Global Channel Management - E-Commerce

Global Channel Marketing
Multi-channel vs Omni-channel

Tom Fleerackers
tom.ﬂeerackers@kdg.be

Jeff Bezos, CEO amazon.com - 1994
“You could build a store online that simply could
not exist in any other way.”

1999 2007 2016201220112009
2017

Amazon's Profitability
Can Further Decline
In The Future
Forbes, 12/2014

$405B market capitalization
Source: Yahoo Finance
March 2017

Source: Yahoo Finance
March 2017

42,5%
Share of online sales in the US - nov./dec. 2014
4,3% 3,1% 2,9% 2,7% 2,4% 2,2% 2,0% 1,9%
1,8
%
1,0
% 24,9%

€ 21,1b
Europe TOP10 Internet Retailer - 2015 / Websales - 2014
€ 6,5b
€ 4,0b
€ 3,4b
€ 2,8b
€ 2,6b
€ 2,3b
€ 2,2b

High revenue
doesn’t equal high
net income

+$595m
-$241m
+$1,1b
+$107b
+$88,9b
+$34,2b

Evolution of net income +$107b +$482b

worldmap
11 global
market
places
11 global
market
places
11 global
market
places
11 global
market
places
11 global
market
places
11 global
market
places
11 global
market
places
11 global
market
places
11 global
market
places
11 global
market
places
11 global
market
places
109
fulfillment
centers
Buying
customers in
180
countries
More than
30 listing
categories

Jeff Bezos carefully assessed the true
advantages the internet would give him,  
and push them to their boundaries.

1 Limitless inventory
2 Customer care
3 High margin, low prices

2 Customer care
3 High margin, low prices low prices
customer experience
large selection
Old school business model

2 Customer care
3 High margin, low prices low prices
customer experience
large selection
Old school business model on steroids

1995
Amazon starts with 1 product categorie,  
books.

1999
Amazon has 3 product categories,  
books, music and films.

1999
large selection
over 130k collection with 280 subgenres

1999
large selection
convenience
most efficient search engine (NYT)

1999
large selection
convenience
low prices
up to 30% discount on some albums

1999
large selection
convenience
low prices
up to 30% discount on some albums
120 days  
to become
the largest
online seller

each year Amazon introduces 2 new
categories

2016
Today, Amazon has 30 listed product
categories

2016
Primary product category
Amazon seller study 2016
18%
Home&
kitchen
11%
Toys&
games
9%
Books
8%
Health
8%
Beauty
7%
Electronics
7%
Clothing
6%
Sports&
outdoor

1998
“Commerce is the simple find it, buy it,
ship it action. 
E-commerce is much more about  
online customer behavior”

“Be afraid of our customers, because
those are the folks who have the money.
Our competitors are never gonna send us
money. ”

“Be afraid of our customers, because
those are the folks who have the money.
Our competitors are never gonna send us
money. ”
“If you do build a great experience,
customers tell each other about that.
Word of mouth is very powerful.”

1995
Customer centric innovations
Customer reviews
Selection proces

1997
Recommendations & bundles
Selection proces

2001
Look inside the book
Selection proces

2003
Search inside the book
Selection proces

1997
1-click ordering
Order proces

2001
Receiving proces
Where’s my stuff?

2002
Receiving proces
Free super saver shipping

Logistics are Amazon’s secret weapon
chooses the cheapest
origin in real-time.
Amazon
warehouses
Amazon
warehouses
Third party
sellers
fast moving are stored in all FC
hard to ﬁnd in small quantities in 1 or 2 FC
easy movable are stored in  
highly automated FC
Drop shipping. If applicable 
Amazon asks supplier to ship

chooses the cheapest
origin in real-time.
Amazon
warehouses
Amazon
warehouses
Third party
sellers
fast moving are stored in all FC
hard to ﬁnd in small quantities in 1 or 2 FC
easy movable are stored in  
highly automated FC
Drop shipping. If applicable 
Amazon asks supplier to ship
Interconnected supply chain

is a paid service ($99 per year, plus a free 30-day trial or $10.99 per month) that
gives Amazon shoppers a few distinct advantages. Members of Amazon Prime are
eligible for free one- or two-day shipping on most items, among several other perks.

>50%of Amazon shoppers are Prime members.

87%of buyers
compares your company with
Amazon service levels.

Creating loyal customers  
and getting them to spend a lot of money.
x4,6

Over 100.000 exclusive deals  
for Amazon Prime members 
on Prime day.

O2O
Online
Off-line
Treasure Truck
Amazon Locker
Amazon Dash

Amazon is ‘shutting down’
store based sales!

Amazon is ‘shutting down’
store based sales!
Death by Amazon (dba)-index

Despite Amazon's dominance in online traffic,  
the majority of purchases in several sub-categories still occurs in store.

2015
Amazon opens brick & mortar

2015
Amazon opens brick & mortar
Amazon’s goal is to learn about how it can
use data from its online e-commerce
operation to boost sales at a retail store.

2016
Amazon Go
What makes Amazon Go interesting is  
not the concept of a grab-n-go grocery.  
It’s the weaving together of digital technology
with the offline shopping experience to  
solve consumers’ biggest problems.

Amazon officials
owns Whole Food’s
28/8/2017
Amazon buys Whole
Foods
16/6/2017

2017
On the first day of operations Amazon
lowered prices with 30% on average!

Marketing Distribution Channels change over time
chaped by the evolution of technology and distribution

Silent Generation
Babyboomers
Gen X

Silent Generation
Babyboomers
Gen X
Gen Y

Silent Generation
Babyboomers
Gen X
Gen Y
Gen X

Silent Generation
Babyboomers
Gen X
Gen Y
Gen X
1900s 1910s 1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s 2010s

E-commerce (electronic commerce or EC)  
is the buying and selling of goods and services, or the transmitting of funds or
data, over an electronic network, primarily the internet.

North America
$419b
+12%
72%
Asia Paciﬁc
$388b
+23%
44%
Western  
Europe
$291b
+14%
72%
World
$1.222b
+17%
40%

North America
$419b
+12%
72%
Asia Paciﬁc
$388b
+23%
44%
Western  
Europe
$291b
+14%
72%
Eastern  
Europe
$48,5b
+21%
41%
Latin America
$46b
+22%
33%
Middle East & 
Africa
$27b
+31%
31%
World
$1.222b
+17%
40%

E-commerce - The big countries

World
$1.222b
+17%
40%
#1China
$562b
Shopping is fastest growing online activity
Average internet user is over 25y

World
$1.222b
+17%
40%
#1China
$562b
More purchases on desktop then mobile
72% of small & medium business aren’t selling online
#2 US
$349b

World
$1.222b
+17%
40%
#1China
$562b
Online sales represent 30% of the economy
33% of all online sales happen after 6PM
#2 US
$349b
#3 UK
$93b

World
$1.222b
+17%
40%
#1China
$562b
Favorite online activity is reading e-mail
97% of internet users shop online
#2 US
$349b
#3 UK
$93b
#4Japan
$79b

World
$1.222b
+17%
40%
#1China
$562b
Amazon & Otto represent 50% of all online sales
Highest open rates occur in the morning
#2 US
$349b
#3 UK
$93b
#4Japan
$79b
#5Germany
$74b

World
$1.222b
+17%
40%
#1China
$562b
19% of online sales happen on non-french sites
Only 68% of the French use the internet
#2 US
$349b
#3 UK
$93b
#4Japan
$79b
#5Germany
$74b
#6France
$42b

World
$1.222b
+17%
40%
#1China
$562b
Most online shoppers shop between 10pm and 12pm
Fastest internet speed in the world
#2 US
$349b
#3 UK
$93b
#4Japan
$79b
#5Germany
$74b
#6France
$42b
#7
South 
Korea
$36b

World
$1.222b
+17%
40%
#1China
$562b
Nearly 70% of smart-phone users shop online
45% of online purchases happen on non Canadian sites
#2 US
$349b
#3 UK
$93b
#4Japan
$79b
#5Germany
$74b
#6France
$42b
#7
South 
Korea
$36b
#8Canada
$29b

World
$1.222b
+17%
40%
#1China
$562b
Most common form of payment is COD
13% of Russians shop online
#2 US
$349b
#3 UK
$93b
#4Japan
$79b
#5Germany
$74b
#6France
$42b
#7
South 
Korea
$36b
#8Canada
$29b
#9Russia
$20b

World
$1.222b
+17%
40%
#1China
$562b
Only 7% of purchases are made on a smart-phone
18% of all online sales are fashion (related)
#2 US
$349b
#3 UK
$93b
#4Japan
$79b
#5Germany
$74b
#6France
$42b
#7
South 
Korea
$36b
#8Canada
$29b
#9Russia
$20b
#10Brazil
$19b

E-commerce - The big sites

1 601m

1 601m
2 524m

1 601m
2 524m
3 268m

1 601m
2 524m
3 268m
4 104m

1 601m
2 524m
3 268m
4 106m
5 104m

1 601m
2 524m
3 268m
4 106m
5 104m 6 65m

1 601m
2 524m
3 268m
4 106m
5 104m 6 65m
7 65m

1 601m
2 524m
3 268m
4 106m
5 104m 6 65m
8 56m
7 65m

1 601m
2 524m
3 268m
4 106m
5 104m 6 65m
9 44m
8 56m
7 65m

1 601m
2 524m
3 268m
4 106m
5 104m 6 65m
7 65m
9 44m
8 53m
10 30m

€1759 average online spending
8% growth Y/Y
80% bought abroad at least once

1759 average online spending
8% growth Y/Y
80% bought abroad at least once

E-commerce - TOP 10 of Austrian online shops (2014)
342,6m
107,5m
72,5m
64,1m
41,5m
40,0m
37,7m
35,8m
34,8m
32,6m

E-commerce - TOP 10 of Austrian online shops (2016)
556m
174,4m
111,1m
71,5m
63,8m
50,9m
50,0m
48,0m
42,9m
40,0m

E-commerce - % of total sales
6,1B
2017(est)
83,1B
TotalRetailSales
Online
7,4%
2016
5,4B
Online
6,7%

Whois shopping online in Austria?

Howmuch do online shoppers spend in Austria?

70% of e-buyers reported to have no problem when purchasing online
28

E-commerce - Why are people buying online?
38% 35% 33% 31% 30% 29% 17%
Low
Prices
Shopping
Convenience
Easy to
Compare
Free
Shipping
Time
Saving
Easy
to Buy
Range of
Products

E-commerce - What makes you more likely to buy online?
80%
66%
64%
48%
42% 42% 41%
39%
37%
Free
Shipping
1-day
Shipping
Free  
Exchange
Easier  
Online
Returns
Payment  
Security
Multiple  
Shipments
Same day 
Shipping
Easier 
In-store
Returns
Visual 
Try-on
Capabilities

E-commerce - What are barriers to buy online?
60%
See, Touch
& Feel

60%
53%
33%
25%
22%
20%
13% 13% 12%
See, Touch
& Feel
Get
Product
Immediatly
Certain  
About 
The Fit
More
Comfortable
More  
Easy
Returns
Quicker  
Delivery
Support
Local
Retail
Enjoy
Shopping
Experience
Get
Lowest
Price

60%
53%
33%
25%
22%
20%
13% 13% 12%
See, Touch
& Feel
Get
Product
Immediatly
Certain  
About 
The Fit
More
Comfortable
More  
Easy
Returns
Quicker  
Delivery
Support
Local
Retail
Enjoy
Shopping
Experience
Get
Lowest
Price
c
c
c
c
c

E-commerce - The end of brick & mortar?

E-commerce - The end of brick & mortar? NO

Many touchpoints, same great experience

E-commerce - A challenge for brick & mortar

Browse online
Buy in-store
Webrooming

Browse in-store
Buy online
showrooming

Browse online
Buy in-store
Browse in-store
Buy online
Webrooming
Webrooming

Browse online
Buy in-store
Browse in-store
Buy online
73%
Webrooming
showrooming

Browse online
Buy in-store
Browse in-store
Buy online
73%
Webrooming
88%
showrooming

73%
showrooming
33% check for competitor pricing in store
31% check for product reviews in store
71% purchase form a different company 
when they return home

73%
showrooming
33% check for competitor pricing in store
31% check for product reviews in store
71% purchase form a different company 
when they return home
Webrooming
88%
47% wants to avoid shipping costs
46% wants to touch & feel the product

Why are we showrooming?
Lost of trust in the dealership or sales experience due to
previous experiences

50% who purchased from  
a retailer online had also  
an in- store experience 
in the same period.
over25% 
off in-store shoppers 
have interacted with the retailer online
in the last 3 months.

Conversion rate is a ratio between number of website visitors who made a
purchase and total number of website visitors.  
So if you had 100 in total and 2 of them made a purchase,  
the conversion rate is 2%.

So what is an average conversion rate in 2016? It is around 1.3-1.4%.
Average Conversion Rate was 1.12% for multi-channel retailers  
and 2.00% for pure-play online retailers according

Conversion rate differs per medium used! Desktop still has the highest conversion
rate.

How does load-time affect conversion rate

Customer journey in e-commerce

Customer journey in e-commerce 
5 key stages of the buying process and main drivers

User Experience FAILS which impact conversions

Absence of Product Page Videos
The average time spent by a user on a particular site is just 6 seconds.  
Your UX must therefore be designed to convince users they need to spend more
time on the site. This is why using a video is absolutely crucial for your efforts

Insufficient Product Information
42% shoppers’ abandon an online purchase because of limited product information

Product Images
Product pages offering tons of information about the product. A user can also click on
the product image to view a larger version of the image; coupled with all other
information on the page.

Product Images
The use of responsive web design is also
becoming prevalent, which ensures a website
renders effectively on all screen sizes.

Poor customer service pages
This is another huge mistake made by e-commerce merchants. The customer
service area of their site is either non-existent; even if it is there; it gives out a
feeling that the merchant couldn’t be bothered about customer service.

User Experiences which have a positive impact conversions
Mobile responsiveness
People want to shop while they are on the go, it’s been proven time and time
again, if your website is not compatible for mobile, you will have a hard time
pleasing your customers. This is an investment that you absolutely must make
when starting an ecommerce website.

Security
As people shop online, they will want to know that their personal information is
secure. The data that is collected through your website should definitely not be
disclosed to any unauthorized personnel, and you should take measures to
demonstrate to visitors you’re your website is secure and legit.

Simplicity
No one wants to read a manual to be able to use your website. The design
should be simple and very straightforward. The login and sign up options
should be very evident, and when someone presses buy they shouldn’t have to
jump through hoops to get down the funnel.

Product information and images
The design of your website should accommodate lots of product pictures and
descriptive information. No one wants to buy something that they cannot see or
they have no information about. The goal is to make sure that the customers
are better informed when they are doing their shopping.

Search
Make sure that your have a convenient search tool. The first time visitor is
likely looking for one particular thing. They do not want to spend the whole day
sifting through items that they do not need.

Colours
No one wants to have their senses assaulted by a cocktail of strange colors.
One very common mistake many people make with ecommerce websites is
setting white text on a black background. Make it easy to see text and images,
and find colors that complement each other.

Recommendations
When you provide your customers with links to recommended products they
might like, then you are going to make shopping easier on your site and
promote additional sales. At least six links will make for an easier shopping
experience that encourages extra additions to their cart.

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