Issues related to technology and retailing. Alibaba versus Amazon. Disruption, channel conflict, omnichannel issues and more.

1. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Online Retail
Disintermediation:
• Print media
• Retail
– Music
– Books
– Travel
– Banking
– Autos (Tesla ?
Digital Marketing alexbr.brown@gmail.com University of Delaware

2. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Online Retail
Disruptors:
• Amazon, 1995
• eBay, 1995
• Craigslist, 1995
• Netflix, 1997
• Napster, 1999
Digital Marketing alexbr.brown@gmail.com University of Delaware

3. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Online Retail
Disruptors:
• iTunes, 2000
• Orbitz, 2001
• YouTube, 2005
• Walmart
• Apple
• Uber / Airbnb
• Tesla
Digital Marketing alexbr.brown@gmail.com University of Delaware

4. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Online Retail
Stores Closing:
• Staples
• Barnes & Noble
• Sears
• RadioShack
• Borders
• Circuit City
Digital Marketing alexbr.brown@gmail.com University of Delaware

5. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Online Retail
% Shifted online by category:
• Computers, Electronics, Appliances: 25%
• Books, Magazines, Music: 19%
• Toys, Sporting Goods: 12%
• Clothing: 11%
Digital Marketing alexbr.brown@gmail.com University of Delaware

6. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Online Retail
% Shifted online by category: Food
• Complexity: Fresh, Frozen, Chilled, Low Margin
• Webvan
• Peapod
• Amazon Fresh
• UK, Korea: Tesco
Digital Marketing alexbr.brown@gmail.com University of Delaware

7. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Online Retail
Two Global Online Giants: Amazon:
• 1994
• Dominates North America and …
• Mature retail landscape
• NA Competition: eBay, Traditional Retail
• China: 10 year presence (joyo.com)
Digital Marketing alexbr.brown@gmail.com University of Delaware

8. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Online Retail
Two Global Online Giants: Alibaba:
• 1998
• Toabao, Tmall, Alipay and …
• Dominates China
• Leapfrogging traditional retail development
• Business model: ad revenue & subscriptions
Digital Marketing alexbr.brown@gmail.com University of Delaware

9. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Online Retail
Two Global Online Giants: Alibaba:
• Numbers:
– Larger than Amazon & eBay combined
– 60% parcels delivered in China
– 70-80% of China e-commerce (>600m China Internet)
• China Competition: Tencent, Traditional Retail
• China e-commerce to grow: $650bn by 2020
• US: 11 Main Street …
• 2014 US IPO: 11main.com
Digital Marketing alexbr.brown@gmail.com University of Delaware

10. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Online Retail
Two Global Online Giants: 2013 Revenue:
• Alibaba, $160 billion (#2 retailer globally)
• Amazon, $75 billion (about #15 retailer
globally)
• By comparison
– Walmart: $476 billion (#1 retailer globally)
– eBay: $16 billion
Digital Marketing alexbr.brown@gmail.com University of Delaware

11. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Online Retail
From PC to mobile:
• Location data
• Increased ubiquity
• Second wave of disruption (Uber)
• Smart store (iBeacon etc)
– 1 disrupted
– 2 omni-channel (Macy’s: react)
– 3 smart-store (Macy’s: proactive use)
Digital Marketing alexbr.brown@gmail.com University of Delaware

12. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Traditional Retail
• Smart store
– In store signage
• Burberry, Nordstrom, Kate Spade
• Macy’s
– Mobile app
• Store-fronts for online Brands
– Amazon etc.
Digital Marketing alexbr.brown@gmail.com University of Delaware

13. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Online Retail
Platforms, Marketplaces:
• Amazon Marketplace
– 85m mau, Fulfillment
• Alibaba
• Ebay
– Not competing w/ Ebay
• Etsy
– Arts/Crafts – Smaller marketplace
• Craigslist ?
Digital Marketing alexbr.brown@gmail.com University of Delaware

14. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Online Retail
Platforms:
• Ad Platforms: ex: Google: Product Ads /
Google Shopping
• E-commerce Platforms, Ex: Shopify
– 70k retailers
– Monthly fee
– Apps extend functionality
• Alibaba – 11main.com
Digital Marketing alexbr.brown@gmail.com University of Delaware

15. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Online Retail
Platforms:
• Apple iStore
• Google Play Store
• Own site
– Build own, or outsource (Shopify?)
• Cloud / SaaS solutions
Digital Marketing alexbr.brown@gmail.com University of Delaware

16. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Shorter Channels
• Direct to Consumer
• Consumer to Consumer
• Channel Conflict
• Omnichannel (Macy’s)
Digital Marketing alexbr.brown@gmail.com University of Delaware

17. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Shorter Channels
• Cannibalization
• Showrooming (Best Buy)
• Reverse Showrooming (Amazon)
– Zero variable cost to Amazon
• The Last Mile
– Drone delivery ?
Digital Marketing alexbr.brown@gmail.com University of Delaware

18. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Smarter Channels
• Big Data
• Robots
– Amazon’s Kiva Systems
• RFID
• EDI
Digital Marketing alexbr.brown@gmail.com University of Delaware

19. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Smarter Channels
• Extranets
• B2B Exchanges
• Cloud Computing
Digital Marketing alexbr.brown@gmail.com University of Delaware

20. #buad477 follow @alexbrownracing http://www.udel.edu/alex/classes
Distribution: Smarter Channels
• Offshoring
– Apple, China
– Fashion, Bangladesh
• Outsourcing
– Customer service, India
• Fedex and UPS (Logistics)
• 3D Printing ?
Digital Marketing alexbr.brown@gmail.com University of Delaware