Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

67
© FitForCommerce eCommerce Strategy Bernardine Wu CEO, FitForCommerce February 8, 2011

description

 

Transcript of Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

Page 1: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

eCommerce Strategy

Bernardine WuCEO, FitForCommerce

February 8, 2011

Page 2: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

eCommerce Strategy

Bernardine WuCEO, FitForCommerce

February 8, 2011

Multi-channel

Page 3: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

eCommerce Strategy

Bernardine WuCEO, FitForCommerce

February 8, 2011

Omni-channel

Page 4: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

eCommerce Strategy

Bernardine WuCEO, FitForCommerce

February 8, 2011

Commerce

Page 5: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 5

Strategy is only as good as the execution

Page 6: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 6

The best intentions don’t always work out

Page 7: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 7

Band-aids are a sure sign you need a change

Page 8: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 8

“Making things work” doesn’t always mean it’s what’s best

Page 9: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 9

Getting from Here to There

Page 10: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

10

About FitForCommerce• FitForCommerce is a consultancy founded to help online businesses ‘figure out what

they need and how/where to find it’– Team of former multichannel retailers, marketers, technologists and service providers, with

hands-on expertise in eCommerce and mCommerce

• eCommerce Diligence™ is a philosophy and methodology based on diligent preparation and decision-making to ensure success

– Strategic Diligence – eMerchandising, eMarketing, Multichannel, Operations, Technology, Organization, Financial Planning

– Selection Diligence – Requirements, RFP, Selection of eCommerce technologies and providers including: platforms, mCommerce, back-end, all point solutions, 3PL/CS

– eCommerce Marketing Consulting– mCommerce Strategy– Implementation Coaching

• eCommerceKnowHow.com is the first eCommerce knowledge base:– Best practices, feature evaluations, expert advice and info on 100s of features, functions

and topics– 100s of provider and solution comparative info

• FFC mCommerce Benchmark & Buyers Guide is a structure benchmark to assess the market, compare where you stack up, help prioritize improvements (2Q 2011)

Page 11: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

Client Sampling

Page 12: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

The Obvious

• Evaluate• Competition• Benchmark

Assess where you are

ExecuteDevelop a tactical plan

Develop a full

strategy

• Goals• Approach

• What• Who• How• When• How much $

• Do it• Re-evaluate• Adjust• Re-do

Keep it Simple!

Page 13: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

eMer

chan

disi

ng

eMar

ketin

g

Tech

nolo

gy

Ope

ratio

ns

Org

aniz

atio

n

Web

stor

e

P&L / Budgeting

eCommerce Strategy

Page 14: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 14

Critical Success Factors

ORGANIZATIONRight skills, right people, doing the right things at the right time – and working together with shared objectives and accountability under clear leadership

FUNCTIONALITYAppropriate features, functions, capabilities for a great customer experience and for efficient management and growth of the business

OPERATIONSProcesses that add value and are efficient; and are not substitutes for sub-optimal organization, functionality, technology

TECHNOLOGYAppropriate tools, technology, integrations to support the business in the most efficient and fail-safe manner

© FitForCommerce

MERCHANDISEThe appropriate assortment for the target audience in line with the brand and showcasing products to sell the most

MARKETINGBeing found when someone is searching and driving qualified traffic that will buy and return to buy from the webstore

BUDGET / P&LInvestment thinking so funds and resources go to the right places and there is room for experimentation

Page 15: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

BENCHMARKING

Knowing how you stack up

Page 16: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

16

Market Comp( Sample )

Page 17: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

17

IR Top 500• Comparison of sites for conversion rate and average ticket

( Sample )

Page 18: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

18

Gathering Intel• Consult with an Expert

• Mystery Shopping

• Hoovers, D&B & other financial sources

• IR Top 500 Guide

• Vendors

• Industry news, Blogs, Newsletters

• Attending & Networking at Events

• Recruiting

• Usability Studies, Eye Tracking, Focus Groups

• Other competitive data sources:– Quantcast– Hitwise– Google Trends– Google Insight– Google Adwords– Way Back Machine– The Search Monitor– Comscore– Alexa– BuzzNumbers– Compete.com– ZoomInfo– Statsaholic– nielsen-online.com– Netcraft– Ranking.com– Highbeam

Page 19: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

MERCHANDISEThe appropriate assortment for the target audience in line with the brand and showcasing products to sell the most

Page 20: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

eMerchandising• What are you selling?

– Brand alignment– Merchandise assortment– Merchandise depth– COGS, Pricing, Margin– Multichannel dynamics

• How are you selling?– Robust information on webstore– Emotional connection– Leading her to a sale, making it easy– Guided selling– Cross-channel drivers

Page 21: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

Merchandising Analysis

Page 22: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

Romancing the Product

Page 23: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

Others:Hero imageLifestyleSwatchingZoom360

Page 24: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

MARKETINGBeing found when someone is searching and driving qualified traffic that will buy and return to buy from the webstore

Page 25: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

Marketing Investment

• Creating Marketing Budgets is both an art and a science with more emphasis on individual success of marketing programs. Industry benchmarks are guides rather than rules.

Source: The Econsultancy / ExactTarget Marketing Budgets 2010 Report is based on a survey of more than 1,000 client-side marketers and agency respondents.

Page 26: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

Balancing the eMarketing Investment

• Branding, Advertising• Outreach: Email, Social,

Mobile• Get found (80% rule!): SEO,

PPC/SEM, Affiliate, Marketplaces (CSE)

• Offline: print ads, catalog, direct mail

• Cross-channel: store-to-web, web-to-store, catalog-to-web, package inserts programs (PIP), in-store kiosks/endless aisle, POS programs (POP)

• Consistently great experience• Outreach: Email, direct mail• Loyalty programs• Community, social• Content• Cross-channel: PIP

CUSTOMER ACQUISITION CUSTOMER RETENTION

Page 27: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

Attribution of Marketing Spend

• Track sources for traffic, quality, conversions• Use matchbacks for catalog or print• Analyze house file for size, age, activity

Page 28: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

Detailed Analysis• Abandonment by Channel - Email-driven traffic is is showing

significant signs of weakness, particularly in View Bag and Order Complete stages of checkout

Aba

ndon

men

t Rat

e

Page 29: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

Email Marketing• Performance

– Bounce rate: 11% (first campaigns) 2.5-3.5% (established)– Open Rate: 25-30%– Click Through Rate (CTR): 10-15%

• Key to Execution– Segmentation & Targeting– Messaging (Relevancy) & Frequency– Trigger– Reporting– Think in context of contact strategy– Beware of attrition

• Measuring Success– ROAS = Return on Advertising Spend (a.k.a. ROI)– CPA = Cost Per Acquisition– Are you overpaying for any of your sales?– Cannibalization vs. Lift

• Lift is the net amount of traffic that is added to the mix• Cannibalization is the portion of traffic that comes at the expense of another driver

Page 30: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

Source: emarsys eMarketing Systems 2010 Email Report The data for this report was collected between January 1 and December 31, 2009. Results based on analysis of response data from more than 30,000 regular B2B and B2C email campaigns (newsletters, promotional emails) sent by more than 500 companies.

Page 31: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

Marketing Spend• Paid Search

– Average conversion rate for Paid Search is 3.15% (Source: eConsultancy)– Percentage of site visits via paid search 19.8% (Source: eConsultancy )– Retailers on average spend 40% of their budget on Search (Source: Internet

Retailer)

• Marketplaces/Feeds/Comparison Shopping Engines– Average conversion rate for Comparison Shopping Engines is 3.7% (Source:

Marketing Sherpa)– Shopping Feed demand is mostly driven by consumer looking to comparison

shop for prices– Apparel Retailers are less likely to be successful with shopping feeds

• Banner Ads– CPM = $10 (a typical rate for general, not-very-targeted websites) (Source:

eConsultancy)– CTR = 0.5% (Source: Marketing Sherpa) – Conversion Rate = 2% (Source: Marketing Sherpa)

Page 32: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 32

Distribution of Spend (example)Example of Spend/Revenue Scenario• Budget - 61% increase • Revenue - 23% increase • Email - Need aggressive growth in email capture/housefile. Numbers based on more targeted

email strategy and trigger program. • Paid Search - ROAS comes down and revenue increases 30% • Banner - Optimize program on no additional spend• Social - Optimal area to grow• Feeds - no growth planned• Other/Testing - No revenue $’s attached to Program/Bucket

Page 33: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 33

Page 34: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 34

Page 35: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 35

eMarketing KPIs• These KPIs should be compiled and reviewed to help drive the

business:– Weekly Site Metrics Report– Channel Report– KPI’s

Channel Report • Revenue by Media LY • Orders by Media LY• AOV by Media LY• Items per Order TY & LY• Conversion Rate LY• Visits LY• NTF• CPA• ROAS• Cost

Website Metrics• Buying Sessions• Orders per Session• New Vs. Returning Visitors• Shopping Cart Abandonment

Rate• Days and Visit to Purchase

Page 36: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

FUNCTIONALITYAppropriate features, functions, capabilities for a great customer experience and for efficient management and growth of the business

Page 37: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

37

37

Funnel Analysis

37

4.45%convert

Add To Bag 3,256

Bill & Ship1,572

Receipt 937

Sessions: 21,022

Browsers11,975

Ship Meth1,378

Pymt/ Review 1,310

Multi Page Sessions: 17,806

Shopping Bag2,801

Percent Lost Between Each Stage

15%

33%

73%

14%

44%

12%

5%

29%

Checkout

*Monthly averages since 3/07

Optional Offer Code Page

Omitted

Could have abandoned Ship

Meth or Offer Code Page

( Sample )

Page 38: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

38

Competitive Feature Comparison

Shopping Bag Features of an Site vs Competitors

Retailer

( Sample )

Page 39: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

Seek out ‘market data’

• Ask your peers

• Read key reports, blogs– Forrester– Gartner– Getelastic blog

• Benchmarking studies – e-tailing group

EG100 Gauge (“egeg”)

• Knowledge basesThis is real data on the feature: Ratings & Reviews

39

Feature: Ratings & Reviews

Source:

Page 40: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

40

Eye Tracking / Usability StudyHeatmaps Gaze Plots Cluster Maps

Fixation Count, Observation Time, Participant % Charts

( Sample )

Page 41: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

41

41

41

Top Recommendations: This Year1. Save Bag Longer: tie bags to user cookie, and save longer link

2. Offer Code in Bag: offer code entry in bag and edit payment pg link

3. Edit Items in Bag: edit color, size, qty in bag, remove items in 1-click link

4. Shipping Method Selection: select method/see rates in bag, Mini-bag link

5. Gift Card Balance: show GC and eGC amounts used, balance, check link

6. Add-to-Bag Confirm Page: add ATB overlay w/cross sells & offers link

7. Full Mini-Bag Overlay: show full bag in drop-down from mini bag icon link

8. Mini-Bag Icon: show item count in mini bag icon link

9. Gift Boxing in Bag: select gift boxing options in bag link

10. Calculate Tax in Bag: calculate/show tax in bag link

11. Cross Sells: show cross sells in ATB overlay, Mini-bag and bag link

12. Move Items to Wishlist: move items to/from wishlist, save for later link

13. Error Messaging: improve HazMat, Trademark, etc errors link

14. Address Error Messaging: improve address validation error msgs link

15. Promotion Communication: show promotions differently, deal pricing link

16. Shopping Bag Item Detail: show delivery date, ‘was’ price, color name link

17. Log-in/Registration: login/registration at top of Bill/Ship pg only link

18. Email/Print Bag: email or print bag link

T: XL

Benefit/Impact  vs Tech Effort

T: LB:XL

T: LB: L

B: L T: MB: L T: MB: L T: M

T: XLB: M

B:XL

T: LB: L

T: MB: M

B: L T: LT: LB: L

B:XL T: L

B: L T: M

T: MB: MT: MB: M

T: SB: S

T: XLB: L

B: L T: XL

( Sample )

Page 42: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 42

Site Workflow Document

Page 43: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

TECHNOLOGYAppropriate tools, technology, integrations to support the business in the most efficient and fail- safe manner

Page 44: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

ECP OMS

WMS ERPSite Search

Ratings & Reviews

eMerchandising

eMarketing

SEO/SEM

ComparisonEngines

AffiliateEmail

Social

Mobile

Web Analytics

Personalization

Facebook

MySpaceTwitter

Rich InternetApps (RIA)

Loyalty

Zoom360°

eCatalog

Searchandising

Quick View

Marketplaces

PaymentCMS

Customer CareCall Center

CR MCustomer Satisfaction

Measurement Gifting

Security PCI Fraud

HostingLogistics

Fulfillment Returns

Inventory

Chat

CDN

Performance

Click-Recording

eCommerce Galaxy

MCP

Multichannel

International

Page 45: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

45

Key Indicators it’s Time for a Change

• Falling Behind the Competition• Missed Benchmarks vs. Best Practices• Cannot Overcome Current Deficiencies• Internal Costs are Too High• Strategic or Future Growth is Dependent

Page 46: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

46

Key Components & Integrations

Marketing Webstore(ECP)

Order Mgmt(OMS)

FulfillmentWMS

ERP

CustomerService

Customers/ordersInventory

Shipping info

Tracking info

Sales Tracking info

Inventory Price/Stock Qty.

Merchandising

CatalogPricingContentImages

Traffic

Retail(POS)

Mobile store(MCP) Catalog

( Over-simplified! )

Page 47: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 47

Mobile adoption• 58% of companies do NOT have mobile marketing OR mCommerce.• Of the 42% that have mobile:

– 39% are using mobile marketing– 81% have a fully optimized mobile site – 42% have a mobile app

• 34% of companies have mCommerce, not just mobile marketing

Source: FitForCommerce M-Commerce Survey Sept 2010

Does your company have a:

Mobile 42%

Page 48: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 48

Plans for mCommerce• mCommerce website• Only 17% have no plans• 46% have plans in next 12

months• 35% more than a year from now

• mCommerce application• 37% have no plans• 46% in next 12 months• 17% more than a year from now

Source: FitForCommerce M-Commerce Survey Sept 2010

Page 49: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 49

Technical Component Diagram

Page 50: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

OPERATIONSProcesses that add value and are efficient; and are not substitutes for sub- optimal organization, functionality, technology

Page 51: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

Functional Component Diagram

51

Page 52: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 52

Fulfillment Decision Tree

Fulfill in-house

Modify DC(Bldg 4)

Build new warehouse

Fulfill from 3PL

- Not enough space- Too costly- Inefficient configuration

- Higher startup cost than 3PL- Slower time-to-market- New competency risk

+ Leverage real estate+ Leverage pooled inventory

+ Lower cost than 3PL long-term

Inventory Size

SKU count

Sources

+ Leverage outside expertise+ Lower investment cost+ Speed-to-market+ Variable cost base

Vendor drop-ship(as supplement)

+ Leverage top vendors+ Lower MSG inventory

Fill from Store - All stores- Regional stores

Fill from Store(as needed) - Regional stores

- Stores cannot handle volume

+ Increase fill rate

- Increased inventory- More expense over time

- Dependence on others- Lower margin

Page 53: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 53

Cross-ChannelIn-StorePickup

• Check item availability in stores• Purchase Item online, pick-up in store• Drives store traffic• Inventory accuracy is crucial

Kiosk• Self service webstore access• Locate inventory in other markets• Find products not offered in stores (vendor drop ship items)

Endless Aisle

• Associate driven order entry for items not in stock• “Ship anywhere” service in stores• Items shipped to guest from

warehouse (no shipping charge)

Store Fulfillment

• Supplement inventory with items not in warehouse• Regional high volume stores• Pick/pack/ship in back stock area• Inventory accuracy crucial

Ship To Store

• Select store as a delivery destination in webstore & endless aisle• Use store inventory when in-store pickup is rolled out• Store to store shipping supported by store fulfillment

Page 54: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

ORGANIZATIONRight skills, right people, doing the right things at the right time – and working together with shared objectives and accountability under clear leadership

Page 55: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

55

eCommerce Org Structure

eCommerceMerchandising

eCommerceMarketing

eCommerce Technology

eCommerce Operations

Creative/Art Direction

Catalog Management

Search Marketing

Email/Retention Marketing

Affiliate Marketing

Front-end Development

QA

Site Support

Fulfillment

Customer Service

Web Design

Content / AssetManagement

Tech Project/ Program Mgmt

Direct-to-Consumer

Corporate Functions (Finance, HR, Legal)

Business Units

Merchants Marketing IT Operations

Graphics Design

PhotographyMobile

M-Commerce

Analytics / Reporting

Social Media MktgStrategic Partner

Strategic Partnership Mgmt

“A” Merchandising/ Business Unit

“B” Merchandising/ Business Unit

“C” Merchandising/Business Unit

Mobile Marketing

Back-end Development

( Sample )

Page 56: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

56

Organizational Growth(Oversimplified) Growth Patterns

LEVEL 1

1-2 Person Shop

< $1mm

LEVEL 2

Handful ofPeople Team

(<5 FTE)

<$10mm

LEVEL 3

Full TeamCovering

AllDisciplinesPoised for

Growth(~15 FTE)

$10-20mm

LEVEL 4

Full TeamCovering

AllDisciplineswith Scale

&Some

Outsourc’g(~20 FTE)

$20-50

LEVEL 5

Full TeamCovering

AllDisciplineswith Scale

& Balanced

Outsourc’g & In-house3rd Party

Vendors &Integration

s(~30 FTE)

$50-150

LEVEL 6

Full TeamCovering AllDisciplines

with Deeper

expertise,Scale

Heavy MktgMulti-channel

Bringing it back in-house

Some 3rd

Party/OS

(~40 FTE)

$150m+

5 6

LEVEL 7

Full TeamCovering AllDisciplines

with Deep

in-house expertise,

Scale, Heavy Mktg

Cross- channelSome 3rd

Party/OS

(~60 FTE)

$250m+

Note: includes tech, but not fulfillment/customer service

( Over-simplified! )

Page 57: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 57

Why not mobile?• Technical obstacles, resource constraints and skills, but not that they should not be.• Many need to focus on eCommerce before mCommerce - “One thing at a time”• Need to support the upside potential with hard data to make mobile commitment.

Why are you not yet Mobile?

Source: FitForCommerce M-Commerce Survey Sept 2010

Page 58: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

BUDGET / P&LInvestment thinking so funds and resources go to the right places and there is room for experimentation

Page 59: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 59

$15M Revenue P&LOption 1 Option 2 Option 3 Option 4

FF in-house FF in-house FF outsrc (3PL) FF outsrc (3PL)Status Rate Best Pr CS in-house CS outsourced CS in-house CS outsourced Notes

Gross Sales 15,000,000 15,000,000 15,000,000 15,000,000 Orders (Demand) $85.00 176,471 176,471 176,471 176,471 Based on GSI 2010 AOV Cancelled 3.5% (525,000) (525,000) (525,000) (525,000)

Shipped Sales $ 14,475,000 $ 14,475,000 $ 14,475,000 $ 14,475,000 Orders (Shipped) 170,294 170,294 170,294 170,294

Returns 11.0% (1,592,250) (1,592,250) (1,592,250) (1,592,250)Adjustments 1.0% (144,750) (144,750) (144,750) (144,750) Cost of MVP Points

Net Sales $ 12,738,000 $ 12,738,000 $ 12,738,000 $ 12,738,000

Cost of Goods SoldInitial COGS 45.0% 5,732,100 5,732,100 5,732,100 5,732,100 Freight In 1.0% 127,380 127,380 127,380 127,380 Markdowns 8.0% 1,019,040 1,019,040 1,019,040 1,019,040 Other/Shrink/Damages 1.0% 127,380 127,380 127,380 127,380

Total Cost of Goods Sold $ 7,005,900 $ 7,005,900 $ 7,005,900 $ 7,005,900 % of Net Sales 55% 55% 55% 55%

Gross Revenue $ 5,732,100 $ 5,732,100 $ 5,732,100 $ 5,732,100

Operating ExpensesCredit Card Fees 3.0% 434,250 434,250 434,250 434,250 Estimated fees based on industry average Bad Debt/Chargebacks 0.5% 72,375 72,375 72,375 72,375 Estimated fees based on industry average Shipping 15.0% 2,171,250 2,171,250 - - Estimated actual cost of shipping Shipping Revenue 17.0% (2,460,750) (2,460,750) - - Shipping & Handling charge to online customer

Total Operating Expenses $ 217,125 $ 217,125 $ 506,625 $ 506,625 % of Net Sales 2% 2% 4% 4%

Marketing Expenses 10.0% 1,273,800 1,273,800 1,273,800 1,273,800 Agency Fee 15.0% 161,070 161,070 161,069 161,070

Content (copy & images) 30,000 30,000 30,001 30,000 Ongoing catalog maintenance(item copy; attributes/tagging;

images)

SEM/PPC 25.0% 270,683 270,683 270,683 270,683 Pay for performance (search engines, network buys) Affiliates 15.0% 162,410 162,410 162,410 162,410 Third party costs & support email Marketing 5.0% 54,137 54,137 54,137 54,137

Cross Channel (DM, store adv.) 20.0% 216,546 216,546 216,546 216,546 Compare Shop Sites 5.0% 54,137 54,137 54,137 54,137

Promotions 10.0% 108,273 108,273 108,273 108,273 Free ship, Free gift w/ purchase, Channel Partner exclusive SEO 5.0% 54,137 54,137 54,137 54,137

Total Marketing Expenses $ 1,111,391 $ 1,111,391 $ 1,111,391 $ 1,111,391 % of Net Sales 9% 9% 9% 9%

Page 60: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 60

Summary of OptionsSUMMARY

Current Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 5-Year2010 Year 1 Year 2 Year 3 Year 4 Year 5 Cumulative

%incr %inc r

%incr %inc r

Gross Sales $ 9,000,000 $10,000,000 $15,000,000 33 %

$20,000,000 25% $25,000,000 20% $30,000,000 17% $ 100,000,000

$10m is baseline "min" and basically equals current site .$15m is "par" and should be achievable with additions and improved site. $20m is "max" or stretch goal for 2 yrs, but achievable in 3 yrs. Growth to $30m in 5 yrs is aggressive but achievable.

Net Sales $ 8,492,000 $12,738,000 $17,174,729 Gross Revenue $ 3,821,400 $ 5,732,100 $ 7,728,628 $ 9,650,000 $11,580,000 $ 38,512,128

ExpensesOption 1FF & CS in-house $ 4,711,841 $ 4,822,816 2% $ 4,871,347 1% $ 5,358,481 10% $ 5,805,021 8% $ 25,569,505 Includes investment in

new/multichannel capabilitiesOption 2FF in-house / CS outsourced $ 4,794,341 $ 5,074,191 6% $ 5,243,347 3% $ 5,767,681 10% $ 6,248,321 8% $ 27,127,880 "Option 3FF outsourced / CS in-house $ 4,533,141 $ 5,063,891 10

%$ 5,483,947 8% $ 6,032,341 10% $ 6,535,036 8% $ 27,648,355 "

Option 4FF & CS outsourced $ 4,615,641 $ 5,315,266 13 %

$ 5,855,947 9% $ 6,441,541 10% $ 6,978,336 8% $ 29,206,730 "

Gross Rev minus ExpensesOption 1FF & CS in-house $ (890,441) $ 909,285 $ 2,857,282 68% $ 4,291,519 33% $ 5,774,979 26% $ 12,942,624 See details for Expenses in yrs1-3

Option 2FF in-house / CS outsourced $ (972,941) $ 657,910 $ 2,485,282 74% $ 3,882,319 36% $ 5,331,679 27% $ 11,384,249 "

Option 3FF outsourced / CS in-house $ (711,741) $ 668,210 $ 2,244,682 70% $ 3,617,659 38% $ 5,044,964 28% $ 10,863,774 "

Option 4FF & CS outsourced $ (794,241) $ 416,835 $ 1,872,682 78% $ 3,208,459 42% $ 4,601,664 30% $ 9,305,399 "

9% 15% % of Gross Rev. FYI, $10m store: 10- 15% profit

CapEx (36 mth depr)Option 1FF & CS in-house $ 1,874,667 $ 1,874,667 $ 1,874,667 $ 100,000 $ 100,000 $ 5,824,000 See details for CapEx; $100k in yr4&5

is nominalOption 2FF in-house / CS outsourced $ 1,874,667 $ 1,874,667 $ 1,874,667 $ 100,000 $ 100,000 $ 5,824,000 "Option 3FF outsourced / CS in-house $ 708,000 $ 708,000 $ 708,000 $ 100,000 $ 100,000 $ 2,324,000 "Option 4FF & CS outsourced $ 708,000 $ 708,000 $ 708,000 $ 100,000 $ 100,000 $ 2,324,000 "

Gross Rev minus Expenses minus CapEx (36 mth depr)

% of rev % of rev % of rev

% of rev % of rev

Option 1FF & CS in-house $ (2,765,107) - 28%

$ (965,382) - 6%

$ 982,615 5% $ 4,191,519 17% $ 5,674,979 19% $ 7,118,623 7%

Option 2FF in-house / CS outsourced $ (2,847,607) - 28%

$ (1,216,757) - 8%

$ 610,615 3% $ 3,782,319 15% $ 5,231,679 17% $ 5,560,248 6%

Option 3FF outsourced / CS in-house $ (1,419,741) - 14%

$ (39,791) 0% $ 1,536,682 8% $ 3,517,659 14% $ 4,944,964 16% $ 8,539,773 9%

Option 4FF & CS outsourced $ (1,502,241) - 15%

$ (291,166) - 2%

$ 1,164,682 6% $ 3,108,459 12% $ 4,501,664 15% $ 6,981,398 7%

Retail Store Revenue $ 568,000,000 $ 600,000,000 $ 618,000,000 3% $ 636,540,000 3% $ 655,636,200 3% $ 675,305,286 3% $ 3,185,481,486 Assumes 3% growth across 5 yearsOnline as % of Retail Store Revenue 1.58% 1.67% 2.43% 3.14% 3.81% 4.44% 3.10% Average over 5 yrs

'Profit' - Same growth as MSG $ 700,000 $ 1,050,000 33 %

$ 1,400,000 25% $ 1,750,000 20% $ 2,100,000 17% $ 7,000,000 However, this assumes can grow MSG significantly even though they haven't been able to in past years

'Profit' - Same growth as past perf $ 630,000 $ 700,000 $ 791,000 6% $ 893,830 6% $ 1,010,028 6% $ 1,141,332 6% $ 4,536,190 More moderate growth

Page 61: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 61

People / Overhead

OutsourcedFF/CS

In-houseFF/CS

Page 62: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce 62

Capital Investments

OutsourcedFF/CS

In-houseFF/CS

Page 63: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

Can you leapfrog the competition?Fu

nctio

nalit

y / C

usto

mer

Val

ue

eCommerce Evolution

FEATURES• Catalog• Shopping cart• Payments

HomegrownManual updatingScaling issues

ADDED FEATURES• Search• Promotions• Merchandising• Order Status• Cross Sells• Bolt-on approach

(3rd party systems)

Product-centricSingle-channelLimited features

BEST-IN-CLASS• Personalized experience• Continuity/Subscription• MicroSites• Integrated OMS• Integrated call center• Integrated POS• Dynamic content mgmt• Micro-targeted

content/offers• Guided navigation• Rich media• Web analytics• Customer intelligenceCustomer-centricMerchandiser controlMulti-channel

1st Generation

MarketingOnly

2nd Generation

3rd Generation

4th Generation

63

© FitForCommerce

Page 64: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

64

Resources• There are many great resources out there for you –

some are literally at your fingertips; others require more time and effort!

• To name a few:– Tradeshows: IRCE, Shop.org, eTail– User Conferences Omniture & many others– Associations: MGA/DGA, NR F/Shop.org, DMA– Consultancies: FitForCommerce ☺– Informational websites: eCommerceKnowHow.com,

InternetRetailer.com, GetElastic.com

– Industry papers/magazines: Internet Retailer, Stores, Multichannel Merchant

– Networking Groups: Women in Ecommerce

Page 65: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

65

eCommerceKnowHow.com

• Knowledge base and Community expertise• Searching and sorting for eCommerce Solutions• Do-It-Yourself requirements posting on Opportunity Corner

Page 66: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

66

Best Practices Checklists

• Best Practices Checklists • Key Questions to Ask Providers • 32 different topics• www.eCommerceKnowHow.com/bestpractices

Affiliate MarketingComparison Shopping / MarketplacesConsultancy / Professional ServicesContent Delivery NetworksContent Management SystemsCRM SystemsCustomer CareCustomer Satisfaction MeasurementData  Mining / WarehousingeCommerce PlatformsEmail MarketingGift Card / CertificatesInternational eCommerceInternet SecurityISP / HostingLogistics

Loyalty / Promotions ManagementMobile CommerceOnline Catalog / Catalog ManagementOnline Customer Support / Demos / ChatOrder Management SystemsPayments / Fraud ServicesPersonalizationRich MediaSearch Engine Marketing / PPCSearch Engine OptimizationShippingSite SearchSocial MediaWeb AnalyticsWeb Design / User ExperienceWebsite Performance / Monitoring

Page 67: Magento's Imagine eCommerce Conference 2011 - eCommerce Strategy

© FitForCommerce

67

Q&A

Bernardine WuCEO, [email protected]+1 973.379.7399

www.FitForCommerce.comwww.eCommerceKnowHow.com

Thank You