Prestudy USA eCommerce Growth, 27.10.2015

Näkymiä USAn Verkkokauppaan:Mahdollisuudet Suomalaisille Yrityksille

Hartti SuomelaOctober 2015

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E-commerce grows, reaching almost $500bn by 2018

5Source: Forbes; eMarketer.com.

Trendspotting&

Interesting CASEs

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More Information and Examples

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From Online to Offline &Make People Stay

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Source: Gallivant

Source: Rent The Runway

Source: LinkedIn Pulse

Case: Adidas

9Source: FashionBi (2014).

Offline > online

Research > Purchases

This problem of not having enough space toexhibit their entire product range was sensedby Adidas, which lead to them partner withIntel to create a virtual footwear wall,Adiverse. Adidas has been using digitalsignage in its stores for years to promoteproducts and show product videos but this 3Dinteractive wall virtual wall is a step ahead. Itis a natural extension of their physicalproduct range as it showcases the virtualproduct range, it allows customers to interactwith the entire footwear line available ontheir website, not just what was on theshelves.

By sensing the gender of the customer, thevirtual wall makes product recommendationsand provides all information about theproduct. Products chosen on the virtual wallcan be purchased from the store just like theproducts in their physical product range. Thisway, an Adidas store in a small town canseem like a flagship store as it would have allmerchandise under their roof.

Sephora’s Fragrance IQ

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Online ShoppingSimplicity, Speed, Experiences, Prices

• All about seamless user experience

–Do not lose a customer before checkout and make customers return

–Recommendations, shopping cart handling, backend processing, etc.

• Amazon Prime subscription a strong incentive to stay in Amazon ecosystem

–Failed for Jet.com

• Rise of discount online stores

–Like Gilt, The Clymb, LeftLane Sports, etc.

• Hyper dynamic pricing

–Especially around big shopping days like Black Friday and Cyber Monday

• Easy and fast shipping

–Note: Costs are going up!

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AllRecipes & Instacart: Seamless Groceries

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Case: Tiffany

13Source: FashionBi (2014).

Online

Research

The Tiffany and Co Engagement Ring Finderapp brings the smooth and unclutteredshopping experience of the Jeweler’s website tosmartphones. Users can browse rings by shape,setting, metal, design and six different caratsizes Rings are displayed true-to-size and frommultiple angles with zoom functionality.

Another interesting feature of this app is the‘Ring Sizer’ which helps the customer find theirexact ring size by placing one of their rings onthe screen. Potential customers can also seehow it looks on their hand by placing their handover the screen and photos of this can be savedand shared to get others opinions beforefinalizing on an engagement ring.

Payments – Online and Offline

• PayPal and credit cards still rule

• Gift cards are used more than in Finland but still gift card market is only about $130 billion (open network cards about $45 billion, retailer cards, restaurant cards)

– Spillage decreasing (< 1%)

– E-gifting is about $6 billion

• Mobile payments only 1% of all retail transactions

– Apple Pay not growing very fast

• Limited amount of banks and retailers supported

• Adoption of Bitcoin has been slow

– Overstock.com is the best known retailer

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Online CommerceOpportunities for

Technology & Tools Providers

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Opportunity matrix (“our take”) for tools and technologies

16Source: Vinna Ventures, September 2015

Opportunity*

*

Risks*

Legend:

- The above presented matrix represents a subjective version of the opportunity field for value-adding technologies in online commerce, which can be further analyzed and “rationalized” within a more comprehensive study in the future about market sizes, competitors, margins, go to market options (e.g. partnerships vs. M&A).

- * Risk: as perceived in terms of timing (short- vs. long-termed), competition, financial needs and uncertainty;- ** Opportunity: in terms of potential revenues and impact (game changers).

Unmanned vehicles

Smaller Mid-size Large

Lower

HigherCloud

technologies

Cross-device marketing

Automated ad formats

3D printing

Programmatic buying

Re-engagement

Cost-controlling

Wearables

Predictions

Experience sharing

Mobile payments

Augmented reality

Security

Analytics

Interactivity

Order customization

Curation systems

In-store convenience

Loyalty programs

Beacon

Cross-border B2C

Digital content enablers

Speech recognition

Machine learning

Gamification

Fair trade

Customer acquisition

M-commerce optimization

Most promising opportunities in e-commerce and retail

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Enhancing Customer ExperienceSolutions that makes the customer experience faster, easier or more efficient are highlysought after in the US market.

Mobile CommerceThe customers are moving towards mobile. The use of mobile phones for comparison,peer validation, inspiration and discounts is growing rapidly. The mobile phone is anessential tool in the new retail landscape.

Supply chain management and logisticsProducts and solutions that optimizes backend services like supply chain and logisticsand saves costs is still rather over looked, but shows great potential.

Data AnalyticsCustomer data has been utilized for increased sales in retail for years, but new solutionsmakes analytics useful for planning and operations of stores, both online and offline.

Curation and recommendationNew technologies such as artificial intelligence (AI) and machine learning is used toimprove product recommendations in retail. The social shopping and digital influencerphenomena is also growing stronger, particularly in the younger generation.

Enhancing Customer Experience

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Besides various articles, several interview respondents mentioned products and services that enhances the customer experience, both online and offline, as a key areas where there is a high demand. Any solution that makes the customer experience faster, easier or more efficient are deemed as interesting and highly sought after on the US market.

Several companies are working on various smart algorithms, AI systems and other ways to make the experience more pleasant, but also more tailored services and systems for providing customers really personalized offerings was mentioned. Smoother check out and payment processes such as paying with and app for Über instead of in cash for a taxi was also an area of particular interest that came up frequently.

Shop.coEnhanced shopping via Machine Learning and Ai.

www.shop.co

Lowes - OSHbotRobots for information and in-store guidance.

fellowrobots.com

Curation and recommendation

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In an environment with too much information and too many options at hand, a strong trendthat is coming is curation and personalized selections. Both IRL personal shoppers and newtechnologies such as AI and machine learning is used by several new companies to improveproduct recommendations.

Blynk Style“Tinder for shopping” an app for

personal styling suggestions

www.blynkstyle.com

The social media influenced shopping phenomena isgrowing stronger, particularly in the younger generation.The Millennials are getting a lot of shopping influencesfrom sites such as Pinterest, Instagram Youtube andvarious fashion blogs. The power of the fashioninfluencers is very strong and it’s starting to have amassive impact on marketing budgets as well. There is abright future ahead for companies that can provide goodtools to measure influencer marketing and the ROI thereaccording to one of the respondants.

LimespotAdvanced Content Personalization Technology

limespot.com

Selling Products Online in U.S.

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Selling in U.S. – Things to Keep in Mind

• Check regulation – including import rejection laws and trade barriers

– Sources & regulatory agencies vary depending on your product (Homeland Security, USDA, FDA, FCC, etc.)

– Brochures, sell sheets, and websites are considered part of your packaging and subject to regulations (where applicable) – they also need to be “Americanized”

• Set-up your own business (incorporation, business licenses)

– Aspects: Exposure (accounting, taxation, liability), site selection, etc.

• Customs issues are complicated so talk to a customs lawyer first and consider using a customs broker

– Licenses, taxes, duty fees, etc.

• Get necessary licenses (note: samples have their own processes)

• Check into local political, religious, and social issues, including action groups that could impact your business

• Figure out distribution and sales strategy (more on the following slide)

• Prepare for customer support and handling returns

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Tidbits on Distribution and Sales Strategy

• Many stakeholders involved – know what each does and will not do (for example – most retailers do not import)

–Importers, distributors, brokers, and retailers

• Margin structure different than in EU

–Reserve much more for middlemen

–Your wholesale price x 2 to 3 times is a good starting point

• Determine your competitors’ access and hold on to your distribution and retail channels

• What is your online strategy?

–Own online store vs. Amazon (with or without Amazon Fulfillment)

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CASE:

• Ambronite is a drinkable supermeal that takes hunger away for 4-5 hours

• Sales started with crowdfunding project in 2014 on Indiegogo

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CASE:

• Current channel: Own online store (single purchases and subscriptions) and recently also other online retailers (single purchases)

– Why not Amazon? A: To get the customer emails from Amazon is a challenge

• Extensive payment solutions (Stripe, Braintree, PayPal)

– PayPal might help increasing mobile check-out rates?

• Sales materials were made for U.S. customers from the start

• Regulation needs: FDA registration, production facilities pre-registration, trademarks, etc.

• Shipping & Distribution: ShipBob

– Small, nimble startup, willing and not too expensive to accommodate customization requests (like different labeling for purchases of first-time buyers)

• Other learnings

– Make shipping effortless for the customer (e.g. very few people want to visit USPS)

• Might be different solution for different markets

– Be careful with packaging labels10/29/2015

© Finpro 27Source: Interview with Simo Suoheimo / Ambronite

CASE:

• A sleep sensor strip with a mobile (iOS/Android), Apple Watch and Web interface

• V1 of product was launched through a crowdfunding campaign on Indiegogo in 2013

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CASE: ctnd.

• Current channels:

– Own online store, Amazon (as Vendor), retail (including Apple Stores starting Oct 2015), other online stores through the networks of their distributors

– Distribution & export/import methods differ based on channel (for certain cases Ex Works, for others DDP)

– Big deals sold to distributor through Beddit Finland, B2C sales through Beddit USA

• Shipwire (part of Ingram) handles Beddit’s “own” logistics

– Works well with standard use cases, but lacks flexibility

• Payment initially through PayPal (UX issues with credit card payments), now through Shopify Payments (Stripe)

– Beddit store built with Shopify

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© Finpro 29 Source: Interview with Lasse Leppakorpi / Beddit

CASE: ctnd.

• All sales materials were planned initially for U.S., still continuous improvement

– All materials also approved by lawyers (online store privacy policy, disclaimers, sales materials)

– Materials customized for different channels

• Other learnings

– Sales and distribution from U.S. to Canada might cause issues for customers (e.g. recipients might need to pay customs even for free samples)

– Everything takes time – better prepare everything beforehand (e.g. customs)

– Decrease your own headache by negotiating distributors to take care of import / export

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© Finpro 30 Source: Interview with Lasse Leppakorpi / Beddit

“Askelmerkkejä Joukkorahoitukseen” byTeam Finland Future Watch

• Guide launched at lunch seminar on Crowdfunding in Messukeskus on Nov 12, 12:30-14:20 (during Slush)

• Rough agenda for the lunch seminar

– Chat: What’s behind a successful crowdfunding campaign?

• Oura Ring, Marjut Uusitalo, Marketing Communications Manager

• Ambronite, Mikko Ikola, CEO

– Launch of a Finnish crowdfunding guidebook

• Tiina Tanninen-Ahonen, Head of Office, Tekes Palo Alto

– Chat: Other types of opportunities in crowdfunding

• Beibamboo, Nina Ignatius, CEO (TBC)

• IronSky (TBC)

– Keynote: How to attract crowds in the future?

• Anastasia Emmanuel, Director, Technology and Design, Indiegogo UK

• https://tapahtumat.tekes.fi/event/building_crowdfunding_success

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Hartti [email protected]

Sources

• Online commerce growth program prestudy, 2015 Finpro (Vinna Ventures)

• https://www.internetretailer.com/2015/09/01/canada-gets-serious-about-e-commerce

• https://www.cbinsights.com/blog/startups-disrupting-fedex-ups/

• http://dupress.com/articles/understanding-consumer-behavior-shopping-trends/

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