I was thrilled to be back in São Paulo last week visiting with different companies in the eCommerce space. I met with over a half dozen online retailers, as well as other players in the industry including payment providers and market entry specialists. It was also great to have the opportunity to speak at Rakuten’s event on April 24th announcing their official launch in the country.
Below are a handful of takeaways from the trip:
Online momentum is building in categories such as apparel and beauty. In markets like the US and the UK, apparel represents a significant percentage of total online sales. In Brazil, by contrast, this category is just starting to take off, with online sales currently representing a very small percentage of the total market. As issues such as inconsistent sizing are increasingly addressed, however, and new entrants boost the market, the online apparel sector is set to grow substantially. Likewise, there’s much talk of growing beauty sales in Brazil (the country is set to surpass Japan to become the world’s second largest beauty market) – as with apparel, online beauty sales are a tiny fraction of the total today, suggesting substantial growth opportunities going forward.
And yes . . . the entrenched and established e-distributers in the B2B space should be worried. Here’s why:
B2C core assets are very leveragable into B2B. Online merchandising is online merchandising. Logistical support is logistical support. World-class customer service is world-class customer service. And don’t forget about economies of scale and low prices. It can all be extended into this new space. And Amazon’sB2C infrastructure is similar enough to the infrastructure required to sell B2B that Amazon can do it -- and with relative ease.
Integration with Amazon’s buying process is inherently powerful. By bringing their universal login and one-click checkout to the table, Amazon’s vaunted ease-of-use and frictionless eCommerce will now live fully within AmazonSupply’s B2B offering. Customer behavior will not have to change and the user experience will remain second-to-none. Both are powerful influences.
Amazon Marketplace is a force multiplier. Now accounting for nearly 1/3 of Amazon’s unit shipment volume, Amazon Marketplace has clearly established itself as a force to be reckoned with. AmazonSupply nicely complements the already compelling Amazon Marketplace value proposition for B2B companies and further expands Amazon's B2B eCommerce story.
I’m constantly searching for great examples of agile commerce practitioners. These are hard to find, and it’s rare to come across any one organization that exemplifies everything that we believe an agile business needs to be.
Dynamic. Willing to take calculated risks. Organized for cross-touchpoint customer engagement. A clear vision for the future with the customer firmly at the center.
In the various interviews I do, I frequently find that I end up talking about a British retail icon.
So what’s so special about M&S, you may ask. Well, not only is M&S a digital innovator in the space of video and its use of social media, but under the leadership of its Chief Executive Mark Bolland it is transforming itself into a truly multichannel organization. With a clear ambition to be the “UK’s leading multichannel retailer,” M&S has set itself a stretching target.
Technology is radically changing the way bank customers interact with their providers, and mobile touchpoints are at the forefront of this change. In the past five years, mobile banking adoption in the US has more than quadrupled, hitting 17% by the end of 2011. This represents a compound annual growth rate (CAGR) of more than 33%.
As such, eBusiness professionals and mobile strategists at banks are in a white-knuckle contest to out-do each other in the mobile space. To evaluate and gauge banks’ mobile offerings, we applied Forrester’s Mobile Banking Functionality Benchmark to the four largest retail banks in the US.
What we found:
Big US banks offer solid, not-yet-splendid, mobile services. We employ 63 individual criteria in our Mobile Banking Functionality Benchmark methodology. The combination of weightings and scores for the criteria generates an overall score based on a 100-point scale. In our inaugural ranking, the four largest US banks posted an average score of 63 out of 100 – above our minimum standards but far from perfect.
The past five years have been awful for most European retail banks. The financial crisis, and the resulting recessions in most of Europe's economies, nearly destroyed some banks and crushed the profitability of many of the remainder. Worse than that, it was a problem that was partly or largely of (some) banks' own making. Banks are being forced to shrink their balance sheets, sell off non-core businesses and cut costs (i.e. fire employees) just to survive. And Europe's ongoing financial crises are far from over as banks' fortunes are closely entwined with those of their indebted governments.
There's one small silver lining among these dark clouds. Over the past 15 years, eBusiness has evolved from providing an electronic brochure to become a fundamental strategic function within retail banks. One of the effects of the financial crisis has been to force most European banks to focus on how to generate profits in their core retail banking operations by serving customers efficiently. Digital banking is a big part of the answer. So, despite the bleak economic outlook, most retail banking boards know that they must continue investing in digital channels. Digital strategy is an increasingly important component in overall strategy.
I'm still surprised when I find heads of eBusiness who remain marginalized within their firms, reporting into IT or marketing rather than a centralized distribution channels function alongside branches. The leading banks no longer make that mistake. That has greatly increased the power and influence of digital banking executives, but also their responsibility for the overall success of their businesses.
Here's our view of the top five priorities for eBusiness and channel strategy executives at European retail banks:
Along with providing overall online retail market sizes, we note that:
The combined size and growth of China's eCommerce market are unprecedented. China's online retail market surpassed $100B in 2011 and continues to grow at a breakneck pace — when the US online retail market was the same size as the market in China today, growth was considerably slower. We revised our forecast upward to reflect the fact that online sales continue to increase at a rapid pace, even as the market size swells.
Growth rates in Japan, South Korea, and Australia are more tempered. In contrast to China,online retail sales in Japan, South Korea, and Australia will grow at rates more in line with those of the US and developed eCommerce markets of Europe. However, all three markets are attracting increased investment as a growing number of both domestic and foreign players launch new online offerings in these countries.
India will grow quickly off a small base. India's eCommerce market, by far the smallest of those covered in our forecast, is poised to grow by more than five-fold by 2016 as the number of online buyers and per capita online spending increase rapidly. This market is gaining more attention as global brands look to markets that are in the early stages of eCommerce adoption but offer significant long-term potential.
Forrester clients can read a summary of the report here.
Here at Forrester we have been talking about the concept of "agile commerce" for some time now, but it's not always easy to point to live examples of “agile”businesses. What is agile commerce? How do I become agile? Both are very valid questions that we are in the process of building out a series of research documents and case studies in order to answer.
But there is a live example happening right now that encapsulates what agile is all about for me.
For those of you who are yet to become completely addicted to Pinterest (and you will), it's basically an image sharing site that allows you to group together images from around the web into categories and pin them to a virtual pin board. It creates highly visual mood boards, wish lists, galleries, and collections of images that link back through to the original source (which is where Pinterest makes its money). And since so many Pinterest boards are all about style — fashion and home in particular — it has the potential to be a bit of a retail gold mine.
Online retailers are rapidly adding emerging markets to their list of new global opportunities to explore, as these markets are set to take a growing percentage of global eCommerce sales going forward. However, it’s important to remember that Europe still ranks as at the most popular region outside of North America for US online retailers expanding internationally. The market is set to grow at a healthy pace over the next five years: Clients can read my colleague Martin Gill’s recently published forecast of online retail sales in key markets across Europe.
Some takeaways from recent conversations with online retailers expanding into and within Europe:
Until a few months ago Bank of America won the “Best In Biting The Hand That Feeds You” Award when it initiated its $5 debit card fee increase. Citibank may have trumped that in January when it decided that frequent flier miles that it gave away as promotional bonuses in exchange for getting customers to sign up for a new bank account was taxable income that needed to be reported to the IRS. The absurdity of this move is so large it’s not even measurable. Because if they pull this off, they will solidify a position as an anti-customer bank at a time when banks could use some customer love, but worse they threaten to kill the single most effective tactic in the entire marketing industry: the promotion. By giving away a gift in return for a customer’s patronage, and then calling it taxable income, this is the ultimate string attached. Does this mean free ice cream at Ben & Jerry's on their customer appreciation day is taxable? What about upgrades airlines sometimes give for free on flights? Or the eyeglasses that Coastal.com is giving away for free? Most of the time your social security number isn’t captured, so there isn't an easy means to report any promotion or gift to the IRS, but let’s hope we never get to the day where we do have to give away such information in order to take advantage of a promotion. How anyone at Citi could have thought this was a good idea (and not making very clear the taxation consequences) is baffling. Marketing freebies are aimed at getting new customers or retaining existing
This year, North American insurers overall are pretty darn happy. For starters, there clear signs that the economy is finally starting to gain steam, premiums are on the rise, the market’s firming, and the political will may well shift enough to revisit past regulatory reforms, particularly those that impact health insurers. And these factors are coalescing into the new strategies for 2012. In our “Trends 2012: North American Insurance eBusiness And Channel Strategy”, we discuss what factors are driving insurance ebusiness teams to:
Become obsessed about their customers
Get serious about how to collaborate better with their agents
Focus on the infrastructure that supports the digital business
Refine their thinking about what eBusiness means to the insurance ecosystem