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Webinar July 12


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Webinar July 12

  1. 1. The Changing Dynamics of Retail -- Multi-Supplier Marketplaces <ul><li>To Join The Teleconference : </li></ul><ul><li>Toll: +1 (909) 259-0012 </li></ul><ul><ul><li>Access Code: 515-292-310 </li></ul></ul><ul><li>Webinar ID: </li></ul><ul><li>226097318 </li></ul><ul><li>Presentation Content: </li></ul><ul><ul><li>Will be made available for download at </li></ul></ul><ul><ul><li>Email will be sent to notify you of availability </li></ul></ul><ul><li>Questions: </li></ul><ul><ul><li>Please ask questions via Twitter #IXWebinar or through the Q&A function </li></ul></ul>Presenters Paul Kogan, VP Business Development, Ixtens Sucharita Mulpuru, VP and Principal Analyst, Forrester Eugene Nikiforov, CPO and Co-Founder, Ixtens Special Guest Speaker
  2. 2. Agenda Brief Introduction of Ixtens and our Speakers Marketplaces in Action with Eugene Nikiforov What You Need To Know About Marketplaces with Sucharita Mulpuru Q&A How Marketplaces Work Copyright Ixtens, Inc. © 2011
  3. 3. <ul><li>Ixtens mission is to power the next generation of marketplaces </li></ul><ul><li>A group of e-commerce veterans who helped Amazon build their web store Services offer. </li></ul>Ixtens Company Overview <ul><li>6+ years of expertise in e-commerce and online marketplaces </li></ul><ul><li>Global reach with offices in New York, London, Russia </li></ul><ul><li>80+ employees </li></ul>Copyright Ixtens, Inc. © 2011
  4. 4. Some of Our Clients Copyright Ixtens, Inc. © 2011
  5. 5. Ixtens Products Copyright Ixtens, Inc. © 2011
  6. 6. Sucharita Mulpuru, Principal Analyst, Forrester <ul><li>Research </li></ul><ul><li>At Forrester, Sucharita serves eBusiness & Channel Strategy Professionals </li></ul><ul><li>Leading expert on eCommerce, multichannel retail, consumer behavior, and trends in the online space. </li></ul><ul><li>Authored joint study “State of Retailing Online” </li></ul><ul><li>Previous Work: </li></ul><ul><li>Director of Marketing, Saks Fifth Avenue </li></ul><ul><li>Management at Toys “R” Us </li></ul><ul><li>Walt Disney Company </li></ul><ul><li>Education: </li></ul><ul><li>B.A. Economics from Harvard </li></ul><ul><li>M.B.A Stanford Graduate School of Business </li></ul>Copyright Ixtens, Inc. © 2011
  7. 8. What Every Large Retailer Or Media Company Needs To Know About Marketplaces <ul><li>Sucharita Mulpuru, VP and Principal Analyst </li></ul>Month Day, 2011
  8. 9. Amazon is the new Walmart
  9. 10. Trend 3: Investment in online marketplaces “ One of the most significant facts regarding eCommerce in recent years is how is growing faster than the rest of the eCommerce industry…. Retailers that compete with Amazon have come to discover that offering marketplaces on their own sites is critical to driving margins and remaining competitive on the prices and the shipping fees of the items they do stock in inventory. “
  10. 11. Agenda Lessons from Amazon’s marketplace Key considerations
  11. 12. Amazon is the force to reckon with online
  12. 13. This is a relatively recent notion Source: Amazon annual reports 2000-2010 Profitable Small and erratic! Profit as a % of sales NA NA NA 1% 8% 4% 2% 3% 3% 4% 3%
  13. 14. And oddly enough, this profit came in a counterintuitive way US Marketplace revenue and GMV ($B) US Marketplace Revenue as a profit driver Source: Amazon SEC filings; Forrester analysis
  14. 15. What is the marketplace? A product offered for sale by The same product on the same product detail page offered by other sellers
  15. 16. Some Amazon marketplace highlights <ul><ul><li>Marketplace has many pros: wider product & brand selection, no costs for storage and distribution, content costs borne by sellers/merchants </li></ul></ul><ul><ul><li>Sales from marketplace sellers represented 31% of unit sales in 2010 (up by 3% compared to 2005) </li></ul></ul><ul><ul><li>Given that Amazon makes up to 15% (in revenue share) from any sales on marketplace and that 31% of unit sales is sales from marketplace and assuming that units had the same average price from Amazon and marketplace, Forrester estimates that marketplace sales account for 6% of total sales. </li></ul></ul>
  16. 17. Some retailers have learned this the hard way, and others likely will follow
  17. 18. The implications of this business model are transformational Retailer 1 Retailer 2 Retailer 3 Consumer electronics sales 5% 10% 15% Est. margin from CE sales 0.5% 1% 1.5% Other categories 95% 90% 85% Old profit 1% 2% 4% New profit 0.5% 1% 2.5% % decline in profit -50% -50% -38%
  18. 19. Agenda Lessons from Amazon’s marketplace Key considerations
  19. 20. How is this different from drop shipping? <ul><li>A drop ship program is a good start; it is the synchronization of order details to disparate fulfillment destinations </li></ul><ul><li>Drop ship programs send packages on behalf of a retailer; the retailer generally handles most customer service issues including returns </li></ul><ul><li>Marketplaces are essentially affiliate programs with a shared checkout; customer service is generally handled by the 3 rd party retailer </li></ul><ul><ul><li>In some cases such as Fulfillment by Amazon, a 3 rd party can be part of the Amazon Marketplace but can remit all fulfillment responsibilities to the retailer that sells their goods </li></ul></ul>
  20. 21. What are the challenges with marketplaces? <ul><li>Your brand equity is reliant on a 3 rd party; invariably, lapses occur with marketplace partners </li></ul><ul><li>It takes many years to build up appropriate partnerships and business processes (e.g. escalation, order swat teams) to ensure that marketplaces operate with minimal problems </li></ul><ul><li>Companies may be reluctant to share the keys to their kingdom (sales, velocity, price elasticity) with potentially competitors; finding effective partners can be a challenge </li></ul><ul><li>Competition is more difficult because product assortments may be less differentiated; your marketplace partners may be the same partners of others </li></ul><ul><li>The ability to capitalize on a marketplace depends on a unique, differentiated asset that your site delivers to shoppers (e.g. one-stop shop, superior service, name recognition) </li></ul>But if executed effectively, marketplaces can be extremely lucrative
  21. 22. Two other important facts: consumers don’t really shop around… “ Thinking about your most recent online purchase, approximately how many online retailers did you visit during the purchase process?” Base, 3,179 US online adults Source: Q2 2010 Forrester Consumer Technographics Online Retail Survey
  22. 23. … and they seek selection and variety online Source: Q2 2010 Forrester Consumer Technographics Online Retail Survey Percent agreeing with statement Base: 4,114 US online adults
  23. 24. Thank you Sucharita Mulpuru [email_address]
  24. 25. Marketplace Origins How It Works Marketplace Today Marketplace in Action Agenda Copyright Ixtens, Inc. © 2011
  25. 26. Marketplace Origins Throughout History In the Age of eCommerce Buyers Money Buyers Money Copyright Ixtens, Inc. © 2011 Manufacturer Dropshipper Webmerchant
  26. 27. Amazon has proven the marketplace concept 1995 only books 1998-99 music, DVDs, toys, electronics, tools, and hardware 2002 Launch Amazon Marketplace (3rd party sellers) 2004 Launch Webstore Services 2010 40+ product categories Marketplace Sales are > 30% of Total $16 Million $610 Million $3.12 Billion $6.92 Billion $34.20 Billion Copyright Ixtens, Inc. © 2011
  27. 28. <ul><li>Marketplaces are one of 5 major ecommerce trends for 2011 according to Forrester </li></ul><ul><li>Within the last two years Walmart and Sears built their own marketplace platforms. </li></ul><ul><li>TESCO is reportedly launching a marketplace in the U.K. (Retail Week/BBC News) </li></ul><ul><li>eBay is shifting its business model to a more Amazon-like experience. </li></ul>Recent trends Copyright Ixtens, Inc. © 2011
  28. 29. Marketplace Checklist Online Retailers I want to become a one-stop destination for my customers I want to expand my catalog without large inventory investment I want to experiment with selling adjacent categories ✔ ✔ ✔ Copyright Ixtens, Inc. © 2011 Media Companies I attract some traffic My visitors are loyal and trust my website My visitors could buy products related to my content I want to add a new revenue stream ✔ ✔ ✔ ✔
  29. 30. Marketplace Benefits Copyright Ixtens, Inc. © 2011 BENEFITS RETAILER MEDIA Increase your product offering Sell 3 rd -party products under your brand ✔ ✔ Get rid of your inventory cost Suppliers handle inventory, fulfillment and returns ✔ ✔ Simplify suppliers integration One-time onboarding of multiple suppliers ✔ ✔ Gain new float revenue Collect payment and pay suppliers after 15-30 days ✔ ✔ Transform your content readers into customers Stop sending your readers away when they are ready to buy Own the customer and the data ✔ Transform your advertisers into suppliers Extend your relationship with your advertiser ✔
  30. 31. <ul><li>You are the “merchant of record” - collect payment, set and payout your own commissions </li></ul><ul><li>You keep the customer and all transaction data </li></ul><ul><li>Single, integrated user experience </li></ul><ul><li>Increased basket size and conversion rate with “single basket” purchase </li></ul><ul><li>Additional revenue from featuring merchants, products, deals </li></ul>Affiliate Model Marketplace Model <ul><li>Tracking and crediting publisher for sales is inaccurate and often fails. </li></ul><ul><li>You “lose the customer” and all transaction data </li></ul><ul><li>Fragmented user experience leads to higher abandonment rate and few multi-item transactions, </li></ul><ul><li>Outside merchants controls user experience, your payout and the products offered </li></ul>Affiliate vs. Marketplace Model Copyright Ixtens, Inc. © 2011
  31. 32. Eugene Nikiforov, Co-Founder / CPO <ul><li>History </li></ul><ul><li>Been involved in electronic commerce since 1996 </li></ul><ul><li>Co-Founder of Ixtens, which was spun out of Quantum Art where Eugene was also a Co-Founder </li></ul><ul><li>Previous Work: </li></ul><ul><li>Director of Multimedia Development at Fountainhead Management </li></ul><ul><li>Citibank, Internal Technology Division </li></ul><ul><li>Senior Financial Advisor, Interpegro Trading Company </li></ul><ul><li>Education: </li></ul><ul><li>Masters Degree from Moscow State University </li></ul>Copyright Ixtens, Inc. © 2011
  32. 33. Marketplace Fulfillment Customer Browses Catalog Items Marketplace Supplier A Supplier B Supplier C Single-Cart shopping experience Each Supplier responsible for fulfillment Unified Marketplace Catalog Marketplace Routes Order-Items to each Supplier Copyright Ixtens, Inc. © 2011
  33. 34. Marketplace Payments Customer Makes Purchase Payments $ Merchant A Merchant B Merchant C Your Marketplace is “ Merchant of Record ” Suppliers paid weekly or monthly Markeplace settles with Merchants Minus 8-20% Marketplace fee You Manage and Promote Destination Site $ Marketplace Collects Payment/ Holds float up to 30 days Copyright Ixtens, Inc. © 2011
  34. 35. View of a Marketplace Platform Copyright Ixtens, Inc. © 2011
  35. 36. Suppliers Building blocks of a marketplace Interactions between marketplace participants Customers Storefront Marketplace Owner Building blocks of a marketplace implementation Marketplace Back-end Suppliers integration Storefront Marketplace Owner integration <ul><li>Storefront design </li></ul><ul><li>Shopping cart implementation </li></ul><ul><li>Webhosting </li></ul><ul><li>Inventory </li></ul><ul><li>Financial/Accounting </li></ul><ul><li>Order management </li></ul><ul><li>Customer relationship </li></ul>Marketplace Back-end <ul><li>Product moderation </li></ul><ul><li>Category gating </li></ul><ul><li>Data enrichment </li></ul><ul><li>Rating </li></ul><ul><li>Merchant onboarding and leaving </li></ul><ul><li>Shipping info </li></ul><ul><li>Product content info </li></ul><ul><li>Price info </li></ul><ul><li>Inventory info </li></ul><ul><li>Taxonomy </li></ul><ul><li>Technical help </li></ul><ul><li>Portal </li></ul><ul><li>Content management </li></ul><ul><li>Custom reports </li></ul><ul><li>Portal </li></ul><ul><li>Order routing </li></ul><ul><li>Labels </li></ul><ul><li>Commission / payment </li></ul><ul><li>Tax </li></ul>Copyright Ixtens, Inc. © 2011
  36. 37. Setting-up a Marketplace Build the master catalog Create a customized marketplace Onboard merchants Phase To Do Example 20 suppliers 1000 SKUs per supplier 20,000 SKUs in the master catalog Selection of 20,000 SKUs on the marketplace Supplier’s inventory <ul><li>Find merchants </li></ul><ul><ul><li>Right products </li></ul></ul><ul><ul><li>Right fulfillment </li></ul></ul><ul><li>Define partnership </li></ul><ul><ul><li>Marketplace rules </li></ul></ul><ul><ul><li>Commission </li></ul></ul><ul><ul><li>Shipping policy </li></ul></ul><ul><li>Import the merchant catalogs </li></ul><ul><li>Transform the data and make it homogenous </li></ul><ul><li>Define the selection </li></ul><ul><ul><li>Rules-based </li></ul></ul><ul><ul><li>Manual </li></ul></ul>Copyright Ixtens, Inc. © 2011
  37. 38. Marketplace! Copyright Ixtens, Inc. © 2011
  38. 39. User Case Studies: Ixtens Marketplace Ixtens Assembles One Stop Shopping For Name: Sales Channels: SKU ’s: 2,500+ Launch Date: Q4 2010 <ul><li>Mydeco reached out to Ixtens with a desire to create a marketplace that would enable them to increase the number of items available on </li></ul><ul><li>Wanted to increase their market beyond furniture to include kitchenware </li></ul><ul><li>Needed a solution that would enable them to offer a web portal to their suppliers and merchants for managing data and inventory </li></ul><ul><li>Within a couple of months, they ’ve launched with 10 manufacturers offering 2500+ products, </li></ul><ul><li>Maintain an automated, central repository for managing merchants and data feeds </li></ul>Copyright Ixtens, Inc. © 2011
  39. 40. User Case Studies: Ixtens Central Ixtens Makes a Happy Home Online For Lifetime Brands <ul><li>Lifetime Brands had an extensive number of back-end systems that they need to automate the sharing of information across. </li></ul><ul><li>Had to choose a solution that did not interrupt core operations and workflows that were vital to their business. </li></ul><ul><li>Lifetime selected Ixtens Central to provide data automation and integration across their systems and sales channels. </li></ul><ul><li>Company no longer wastes valuable time and resources manually entering data and synchronizing updates across multiple channels. </li></ul>Copyright Ixtens, Inc. © 2011
  40. 41. Thank you! Q&A <ul><li>[email_address] </li></ul>Presenters Paul Kogan, VP Business Development, Ixtens Sucharita Mulpuru, VP and Principal Analyst, Forrester Eugene Nikiforov, CPO and Co-Founder, Ixtens