where the customer is can tough economic times. In the UK, for example,
have a major impact on how quickly – or even if merchants are clearly responding to growing
– they can be served. Shipping goods overseas competition from domestic websites and cutbacks
means dealing with issues surrounding different in household spending due to the financial crisis:
currencies and customs regimes and longer A recent survey showed that 64 percent of online
transport times. Overheads – such a factoring in retailers there plan to expand internationally in
the costs of returns from abroad – may put a 2012. Good logistics will therefore play a central
squeeze on profit margins. Suddenly, from the role in future competition among e-retailers.
e
-retailer’s perspective, delivering the goods from
A to B is fraught with difficulty, especially if A is “The real growth opportunity is international,”
on one side of the world and B is on the other. says Andrew McClelland, the Chief Operations
27. InsightOn: Reaching Customers – Globally and Locally 27
& Policy Officer of the Interactive Media in Re- Chinese market, and to better understand how
DELPHI THESIS 52
tail Group (IMRG), a UK e-retail trade group. consumers across China interact with Macy’s and
“Overseas e-commerce markets offer a com- the products we sell,” said Terry J. Lundgren, chair- IN FUTURE …
pletely fresh customer base and one that is in- man, president and chief executive officer of Ma- … more than 3 billion
creasing exponentially.” By the end of this year, cy’s, Inc. “We know that Macy’s is very well known people in the world run their
there will be 2.5 billion internet users worldwide. and regarded in China through international tour- businesses completely and
By 2015, this number will rise to 3.7 billion. ism, globally broadcast events such as the Macy’s more effectively than ever
Thanksgiving Day Parade, and movies such as Mir- via the internet, making
For merchants, going global is easier said than acle on 34th Street. But we still have a great deal to use of the World Wide
done. And it’s just one of the many challenges to learn about the shopping patterns and merchandise Web’s marketing power;
tackle as the e-commerce market matures and preferences of consumers in China’s very diverse 50% of B2C transactions
customer demands rise for the best service and and rapidly emerging consumer marketplace. are carried out online.
the best prices. PROBABILITY
“We continue to believe there is significant long- Definitely not: Definitely:
term opportunity internationally for both Macy’s 1% 10 %
and Bloomingdale’s. But we need to be certain Unlikely:
“A retailer’s ability to serve
25 % Probably:
that our future decisions in this regard are based 27 %
on fact and experience.”
customers abroad may
Macy’s are not alone in being cautious in entering
make or break a business, new territories. Only a small proportion of the Possibly:
sites the IMRG has surveyed offer currency con- 37 %
especially during tough verters or customer support in a local language. Delivering Tomorrow: Customer Needs in
2020 and Beyond. A Global Delphi Study (see
economic times.” One hurdle they face is missing infrastructure
p. 119 for details)
for cross-border transactions. Search engines,
which know no geographical borders, may drive
traffic to a retailer’s site, but sales are lost without
Beginning in the early 1990s as a curious new the requisite checkout, customs and delivery ser-
form of distance selling, e-commerce has be- vices for international clientele, as well as a host
come an overwhelming force to reckon with – of other adaptations.
for both small and medium enterprises (SMEs)
and the world’s largest retailers. While early en- These include site-specific ways to handle lan-
trants like Amazon.com and eBay continue to guage and cultural barriers as well as the chal-
drive expectations with their giant marketplaces, lenges of cross-border fulfillment and returns. For
experts say much unclaimed territory is still example, not all merchandise can be shipped
available to those online sellers that get multi- across international lines without incurring taxes
channel retailing right and learn to cross borders or duties, and returns from a different country are
effectively. more complex and costly than domestic ones.
Opportunities – A Click Away European Cross-Border E-Commerce
According to recent industry surveys, even the big- Cross-border e-retailing within the European
gest names in retail e-commerce are taking a slow, Union would seem easy enough since internet
measured approach to expanding abroad, given the use and online buying from domestic websites is
risks of failure, which would be costly and damag- on the rise across member countries, led by
ing to hard-won brand confidence. For example, in adoption in Norway, the UK and Sweden. The
May 2012, US retailer Macy’s announced its inten- percentage of individuals who made purchases
tion to dip a toe into the Chinese market by selling over the internet has, on average, more than
an assortment of its private brand merchandise di- doubled from 20 percent to 43 percent between
rectly to consumers in China through a Macy’s sec- 2004 and 2011, Eurostat says. In addition, the
tion on omei.com, a newly established China-based European Union’s 27 member countries have a
online retailer of in-season luxury and fashion common legal basis for trading and 17 countries
brands operated by VIPStore Co., Ltd. share the common currency.
“Our relationship with VIPStore will allow us to Yet significant barriers to cross-border e-com-
gain additional experience in the fast-growing merce still exist in Europe. In 2010, some
28. 28
74 ercent of EU online retailers did not sell to
p Many companies simply underestimate the cul-
other EU countries. tural divide present when expanding to interna-
tional markets. Experts believe they do so be-
A report released in 2011 by the European Par- cause of the lingering myth that technology
liament found a lack of consumer confidence in eradicates borders in our lives.
cross-border online commerce. Apparently, cus-
tomers hesitate before making purchases outside
their home countries because of differing rules
on sales taxes (VAT), returns and the inability to “There are still a significant
compare prices in different languages. This fear
of the e-commerce unknown seems to be easily number of consumers who
overcome, however. A 2011 report, published
DELPHI THESIS 54
by the European Consumer Centres Network, are not yet aware of the
found that 61 percent of the consumers who
IN FUTURE … have already shopped across borders are equally offers and competitive rices
p
… people are “always on” confident in cross-border and domestic online
the internet, surrounded shopping, compared to only 33 percent of the that are available from
by easy-to-use appliances general population.
and virtual “smart agents” cross-border retailers.”
automatically assisting the Europe needs more multilingual price compari-
users in their daily activities, son sites, says Pablo Arias Echeverría, the rap-
filtering information and porteur for a European Parliament Working
serving as personal coaches. Group on e-commerce. “There are still a signifi- Yet, by neglecting to adapt to local conditions,
cant number of consumers who are not yet some retailers could be cutting themselves off
PROBABILITY
aware of the offers and competitive prices that from growth: During recent years, e-commerce
Definitely not:
2%
Definitely:
16 % are available from cross-border retailers. Despite sales have been the main growth engine of the
Unlikely:
9% the 300 price comparison websites that exist, retail sector. According to the European Com-
only a handful provide cross-border price re- mission, e-commerce is the dominant distance
views,” he has said. sales channel and accounts for around 4 percent
of the total retail sector.
Consumer uncertainty and language barriers
Possibly:
29 % Probably:
have made themselves visible in the numbers as Getting Cross-Border E-Selling Right
44 % well: From 2008 to 2010, cross-border e-shop- Amazon.com has successfully expanded to inter-
ping in Europe only grew from 6 percent to 9 national markets. Yet the world’s largest online
Delivering Tomorrow: Customer Needs in
2020 and Beyond. A Global Delphi Study (see percent while domestic online purchases rose retailer, with 48.08 billion US dollars in net sales
p. 121 for details)
twofold. in 2011, acknowledged in its latest annual report
29. InsightOn: Reaching Customers – Globally and Locally 29
that international operations present risks such viding call centers. That’s because some consum-
DELPHI THESIS 53
as a relative lack of operating experience in a ers only feel comfortable making a purchase
particular country, legal and regulatory uncer- fter finding out that the company is ‘real’ by
a IN FUTURE …
tainty and established local brand-name compa- a
ctually speaking to someone. … rapidly expanding
nies as competitors. mobile infrastructures and
US retailer Walmart operates a website in China free access to information
Still, a “significant” portion of the company’s to- that is highly tailored to the local market. Where- let emerging economies
tal revenues come from outside the US, and it is as its global site is designed for consumers who catch up with Western
clearly a leader off of its home turf. Some ana- want to purchase online, its Chinese site is made societies.
lysts believe the Seattle-based company may be to have an “official” look and feel appropriate for a PROBABILITY
entering a new international expansion phase af- retailer with the size and clout of Walmart. Definitely not: Definitely:
ter slowing the pace following its 2004 debut on 4% 5%
the Chinese market. Amazon has retail websites According to an analysis of the site by a group of Unlikely: Probably:
31 %
24 %
in the US as well as in Canada, the UK, Germa- professors from universities in the US, Hong
ny, France, Italy, Japan and China. It launched in Kong and Taiwan, Walmart’s site rightly focuses
Spain in 2011, and reports say the giant is now on what’s important in the Chinese market –
eyeing new markets. i
ntroducing the company, cooperation with the
government, social responsibility, the latest
Even as market leaders like Amazon.com or Ali news, supplier services and food security. Possibly:
baba.com forge ahead outside their home markets, 36 %
significant opportunity still exists. But what works Scott Price, the Asia CEO of Walmart, said the
Delivering Tomorrow: Customer Needs in
in Michigan won’t necessarily work in Mumbai. company is “very keen” on the online market in 2020 and Beyond. A Global Delphi Study (see
p. 120 for details)
So how must businesses and supply chains adapt China. Walmart operates about 370 bricks-and-
when going abroad? Researching customers and mortar stores across China and has a minority
markets is critical, naturally, because each market- position in Yihaodian, a company that has
place is different. Apart from getting a handle on carved a niche in same-day or next-day deliver-
culture, language and etiquette, retailers will need ies in five cities. Walmart is applying to take a
to understand what product – and packaging – majority position in the company. “We’re com-
will work best in the locations they are targeting. mitted to the Chinese market,” Price said.
Experts agree that “local” is the lingua franca. The Localization Industry
They say companies should start exactly there by For retailers large and small, the cross-border
making shopping carts, websites and customer o
pportunity is too attractive to ignore, and an
service available in the local language and pro- i
ndustry of boutique companies has cropped up
30. 30
to help others properly design localized, multi Macy’s is addressing all these questions and
lingual websites. According to some estimates, the more as it expands abroad with its Macys.com
decade-old industry is already worth more than website. The company’s flagship store in Man-
10 billion US dollars. hattan is a popular destination among foreign
shoppers, and Macy’s has tried to cultivate that
These consultants are prepared with software customer segment for years.
and solutions that will help companies run
fl
exible websites that can scale up and down In 2011, the company began offering shipping
a
lmost by the minute – as demand dictates. outside the US. According to a news report, its
website is being reconfigured to detect a shop-
per’s location worldwide and display a welcome
screen in the appropriate language. Shopping
“The future will be to figure will then continue in English, but at checkout,
the consumer is notified of the price and ship-
out how to encourage the ping costs in the local currency.
online customer to come to Overall, Macy’s online sales are booming. CEO
Terry Lundgren said in a TV interview that he
the stores, and encourage expects them to exceed 2 billion US dollars in
2012. “We’re one of the most advanced com
the customer in the store to panies when it comes to the online business. And
we’ve been investing there. A lot of the capital
shop online.” investments I’ve made for the company over the
last three years have gone into technology. It’s
r
eally paying off.”
They also help retailers consider critical questions Shopping Channels A La Carte –
when reaching out to new markets: Is your prod- In Store, By Phone, Online
uct selection adapted to local tastes and are prices Macy’s international push online is part of its
competitive? Does your advertising comply with overall strategy to meet the demands of sophisti-
applicable law and does the approach resonate cated shoppers who want access to Macy’s prod-
with locals? And are your fulfillment process and ucts and services in a multi-faceted way.
logistics effective and cost-efficient?
“Today, the most important customer and the
most important trend is what we call the ‘omni-
channel consumer,’” Lundgren told a reporter.
“This is the consumer who is shopping on his or
her phone, shopping at their desktop and going
into our stores. The future will be for us to figure
out how to encourage the online customer to
come to our stores, and encourage the customer
in our store to shop online.”
As a result, the retailer is now testing or imple-
menting capabilities such as digital receipts, free
Wi-Fi in stores and tablet computers for sales
clerks that will help improve customer service by
giving easier access to online information. And
Macy’s already has the technology at its cash reg-
isters to allow sales clerks to search for an item
online that may not be available in the store and
complete an online purchase for the customer
who is standing in the store.
The UK department store House of Fraser and
others have taken the multi-channel idea one
31. InsightOn: Reaching Customers – Globally and Locally 31
step further. In a move that was unimaginable “This isn’t about taking baby steps – it’s about
only a few years ago, it has opened stores in cen- committing to multi-channel and aligning your
tral shopping areas in Aberdeen and Liverpool incentives and your organizational structure in
that don’t sell any products at all. such a way that you can set yourself up for suc-
cess,” she was quoted as saying.
Instead of walking in to find racks of products,
shoppers enter what looks like a lounge where And if retailers get it right, the bounty could be
they can browse – but mostly online. Packages rich for society at large. In Europe alone, the
are delivered to the customer’s home or to the gains to consumer welfare could be 204 billion
shop for pickup the next day. If the consumer euros or 1.7 percent of GDP, if e-commerce
happens to be un-initiated into the world of on- grows to be 15 percent of the retail sector, the
line buying, a friendly assistant is there to help European Commission says.
the person navigate the clicks.
The Economist magazine predicts winners and
The move by the House of Fraser illustrates losers in what it describes as the “coming retail
a
nother way retailers are coming to grips with boom.” With shops representing a fifth of small
shoppers who want to browse and buy in all businesses in Europe, it says many will have to
ossible ways and at their own whim. At any
p change their strategies when they face up to
given time, these channel-hopping consumers competition from their larger counterparts.
may want to research online, view in a store,
purchase via the web or handle returns by mo- The magazine wrote: “But the winners will out-
bile phone and mail. number the losers. Some of Europe’s small shops
will give up the battle… and reinvent themselves
For many consumers, deciding if, when, where as stylish showcases for e-commerce. Oddly
and how to shop is a matter of “personal free- enough, the old continent’s best chance of pre-
dom,” and those vendors who don’t enable them serving its cultural traditions lies with harness-
to move freely among the channels end up, well, ing new technology, not ignoring it.”
cramping the shopper’s style.
Accordingly, retailers should carefully organize
and plan cross-channel efforts for optimal exe-
cution, says Sucharita Mulpuru, vice president
and principal analyst for Forrester Research, in
the Retail TouchPoints 2010 Outlook Guide.
32. 32
China’s Big Sellers: Alibaba, TMall, Taobao B2B trade, retail and payment platforms, a shopping
search engine and distributed cloud computing ser-
Tmall, which is part of the Alibaba Group, was launched vices. Privately held, the group reaches internet users
in April 2008 and is the most visited online retail web- in more than 240 countries and regions and employs
site in China, offering an extensive brand selection more than 25,000 people in some 70 cities in China,
of consumer electronics, home furnishings, designer India, Japan, Korea, the UK and the US.
footwear and beauty products, to name a few.
Alibaba also owns Alibaba.com, a global e-commerce
Chinese consumers are certainly buying: Tmall reached platform for small businesses and the Taobao Market-
its highest single-day transaction volume during a place, a popular C2C online shopping destination.
special promotion on November 11, 2011. That day,
sales of goods reached a volume of RMB 3.36 billion Alibaba.com provides three marketplaces:
(531.76 million US dollars), or an average of more • global trade platform (www.alibaba.com) for
a
than RMB 38,000 (6,022.18 US dollars) per second. importers and exporters
Tmall’s owner, the Alibaba Group, is a family of • Chinese platform (www.1688.com) for domestic
a
internet-based businesses that include online mar- trade in China
ketplaces which facilitate international and Chinese
• nd a transaction-based wholesale platform on
a
the global site (www.aliexpress.com) geared for
smaller buyers seeking fast shipment of small
quantities of goods
Together, these marketplaces form a community of
more than 79.7 million registered users. Further-
more, the company offers Chinese traders a wide
choice of business management software, internet
infrastructure services and export-related services.
Taobao Marketplace was launched for consumers in
China. With more than 800 million product listings
and more than 370 million registered users in 2012,
it is one of the world’s top 20 most visited websites.
Clouds Parting Above the Developing World to launch new services (such as social media) with
minimum risk.
Just as the advent of internet technology allowed
giant online marketplaces to flourish years ago, As such, its uptake is increasing. UK industry body
the low-cost and scalable software and services the Cloud Industry Forum (CIF) recently conducted a
enabled by so-called “cloud computing” could give survey across 250 UK-based organizations and found
a spectacular boost to e-commerce – also in the that 61 percent are currently using cloud-based
developing world. services, with a 92 percent satisfaction level. The
research also showed that the primary reason for the
The cloud computing business model is designed to adoption of cloud is the flexible model of delivery
provide digital storage space on a shared network (71 percent), scalability (66 percent) and the low cost
(i.e. in the cloud) along with the latest versions of soft- of adoption (58 percent), although operational cost
ware and supporting services. This means businesses savings were not the major driver.
using internet-accessible services from the cloud
can avoid costly upfront investments in servers or For instance, international aid organizations often
software that needs to be installed on desktops. stress how the “digital divide,” or the lack of access
to broadband networks and the internet, harms the
The cloud revolution, say some commentators, is economic growth prospects of billions of people liv-
coming – and it could be a breakthrough for many ing in developing countries. Now some have pinned
when it does. In part, that’s because it offers com- hopes on cloud computing as a way for countries to
panies scalability, flexibility, agility and the chance catch up, once the broadband networks are available.
