maandag 3 januari 2011
e-Commerce will capture 15% of all retail sales in 2011
The recession is over, if your in business with eCommerce. Online shopping figures have been consistently rising over the last decade reaching 8% of all retail sales in America and Asia, Europe is at 5%.° The Internet Retailer Online Retail Index of 25 eCommerce stocks on NASDAQ from 2009 to 2010 have soared up 91%. 2011 is going to be the transition for online retail from toddler to teener- the internet is maturing. And what makes 2011 the difference? Three things: frugality, ease of use and cloud computing are the driving forces will shape the scenarios for eCommerce this year. How can ERP solution providers play into this trend? This article explores the merging shopping dynamics that are increasingly happening online, by recommendation and via a mobile device. What's relevant for ERP solution providers is how to enhance integrating the supply chain with a
°Retail v e-tail in America Bleak Friday Nov 26th 2009 | NEW YORK the Economist
MILLENIALS are FRUGAL
ERP solutions providers, and particularly those with a vertical focus in retail, warehouse management and food should be aware of how the consumer will increasingly be making purchases online in 2011. And leading the way is the demographic group the Millennials, who are ages 10-28, and they make a $200 billion contribution to the economy each year. They have become the largest generation, bigger than the baby boomers; there are about 82,900,000 Millennials. Resource Interactive has researched Millennials since 2006 and has uncovered key defining traits of Millennials, notably is an aversion to credit. Having grown up in wealthy times and then seen their parents struggle with towering credit card debt Millennials have developed a genuine reluctancy to spending more than they have°. Further more, they are always online. Have you been to a lecture theatre in a university lately, well when the lecture hall lights go down the glow of Facebook blue is readily seen across many connected faces.
The fact is, this the generation that is born with internet and mobile phones-one interpretation you can take out of that is that they are not inhibited by the notion of purchasing directly online or via the mobile because they haven't built a pre-internet shopping history. In fact, in pre-internet times just as now, a personal recommendation was the driving factor in making a purchase. In an average smart phone there are 50 contacts, and those contacts of contacts have another 50 contacts each. That implies that there is a significantly larger amount of consumer recommendations in our pockets where ever we are. This is changing shopping dynamics.
°Get Them Talking: How Growing Participation Chanis Will Grow Sales, Nov 17, 2009 , Sam Decker and Ze Frank. Bazaarvoic.
RECOMMENDED by WOMEN
Sellers in the retail space know that recommendations from friends or autonomous consumer groups are the ultimate sweet spot for sales. 77% of women are influenced by peer recommendations and about half (51%) of female shoppers are already following their favorite brands through social networks like Facebook and Twitter. But the figures from a recent study by SheSpeaks has uncovered what my mother and her friends did back when I was a kid- cut out coupons. They all used to pull them out of the purses at the till, often mixed with cash and plastic. Coupons still have their sway, they're just not cut our of the newspapers on saturday morning anymore. Women are less likely to make a purchase because of a social product page. Instead, women are looking for coupons (68%), online product reviews (61%) and company emails (45%) to help them make purchasing decisions.
"When it comes to building preference and motivating in-store sales, digital is emerging as a strong contender. If brands can motivate trusted customer recommendations and couple them with a 'call to action' such as a coupon, it's a powerful one-two punch that drives sales and advocacy," said Aliza Freud, CEO of SheSpeaks.
Coupons and grocery shopping go hand in hand. It's not new news - but how can coupons find it's way into a Food industry solution, an obvious place is in the CRM. Microsoft's role center approach focuses on customer centricity, well coupons certainly put the customer first. Coupons nowadays can be electronic pulling data from our loyalty cards and appearing in our smart phones. We scan them at the resister for our rebate, build up loyalty points and be inclined to utilize my local supermarket's mobile food application. Over time, the coupons i receive are quite personalized by an algorithm not so far off Google adds. Think of the "deal of the day" that is fine tuned to purchasing habits. And more interestingly for the supermarket, my purchases and coupons can be linked to the consumer's social graph - the network of friends spun on social networks that turn purely transactional interactions into personal recommendations. That means that my friends know when I bought something and saved money. Maybe it's just me, but growing up as a New Yorker conversations among my mom and her friends on saturday afternoon often mentioned the best deals and coupons that week.
MOBILE MAKES it EASY
So far the smart phone is getting allot of attention in terms of game changing consumer habits, lets have a look at what Google has found out. Organizing the World’s Information for Shoppers Sameer Samat, Director of Product Management, Google, at the Social Commerce Trends Report Summit 2010 highlighted three industry trends that drive Google’s strategy: online-to-store shopping, mobile, and social. Samat suggests making these trends part of a company’s operational plans. For example, retailers should make sure they have 3G mobile coverage in all stores, making it easy for customers to bring information from the web directly into store aisles. He also suggests that UPC codes for products be prominently displayed, so people with mobile phones can easily scan them to get online information with new smart phone applications. However, Mitch Joel author of Six Pixels of Separation, believes that, with the increasing connectedness of everyone, search will actually be less pervasive in shopping. He believes people will get information from friends, then purchase immediately, such as through their smart phones. Currently two thirds of the world’s population have mobile phones, and smart phones are expected to eclipse PC sales by 2012. Samat tells that Google’s internal data has shown a 3000%+ growth in mobile “shopping” queries in the 3rd quarter of 2010; mobile queries to Google now exceed online queries in some geographies, and the number of queries issued to Google Maps products has grown substantially°. Layering the internet on top of your real-time experience is why Augmented Reality has tremendous potential, as long as our smart phone batteries can keep up.
°Social Commerce Trends Report Summit 2010 April 19-21, 2010
Augmented Reality (AR) will redefine 'pop op' stores and guerilla marketing. Layar, announced at Picnic 2010 that they will be able to provide 'branded' apps on their AR platform which, until now was a horizontal platform open to the public. With an AR app in the retail industry, effectively one person can hold an entire store inventory in a portable device and open it to reveal all the products in an immersive environment. This could range from an AR car dealership, fashion show to a Tupperware party. Right now viewers will need to have an app on their smart phone to see the projection, in 2011 you'll start to see AR glasses entering a price range that would constitute a consumer product. Either way, with the phone or glasses you'll see celebrities and brand champions walking down the street or into select events and pop-up an AR store. The right product at the right place in the right time. Think about it, retailers will need dramatically less retail space driving down price and shifting budgets to customer relationships. In an uncertain economic climate a major strategy for retailers is to keep supply chains as lean as possible to reduce costs associated with storage. AR might be a big jump for some traditional retailer but times are changing. Even the fashion industry is shifting from the traditional 4 season cycle to 16 cycles per year. Uncertainty and volatility in the consumer market demands on a flexible supply chain, by having 16 cycles a retailer dramatically reduces the risk of picking the wrong trend while simultaneously reducing storage costs. Five years ago only Zara, a Spanish clothes retailer, followed such a strategy, but firms such as J.C. Penney, Saks and Macy’s have since adopted it too.°
° In The May 27th 2010 issue of the Economist “America’s Shoppers” Paul Leinwand, a consultant at Booz & Company
Partners in the retail industry should be angling their ERP strategy for retail to embrace web shops, it's not just airplane tickets and car rentals anymore. Luxury brands will eventually be the new gated communities online with waiting lists to get in, but for now, they are content with growing sales. Prada now says that within five years, some 40% of its revenues in America will come from the internet. Prada currently sells only bags, wallets and other accessories online, not its main clothing and footwear collections. Louis Vuitton, a maker of leather goods and clothes, is one of the few luxury brands to have prospered online. Unlike many of its peers, it offers nearly all its products on the web. The internet brings in as much money as one of its biggest bricks-and-mortar shops, says Antoine Arnault, the firm’s communications director°. However Louis Vuitton’s parent, LVMH, was forced to shut down eLuxury in 2009, a website founded in 2000 that sold a wide variety of luxury brands, because it lost money by the suitcase-full. According to insiders, it failed mainly because it lacked focus: it sold expensive products alongside relatively cheap ones. 2011 is the year eCommerce matures and retailers start treating commerce electronic terms instead of bricks and mortar. The first commercial on TV was a minute long still image with a product name and address of where to buy it, more or less a newspaper add on TV. This analogy applies to the last decade of eCommerce, retailers have been approaching online shopping in traditional terms and have now finally started losing their milk teeth, watch out for a big bite in retail sales online. A strong selling point for wholesale distribution and automated warehouses will be how they can quickly process online orders and handle huge spikes and dips in orders. Because online purchasing can happen at home after watching TV , or during a conversation with a friend or at an event with a smart phone emotional and spontaneous purchasing will increase. Supply chains need to be able to turn on a dime and a connected ERP solution is best situated to maximize opportunities.
°Luxury firms are digital laggards, but some are catching up Jul 22nd 2010 | berlin and paris. Economist Intelligence Unit
COCOONING VS GOING OUT
Going to an online shop versus purchasing out of a conversation in the real world.
When there is a vertical integration in the back end one can start Imagining buying strategically placed products on online TV, during sports matches and movies in the cinema- or even offer a gaming experience on top of the live sports event. The idea is layering the online world via smart phones on to our experiences and integrating online shopping functionality in our TV programs and movies. And one can't speak of online integration not see the significance of Augmented Realty's ability to enhance or public experiences. Like the famous cafe scene where women gather round over cafe and cake to talk about life experiences and consumer products, in 2011 with tablets and smart phones in the mix we will start seeing that this is the place where a majority of online purchases take place, amount friends and in public. Men not excluded of course- lets just shift the apple pie with cream to a beer and a big screen TV.
CLOUD VS BATTERY
eCommerce from home or on location.
All online shopping and gaming has to deal with data transfer, accessibility and scalability. This is where cloud computing and battery life will be a practical determinant in how far this online world will take us out of our homes and emerge our public experiences. We all have had a regular sense of urgency regarding our smart phones and laptop's battery life, well guess what- our apps our out passing our battery life technology. Not an issue when at home but in terms of mobility there is only so much cloud computing can to do shift the computing demands of our phones to the virtual server in the sky.
Going up on the vertical axis in 2011 means that battery power can't deliver more than 20 minutes of quality AR shopping or online gaming interaction from our smart phones, hence it won't be a major factor in retail purchases. Going up on the axis means we are using our laptops and tablets more for online retail than phones. In this reality sales and product configurators will make a big bag in 2011 - the ultimate answer to customizable products at a mass scale. Now with touch screen technology consumers can slide their outfits, home furnishings, bike, computer and car parts together to make their own creations. How does it work? Components are represented as a graphical interface and are linked to a table that has product information like price, availability and compatibility. Affectively what's happening is as you slide pieces together, the software is computing the order and contacting all logistic and external vendors needed to get your creation home. In the moment you press: send, buy, compose, create or build the product order has been processed. Respectively, if the combination you put together wasn't possible or out of stock you would know instantly. Don't try this on your mobile, yet.
In 2011 the battery issue will not be solved, but that doesn't stop retails and hospitality from catering to customer battery needs. Like airports in the last few year, why shouldn't stores and cafes instal charging islands for our smart devices. It makes business sense because it keeps us in the retail space longer and connects us to added value and peer recommendations. As we move down the vertical axis and shift away from online at home to online on location it will be social media that makes a big impact on retail, yes AR pop up shops hovering around celebrities is wow, but still niche. Online shops and consumer groups will increasingly be using twitter and Facebook to drive sales, elect brand champions and push personal recommendations. And our older population will join in heavily because lets face it, unlike tiny mobile phones they can actually see what's written on a tablet.