The document discusses disruptive trends in digital retail and technology. It identifies the top 16 disruptors for 2016, including the sharing economy, online grocery shopping, and the subscription economy. It also outlines the top five retail technology trends in Asia, such as the growth of streaming media and the fast adoption of 3D printing. The document is a summary and analysis of emerging technologies and business models that are impacting the retail industry.

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THE FUTURE OF DIGITAL RETAIL
Deborah Weinswig
Fung Business Intelligence Centre Global Retail & Technology
deborahweinswig@fung1937.com
Cell: 917-655-6790
@debweinswig

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AGENDA
• About Fung Business Intelligent Centre (FBIC)
• Top 16 Disruptors for 2016
• Top Five Retail Technology Trends in Asia

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Fung Business Intelligence Centre (FBIC)
• Established in 2000 and headquartered in Hong Kong
• FBIC serves as the knowledge bank and think tank for the Fung Group
– Collects and analyzes market data on sourcing, supply chains, distribution and retail
– Provides thought leadership on technology and other key issues
• New York–based Global Retail & Technology team
– Follows broader retail and technology trends
– Provides advice and consultancy services to colleagues and business partners of the
Fung Group
– Builds collaborative knowledge communities

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Futureproofing
• Anticipating future trends and developments
• Plan for future value and avoid obsolescence
– What problem are you trying to solve?
– How will the solution be used?
– How robust does it need to be?
• Ensure flexibility to manage changing formats and deployment patterns

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OUR PARTNERSHIP WITH ACCELERATORS
Alchemist Accelerator is an accelerator exclusively for startups whose revenue comes
from enterprises, not consumers.
CoCoon is a coworking space where entrepreneurs, creative talent, successful leaders
and investors meet, collaborate and deliver results together. Member companies get
access to networking opportunities, work space, a photography studio and mentors.
Entrepreneurs Roundtable Accelerator (ERA) provides participant companies with an
intensive four-month program, with the goal of helping early-stage companies progress
rapidly into exciting, viable businesses.
New York Fashion Tech Lab is an accelerator that is a result of a collaboration between
the Partnership Fund for New York City, Springboard Enterprises and major fashion retailers.
It focuses on early- and growth-stage companies.
Plug and Play is a global innovation platform. It connects startups to corporations, and
invests in over 100 companies every year. Its 360° ecosystem allows for remarkable
innovation to take shape on an international scale.
Techstars is a global ecosystem that empowers entrepreneurs to bring new technologies
to market wherever they choose to build their business.

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Fung Capital/FBIC
Commerce Technology Landscape

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TOP 16 DISRUPTORS IN 2016

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Top 16 DISRUPTORS in 2016
1. IoT-DrivenPartnerships
2. E-Commerce Players Go Offline
3. Ready-to-Cook/Eat Economy
4. Online Grocery Shopping
5. Online Fashion Resale Marketplaces
Show Explosive Growth
6. Samsung Pay Accelerates Contactless
Payment Adoption
7. Sharing Economy
8. A Subset of the Sharing Economy Is
the Rental Economy
9. Subscription Economy Is Nibbling Away
at Traditional Retailers’ Sales
10. Caring Economy Promotes Startups for
Social Good
11. Experience Economy Is Taking Away
Retail Spending
12. Home Furnishings Market Disrupted by
E-Commerce Pure Plays
13. Jet.com
14. Athletic Brands Investing in Fitness Apps
15. Facial Recognition
16. Lack of Disruptors: Victoria’s Secret

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1. IoT-Driven Partnerships
• Unprecedented cross-industry partnerships
being formed
• Samsung and Microsoft developing IoT devices
based on Windows 10
• Panasonic is partnering with Denver to transform
it into the first smart city
– Create an energy-efficient hub
– Solar technology, tele-medicine tech, traffic management
and security
• Audi and Qualcomm are partnering to integrate
Qualcomm’s Snapdragon 602A to provide
cutting-edge connectivity technology
– Infotainment, advanced smartphone connectivity,
navigation, voice quality and control features

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1. IoT-Driven Partnerships
• Ford is partnering with Amazon to integrate
vehicles with Echo, Amazon’s smart-home
device
• Intel is working with New Balance on an
Android Wear fitness watch that is due out next
holiday season
• IBM and Under Armour are integrating the
Watson supercomputer with the Connected
Fitness network to analyze data and provide
real-time coaching on health and fitness
• Volvo pursued a partnership with Microsoft to
enhance connected-car strategies
– The Microsoft Band can be pressed and told to start
the car heater, for example

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2. E-Commerce Players Go Offline
• Millennials prefer mono-brand brick-and-mortar stores, and they shift between
online and offline along the shopping journey
Retailer # of Stores
1
1
20
19

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2. E-Commerce Players Go Offline
Case Study: Warby Parker
– Targeting millennials
– Started exploring offline with pop-ups and
a showroom in its NYC office; now
expanding to over 20 cities in the US
– Warby Parker’s stores make more than
$3,000 per sq. ft., putting the retailer in
an elite category with companies such as
Tiffany and Apple
– More than 85% of store shoppers will
later visit the website, increasing the
chances for further orders

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3. Ready-to-Cook/Eat Economy
Disruptors: Blue Apron, Munchery, Plated, HelloFresh
• Blue Apron was the fastest-growing US e-tailer in 2014, with
sales growing 550%, to $65 million
• Healthier and cheaper than eating out and takeout
• Convenience: ready-to-cook boxes and curated grocery
according to menus, delivered to your doorstep
• US food market
– $1.2 trillion, with $600 billion
in restaurants
– Millennial focused
550% in 2014

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4. Online Grocery Shopping
Disruptors: Instacart, AmazonFresh
• Walmart Grocery Pickup
– Order online
– Pick up at the store
• Amazon Prime Pantry, $5.99
– Order everyday items online, filling the box
– Ship to your home
– Gamified promotion, slower shipping options in
exchange for free Pantry
• Instacart: Personal Grocery Shopper/Multiple Stores

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5. Online Fashion Resale Marketplaces
Show Explosive Growth
Disruptors: thredUP, Tradesy, The RealReal, Poshmark, Vestiaire Collective
• Online resale industry is worth $34 billion in the US
• SnobSwap estimates the market is growing at a 10% compound annual rate
• Mobile is hot in resale; over 45% of thredUP’s sales come from mobile devices
• Patagonia, Eileen Fisher and H&M launched resale programs
Source: thredUP

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Disruptors: thredUP, Tradesy, The RealReal, Poshmark, Vestiaire Collective
• Why Online Resale Marketplaces Took Off
– Heavy venture capital investment in online consignment industry (over $450 million)
– Retail brands’ resale programs encouraged consumers’ sustainable consumption habits
– Consumers are convinced by great quality
of secondhand apparel bought via online
platforms
– Societal shift toward less ownership —
the art of decluttering
5. Online Fashion Resale Marketplaces
Show Explosive Growth

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6. Samsung Pay Accelerates Contactless
Payment Adoption
Disruptor: Samsung Pay
• Samsung Pay will accelerate the current
slow adoption of contactless payment
because it uses magnetic stripe
capability (MST) chips
– MST works with new and older credit card
terminals—no additional investment required
– Most widely accepted mobile wallet in the
US
– Consumers can incorporate loyalty cards
into Samsung Pay
– In 2016: expanding to China, lower-priced
handsets and online transactions
Digital Payment Method Acceptance by North American Retailers
As of July 2015
Source: Boston Retail Partners

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7. Sharing Economy
Disruptors: Uber, Airbnb, Lending
Club, WeWork
• Valuations of sharing economy
companies have skyrocketed
• Revenues are projected to catch
up to aggressive valuations:
Startup Industry Valuation
Uber Car Sharing $50.0B
Airbnb Peer-to-Peer Accommodation $25.0B
Didi Kuaidi Car Sharing $16.5B
WeWork Office Sharing $10.0B
Lending Club Peer-to-Peer Lending $7.4B
OLA Car Sharing $5.0B
Etsy Maker Online Marketplace $3.5B
HomeAway Peer-to-Peer Accommodation $3.0B
Lyft Car Sharing $2.5B
Instacart Logistics/Delivery $2.0B
Prosper Peer-to-Peer Lending $1.9B
TransferWise Finance $1.0B
Funding Circle Finance $1.0B
$15 Billion
2013
$335 Billion
2025
CAGR: 29.5%
Source: PwC
Source: Company reports/analysts’ estimates

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8. A Subset of the Sharing Economy Is
The Rental Economy
Disruptors: Airbnb, Zipcar, Netflix
• Renting goods, services and space is
becoming more popular than owning
• Renting saves consumers money and
the hassle of maintenance
• Suitable for urban living and limited
space
• More environmentally friendly
• Airbnb, Zipcar, Rent the Runway and
Le Tote are major disruptors
Leaders in The New Sharing Economy
(and Year Launched)

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9. Subscription Economy Is Nibbling Away at
Traditional Retailers’ Sales
Disruptors: Le Tote, Birchbox, BarkBox, Pijon, Stitch Fix
• Convenience and curated products for consumers
• Recurring revenue model for retailers
• Element of self-gifting
• Beauty is the biggest category
• Fashion styling subscriptions
are becoming popular

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10. Caring Economy Promotes Startups for
Social Good
Disruptors: TOMS, Reformation, Warby Parker,
NOURI, SoapBox Soaps, Zady, GoodXChange
• Social activism over self-indulgence
– Consumers, especially Gen Z, are increasingly demanding
integrity from brands and retailers
• Startups for social good apply market-based
strategies to achieve a social goal
– TOMS, the shoe company, has a “one for one” business model
– Reformation designs and manufactures sustainable apparel,
sourcing sustainable fabrics and vintage garments

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11. Experience Economy Is Taking Away
Retail Spending
Disruptors: Gigzolo, Zaptravel, OpenTable, Beautified
• Consumers are spending less on apparel and more on experiences
• 78% of millennials prefer to spend money on an experience rather than
buying something desirable
• Gigzolo: curated network of musicians and DJs available for hire for events
• Zaptravel:
– Digital travel agent
– Uses a semantic search engine to scroll through its database

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12. Home Furnishings Market Disrupted by E-
Commerce Pure Plays
Disruptors: Wayfair, Hayneedle,
Art.com, Houzz
• E-commerce pure plays are gaining
significant market share from omni-
channel home retailers
• They offer more curated products
and good customer service
• Houzz is an online home-remodeling
community of 35 million users
worldwide that connects
homeowners with design inspirations
and home professionals
US Furniture E-Commerce Outlook
Source: eMarketer/Forrester Research
$15
$18
$20
$23
$26
$29
$32
2012 2013 2014 2015 2016 2017 2018F
Sales Forecast (USD Bil.)

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12. Home Furnishings Market Disruptor: Houzz
• Founded in 2009, Houzz is aiming to
disrupt the home furnishings space
• Houzz is an online home-remodeling
community that connects homeowners
with design inspirations and home
professionals
• Its business model is driven by
community, content and commerce
• Houzz has already attracted 35 million
users across 200 countries

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13. Jet.com (Pricing Model and Smart Cart Technology)
Disruptor:
• Smart Cart technology: savings increase
with each item added, based on the
location of the sellers and the buyer
• Pulls costs out of the supply chain and
bumps them back to customers
• A win-win situation for retailers and
consumers
• On average, 9% cheaper than Amazon
and 6% cheaper than Walmart (Profitero)
+10% +10%
+6%
+7%
+11%
+7%
+12%
+8%
+7%
+4%
-2%
+7%
+6%
+10%
Baby Beauty Electronics Grocery Household Office
Supplies
Pet Supplies
Price Comparison of Jet, Amazon and Walmart
Amazon vs. Jet Walmart vs. Jet
More
Expensive
than Jet
Less
Expensive
than Jet

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13. Jet.com (Customers Can Feel Smart)
• Website offers constant comparison and savings versus
Amazon.com
• Also tracks cumulative savings on Jet.com
• Customers can “see” savings by waiving return privileges
or through shipping synergies (Smart Cart)
• Clean, simple website and mobile app

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14. Athletic Brands Investing in Fitness Apps
Disruptor: Under Armour
• Under Armour’s Connected Fitness Platform
– Company launched its own fitness app, UA Record
– Introduced UA HealthBox: set includes wristband, heart
rate monitor and scale, priced at $400
– Under Armour owns the world’s largest digital health and
fitness community, with 130 million users
– One of eight people purchasing a fitness device will be
synced on UA’s platform—Apple Watch and Google are
not competing
2013 20152015 2015
$475 million (cash)
Feb. 2015
$85 million (cash)
Jan. 2015
Jul. 2015
(terms undisclosed)
$150 million (cash)
Dec. 2013

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15. Facial Recognition
Disruptor: Intel
• The global advanced Facial Recognition market expected growth: $2.77 Bil. in 2015 to $6.19 Bil. in 2020
(CAGR 17.4%)
• 30% of retailers are using facial recognition technology to track customers in stores (CSC)
• Applications are increasing: health, wellness, beauty and advertising
– Determine the thickness and application of makeup
– Analyze in-store shopper data
• In 2015, Walmart tested with FaceFirst:
– Cameras check you in at location
– Smartphone receives customized deals based on demographic
• Intel released RealSense facial recognition technology
in 2015
– Consumer grade 3D cameras
– Home usage: camera recognizes face to unlock front door
• Challenges: Consumers are not especially comfortable with technology use in retail

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16. Lack of Disruptors: Victoria’s Secret
Disruptor: Who will it be?
• Victoria’s Secret’s Success Formula
– Marketing via $12 million annual fashion show
– A brand that creates celebrities
– Benefits from athleisure/loungewear trend
– Close attention to in-store experience
– Wise international expansion strategy
– 20% e-commerce penetration
– L Brands reported 8% holiday comps
Victoria’s Secret Store and Beauty Comparable
Store Sales
14%
13%
6%
4%
3%
4%
8%
Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015 Q4 2015

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TOP FIVE RETAIL TECHNOLOGY TRENDS IN ASIA
1. Uberification in Asia
2. Streaming Media
3. Fast Adoption of 3D Printing
4. Inconsistent Mobile Payment Growth
5. End of One-Child Policy in China Driving Retail

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1. Uberification in Asia
• On-demand services are available for
everything from accommodation to
personal chefs in Asia
• Home Cooked is the most successful
uberified service in China
• Uberified services faced legal and
regulatory challenges
• Not expected to replace established
industries
Service Company (Location)
Accommodation Hanintel (S. Korea), Kozaza (S. Korea)
Babysitting Caregiver Asia (Singapore)
Food and Drink Delivery Grain (Singapore), Home Cooked (China)
Home Cleaning Whome365 (China)
Home Finder AnAnZu (China)
Logistics (Pickup and Delivery) GogoVan (Hong Kong), EasyVan (Hong Kong)
Taxi Service Kuaidi ONE (China), Ola (India)
Selected Asian Startups that Provide Uber-Like Services

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2. Streaming Media
• Netflix will expand into Hong Kong,
Singapore, South Korea and Taiwan
in early 2016
• HOOQ, a joint venture of Singtel,
Sony Pictures and Warner Bros., is
competing directly with Netflix
• Alibaba recently acquired streaming
media company Youku Tudou for
$4.4 billion
• Growth driven by the rising affluence
of consumers, growing Internet
penetration and increasing
smartphone ownership
Rank Country
Minutes per
Day
2-Year
Growth Rate
1 China 67 5%
2 Vietnam 61 84%
3 Thailand 60 14%
4 UAE 54 43%
5 Hong Kong 51 16%
6 Philippines 51 74%
Time Spent Watching Online Video
Top Six Countries (4Q 2014)
Source: GlobalWebIndex

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3. Fast Adoption of 3D Printing
• The Asia-Pacific region accounted
for 27% of global 3D printer
shipments in 2014
• Key region for fast adoption due to
government support and extensive
industrial funding in important
markets
• China plans to invest $300 million in
3D printing over three years
3D Product Shipments: Market Share by Region, 2014
Source: Canalys/FBIC Global Retail & Technology
AMERICAS
42%
ASIA-PACIFIC
27%
ASIA-PACIFIC
27%
Asia-Pacific
27%
The
Americas
42%
Europe,
Middle East
& Africa
31%

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4. Inconsistent Mobile Payment Growth
• China is experiencing fast adoption of mobile
payment via Alipay and WeChat Wallet
• South Korea, Japan, Hong Kong, Taiwan and
Singapore have the infrastructure, but are not yet
seeing substantial growth
• Several banks in Singapore have launched mobile
payment services and new services using NFC on
USIM cards
Mobile Payments Readiness Index:
Selected Countries in Asia
Source: MasterCard
Global
Ranking
COUNTRY
1 Singapore
5 South Korea
6 Japan
10 China
11 Taiwan
12 Philippines
13 Malaysia
14 Hong Kong
20 Thailand
21 India

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5. End of One-Child Policy in China Driving Retail
• Starting in 2016, couples in
China will be allowed to have
two children without risk of fine
• Huatai Financial estimates that
the relaxation of the one-child
policy could create a $15 billion
market
• The second-child boom will
benefit several categories,
including food and dairy,
healthcare, garments,
automotive and education
• The first wave of the second-
child boom is expected in 2017
Source: MasterCard

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THANK YOU!
deborahweinswig@fung1937.com
Cell: 917-655-6790
HK: 852.6119.1779
CHN: 86.186.1420.3016
@debweinswig