Webinar July 12

To Join The Teleconference: Toll: +1 (909) 259-0012

Access Code: 515-292-310

Webinar ID: 226097318

Presentation Content:Will be made available for download at www.ixtens.com

Email will be sent to notify you of availability

Questions: Please ask questions via Twitter #IXWebinar or through the Q&A function

PresentersPaul Kogan, VP Business Development, Ixtens

Sucharita Mulpuru, VP and Principal Analyst, ForresterEugene Nikiforov, CPO and Co-Founder, Ixtens

The Changing Dynamics of Retail -- Multi-Supplier Marketplaces

Special Guest Speaker

http://www.ixtens.com/

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

Ixtens mission is to power the next generation of marketplaces

A group of e-commerce veterans who helped Amazon build their web store Services offer.

Ixtens Company Overview

6+ years of expertise in e-commerce and online marketplaces

Global reach with offices in New York, London, Russia

80+ employees


Some of Our Clients


Ixtens Products


Sucharita Mulpuru, Principal Analyst, Forrester

Research•At Forrester, Sucharita serves eBusiness & Channel Strategy Professionals•Leading expert on eCommerce, multichannel retail, consumer behavior, and trends in the online space.•Authored joint study “State of Retailing Online”

Previous Work:•Director of Marketing, Saks Fifth Avenue•Management at Toys “R” Us•Walt Disney Company

Education:•B.A. Economics from Harvard•M.B.A Stanford Graduate School of Business


© 2011 Forrester Research, Inc. Reproduction Prohibited8 © 2009 Forrester Research, Inc. Reproduction Prohibited

What Every Large Retailer Or Media Company Needs To Know About Marketplaces

Sucharita Mulpuru, VP and Principal Analyst

Month Day, 2011


Amazon is the new Walmart


Trend 3: Investment in online marketplaces

“One of the most significant facts regarding eCommerce in recent years is how Amazon.com 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. “

Trend 3: Investment in online marketplaces

“One of the most significant facts regarding eCommerce in recent years is how Amazon.com 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. “


Lessons from Amazon’s marketplace

Key considerations

Agenda


Amazon is the force to reckon with online


This is a relatively recent notion

Source: Amazon annual reports 2000-2010

Profitable

Profit as a % of sales NA NA NA 1% 8% 4% 2% 3% 3% 4% 3%

Small

and

erratic!


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


What is the marketplace?

A product offered

for sale by

Amazon.com

The same product on the same

product detail page offered by

other sellers


• Marketplace has many pros: wider product & brand selection, no

costs for storage and distribution, content costs borne by

sellers/merchants

• Sales from marketplace sellers represented 31% of unit sales in 2010

(up by 3% compared to 2005)

• 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.

Some Amazon marketplace highlights


Some retailers have learned this the hard way, and others likely will follow


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%


Lessons from Amazon’s marketplace

Key considerations

Agenda


How is this different from drop shipping?

A drop ship program is a good start; it is the synchronization of order

details to disparate fulfillment destinations

Drop ship programs send packages on behalf of a retailer; the retailer

generally handles most customer service issues including returns

Marketplaces are essentially affiliate programs with a shared checkout;

customer service is generally handled by the 3rd party retailer

– In some cases such as Fulfillment by Amazon, a 3rd party can be part of the

Amazon Marketplace but can remit all fulfillment responsibilities to the retailer

that sells their goods


What are the challenges with marketplaces?

Your brand equity is reliant on a 3rd party; invariably, lapses occur with marketplace

partners

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

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

Competition is more difficult because product assortments may be less differentiated;

your marketplace partners may be the same partners of others

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)

But if executed effectively, marketplaces can be extremely lucrative


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


…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

© 2009 Forrester Research, Inc. Reproduction Prohibited

Thank you

Sucharita Mulpuru

[email protected]

Marketplace Origins

How It Works

Marketplace Today

Marketplace in Action

Agenda


Marketplace Origins

Throughout History In the Age of eCommerce

Manufacturer

Dropshipper

Webmerchant

Buyers Money Buyers Money


Amazon has proven the marketplace concept

1995 only books

1998-99 music, DVDs,

toys, electronics, tools, and hardware

2002Launch Amazon Marketplace (3rd

party sellers)

2004Launch

Webstore Services

201040+ product categories

Marketplace Sales are > 30% of Total

$16 Million

$610 Million

$3.12 Billion

$6.92 Billion

$34.20 Billion


Marketplaces are one of 5 major ecommerce trends for 2011 according to Forrester

Within the last two years Walmart and Sears built their own marketplace platforms.

TESCO is reportedly launching a marketplace in the U.K. (Retail Week/BBC News)

eBay is shifting its business model to a more Amazon-like experience.

Recent trends


Marketplace Checklist

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

✔

✔

✔

✔

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

✔

✔

✔


Marketplace Benefits

BENEFITS RETAILER

MEDIA

Increase your product offeringSell 3rd-party products under your brand ✔ ✔Get rid of your inventory costSuppliers handle inventory, fulfillment and returns ✔ ✔Simplify suppliers integrationOne-time onboarding of multiple suppliers ✔ ✔Gain new float revenueCollect payment and pay suppliers after 15-30 days ✔ ✔Transform your content readers into customersStop sending your readers away when they are ready to buyOwn the customer and the data

✔

Transform your advertisers into suppliersExtend your relationship with your advertiser ✔


You are the “merchant of record” - collect payment, set and payout your own commissions

You keep the customer and all transaction data

Single, integrated user experience

Increased basket size and conversion rate with “single basket” purchase

Additional revenue from featuring merchants, products, deals

Affiliate Model Marketplace Model

× Tracking and crediting publisher for sales is inaccurate and often fails.

× You “lose the customer” and all transaction data

× Fragmented user experience leads to higher abandonment rate and few multi-item transactions,

× Outside merchants controls user experience, your payout and the products offered

Affiliate vs. Marketplace Model


Eugene Nikiforov, Co-Founder / CPO

History•Been involved in electronic commerce since 1996•Co-Founder of Ixtens, which was spun out of Quantum Art where Eugene was also a Co-Founder

Previous Work:•Director of Multimedia Development at Fountainhead Management•Citibank, Internal Technology Division•Senior Financial Advisor, Interpegro Trading Company

Education:•Masters Degree from Moscow State University


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


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


View of a Marketplace Platform


Suppliers

Building blocks of a marketplace

Interactions between marketplace participants

Customers

Storefront

Marketplace Owner

Building blocks of a marketplace implementation

MarketplaceBack-end

Suppliers integration

Storefront

Marketplace Owner integration

• Storefront design• Shopping cart implementation• Webhosting

• Inventory• Financial/Accounting• Order management• Customer relationship

Marketplace Back-end

• Product moderation• Category gating• Data enrichment• Rating

• Merchant onboarding and leaving

• Shipping info• Product content info

• Price info• Inventory info• Taxonomy• Technical help• Portal

• Content management• Custom reports• Portal

• Order routing• Labels• Commission / payment• Tax


Setting-up a Marketplace

Build the master catalog Create a customized marketplace

Onboard merchantsPhase

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

• Find merchants• Right products• Right fulfillment

• Define partnership• Marketplace rules• Commission• Shipping policy

• Import the merchant catalogs

• Transform the data and make it homogenous

• Define the selection• Rules-based• Manual


Marketplace!


User Case Studies: Ixtens Marketplace

Ixtens Assembles One Stop Shopping For mydeco.com

Name: mydeco.comSales Channels: mydeco.comSKU’s: 2,500+Launch Date: Q4 2010

Mydeco reached out to Ixtens with a desire to create a marketplace that would enable them to increase the number of items available on mydeco.com

Wanted to increase their market beyond furniture to include kitchenware

Needed a solution that would enable them to offer a web portal to their suppliers and merchants for managing data and inventory

Within a couple of months, they’ve launched with 10 manufacturers offering 2500+ products,

Maintain an automated, central repository for managing merchants and data feeds


User Case Studies: Ixtens Central

Ixtens Makes a Happy HomeOnline For Lifetime Brands

Lifetime Brands had an extensive number of back-end systems that they need to automate the sharing of information across.

Had to choose a solution that did not interrupt core operations and workflows that were vital to their business.

Lifetime selected Ixtens Central to provide data automation and integration across their systems and sales channels.

Company no longer wastes valuable time and resources manually entering data and synchronizing updates across multiple channels.


Thank you!

Q&A

[email protected]

PresentersPaul Kogan, VP Business Development, IxtensSucharita Mulpuru, VP and Principal Analyst, ForresterEugene Nikiforov, CPO and Co-Founder, Ixtens

Webinar July 12

Business

Transcript of Webinar July 12