4 eCommerce Strategies for Success in 2018
In Soho House London last month our MD Ciaran was on stage with other leaders in the UK eCommerce space including Google and leading retail brands.
Ciaran spoke about the eCommerce success secrets that we see our customers employing to grow their business globally over the next 12 months.
Watch the video below or read the transcript to find out about the areas you need to be focusing on.
Presentation transcript .
Good evening everybody and thanks a lot for joining us. Our theme tonight is ecommerce success strategies. I’m going to talk you through some of our experiences over the last 17 years of working with customers across different markets. These are businesses with varying requirements and I will focus on some of their core elements, from mobile through to marketplaces. I’ll touch on each of these areas.
We’re all aware of the statistics in terms of how that growth is happening right now in the market. I feel that working with brands is an opportunity at the smallest level through to the largest level, whether it’s looking at marketplaces that represent 40% of the growth that’s happening out there, or the incredible success of the sales in Singles’ Day. The statistics are just phenomenal. In one second there were over 175,000 transactions in the first hour of Singles’ Day.
The opportunity is vast and I’ll try and dig into some of the reasons why brands are enjoying some of that success, looking at where retail sales will reach about 3.4 billion in the UK.
Let’s look at the impact of cloud ecommerce and how that’s changed in the dynamic of how we look at our operations and in terms of retail operations to help drive that success globally.
Let’s look at the comparison between on-premise platforms which is where you install the platform physically on your own servers and cloud. The Forester reports, the Gartner statistics, all the statistics that are out there, you’ll see that 66% of ecommerce software by 2019 will be on SAAS and Cloud. 2019 is not far away and that represents about $9.4 billion in spending, so pretty significant.
From our point of view I’m a little bit biased in that we are a Cloud commerce platform, but what we see from some of our customers who are moving from on-premise to the Cloud, is that there is a huge reduction in TCO over the period of time.
TCO is the total cost of ownership over the project life cycle. So if I want to take my brand online, growing and developing a revenue stream over that period of time, what are the costs from an operational point of view? Why should I choose Cloud versus on-premise? Cost quickly becomes the biggest factor.
I’m sure the experience is similar for you as well in terms of both brands and retailers choosing platforms and vendors. These are some of the experiences that we’ve had in converting customers and changing customers from on-premise to in the Cloud.
I don’t believe that we should be charging a huge amount of cash for any brand to get access to the platform or to get access to digital commerce to showcase their products and to turbo-boost their sales. I don’t believe in that model and I think that model ultimately will end up being phased out. It should be about embracing brands, bringing them on our platform and having a shared success. It is a model that shares that success both sides, on the brand side and on the platform side.
That is very much our vision and mission to democratise the market and simplify how we take a brand from here to there. I’ll show some examples of that as we go forward.
Just to give you a bit of background, Kooomo was a business that was set up 17 years ago. It’s heritage and where we were founded was in Italy, working with some of the big fashion brands.
We took Dolce & Gabbana online and others back in the early 2000s. We built experience with Acqua Di Parma for example, Maserati and many, many international well-known brands who came from an offline experience to an online experience. We were the first to partner with them to bring them online.
It’s interesting how parallel customers have said to us they want to outsource everything; warehousing, logistics, customer care- the whole piece. One of our customers is Havaianas, the flip-flop makers. It is a big brand in the UK and they sell a lot. Havaianas said, ’We have these flip-flops- please can you help us sell it in all these markets, provide the warehouses, provide everything, even down to merchandising the products on the store and providing an ecommerce manager within our business?’.
Fast-forward a few years, we’re actually still doing that for a lot of brands. That business model was thought to have died out as people became more mature in the market and insourced. I think what has happened is customers have understood the complexity in some of those areas and realised our core expertise is in the brand, in selling our product and not in logistics, not in payments or not in customer care per se.
Our heritage, as I said, was in fashion. Since then we’ve moved into other areas. You’ll see our new customers include everybody from Butlers Chocolates to luxury perfume brands like Sana Jardin, Denver Bikes and many more across different types of verticals.
We have announced a partnership with JetStream which takes all of our brands who are international to the Asia-Pacific market and gives them access to over 50 marketplaces. The three brands that we’re starting with are Hummel, Tens, Gilda & Pearl. Taking these great brands and their products and taking advantage of that Asia-Pacific market by us doing everything for them- providing the warehousing, providing access to those 50 new marketplaces, because it isn’t just about eBay and Amazon as we’ll go into in a moment.
As a case study and example, this is SLAM who is a leader in outdoor clothing. It switched to Kooomo from Magento and we completed the migration and got the store live within 12 weeks. We have three other e-stores that went live this week; Avoca, Butlers and Sana Jardin. These were all projects that started around early August or late July. It is possible , not a myth that you can get started and take your ecommerce store live within a two to three month period.
One of the big considerations for Slam was it was very much an Italian brand, so the challenge was, how do we take this brand internationally? Kooomo, by bringing it online, by taking advantage of the fact that it’s a Cloud platform and SEO digital market ,we started to see orders from more than 40 countries around the world within days. That was through organic search, much more available platform in terms of its products.
One of the other questions we get asked all the time within the Kooomo platform is can we manage all sales channels? Whether it’s instore, sales to instore, click and collect, Omnichannel , marketplaces or through an e-shop. all of this is managed within the one platform. It’s pretty unique that we link directly to eBay and Amazon and list and manage your products.
We get asked all the time: ‘What are the considerations here, we’re a bit nervous about going on Amazon and eBay; is that going to haemorrhage my core pricing for example, how’s my brand going to be represented, is it going to commoditise my product?’. There are many, many considerations and we will guide customers. What is really compelling and you cannot ignore, is the size of the opportunity that is there and the size of the audience.
How do we take advantage of that audience? There’s 40% of sales coming from marketplaces, so it’s here to stay and it’s growing at a phenomenal rate but I don’t think it’s just about eBay and Amazon. There could be niche marketplaces for boutique brands that work much better than selling on eBay and Amazon as it’s a competitive environment and it’s difficult to get noticed on those platforms. Looking at the statistics, it’s interesting to see Amazon’s net sales in 2016 were just over 136 billion, 275,000 transactions per second during the first hour of Singles’ Day in Alibaba. The audience is roughly about a billion people using the top four marketplaces.
Another consideration is brand positioning. If I’m a luxury brand and I position my brand on eBay and Amazon as an example, how is that going to affect my core pricing on my e-shop? Do I sell the same products that I sell on my ecommerce store? Our experience is that with a lot of high-end fashion clients, for example at the start of the season will not sell a lot of their core products under a new season on marketplaces but will use it as a way of selling the end-of-line stock. We’re all aware that right at the start of the season a product could be a hundred quid for something and at the end of the season it’s 50€. The margin is squeezed. So many brands will get rid of that stock on the marketplace and sell it at a reasonable margin in a fast enough period of time, without haemorrhaging core pricing.
There are many ways I think that marketplaces can be used to take advantage of that billion users who have huge purchase power to drive and accelerate your brand growth into new markets and international markets.
One of the interesting things to look at is Google versus Amazon. So what is happening? What are consumers doing and what is consumer behaviour? How is that informing, how we as vendors and brands and retailers react to that?
It’s interesting to see that about 50% of product searches all happen directly from Amazon instead of Google. Consumer behaviour and consumer pattern are changing so why is it happening? People are going to going to Google to do broad research and then they go on Amazon to research a specific product, they end up completing that journey through Amazon directly and not directly at the retailer’s online store which is very interesting.
Supermarkets would look at high selling products like Kellogg’s Cornflakes where brands have squeezed down the margins for the supermarket. One supermarket multiple might say, why don’t we just put our own brand up there. Which is how own brand products emerged. Amazon is also going down that route as I’m sure you’re all aware. If a brand is successful and sells a lot, they will look to replace it and buy it themselves which you can understand. There’s a bit of a warning sign there I think as well, in terms of retailers and brands and their strategy there.
It’s an interesting period when we look at how Google and Amazon are impacting the change and the consumer behaviour when it comes to shopping.
Diadora,a major manufacturer of trainers, have been a customer of ours for nearly 10 years and use us to sell on marketplaces at the end of a season. So one of the things that they wanted to do was get rid of all of that stock. We opened an eBay and Amazon account in 14 countries within two weeks. They had a real need within a short period of time to sell as much as they possibly can, to get rid of their end-of-line stock.
Within the Kooomo platform, you can manage all sales channels, not just your e-shop but marketplaces as well. Because the products were already within Kooomo, we can simply turn on those 14 countries. From an order management point of view, you can see all the revenue flowing in. You could see which sales channels the revenue was coming from, and you didn’t have the complexity of worrying about managing those KPI's .
It’s interesting because the challenge is no longer about how do you position your brand, it is how do you use it to take advantage of that audience.
The advantage of having one platform which manages all sales channels, is you can allocate and control the stock and ensure it is synchronised across all areas even if that’s a physical store, because a store is a warehouse as well. There are a lot of complexities in fashion, where you have 20 colours, 20 sizes and you can’t have all of that stock available in every store or in every warehouse. So synchronisation of all stock is crucial when you’re looking at selling on multiple sales channels, and having that stock available within one system across all sales channels creates a massive opportunity to maximise that opportunity of selling the product and not haemorrhage your margin.
Let’s look at the correlation between the growth in the adoption of smartphones and the growth in the digital commerce and ecommerce market. There’s a direct correlation between what’s driving those sales. But what is the average order value on these devices? What’s driving that average order value, what are the inhibitors, and what are the drivers?
We have access to all the analytics for all our customers to get informed data on the customer behaviours. Mobile is a critical game changer in terms of driving sales but still has some way to go.
Is that inhibited by the size of the screen? Is it the one-click checkout inhibitors that have been there up until now? What’re the factors that are stopping that from happening?
Clearly, from looking at some of those statistics, it would point to the fact that the screen size is definitely an inhibitor. Looking at what kind of device has the highest conversion ratios the traditional desktop is still, still by far the place where people are converting higher - about 4 to 5%; smartphone – about 1.5% ,but I think that’s changing.
The Amazon one-click checkout patent is finally being contested and that’s now available from many more vendors. That’s going to help drive and fuel a smoother process for checkout for customers both on mobile and desktop.
For our brands, one-click checkout is a crucial component in trying to convert those sales from mobile, which is already a difficult channel to convert in. It’s a must-have to simplify the buying process.
Responsive design, that will adjust to multiple screen sizes across multiple devices is a key consideration. We saw that with the Havaianas example. Interesting we had a much higher conversion ratio when we created a smartphone app versus mobile responsive site for Havaianas. The consumer case studies and statistics would point to the fact that consumers do prefer dedicated . Looking at two separate studies, 85% of consumers preferred apps. Most likely because the experience was slightly faster. It’s not saying that we all have to have apps but certainly the statistics would say that it is worth the investment.
How do you future-proof the experience for the consumer and the digital commerce journey and what are the considerations? By 2018, Gartner, Forester and most of the industry analysts which are looking at this market, are pointing to the fact that 50% of commerce sites will integrate technologies from over 15 different vendors.
We try to look at your platform's ability to support integration partners to grow and change as new opportunities and business arise. What does that mean? That means, when you use the Kooomo cloud platform you might use MailChimp email marketing to do integrated marketing to your customer base. Other integrations are available within our platform with a single click. You simply scroll down to our integration partners, put in your credentials and it will synchronise the data from all these partners into the Kooomo platform.
It’s pretty powerful and why we won the Gartner Cool Vendor status in 2016 and we further embellished that by being in the magic quadrant for 2017 with Gartner.
It simplifies the process. Makes managing your business easier. Expands your options and future-proofs your business.
As businesses change, whether it’s artificial intelligence, people buying through voice instead of search.. it's very difficult to keep up pace with all of these technologies and our way of dealing with that is to bring these partners into our ecosystem. This lets you choose which you feel is best across all the key verticals in digital commerce, whether that’s customer intelligence or bringing in rating systems, helping SEO and improving conversion ratios, or working with logistics or marketing partners.
There’s an incredible opportunity in ecommerce. It is about looking at all sales channels and trying to embrace them. Each sales channels may not be right for every brand but certainly there is opportunity when you look at a billion people using marketplaces. The 'click and collect' market and how that’s driving footfall purchase instore, and incorporating all those sales channels into one unified approach is crucial. It’s crucial from both the consumer experience and also from an operational management point of view.
Mobile, while not yet driving the conversion we want, still represents a market of about £23 billion of £69 billion. It’s not small, and we’d all like a piece of that!
Thank you very much!