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Presenters Paul Kogan, SVP Business Development, Ixtens
Sucharita Mulpuru, VP and Principal Analyst, Forrester Research Eugene Nikiforov, CPO and Founder, Ixtens
The Changing Dynamics of Retail -- Multi-Supplier Marketplaces
Special Guest Speaker
Agenda
Brief Introduction of Ixtens
Marketplaces in Action with Eugene Nikiforov
What You Need To Know About Marketplaces with Sucharita Mulpuru
Q&A with Eugene and Sucharita
How Marketplaces Work
Copyright Ixtens, Inc. © 2011
Ixtens Mission
Copyright Ixtens, Inc. © 2011
! A group of e-commerce veterans who helped Amazon build their Enterprise Webstore.
Ixtens Company Overview
! 7+ years of expertise in e-
commerce and online marketplaces
! Global reach with offices in
New York, London, Russia
! 80+ employees
Copyright Ixtens, Inc. © 2011
Some of Our Clients
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Ixtens Connect • SaaS solution that powers online multi-channel ecommerce
Ixtens Central • Normalization platform, optimizing data flows in real time
Ixtens Marketplace • Backend platform managing third party supplier ecommerce
Ixtens Products
Copyright Ixtens, Inc. © 2011
Sucharita Mulpuru, Principal Analyst, Forrester
Research • At Forrester, Sucharita serves eBusiness & Channel Strategy Professionals • Leading expert on eCommerce, multichannel retail, consumer behavior, and trends in the online space. • Authored joint study “Top 5 eCommerce Trends 2011”
Previous Work: • Saks Fifth Avenue • Toys “R” Us • Walt Disney Company
Education: • B.A. Economics from Harvard • M.B.A Stanford Graduate School of Business
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What Every Large Retailer Or Media Company Needs To Know About Marketplaces Sucharita Mulpuru, VP and Principal Analyst
July 12, 2011
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Amazon is the new Walmart
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Trend 3: Investment in online marketplaces “One of the most significant facts regarding
eCommerce in recent years is how Amazon.com is growing faster than the rest of the eCommerce industry…. Retailers that compete with Amazon
have come to discover that offering marketplaces on their own sites is critical to driving margins
and remaining competitive on the prices and the shipping fees of the items they do stock in
inventory. “
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Two key facts: consumers don’t really shop around…
“Thinking about your most recent online purchase, approximately how many online retailers did you visit during the purchase process?”
Base, 3,179 US online adults
Source: Q2 2010 Forrester Consumer Technographics Online Retail Survey
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…and they seek selection and variety online
Source: Q2 2010 Forrester Consumer Technographics Online Retail Survey
Percent agreeing with statement
Base: 4,114 US online adults
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Lessons from Amazon’s marketplace
Key considerations
Agenda
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Companies cannot ignore Amazon
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Amazon has gradually earned more profit
Source: Amazon annual reports 2000-2010
Profitable
Profit as a % of sales NA NA NA 1% 8% 4% 2% 3% 3% 4% 3%
Small and erratic!
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What is the marketplace?
A product offered for sale by Amazon.com
The same product on the same product detail page offered by other sellers
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• Marketplace has many pros: wider product & brand selection, no costs for storage and distribution, content costs borne by sellers/merchants
• Sales from marketplace sellers represented 31% of unit sales in 2010 (up by 3% compared to 2005)
• Given that Amazon makes up to 15% (in revenue share) from any sales on marketplace and that 31% of unit sales is sales from marketplace and assuming that units had the same average price from Amazon and marketplace, Forrester estimates that marketplace sales account for 6% of total sales.
Some Amazon marketplace highlights
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The Amazon marketplace is a significant driver of the company’s profit
US Marketplace revenue and GMV ($B) US Marketplace Revenue as a profit driver
Source: Amazon SEC filings; Forrester analysis
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Some retailers have learned this the hard way, and others likely will follow
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The implications of this business model are transformational
Retailer 1 Retailer 2 Retailer 3 Consumer electronics sales
5% 10% 15%
Est. margin from CE sales 0.5% 1% 1.5%
Other categories 95% 90% 85%
Old profit 1% 2% 4% New profit 0.5% 1% 2.5% % decline in profit -50% -50% -38%
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Lessons from Amazon’s marketplace
Key considerations
Agenda
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If I already offer drop shipping on my site, is this different?
§ Not necessarily, drop shipping can be one type of a marketplace
§ The common link is shifting inventory ownership
§ Marketplaces can be “white labeled” products or explicitly branded as marketplace offers
§ There is one single shopping cart that captures transactions
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Important facts to know about launching a marketplace
§ Your brand equity is reliant on a 3rd party; invariably, lapses occur with marketplace partners
§ It takes many years to build up appropriate partnerships and business processes (e.g. escalation, order swat teams) to ensure that marketplaces operate with minimal problems
§ Companies (that sell into marketplaces) may be reluctant to share the keys to their kingdom (sales, velocity, price elasticity) with potentially competitors; finding effective partners can be a challenge
§ Competition is more difficult because product assortments may be less differentiated; your marketplace partners may be the same partners of others
§ The ability to capitalize on a marketplace depends on a unique, differentiated asset that your site delivers to shoppers (e.g. one-stop shop, superior service, name recognition)
But if executed effectively, marketplaces can be extremely lucrative
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Key success factors of marketplaces
Breadth of merchandise • Overlap with current merchandise assortment and an extension of it
Extensive presentation of merchandise
• Design support to ensure that marketplace merchandise is well-presented
Merchant performance audits and monitoring
• Feedback from shoppers on accuracy and timeliness of order processing • Consistency of product details and imagery
Self-service merchant tools • Enables merchants to set up items • Links to items in your inventory(if relevant, similar to Amazon) Reporting for merchants on sales, impressions, etc.
Merchant accounting and payment mechanisms
• Bulk of IT development costs and time • “Affiliate-like” payment structure in place
Dedicated team members for marketplace growth and success
• Merchant solicitation and ongoing account support • Assistance in features like SEO
Requirement What It Means
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Thank you
Sucharita Mulpuru
Q&A
Q&A
Questions from Sucharita’s presentation
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Marketplace Origins
Buyers!
Sellers
Marketplace!
Concept Throughout History In the Age of eCommerce
+ +
Amazon has proven the marketplace concept
1995 only books
1998-99 music, DVDs,
toys, electronics, tools, and hardware
2002 Launch Amazon Marketplace (3rd
party sellers)
2004 Launch Webstore
Services
2010 40+ product categories
Marketplace Sales are > 30%
of Total
$16 Million
$610 Million
$3.12 Billion
$6.92 Billion
$34.20 Billion
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! A major trend for 2011 ! Have built their own marketplace platforms.
! Launching a marketplace in the U.K. (Retail Week/BBC News)
! eBay is shifting toward a more Amazon-like experience.
Marketplace Trends
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! Unified Catalog
! Third Party Suppliers
! Merchant of Record
! Single Basket
Marketplace Definition
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Marketplace Benefits
BENEFITS RETAILER MEDIA
Expand eCommerce offering ✔ ✔
Outsource inventory risk and reduce investment ✔ ✔
One-time onboarding of multiple suppliers ✔ ✔
Gain new float revenue ✔ ✔
Transform readers into buyers ✔
Own the customer and the data ✔
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Eugene Nikiforov, Co-Founder / CPO
History
• Founder of Ixtens in 2004 • Working in electronic commerce since 1996
Previous Work: • Co-Founder Quantum Art (CMS Systems) • Intershop • Simon & Schuster • Cannon USA • CBS Sportsline • Tesco • Marks & Spencer
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The Marketplace Platform
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Marketplace Fulfillment Items
Marketplace Operator
Supplier C
Single-Cart shopping experience Each Supplier responsible for fulfillment
Customer Suppliers
Marketplace Routes Order-Items to Each Supplier
Supplier A
Supplier B
Customer browses catalog
Marketplace Operator Customer Suppliers
Marketplace Payments
Merchant C
Merchant A
Merchant B
Marketplace collects payment
Marketplace settles with Merchants
Holds float up to
30 Days Minus Marketplace fee 8-20%
Payments
Marketplace!
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User Case Studies: Ixtens Marketplace
Ixtens Assembles One Stop Shopping For mydeco.com
Name: mydeco.com Sales Channels: mydeco.com SKU’s: 2,500+ Launch Date: Q4 2010
! Mydeco reached out to Ixtens with a desire to create a marketplace that would enable them to increase the number of items available on mydeco.com
! Wanted to increase their market beyond furniture to include kitchenware
! Needed a solution that would enable them to offer a web portal to their suppliers and merchants for managing data and inventory
! Within a couple of months, they’ve launched with 10 manufacturers offering 2500+ products,
! Maintain an automated, central repository for managing merchants and data feeds
Copyright Ixtens, Inc. © 2011
User Case Studies: Ixtens Central
Ixtens Makes a Happy Home Online For Lifetime Brands
! Lifetime Brands had an extensive number of back-end systems that they need to automate the sharing of information across.
! Had to choose a solution that did not
interrupt core operations and workflows that were vital to their business.
! Lifetime selected Ixtens Central to provide
data automation and integration across their systems and sales channels.
! Company no longer wastes valuable time and resources manually entering data and synchronizing updates across multiple channels.
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Q&A
Q&A
Questions for
Sucharita and Eugene
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Twitter: #IXwebinar
Thank you!
Paul Kogan, VP Business Development, Ixtens Sucharita Mulpuru, VP and Principal Analyst, Forrester Eugene Nikiforov, CPO and Co-Founder, Ixtens