Transcript Syndicate Gundo

Analysis of current trends in ecommerce and
possible strategies for SA retail.
OPPORTUNITY STATEMENT
The advancement of technology is
changing consumer behaviour and
demands.
This is driving retailers to consider
e -commerce .
How should SA Retailers respond to
current trends in e-commerce?
OUR RESEARCH
What are the key
reasons for
implementing an ecommerce
strategy?
What are the
consumer trends?
What value b2c
e-commerce
offers?
What are the
technology trends?
Research
Questions
What opportunities
exist for SA
retailers?
What are the trends
in e-commerce in
SA and abroad?
OBJECTIVES
To explain the value of e-commerce in the
South African retail sector.
To investigate current trends in
technological advancement and
consumer usage.
To explore possible strategies and
approaches to online retailing.
To determine and clearly articulate the
cost of not having an online shopping
channel.
METHODOLOGY
Surveys and
interviews with
SA retailers
Focus groups
with SA
consumers
Interviews with
e-commerce
specialists
Interviews with
pure ecommerce
retailers and
with click and
mortar models
Desktop
Research
DEFINED
It is:
It is NOT:
• ONLY AN IT INITIATIVE.
• A REPLACEMENT MODEL FOR CONVENTIONAL SHOPPING.
• FULLY UNDERSTOOD, WELL UTILIZED AND NOT YET MATURE.
THE SA CONTEXT
 Slow adoption of e-com and internet
 Lack of collaboration
 People across LSM groups are online
 Few retailers have digital strategy
 Focus groups show massive growth in
mobile
4 KEY TRENDS
1. Growth of online sales
2. Growth of mobile commerce
3. Growth of multi-channel retail
4. Social Media as a form of
commerce
KEY TRENDS 1
1. Growth of online sales
Growth of Online Sales
SA normal Retail growth
12% online retail 30%
GLOBAL FINANCIAL CRISIS
SA normal Retail growth
online retail
30%
6%
KEY TRENDS 2
1.
Growth of online sales
2. Growth of mobile commerce
3,000
2,500
2,000
1,500
1,000
500
0
MOBILE COMMERCE & SA
Many in SA have not PC & Internet
Most have mobile phones
KEY TRENDS 3
1.
Growth of online sales
2.
Growth of mobile commerce
3. Growth of multi-channel retail
MULTI-CHANNEL
From Selling the way we want to sell
To the way they want to shop
KEY TRENDS 4
1.
Growth of online sales
2.
Growth of mobile commerce
3.
Growth of multi-channel retail
4. Social Media as a form of
commerce
FACEBOOK
750 million users worldwide
50% log in daily
40% follow a brand
SOCIAL MEDIA
Social is
not just
about
Media
is not
justadvertising.
about
advertising.
It’sIt’s
about
conversations!
about
Customer
It’s about
marketing!
Relationship
Management!
Social
Media
NEW:
LISTEN
OLD: SHOUT!
Social is not just about advertising.
It’s about people!
•Multi-Channel
•Social Media
•Grocery & Apparel shop
•Mobile Commerce
Business
Goals
Optimal
•ROI
•Value
How to drive
revenue
and/or
reduce costs
Multi ChannelStrategy
Digital Strategy
Competitive
Environment
Brand
Goals
•Differentiation
•Service
•Engagement
•Positioning
What the
business is
and wants to
become
Flexible Distrib. Strategy
E-Commerce Competence
Social Media
Community
Product Videos
Multi Format
Promotion
Content
Management
Product Search
Online Sales
Mobile
Commerce
Product
Reviews
Channel
Integration
Data Integration
Media
Optimization
CRM
Integration
Strategy
Consumer Goals
Outcome
What
consumers
actually
want to do
(Primary
Research)
Trends & Benefits
Recommendations
Recommendations
Develop a Multi Channel Retail Strategy
DEVELOPING A MULTI CHANNEL STRATEGY MEANS
Creating a business
centred on
customer contact points
Flexible supply chains – DC to customer, DC to
store, Store to customer, In-store to online, Drop shipping,
Collection points, etc
Systems integrated to manage customer
data from all contact points – one customer, many
relationships
DEVELOPING A MULTI CHANNEL STRATEGY MEANS
Current
Channels
Multichannel State
Change State
Internet
Customer Insights
• Segmentation
• Customization
• Trend and growth
mining
Enterprise
Retail
Wide
Charge
Of
Comparability
Internet
Integration
Optimization
Internet
Align Value Proposition
• Assortments
• Pricing
• Compliance
Retail
Integrate Customer
Processes
• Cross channel
fulfillment
• Holistic D2C
Internet
New brands, banner
partnerships, tests
Synchronize Marketing
• Cross channel
calendars and traffic
• Optimize spend
• Enterprise wide
resource allocation
• Promotional parity
Optimize Operating
Model
• Logistics enhancements
• V2C; D2C
• Org design
Internet
•
•
•
•
•
•
•
Broadest & Compelling Assortment
Leverage Marketing Spend
Service Solutions
Cross Channel Testing
Optimized Inventory
Increased Purchase Power
Seamless Customer Experience
DEVELOPING A MULTI CHANNEL STRATEGY MEANS
The internet becomes the enabler to a multi-channel business …
Customer Insights…
• Linking segmentation across retail and direct
• Customization of offers that are unique and/or shared
across channels (push or pull strategy)
• Utilize the wealth of data through a central hub to trend
and mine segments of growth and opportunity to
increase customer insight
Synchronize Marketing…
• Create a unified marketing strategy that supports cross
channel calendars and traffic; leverage unique events
but capitalize on joint events
• Optimize corporate wide media spend based on return
• Create promotional parity
• Reduce ad cost ration by changing the marketing
investment mix to optimize multi-channel opportunity
Align Value Proposition…
• Develop assortments that resonate across channels or
become unique to a channel
• Standardized pricing across all channels
• Migrate to a multi-channel compliance model
Optimize Operating Model & Processes…
•
•
•
•
Enable the ability for cross channel fulfillment
Create a true end-to-end Direct to Customer model
Logistics enhancements
Deploy a Vendor to Customer model to allow for SKU
expansion without inventory costs
• Create an optimal organization to satisfy the cross
channel marketing plan
• Build an open, flexible IT infrastructure
Recommendations
Develop a full Digital Strategy
Source: Tanbir Grover
Develop a Multi Channel Retail Strategy
DIGITAL STRATEGY
Assessment
Review of the business
and marketing strategies
Ideation & Prioritization
Competitive and
Regulatory context
(Detailed Review)
People, Culture,
Organization, and
Capability Map
Understand
The Opportunity
Long Term Enterprise
Digital Vision
Competitive
Environment
Consumer Goals
Digital
Vision
Optimal
Business
Goals
Digital Best Practices
Review of the current
technology investments
Roadmap Development
Brand
Goals
How to drive
revenue
and/or
reduce costs
People
What the
business is
and wants to
become
Process
RETAILER
Segmentation and
Consumer Experience
Primary Research (new)
What
consumers
actually
want to do
(Primary
Research)
Technology
Social
Networking
Web
Development
Maintenance
Mobile
Content
Management
SEO / SEM
eCommerce
Portfolio
Optimization
Measurement
and Analytics
Channel
Integration
Data
Integration
Media
Optimization
CRM
Integration
Short Term Opportunities & Pilots
Technology
Strategy
Business Case
Operating Model
Partnership Strategy
(Agencies, Technology)
Implementation
Roadmap
Strategic impact
Capabilities assessment
Gaps and opportunities
Quick wins
Roadmap
Drive Transformation
One customer – many touch points
Develop the integrated systems to
enable this and manage the customer
data
Recommendations
Develop a Distribution/ Fulfilment
Strategy
Develop a full Digital Strategy
Develop a Multi Channel Retail Strategy
DISTRIBUTION & FULFILLMENT
Route to Customer – 1st Map your Channels
398,200
Store
Store
order
order
Xdock
Xdock
Online
Online
order
order
86,600
MDU
MDU
Pick
Pick up
up
point
point
200,500
23,100
18,100
5,000
45,000
Import
Import DC
DC
45,000
42,900
12,800
Rural
Rural
store
store
MDU’s
MDU’s
53,300
17,300
Urban
Urban
store
store
MDU’s
MDU’s
9,100
3,400
Urban
Urban
store
store
MDU’s
MDU’s
9,100
3,400
Urban
Urban
store
store
MDU’s
MDU’s
Urban
Urban store
store
MDU’s
MDU’s
48,000
48,000
Store
Store
order
order
198600
9,000
3,700
311,600
KEY (Cases)
55,700
CONSUMER -- Rural
Rural
CONSUMER
86,600
23,100
70,600
12,500
12,500
12,700
CONSUMER -- Urban
Urban
CONSUMER
Local
Local
Suppliers
Suppliers
398,200
Primary Distribution
Secondary Distribution normal
Secondary Distr – online store fill
3rd Party Distribution – online
Source : BC Nitsckie
Gundo
Gundo Inc
Inc RTC
RTC effected
effectedthrough
through DC
DC to
to store
store normal
normal sales,
sales, Store
Store to
to customer
customer through
through 33rdrd party
party MDU
MDU
distribution
distribution and
andstore
store pick
pick up
up for
for online
online orders,
orders, MDU
MDU to
to pick-up
pick-up point
point for
for rural
ruralonline
online where
where there
there isis
no
no store.
store. The
Themodel
model uses
uses in-store
in-store fulfillment,
fulfillment, where
where stores
stores are
are closest
closest to
to the
the customer
customer and
and in
incases
cases
where
where there
there isis no
no store
store in
in close
close proximity
proximity such
suchas
as isis sparsely
sparsely populated
populatedareas,
areas, fulfillment
fulfillment isis done
done out
out of
of
the
the DC
DC and
and shipped
shipped via
via Cross
Cross Dock
Dock to
to aa pick
pick up
up point
point by
by the
the MDU
MDU
1
Design and map the route the products take through each channel to
the customer. The shorter the channel the better. Build in the flexibility
needed. Identify the critical path and the points of excess.
DISTRIBUTION & FULFILLMENT
Route to Customer – 2nd Cost your Channels
A
Volume
Assumptions
by Depot
1
B
C
Cost
Confirmation
Resourcing
Sheets by
Depot
Gundo Costs Only
D
Spec
Sheets
2
E
Key Costs
Summarised
for Model
F
Additional
Cost
Assumptions
MDU Total Costs
Costs Modelled
by Depot by
distance by
drop
Iterative
modelling
process of
costs by
drop size by
average trip
distance by
2 main
scenarios
JHB
CPT
DBN
Preparation
Work
SINGLE DEPOT ASSUMPTION
ELN
PE
BFN
1 Set of fixed
and variable
costs from first
principles and
another matrix
with overall
estimate.
G
+
Primary
Distribution
Cost
calculations.
=
MATRIX of
RGBC Costs for
RTC
H
=
MATRIX of E
Snell Costs for
RTC
I
Cost
comparison to
current
operation
Final cost
analysis and
comparisons
ItIt isis essential
essential that
that all
all costs
costs are
are modelled
modelled in
in order
order to
to understand
understand the
the cost-benefit
cost-benefit relationship
relationship of
of each
each distribution
distribution service.
service.
Source : Bradley Nitsckie
1
A good RTC process
seeks to match the design with thorough
data
gathering, costing of each of the distribution channels and delivery of
key insights about the design.
DISTRIBUTION & FULFILLMENT
Route to Customer – 3rd
Use regional costs
PERTINENT INFORMATION:
With the matrix by channel, one can compare
different trip distance and case drop scenarios.
The scenario plotted on the map is a likely scenario
based on the cities involved and their geography.
Snell
MD
RGBC
G.in
21.99
20.59
JHB
It is clear to see the cost difference at the small
Depots between Snell and RGBC. The RGBC option
is highly inefficient on its own. At all of these sites,
the same infrastructure is required to operate the
Snell site as for the mini RGBC site.
150km - 5 cs
150km - 5 cs
Snell
MD
RGBC
G.in
21.99
35.59
150km - 5 cs
RGBC
G.in
42.38
150km - 5 cs
G.in
RGBC
21.99
35.35
MD
Snell
G.in
RGBC
21.99
42.35
PE
150km - 5 cs
Cape Town
MD
Snell
East London
Snell
MD
21.99
Durban
RGBC
G.in
43.11
BFN
Snell
MD
21.99
150km - 5 cs
The
The MDU
MDU to
to Pick
Pick up
up point
point channel
channel will
will likely
likely be
be the
the most
most expensive
expensive channel
channel but
but growth
growth will
will deliver
deliver savings
savings from
from drop
drop size
size increase.
increase.
A geo-location costing structure can be delivered. Enabling
deliberately plan roll-outs according to cost effectiveness.
Recommendations
Develop an E commerce core
competence
Develop a Distribution/ Fulfilment
Strategy
Develop a full Digital Strategy
Develop a Multi Channel Retail Strategy
E-COMMERCE CORE COMPETENCE
Average Ticket
(Site Relevance)
Traffic
(Customer Marketing)









Search marketing investment

Move from Cost per Click to
Cost per Acquisition
Community development
Behavioural retargeting

Retarget non purchasing
customers after they leave
the site
Search engine optimization
Remnant/display ad purchasing
Shopping site expansion
E-mail expansion

Focus on relevance to the
consumer
Contesting
Affiliate Marketing





Cross/up selling

Automated suggestions
of relevant product
Shopping cart improvements
Category display, product
discovery

Home page and category
page rebuilds to feature
depth and breadth of
assortment
Site relevancy and re-targeting
Buying guide program

Content for consumers to
explore and understand
complex product
purchases
Conversion
(Presentation/Search)






Product content improvements
–
Providing the information
needed for a consumer to
make the buying decision
Site tweaks and testing
–
Agile development model
that allows for many
smaller changes
Product review improvements
–
Re-launch user review
program
Product Q & A
–
Introduce forums for
consumers to ask
questions on products
and categories
Search result refinements
Navigational improvement
E-COMMERCE CORE COMPETENCE
Global Google Searches vs. Predicted Facebook Fans
(May 2011)
How do you do this?
Develop a competence to use
your online assets to succeed
RETAILbeyond
BEYOND 2020
Retail
2020
Physical
Stores no
longer
core
1.6m readership
vs. 6.5m
“likes”
Copyright © 2010 Accenture All Rights Reserved.
ACTION
Action
Make goals. Track results.
Think big. Start small.
Go fast. Iterate. Iterate.
Socialize everything.
Copyright © 2010 Accenture All Rights Reserved.
Action
“I shop at your store, I spend time
online daily, I’m already buying
online…On Facebook some of
my friends recommend
products..click click..i buy…I
post about my purchase…click
click they buy…I might….still
shop at your store..”
Copyright © 2010 Accenture All Rights Reserved.