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

Transcript of eCommerce – Dropping the e in eCommerce

  • (plus a few digressions)

  • Dropping the e in eCommerce.

    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 & theres more to the product than price

    ee

  • A forecast for eCommerce in the UKafter 10 years* of online retail development.

    in online sales in 2014**, which amounts to 9.1% of all retail sales.

    per annum, faster than all retail sales over the next five years.

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    **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

    *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.

  • Market influencers.S

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    Increasing need & acceptance of being online.

    Ageing population boosting numbers of older people online.

    Perception that online is cheaper than offline.

    Comparison culture has become a mainstream activity.

    Consumer recession will be much worse in 2010/2011.

    Increasing concerns about security & privacy.

    Problems with delivery, fulfilment & returns.

    User experience not living up to needs & expectations.

  • 0908070605040302

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    THE NEW PLATEAU.The days of dramatic volume growth due to broadband penetration increases are over, but online buyers are spending more per person.

    SOURCE: Ipsos Mori/Mintel

    Percentage of people in UK buying online

    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.

    17.8 billion in onlin

    e retail sales i

    n 09.

    6.6% of all reta

    il sales with

    150% growth s

    ince 05.

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    THE NEW PLATEAU.The days of dramatic volume growth due to broadband penetration increases are over, but online buyers are spending more per person.

    SOURCE: Ipsos Mori/Mintel

    Percentage of people in UK buying online

    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.

    17.8 billion in onlin

    e retail sales i

    n 09.

    6.6% of all reta

    il sales with

    150% growth s

    ince 05.

    Maturity & Greater Competition

  • Off-shore retailers

    23%

    Other8%

    Otherstore-based retailers23%

    Grocers20%

    eBay3%

    Mail order23%

    Real world retailers versus Pure Plays?Only three* of the top 10 retailers by sales are pure plays.

    *Amazon, Dell, eBay

  • 0 10 20 30 40 50 60 70

    Video downloads Lingerie

    Furniture and furnishingsJewellery

    Childrens clothingDIY and garden productsSports and leisure goods

    Mobile handset/accessoriesGifts/cards

    Cosmetics/ToiletriesHome electricals

    Housewares Grocery shopping

    Footwear Music downloadsToys and Games

    Electronic gadgets (eg iPod) Computer hardware/software

    Mens clothingWomens clothing

    BooksCD/DVDs

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    Products bought online in last 12 months Frequency of browsing, by age and socio-economic group

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    Aver

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    More Affluence Less38

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    Every day

    Couple of times a year

    NeverEvery couple of months

    Once a monthOnce a week

    Who, what & how often?

    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.

  • What do people like (& dislike)about eCommerce offerings?

    Convenienceyou can shop at any time

    and expect delivery within 36 hours if you are prepared

    to pay for it. ImmediacyLatest products at the latest prices.

    NavigationIts hard to browse & find what youre looking for.

    Product DisplayColour, picture quality

    and size can be bad.

    ExperienceYou cant try on or try out the goods.

    ComparisonAbility to compare

    products and prices.

    Low PricesSometimes, not all the time,

    people are wising-up.

    RangeFar more than any store, esp. ASOS & Tesco Direct.

    Like Dislike

  • 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...

  • ...1-Click,RANGE &Recommendation.

    #1

    #2

    #3

  • U.S. patent no. 7,222,0871-Click ordering.

    Ease of use and speed to task completion are key eCommerce competition areas, Amazons patent has given it a unique advantage over competitors (like Barnes & Noble) and been licensed to Apple.

    Enable Single-Action Ordering

    Done

    Retrieve client ID

    Set client ID/customer mapping

    Return confirming web page

    Set single action ordering for client

    ID/customer

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    A broad business method patent governing the process by which online shoppers make purchases with a single click, having previously entered their payment and shipping information.

    #1

  • UE, forms & baskets became battlegrounds.

    Top alignedFor reduced completion times & familiar data input Right alignedWhen vertical screen space is a constraintLeft alignedFor unfamiliar, or advanced data entryR

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    Minimize the painNo one likes filing in formsSmart defaults, inline validationIlluminate a path to completion

    Familiar vs. foreign infoFrequently used vs. rarely usedProgressive disclosureErrors, Help, Success

    Source: Luke Wroblewski

  • 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.

    9.7 million is what

    it would cost

    to

    buy everything

    on iTunes.

    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 both worlds.

    #2

  • 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 linesOcado >21,000 SKUs

    *But increasingly a consumer expectation & a user experience challenge. eBays early work on category taxonomy and aspect tagging influenced many site structures.

  • Web

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    Supports the b

    elief

    that online is

    cheaper.

  • Cross-sell & competitive advantage through recommendation systems.OPPORTUNITY TO MOVE PEOPLES MINDSETS FROM:

    SEARCH & BUY. BROWSE & DISCOVER.

    Repeat relationships are built during browsing.

    Single transactions are harvested by search.

    A consumer knows what they are looking for & use keywords to

    search for it. Speed, ease of use, result accuracy & price are the key

    influencers leading to purchase.

    A consumer knows generally what they are interested in or has

    purchased but not left the site. Relevance & engagement create

    opportunities to up-sell.

    #3

  • Browsing history Purchase history

    Items viewed

    Related Items (Item recommendation)

    Other people viewed.... (Social)

    New releases (for you)

    Related Items (Item recommendation)

    Other people purchased.... (Social)

    4 recommendation systems.

    4th? Amazon Approach; combine all 3 with browsing & purchase history.

    Personalised recommendation

    Social recommendation

    Item recommendation

    Recommend based on the individual's past behavior

    Recommend based on the past behavior of similar users

    Recommend based on the item itself

  • 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.

  • eCommerceATOMISES.

  • People will interact with any channel they