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eCommerce – Dropping the e in eCommerce

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E Money 2010 Oct09
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eCommerce – Dropping the e in eCommerce

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From the eCommerce decade to the multichannel present: looking at the growth of online retail and social commerce plus some examples of who is innovating

From the eCommerce decade to the multichannel present: looking at the growth of online retail and social commerce plus some examples of who is innovating

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eCommerce – Dropping the e in eCommerce

  1. 1. ) ns io ess gr di w fe a s lu (p
  2. 2. Dropping the e in eCommerce. e e o The eCommerce decade. - The first plateau, likes & dislikes, range & recommendation engines o eCommerce atomises. - Multichannel fragmentation & new opportunities o Social Commerce - Everyone is a salesman o Who are the Innovators? - Content, experience & there’s more to the product than price
  3. 3. A forecast for eCommerce in the UK after 10 years* of online retail development. in online sales in 2014**, which per annum, faster than all retail amounts to 9.1% of all retail sales. sales over the next five years. Source: Mintel *eCommerce actually began in the 1970s with EFT before evolving to what we now recognise as online retail in the early 1990s, but it is the last decade that saw the birth of profitability. **The world's first recorded online home shopper was Mrs Jane Snowball,72, of Gateshead, in May 1984. She bought groceries from Tesco. http://www.aldricharchive.com/snowball.html
  4. 4. Market influencers. Consumer recession will be Increasing need & much worse in 2010/2011. acceptance of being online. Increasing concerns about Ageing population boosting security & privacy. numbers of older people online. Problems with delivery, Perception that online is fulfilment & returns. cheaper than offline. User experience not living up to Comparison culture has Source: Mintel needs & expectations. become a mainstream activity.
  5. 5. THE NEW PLATEAU. The days of dramatic volume growth due to broadband penetration increases are over, but online buyers are spending more per person. 80 Percentage of people in UK buying online 75 70 65 % 60 55 £17.8 in online ret es billion in ‘09. ail sal es with al etail s 05. r 6.6% of all since ’ h growt 50 150% 45 40 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 Online accounts for almost 40% of all non-store retailers’ sales (i.e all mail order, pure-play internet retailers and markets). Share of store based retailing is lower, even so, it accounts for 2.8% of food retailers sales and 3.3% of non-food retailers’ sales. SOURCE: Ipsos Mori/Mintel
  6. 6. THE NEW PLATEAU. The days of dramatic volume growth due to broadband penetration increases are over, but online buyers are spending more per person. 80 Percentage of people in UK buying online Maturity & Greater Competition 75 70 65 % 60 55 £17.8 in online ret es billion in ‘09. ail sal es with al etail s 05. r 6.6% of all since ’ h growt 50 150% 45 40 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 Online accounts for almost 40% of all non-store retailers’ sales (i.e all mail order, pure-play internet retailers and markets). Share of store based retailing is lower, even so, it accounts for 2.8% of food retailers sales and 3.3% of non-food retailers’ sales. SOURCE: Ipsos Mori/Mintel
  7. 7. Real world retailers versus Pure Plays? Only three* of the top 10 retailers by sales are pure plays. Off-shore Mail order retailers 23% 23% eBay 3% Other 8% Grocers 20% Other store-based retailers 23% *Amazon, Dell, eBay
  8. 8. Who, what & how often? Frequency of browsing, by age and socio-economic group Products bought online in last 12 months 47 CD/DVDs Books Women’s clothing 46 Men’s clothing Couple of times a year Computer hardware/software 45 Electronic gadgets (eg iPod) Toys and Games 44 Music downloads Average age Footwear Never Grocery shopping 43 Every couple of months Housewares Home electricals 42 Once a week Cosmetics/Toiletries Once a month Gifts/cards Mobile handset/accessories 41 Sports and leisure goods DIY and garden products 40 Children’s clothing Every day Jewellery 39 Furniture and furnishings Lingerie SOURCE: GMI/MINTEL (November 2009) Video downloads 38 More Less 0 10 20 30 40 50 60 70 Affluence % 25-44 years-olds are the most active users of eCommerce, with books, CDs and DVDs being the most frequently bought products (the Amazon legacy). Despite press coverage music downloads are less common and concentrated among the young. Fashion is the biggest recent success.
  9. 9. What do people like (& dislike) about eCommerce offerings? Like Dislike Convenience Navigation “you can shop at any time “It’s hard to browse & find and expect delivery within 36 what you’re looking for.” hours – if you are prepared to pay for it.” Immediacy “Latest products at Product Display the latest prices.” “Colour, picture quality Low Prices and size can be bad.” “Sometimes, not all the time, people are wising-up.” Comparison Experience “Ability to compare “You can’t try on or Range products and prices.” try out the goods.” “Far more than any store, esp. ASOS & Tesco Direct.”
  10. 10. A decade of dominance. Since 2000 Amazon.com and eBay have dominated the online retail market in the United States and influence how many eCommerce site owners think...
  11. 11. ...1-Click, #1 #2 RANGE & Recommendation. #3
  12. 12. #1 Enable Single-Action Ordering 301 Retrieve client ID U.S. patent no. 7,222,087 1-Click ordering. Set client ID/customer mapping 302 A broad business method patent governing the process by which 303 online shoppers make Set single action purchases with a single ordering for client click, having previously ID/customer entered their payment and shipping information. 304 Return confirming web page Ease of use and speed to task completion are key eCommerce competition areas, Amazon’s patent has given it a unique advantage over competitors (like Done Barnes & Noble) and been licensed to Apple.
  13. 13. UE, forms & baskets became battlegrounds. •Minimize the pain •Familiar vs. foreign info •No one likes filing in forms •Frequently used vs. rarely used •Smart defaults, inline validation •Progressive disclosure •Illuminate a path to completion •Errors, Help, Success the details. REFINING Top aligned For reduced completion times & familiar data input Right aligned When vertical screen space is a constraint Left aligned For unfamiliar, or advanced data entry Source: Luke Wroblewski
  14. 14. #2 Expanding the range & consumer choice. Pure-plays first drove attention by offering a range of books, CDs & DVDs that no store could physically stock at lower prices. Retailers responded by using eCommerce to extend their reach and protect market share – a cost rather than an opportunity. Now it is about integrating stores & a multi-channel experience to offer the widest range in best of £9.7 is wh ou hi n millio n t to ld cos nes. at it w g on iTu buy everyt both worlds.
  15. 15. * Range is still a USP. Traditional food retailers like Tesco & Waitrose and even catalogue retailers like Argos have used online to expand their range and category offering. Tesco Direct >11,000 lines Ocado >21,000 SKUs *But increasingly a consumer expectation & a user experience challenge. eBay’s early work on category taxonomy and aspect tagging influenced many site structures.
  16. 16. Web Exclusive Ranges FOR DEAL FOCUSED PEOPLE. Supp that o nline e is belief orts th “cheaper”.
  17. 17. #3 Cross-sell & competitive advantage through recommendation systems. OPPORTUNITY TO MOVE PEOPLE’S MINDSETS FROM: SEARCH & BUY. BROWSE & DISCOVER. A consumer knows what they are A consumer knows generally what looking for & use keywords to they are interested in or has search for it. Speed, ease of use, purchased but not left the site. result accuracy & price are the key Relevance & engagement create influencers leading to purchase. opportunities to up-sell. Single transactions are Repeat relationships are harvested by search. built during browsing.
  18. 18. 4 recommendation systems. Personalised recommendation Recommend based on the individual's past behavior Social recommendation Recommend based on the past behavior of similar users Item recommendation Recommend based on the item itself 4th? Amazon Approach; combine all 3 with browsing & purchase history. Browsing history Purchase history Items viewed New releases (for you) Related Items (Item recommendation) Related Items (Item recommendation) Other people viewed.... (Social) Other people purchased.... (Social)
  19. 19. Amazon are keen to involve visitors in refining recommendations... ...the aim of it all is to get you to add more things to your shopping cart.
  20. 20. eCommerce ATOMISES.
  21. 21. “People will interact with any channel they want, when they want.”
  22. 22. From the eCommerce decade... AWARENESS ENGAGEMENT CONVERSION & ACQUISITION. & RESEARCH. & PURCHASE. Price Affiliate offers Search Ad Comparison based site Website Basket - BUY Search on ONLINE. Google Return to Higher-end Higher-end Configurator brand site brand site Refine search terms after bad search results Discount retailer site See a TV Advert View alternatives at Chat with discount store partner OFFLINE. Chat with partner Visit to consideration set retailer
  23. 23. ...to the Multi-channel present. NEED GATHER ACTIVE SUPPORT POST-PURCHASE TRIGGERED. & LEARN. EVALUATION. PURCHASE. EXPERIENCE. ONLINE. Search on Affiliate offers Price Google based site comparison site Writes a review e-mail alert & tweets it Discount Basket BUY Basket - BUY retailer site Refine search Configurator Configurator terms after bad “First thought”, Experience Customer Product News search results brand site Microsite service Article @replies Hits “Like” Btn. MOBILE. Post status on Another friend Facebook comments & Read a Twitter mentions an APP Uploads feed post cameraphone photo of purchase to FB IM chat with APP Store to Unlocks friend who download the Geo-targeted comments APP for free coupon Sees TV Ad OFFLINE. with a URL Chat with partner Visit to Tries the consideration options in-store set retailer Applies for Buy review Talk to store card with Tells magazines co-workers a better online co-workers discount offer
  24. 24. Online-to-Store (O2S): The New Default. 45% re ases a h. purch esearc of in-sto inf lue nced b re y 9 87% use d the in of i t rs use earch and c nterne ernet o to t mpare ter 200 se, res year. onliner : Forres brow st arkete r Source pro ducts la Sou rce: eM in g uer ies us rand q s er of Produ ther c t/ b s, ra ch, ising i ncrease advert The numb Map Sear the ogle ogle ition from Online e footfall: Go Go in-stor i k n-stoc es. n g: shoppers trans ding “ search tha sin increa e real world . Google ad o mobile a re gital t o th nea rby” t di
  25. 25. Retailers respond with CLICK & COLLECT.
  26. 26. ...O2S & back again.
  27. 27. Reflecting increased online confidence. Moms with teens said the internet... Source: BIGresearch and Resource Interactive, August 2009 Helped me save money through Helped me become a smarter access to easier price comparisons, shopper; product reviews and coupons, and deal alerts. ratings, blogs and product information has helped me make more informed purchases.
  28. 28. Coupon sites have been the second-most-visited Source: Business Week, HitWise, Quidco/YouGov, BIGresearch and Resource Interactive, August 2009 category on the Internet, behind job sites, for a year. eMarketer May, 2009 61% able to sca n wa nt to be bar co n othe m ation o d des an r acces s infor . s ’ price stores 9% e ellphon ed a c t us d abou e a frien . tm essag hopping to tex t while s ap roduc 34%an on li ie have looked e a w at le . ne rev urchase p st onc 6 s 2% rs l of UK consu re buy hoppe ties befo e t onlin ing. at k in g a ni be fore m a c ommu
  29. 29. Online is projected to influence 50% of offline sales by 2012 & by 2020, more content will be consumed by mobile devices than all other platforms – PC included. MEANING MORE ENGAGING OPPORTUNITIES AVAILABLE FOR DIGITALLY ENABLED RETAILERS. Sources: Jupiter US Online Retail Forecast, 2007 - 2012, Pew Internet & American Life Report
  30. 30. mCommerce. M&S “Shop your way” strategy, one login across web & mobile. DETECT DEVICE. DYNAMIC PROXY DETECT CONNECTION. TRANSCODING. RENDER SPECIFIC SITE. Amazon provides eCommerce platform, with “Even before the site has launched, hundreds of Usablenet providing the mobile platform & thousands of customers are already shopping with us on their mobile phones and market data is telling Mobile Interactive Group doing the design. us that this will soon be millions.” Dave Hughes, Director of M&S Direct
  31. 31. What services and content can we deliver at the content/context cross-section? Chain-wide localised, product-specific and cost effective marketing when the inventory in more than 70 Adidas Outlet Stores varies from store to store – and so do the special offers. Or Tesco porting its Clubcard to phones and starting to make them smarter.
  32. 32. Promotional mCommerce: Piloting mobile coupons & incentives. TXT Light data capture Mobile site TXT to Opt in Redeem MMS Coupon Purchase in store Light data capture Mobile site On deck/mobile Redeem MMS Coupon Purchase Banner & Mobile App in store Advertising TXT Bounce Light data Back TXT capture Mobile site In-store leaflets TXT Message Redeem MMS Coupon Purchase and OOBE in store Crocs recently extended the limited one month trial across all its 180 US stores, after customers made 94,000 requests for the 15% off offer.
  33. 33. THE PIPELINE? WHAT IS IN Deliver a location based service to iPhone users that wish to receive temporary retail and service-based apps. The minute you leave the vicinity the app disappears so that you don't clog up your iPhone with hundreds of local business apps.
  34. 34. “The majority of the real-time search boom will be in its convergence with another rapidly growing industry, mobile computing. [Offering people] real-time recommendations based on your current location using an application that aggregates information from real-time searches as well as social sites like Yelp and Urban Spoon...... local advertisements and “limited time” discounts on your mobile.”* Social Periphery *Rob Diana
  35. 35. Social Periphery & Mobile Social Networks Local networks of Global Services Mobile & mixed media sensors and devices and Communities applications/tools Content & Context & relationships Location as filter as intelligence GPS, location Social Communities RFID & & bespoke networks & forums NearField sensors Blogs, UGC Barcodes, QR codes & niche sites and markers Dynamic communication based on action and relevance (Ambient awareness/Social Peripheral Vision) Brands as the filter Physical objects On is off/Off is on and the enabler. in intelligent as physical and Ideas must be “good environments digital worlds fuse enough to share” Helping us plan for now and what’s next. by David J. Carr davidjcarr.wordpress.com Based on Nokia’s Mobile Gateway & Jyri Engestrom
  36. 36. SOCIAL COMMERCE.
  37. 37. THREE ASPECTS OF Social Commerce. #1 #2 #3 Brands using social Personal online Directly & publicly network platforms to selling evolving to harness the heuristics “fish where the fish networks of people shoppers use to make are” thus gaining producing for, and intuitive decisions to incremental revenue selling to each other. make purchase and network exposure. actions more likely. universal heuristics of shopping. Heuristic #1: Social Proof Heuristic #4: Liking ‘Follow the Crowd’ ‘Follow those You Like’ Source: Paul Marsden Heuristic #2: Authority Heuristic #5: Consistency ‘Follow the Authority’ ‘Groundwork for future’ Heuristic #3: Scarcity Heuristic #6: Reciprocity ‘Scarce Stuff is Good Stuff ’ ‘Repay Favours’
  38. 38. Heuristic #1: Social Proof ‘Follow the Crowd’ To resolve the uncertainty of what to do or buy, we often look to what others are doing or have done, and take our cue from them. ‘Most popular’ & ‘most viewed’ lists, testimonials provide social proof with a human-interest angle and shared wishlists give us confidence about what people want, while shopping together offers reinforcement.
  39. 39. Enable our commercial relationships in the context of their real relationships and help them to connect.
  40. 40. Heuristic #2: Authority ‘Follow the authority’ People have a natural tendancy to defer to the conclusions of a recognised or accepted authority, regardless of what they say. Recommendations, reviews and even referral programs use shoppers’ trust and need for decision reinforcement to increase conversion. People are willing to pay +20% more for a 5 star product than a 4 star one.
  41. 41. Google Product Reviews Program. Full-length product reviews and user ratings from participating retailers and manufacturers wherever it will help users with their shopping, including in Product Search results and advertising programs.
  42. 42. Juicy Couture increased conversion rates by 162% using CreateTheGroup’s recommendations & referrals software.
  43. 43. Connecting online reviews with the real world & back.
  44. 44. Reviews & social content as part of NPD & community engagement.
  45. 45. You’d be surprised what people are willing to review....
  46. 46. Heuristic #3: Scarcity ‘Scarce stuff is good stuff ’ Time-sensitive, limited access, limited editions increase the perceived worth of products and services, create a sense of competition to get them, and even generate a feeling of act now or risk missing out. Deal/Newsfeeds optimised for lifestreams and Social Apps with exclusives for Fans/Advocates ONLY combine social networking with exclusivity.
  47. 47. Time sensitive offers designed for life-streams. o Integrated into real-time experience with a sense of NOW. o Urgency because traditional marketing campaigns (like TV progs) now can be filtered and time shifted (and even forgotten as our content collection piles up). NB: Facebook have changed the rules...again.
  48. 48. But value needs to be long-term or we create “a community of jaded fans who are only interested in the next coupon”. Peak of interest with a sharp fall. Time sensi sensitive offers d designed for life-streams? ? fo o Integrated into real-time experience with a sense of NOW. real-time i o Urgency because traditional marketing campaigns traditional (like TV progs) now can be filtered and time shifted n be (and even forgotten as our content collection piles up). our NB: Facebook have changed the rules...again. the rules...again. he
  49. 49. Heuristic #4: Liking ‘Follow those you like’ We have a natural inclination to emulate and agree with people we like, admire or find attractive, partly because it builds social bonds and trust (saying yes is a form of social grooming) and partly because it acts as a way of pre-filtering our choices.
  50. 50. Is there any real value to RETAIL EXHIBITIONISM? Increasing opportunities and tools are now available to broadcast all your commercial actions to your followers.
  51. 51. Heuristic #5: Consistency ‘Groundwork for the future’ When faced with uncertainty, we’ll opt for the one that is consistent with our beliefs and past behaviour. Free trials or low risk commitments can lay the groundwork for future larger conversions. People are more willing to make a commitment to a brand if it is consistent with ongoing custom or a previous public gesture or interaction.
  52. 52. From fans to customers OFF THE WALL End to end eCommerce within Facebook. o Brand posts an product for sale as a status update & fans can purchase directly from their live feed, news feed or the brand’s wall. o Complete in-wall checkout process (product details, customer information, shipping options). o Maintains commerce functionality when shared with friends. o ECommerce platform independent & Verisign Certified, Level 1 PCI-compliant.
  53. 53. AN OPPORTUNITY FOR: Use social content to establish a low-risk relationship pre-sale, seed special (or early) “fan only” offers, product introductions, limited editions or limited inventory campaigns, coupons, event support & media rich demonstrations with video, product selectors, etc.
  54. 54. CONSISTENCY & Contributions to user galleries can create a sense of public Repeat Behaviour. commitment to a brand making it consistent with ongoing custom.
  55. 55. Feedback & social pressure combine to reinforce behaviour change & commercial relationships.
  56. 56. Heuristic #6: Reciprocity ‘Repay favours’ We feel good when we reciprocate favours, partly because reciprocity is socially rewarded as the social glue that makes cooperation, relationships, community and society possible. Sampling (reciprocating to uninvited gift with purchase), rewards, local CSR, causal marketing and sponsorship create a sense of relationship that underpins commerciality.
  57. 57. DIRECTLY REWARDING CONSUMER BEHAVIOR. Using engaged consumer communities to spread the word and perform eCommerce business functions.
  58. 58. Collaborative Platforms... ...thrive when “reputation (of participants) is a critical component of the service mechanism. The reputation of participants will derive from the quantity (how much, how often) and quality (how useful) of their contributions. Accreditation (of content) is provided by experts and by the community. Recent, relevant content regarded highly by participants with a good reputation becomes the most visible.” Made by Many
  59. 59. Combine community and commerce to convert using “helpful suggestions”.
  60. 60. RECIPROCITY OR STRAIGHT PEER TO PEER AFFILATE SELLING? Widget-powered affiliate programs for “long-tail” social commerce.
  61. 61. Using helpful content to stimulate consumer feedback & community spread.
  62. 62. Source: Mintel Half of British consumers now buy on promotion but it is not all about money off and discounts, it’s about value.
  63. 63. includes help with making purchase decisions and rediscovering lost skills so you don’t have to pay someone else to do it.
  64. 64. WHO IS innovating?
  65. 65. CONTENT & EXPERIENCE.
  66. 66. Jessops & PrismaStar Product search tool. The Camera Selector was created through a partnership between Jessops and PrismaStar Software, and uses PrismaStar‘s AnswerOil solution. AnswerOil provides patent-pending consumer product research data and decision making technology and prioritises the importance of any product feature and gives highly accurate and unbiased results.
  67. 67. Lastminute.com Pronto search. Drop-down lists appear for each search item, helping the user to make their search as precise as possible, by enabling them to specify different attributes of what they are looking for.
  68. 68. INTEGRATING VIDEO.
  69. 69. OPTIMISING ECOMMERCE WITH VIDEO. Incorporating product descriptions, reviews, ratings, & the ability to purchase directly into video content both for search (meta info) & up to 70% increase in conversion.
  70. 70. Direct video integration as product image.
  71. 71. Combining Brand & Retail in video.
  72. 72. Linked to large scale, impactful product display.
  73. 73. Sharing & use of third party option for registration.
  74. 74. Customer SERVICE.
  75. 75. Social Commerce & o Visible staff involvement in problem resolution. o Reacting and responding to questions and customer issues quickly and transparently, #twelpforce: 13,000 queries in the first two months. service o Engaging in real human conversations.
  76. 76. a digression “Please hide/remove the customer-service number.” And yet “Our requirement is the reduce calls to the call-centre.” “We want people to self-serve.”
  77. 77. NDLER TO RESPOND D HA IN E AP AM PR CEO N OP TO RI N EC CORR T DEPA AT Tech IG HR Support TO EM ASS E RT T EDIU M U RO EN T M 0800 000 000 Customer Marketing Service @Corp someone@someone.com DM @Someone Inquiry/ Immediate/ monitoring auto response & then hand-over aknowledgement Empowered @Someone decision-making, training & investment.
  78. 78. Over a month later the SERP results for “Vodafone & Twitter” are dominated by the news story, not product information. Things happen in real-time but can stick around for a long time.
  79. 79. GROUP Commerce.
  80. 80. Real-time eCommerce o Retailers move closer to real-time inventory management increasing the possibility of more widespread dynamic demand led pricing. o Consumers can be alerted about price changes as they happen. o They can even group together to negotiate bulk discounts. o Or use ShopSavy and Compare Everywhere to find a better price when out and about.
  81. 81. GROUP-BUY DEAL AGGREGATORS. One deal feed to rule them all?
  82. 82. Dell Swarm Singapore buy in a group and save!
  83. 83. The e-commerce opportunity? Real-time insight. “a clothing retailer could identify a spike in positive chat about a celebrity that is wearing one of their apparel items, and could immediately feature that piece of clothing on their homepage and launch campaigns to a targeted audience interested in that celebrity and lifestyle. This allows the retailer to immediately maximize the new revenue opportunity, and deliver more engaging, relevant content to its customer base.”
  84. 84. Engaging & involving USER COMMUNITIES.
  85. 85. Heriarchy of feature posts with imagery. Prominent calls to “Get Involved”. Integrated forum and member posts. Interactive content and feedback tool.
  86. 86. User generated and member curated interest groups.
  87. 87. Customer feedback and suggestions built into the community.
  88. 88. Recruit members of the forum or external bloggers to generate content.
  89. 89. Advertising or cross-selling blog content and signalling different categories. Campaigning features.
  90. 90. Campaigning features. Infographics, multimedia Using tags to guides and generate how to additional content. navigation.
  91. 91. Aggregating and curating content to create a resource.
  92. 92. Commenting and social media content sharing. Signals community involvement. Two-way email channels.

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