Clavis Technology eCommerce Insight

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Grow your Sales through the Online Channel with eCommerce IntelligenceClavis TechnologyMarch 12th, 201312.00pm EST Clavis Technology Ltd. 2008 2013

1Retail is Changing with the Rise of the Online StoreOnline Now Impacts the Top LineMaximize the Online Store OpportunityWhere to start

Clavis Technology Ltd. 2008 2013

#2The changing nature of retail with the rise of Online Clavis Technology Ltd. 2008 2013

3# Clavis Technology Ltd. 2008 2013

According to the latest figures from the US Department of Commerce, eCommerce sales as a proportion of overall retail was more than 5% in the fourth quarter of 2012. But this varies significantly by category with groceries and general merchandise probably closer to 3%.

By 2016 the industry average will be around 10 per cent according to Forrester Research, but in some sectors it could be as much as 20%

And already the web has a significant influences on a much greater proportion of your sales nearly half according to some estimates.

In 2011, more than $1.1 trillion in retail sales could be attributed to web-influenced purchases (offline retail sales influenced by online research), according to [download page] a white paper released in October 2011 by Group M Search and Compete. Data from Searchs Role in the New Retail Shopper Profile indicates that combined with measured online sales, 48% of all retail sales are either online purchases or Web-influenced purchases.

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DemandResearchFeedbackFulfilmentPurchaseEvaluate Clavis Technology Ltd. 2008 2013

#"A key to growing business in this multichannel world is, unarguably, the use of digital technology. The billions of Smartphones, Tablets and other Digital Devices in circulation are fuelling multichannel growth and innovation. By 2015, US retail ecommerce sales are expected to reach $279 billion. It is evident for retailers and brands that digital channel excellence is no longer an option, but an imperative for success.PWC - US Multi-Channel Shopping Survey, 2012

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RetailNext, Forrester # Clavis Technology Ltd. 2008 2013

Trips to physical retail store dipped during the 2012 Holiday shopping season according to RetailNext, it analyzed 8.5 million shopping trips to 780 U.S. stores across nine retail chains from Nov. 22 to Jan 1. Trips to stores were down 16.4% over that holiday period, the vendor says.

Meanwhile Forrester says that 192 million U.S. consumers will shop online in 2016, -up 15% from 167 million in 2012. eMarketer says the number of online shoppers will actually surpass 200 million by 2015

6Global - Ecommerce Sales Topped $1 Trillion for First Time in 20121CPG online increasing 2530% annually to $32 billion in 20152.18% of households purchased groceries online in the past three months.Global - Ecommerce Sales will Grow 18.3% to $1.298 trillion worldwide in 20131Average Online basket - $80 vs $30

Sources (1)e-Marketer (2) Nielsen# Clavis Technology Ltd. 2008 2013

In 2012, Global B2C ecommerce sales grew 21.1% to top $1 trillion for the first time, according to new global estimates by eMarketer. This year, sales will grow 18.3% to $1.298 trillion worldwide, eMarketer estimates, as Asia-Pacific surpasses North America to become the world's No. 1 market for B2C ecommerce sales.

CPG online increasing 2530% annually to $32 billion in 2015 is a Nielsen number, as is the Average Online basket being bigger than in-store - $80 vs $30

According to The Online Grocery Shopper report, just released by the Hartman Group 18% of US households went online in the past three months

And not only is the number of online shoppers increasing, but perhaps the bigger factor in driving e-commerce growth is that each shopper will spend more on average, According to Forresters 2012 eCommerce Report U.S. consumers in 2016 will each spend an average of $1,738 online, up 44% from $1,207 in 2012.

7Online Impacts Your Top Line

Clavis Technology Ltd. 2008 2013

In-Store Sales GrowthOnline Sales GrowthTop line GrowthSupplier A2%30%4.2%Supplier B2%10%2.6%

Source: Sainsburys (UK top 4 grocery retailer) Online makes a big differenceSuppliers that focus on e-Commerce see very significant top line growth

Clavis Technology Ltd. 2008 2013

#Online sales not just substituting off-line but can actually have a significant impact on your top line done well

The growth of eCommerce presents a number of opportunities and challenges for manufacturers of consumer goods. There is real opportunity for forward thinking brand owners to increase market share by proactively managing their information across online stores, and delivering consistent messages across all their channels. However the companies that dont are likely to miss out.

The illustration above from Sainsburys in the UK points to the opportunity for grocery manufacturers by reference to two different unnamed suppliers. Both suppliers generated the same 2% growth in sales across Sainsburys bricks and mortar stores in the first three quarters of the 2011/2012 financial year. However Supplier A, which focused on the digital channel, saw a 30% rise in its business through Sainsburys online store, leading to overall sales growth of 4.2% for the period, compared with just 2.6% total growth for Supplier B.

9Sainsbury's - UK big 4 Grocery Retailer Two suppliers, 9 Months - Q1-Q3 2012.In-store Sales GrowthOnline Sales GrowthTotal Sales GrowthSupplier B - Average online performer 2%10%2.60%Supplier A - Top online performer2%30%4.20%20122013201420152016[company name] Revenue 2012 (USD Million)$1,000.00m* Source: [revenue source]Current Online Store sales % of total revenue 3%Four-Year Cumulative Total[company name] eCommerce sales 10% Online growth $30m$33m$36m$40m$44m[company name] eCommerce sales 30% Online growth$30m$39m$51m$66m$86m$241mValue in Revenue Growth A vs B USD (million) $6m$14m$26m$42m# Clavis Technology Ltd. 2008 2013

Maximize the Online Store Opportunity

Clavis Technology Ltd. 2008 2013

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PromotionComplianceProduct AssortmentPlacementOn-Shelf- AvailabilityPricingPack Information Clavis Technology Ltd. 2008 2013

#A lot of time and effort is spend on manual physical store audits to try to optimize store presence12

# Clavis Technology Ltd. 2008 2013

With the right tools this actually has greater propensity to work in the online arena. 13DemandResearchFeedbackFulfilmentPurchaseEvaluate

PromotionsRight place/time Top 5/10?FeedbackConsistency across chainNo Barrier to Sale? Reviews / AssortmentOnline Store

# Clavis Technology Ltd. 2008 2013

So why use these particular measures? Despite the growth in online it can be a challenge to get consumers all the way through the path to purchase online at every step there is potential for something to go wrong They need to find your products, evaluate them click to buy etc.

From the start when a consumer decides they need something like a tube of toothpaste or a new TV Is the integrity of you product information good enough for the consumer to be assured its the right product is there and up-to-date image? And you want to make sure you have your promotions properly executed and in the right place at the right time to make suer you get can Beat the competition and get the lions share of impulse buys.

At the research stage you need to know that your products are in the top 10, or realistically the top five of search or menu ranking so consumers can find your products.

When it comes to evaluating products its a matter of you have the right assortment of products available in the online store for a start maybe there are product sizes or variants that sell better online for example that would increase consumers propensity to buy. and you want to be tracking your reviews and rating, to make sure you can head-off any problems and also to identify product champions. At the point where the consumer is ready to purchase this is where so many sales are lost because some vital nugget of information is missing, incomplete or inaccurate or the online store listing doesnt have the additional information to convert doubters and increase adds to favourites.

If your product gets over that hurdle then it may not actually be Available in the Online Store so you miss the sale and the consumer is frustrated with your product as much as with the store. The integrity measure is also important at the fulfilment stage as the online store information needs to be consistent with supply chain data so that the store or warehouse responsible for fulfilment ships the right product to the happy consumer

Which opens the opportunity for the happy customer to go online and write a positive review which you can track to Respond to issues faster and identify product champions.

14Grow Online Sales by 15-30% with optimized Assortment, positive First Moment of Truth (product available, with the right information and in a very visible aisle) & Compliance to Promotions

Uncover issues with your Brands identity. e.g., wrong/out of date images & product specific naming/branding issues

Ensure compliance to national & international regulations. e.g. EU Food Information Regulation

# Clavis Technology Ltd. 2008 2013

15 Clavis Technology Ltd. 2008 2013

#To achieve success online manufacturers need to need to be able to answer questions such as:Do we have the right mix of products in the online channel?How does our digital product portfolio compare to competitors?Are our products in the right aisles (menu categories)?Do online stores use accurate, consumer-friendly descriptions?Are our product images present and up-to-date?