From .com to Everything: The Evolution of Ecommerce

2016

Connected CommerceFeatures:

Shopping Doesn’t Always Have to Be an “Experience”

Jet.com: A New Way to Shop and Save

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Contents

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Explore the World of Connected Commerce Daniel Diez, EVP, Global Chief Marketing Officer, R/GA

Introduction00

01 Connected CommerceSucceeding in today’s rapidly evolving landscape requires an entirely new set of skills—and increasingly, brands are looking to startups for help.

04

06 - 07 Trends: From .com to Everything: The Evolution of Ecommerce

Conversations: Jet.com: A New Way to Shop and Save

Perspectives: Shopping Doesn’t Always Have to Be an “Experience” Brad Alan, VP, Commerce, R/GA

10 - 12

08 - 09

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INTRODUCTION

In this month’s FutureVision Trend Brief, we explore the world of “Connected Commerce.”

We begin with an overview of the technology and behaviors that are radically changing the shopping experience by placing the consumer at the center of it all. In-feed social media offers that provide access to products and services at the moment of inspiration, mobile and peer-to-peer payments that are reducing the need to carry cash and cred-it cards, and customer service delivered in home and via social media are all revolutionizing the how, why, and where we buy the products and services we love.

We also sit down for a conversa-tion with Liza Landsman, Chief Customer Officer for Jet.com and Sumaiya Balbale, Jet.com’s VP of Marketing. Together they explain how Jet.com is taking on a certain ecommerce giant, reinventing the category, and empowering shoppers to save money by customizing their experience.

Finally, in Shopping Doesn’t Always Have to Be an “Experi-ence,” Brad Alan, R/GA’s VP of Commerce, explores why brands are exchanging elaborate in-store and online experiences for automated consumerism and the ability to make quick and easy

purchases at the exact moment that inspiration (and desire) strikes. Is this the right strategy for your brand? Brad’s advice for evaluating and reinventing your commerce strategy for the connected age is a great way to begin answering that question.

Daniel DiezEVP, Global Chief Marketing Officer, R/GA

Explore the World of Connected Commerce

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TRENDS

From .com to Everything: The Evolution of Ecommerce

When the first ecommerce websites launched 20 years ago, they were seen as digital extensions of the store catalog—a nice reference, but hardly a replacement for the in-store experience. Fast-forward to the present and the modern ecommerce experience is providing consum-ers with more convenient alternatives to the traditional website.

More than just a digitized cat-alog of products, ecommerce has exploded into a variety of hybrid experiences that combine the ubiquity of mobile with the richness of brick and mortar. Nowhere is this more apparent than in China, where retail sales through smartphones, tablets, and other mobile devices accounted for nearly half of all ecommerce sales in 2015 ($334 billion). Comparatively, mobile commerce makes up only 22 percent of ecommerce sales in the US.

Payments Paved the WayThe ecommerce landscape has always been inextricably

shaped by innovations in digital payments. Starting with PayPal in 1998, digital payment services have worked to make it easier for people to shop online. Today, services like Apple Pay are putting smartphones on track to facilitate true frictionless payments. Social apps like Snapchat have integrated peer-to-peer payments, enhancing a familiar environment to enable small transactions between friends, and potentially accli-mating users to more expensive purchases from brands. These seamless transactions are not limited to smartphones, and are now being baked into watches, connected cars, and

media-streaming boxes. Already, we are seeing the scales tip.

Speed Is, and Isn’t, EverythingAlong with innovations in the monetary transaction, the supporting logistics have grown immensely—with same-day delivery and instant gratification becoming the new norm. Even smaller retailers, who don’t necessarily have the capacity or infrastructural capabilities to do delivery themselves, are partnering with courier services like Postmates and Uber to compete. While quick delivery is clearly important, quality service never gets old. With this in mind, ecommerce upstarts like ENJOY

are sending Experts to deliver products and help customers set them up, using the opportunity to teach owners about their new gadgets. By improving the end-to-end customer experience, the company hopes to compete against the lower prices offered by big-box retailers.

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Casual, Conversational Commerce

Facebook’s M is a virtual assistant that sits inside Messenger and blends AI with human helpers to complete online purchases.

Photo Credit: ENJOY

New Confidence to Click “Buy”

Enjoy sells consumer electronics and sends Experts to personally deliver, setup, and explain how to use new gadgets.

Frictionless In-Feed Commerce

ThirdLove uses image recognition to find the perfect fitting bra.

Photo Credit: Facebook M

Photo Credit: thirdlove.com

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CONVERSATIONS

Jet.com: A New Way to Shop and Save

Daniel Diez:How does Jet plan to disrupt the ecommerce landscape? What problem does it solve? Liza Landsman:Amazon accounts for 30 percent of all ecommerce, but you have to step back and put that in context—only about 8 percent of retail happens through ecom-merce. Additionally, almost all the innovation in ecommerce over the last 20 years has really been focused on going after niche markets, on thinner and thinner pieces of the pie. There’s been almost no innovation around price. And as we thought about the next generation of

ecommerce, we realized it’s real-ly about optimizing the engineer-ing of the supply chain in a way that is transparent to consumers and is a huge value for retailers. Before Jet, no one had built a marketplace that was actually good for both consumers and retailers. Sumaiya Balbale: Online, it’s very common for people to shop for items like electronics and home goods. Where there’s less than one percent penetration is in areas like food, everyday essentials—consumables that you’re used to buying with a regular cadence. That category has barely pen-

etrated ecommerce and repre-sents a really large opportunity.

DD:Walk me through the process of shopping on Jet. How does it work?

SB: You shop as you would in any other ecommerce experience. The difference is, once you add an item to your cart, the magic starts to happen. Icons start appearing on items to show incremental savings above and beyond already low prices. It ends up being this sort of gam-ified experience where you’re able to build a smarter cart.

And a smarter cart is one that enables us to extract as much supply chain cost out of the system as we can and give those savings back to the customer. At checkout, we again reveal ways for you to save even more. For instance, if you know you’re not going to return an item, you can waive your right. Oftentimes, retailers will bake returns into the prices of items and not give buyers the ability to opt out in exchange for a discount. We also give you the opportunity to save by using a payment method that has a lower transaction fee—allowing us to pass on the savings. At every step, we show

Daniel Diez, Global Chief Marketing Officer, R/GA, chats with Jet.com’s Liza Landsman, Chief Customer Officer, and Sumaiya Balbale, VP of Marketing, about how the retailer is disrupting the ecommerce landscape through its supply chain flexibility.

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you opportunities to save more money.

DD:Do items become “smarter” because they are in the same warehouse, or because they are from the same store? LL: They’re in the same inventory pool. They may not actually be in the same warehouse but they’re in the same node of warehouses. So for that selection of items, we can ship everything together. Anytime you see that icon on anything else on the site, you know that we have figured out we can either ship fewer boxes

or shorten the shipping distance or both, and because of that we can pull costs out of the system. Another really interesting thing about the experience, from a customer perspective, is that until you actually place the order, you won’t see an assigned retail-er or merchant or brand supplier because we are repricing the whole basket based on the com-bination of items.

DD:Have you had any challenges with helping people figure all this out?

SB:We sell a vast assortment of products—from TVs to toilet pa-per, as we like to say—and that brings customers of all different types and interest levels. A lot of our customers come and simply shop. They see that there are all sorts of cool, gamified ways to save, and say “Great!” Others are spending a lot of time engag-ing with how Jet works, watching the videos, trying to understand and play with the gamified aspects. We’re trying to build an experience that works for both.

DD:Obviously, Amazon is part of the conversation. Costco is

another. Are you going after their consumers?

LL: I don’t see us going after their consumers in a targeted way in the sense of conquest mar-keting. But we think about our audience as consumers who like to shop online, consumers who care about value, consumers who like building shopping lists and using them. And if those consumers are also customers of those retailers, then yeah, we’re absolutely going after them, but I do think the market is wide open.

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Brad AlanVP, Commerce, R/GA

PERSPECTIVE

Shopping Doesn’t Always Have to Be an “Experience”

Since Amazon.com launched more than 20 years ago, the story of ecommerce has been more about continual optimization than about disruptive innovation. Looking around the web, one can see that the majority of ecommerce sites utilize a standard formula. However, the rise of mobile as our primary (or only) way of accessing the Internet is rapidly altering the landscape. Never more than a few feet away, smartphones—and, increasingly, connected devices of all types—enable consumers to make purchases wherever and whenever they have the desire.

Spilled coffee on your shirt but stuck at work? Buy a new one from Everlane and have it delivered within an hour by Postmates.

Want to buy the Jordan Brand sneakers Drake is wearing in his latest video? Just hit the “buy” button embedded in the YouTube video and check out once the video is done.

Just realized you’re almost out of paper towels? Push the Bounty Dash Button in your pantry and a new pack will be delivered in two days.

What do all of these experiences have in common? They are all simple and seamless and allow consumers to quickly get back to the things they were doing before the need or desire to buy occurred to them.

Typically, brands and marketers dedicate a considerable amount of time and effort to creating “experiences” designed to push consumers down traditional purchase paths. However, shopping doesn’t always have to be an experience—especially for frequently purchased items. Why should consumers have to dedicate so much time and effort to buying the same things

over and over again?For brands, the trick is to make transactions as quick and convenient as possible by letting consumers pull the trigger on a purchase the moment inspiration strikes. More often than not, our impulses to buy are prompted by everyday digital interactions, such as browsing our favorite apps and websites. Increasingly, social platforms are becoming viable avenues for making purchases, with all of the major players, from Facebook and Google to Snapchat and Pinterest, integrating “buy” buttons across their various platforms. These integrations are making it possible for

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consumers to learn about products and make purchases without ever leaving their original source of inspiration.

Automating The EverydayWhile lowering the barrier to purchase is an important step, the real magic happens when the onus of ordering is taken off consumers and placed on the products themselves. Amazon, through its Dash Replenishment Service (DRS), is working with manufacturers to integrate sensors that automatically place an order from a user’s Amazon account when a product starts to run low on supplies or to need replacement parts. Imagine

a water pitcher ordering new filters, or a printer ordering more ink cartridges. Even if consumers are unaware of the need, brands can stay relevant by making themselves available at just the right time. For the customer, confirming a reorder could be as simple as replying to an SMS.

Your New Personal ShopperAutomated consumerism informed by earned data is the new frontline for ecommerce. Further, the integration of artificial intelligence will allow brands to analyze individual purchase histories and demonstrated behaviors to more

accurately predict not only what their customers will need next, but where they will need it and when.

For instance, say you typically order flowers every year in the first week of June. A digital assistant should be able to automate that order annually, but it wouldn’t understand why you always make that particular purchase. However, if this same order is coupled with your social and earned data, the assistant might then correctly “infer” that your mother’s birthday falls in early June and, in addition to placing your regular flower order, suggest complementary

products based on her location and unique interests (dinner reservations at a local restaurant, gift cards from brands she follows online, etc.).

As the technology advances, such suggestions will become much more sophisticated—expanding the role brands can play when consumers make day-to-day purchase decisions. Moving forward, the challenge will be to start integrating more nuanced personal preferences and automating more complex, socially infused purchases.

Reinventing Your Ecommerce Strategy

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With the pace of change in ecommerce increasing by the day, it can be a daunting challenge to create a roadmap that takes you from where you currently are to where consumers expect you to be. It can be even more daunting when you look at the significant investments you’ve already made in people, technology, and processes.

There are many avenues to explore, but we believe that three key principles will form the basis of any ecommerce strategy.

First, brands must understand

the new and changing expectations of their customers. These expectations have been disrupted by mobile-first experiences from the likes of Uber, Starbucks, and Amazon. As a brand, you must reset, regroup, and find the path forward for your specific customers. Essentially, today’s consumers expect a set of experiences that are not only personalized but relevant, valuable, and tied together by amazing customer service.

Next, you must shift how you innovate and roll out solutions to your customers. It is no longer acceptable to develop a product

internally over a long period of time and then unveil it to the world all at once. Experimenting early and often and scaling when ready have become the new norm. This approach is intended to inspire action and allows brands to quickly transition from talking to doing. At R/GA we are helping our clients iterate quickly with prototypes that allow them to test concepts, learn what matters, determine why things may not work, and then roll out revisions at scale.

Lastly, you need to interconnect the experiences that customers have with your brand. Consumers think of brands

as single entities and expect that you are monitoring every interaction they have with you, in an effort to make their experiences better over time. It is unacceptable for your organizational structure to be the reason why a shopper doesn’t have a great experience every time. If the experience that you create fails to meet your customers’ expectations, they won’t hesitate to shop elsewhere the next time they are ready to buy.

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For media inquiries contact Daniel Diez EVP, Global Chief Marketing Officer at Daniel.Diez@rga.com

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