Kantar Retail Digital Webinar - Global ECommerce Innovation Amazon 080614

Global eCommerce Innovation and
The Ever-expanding Amazon Ecosystem

Presented by:
Anne Zybowski, Vice President
Steve Mader, Director Digital Retail
Nicole Santosuosso, Junior Analyst
Digital Webinar Series

August 7, 2014
Agenda
Exploring Kantar Retails Latest Global
eCommerce Forecasts
Optimizing Online Grocery

Amazon: Hardware Driving the Ecosystem
Copyright 2014 Kantar Retail
Exploring Kantar Retails Latest

Global eCommerce Forecasts
A GLOBAL VIEW AND PLANNING
REQUIRES CONSISTENCY
In measurement; much lies in the fine print
In the US, 2013 eCommerce Was $264 Billion Strong

With strong double-digit growth and forecasts
US: Annual b2c eCommerce Retail Sales
(excl. Autos, Fuel, and Foodservice)
CAGR
09-14E
14-19E
15.9%
14.3%
USD billions
Source: U.S. Department of Commerce and Kantar Retail analysis
Yet Even in the US, Headlines Can Deceive

Kantar Retail uses metric that focuses on goods bought/sold
Others often include:
US: Annual b2c eCommerce Retail Sales (excludes autos, fuel, and foodservice)
eCommmerce:
Any purchase of goods between a consumer and a
retailer where the goods are either physical items for first-time use OR are virtual goods
traditionally sold in retail stores (music, video, magazine, news). The financial transaction
must take place on an electronic device. Collection can be made by pickup, download, or
delivery. Excludes auto/motorized vehicles, foodservice, wholesale.
Source: Kantar Retail analysis
Lack of Clarity Compounded When Look Abroad

Media Headlines: True or False?
Chinas $297 Billion Includes Marketplace

Activity
$297 B
83%
=$248 B
Including C2C/Marketplace in the US Stats

$374billion in 2013 AND growing at low double-digit rates
US: Annual eCommerce Retail Sales including C2C
(excl. Autos, Fuel, and Foodservice)
CAGR
08-13E
13-18E
15.0%
11.8%
USD billions
Source: U.S. Department of Commerce and Kantar Retail analysis
10
Widening Horizons from B2C to Include C2C

Important for global consistency to look at both
What is B2C and C2C?
BUSINESS-TO-CONSUMER SITES
BUSINESS MODEL Retailers that sell goods to consumers
DEFINITION
BRICKS &
MORTAR
EQUIVALENT
PRODUCT
LISTINGS
INVENTORY
CONSUMER-TO-CONSUMER SITES
A marketplace business model that
facilitates interaction between customers
Retail Stores that sell to consumers, from

a small box Dollar General to big box
Shopping mall operators
Walmart
Managed carefully within the
merchandising organization with strict
rules
Recruits sellers and sets guidelines but

does not manage carefully. Anyone can
sell to consumer without a middleman
Invests in acquiring the product as early

as possible to guarantee in-stock rates
and speed of delivery
Never owns the product. In some cases

assists with delivery to the consumer
(procuring best delivery relationship with
a 3rd party or direct via the retailers own
fulfillment network)
11
There are 4 Major Types of eCommerce Retail

That Kantar Retail tracks and forecasts
Marketplace: Sales of goods between two parties (usually a consumer and a retailer
but can be between consumer and consumer or wholesaler and consumer) where the
website only arranges the storefront listing and delivery may/may not be arranged
through.
Bricks n Clicks: Sale of non-fresh items (see previous definition) via a retailer
ordering application with pickup of items done by any method provided by the retailer.
The retailer must have stores and keep the merchandise displayed on the catalogue
consistent with merchandise sold in-store.
eGrocery: Sale of fresh items for home preparation with home delivery or point
collection (Fresh includes fruits, vegetables, meats, fish, dairy, other short-shelf life
items or items that require immediate refrigeration/freezing). The payment for delivery
can happen via any retailer ordering application including telephone.
Pure Play: Sale of goods between a consumer and a retailer using total e-retail
definition where the retailer does not have a physical store AND arranges delivery of
the goods via their own distribution network and product listing standards.
12
The Pure Play Business Model Continues to

Dominate eCommerce in the US
Breakdown of USA eCommerce Sales by Type of Business Model, 2014E 2019E
eCOMMERCE SALES (USD, BILLIONS)
(Billions of Dollars)
$772B
$693B
$646B
$547B
$431B
$486B
*Total eCommerce dollars here include all four types of eCommerce that Kantar Retail tracks: Bricks n Clicks, eGrocery, Marketplace and Pure Play.
Source: U.S. Department of Commerce, Kantar Retail analysis
13
eCommerce in China Dominated by Marketplace

Though pure play and b&m gaining strength and momentum
$628B
$557B
$489B
$429B
$372B
$323B
14
UK eCommerce is Developing Across All Models

Relatively even split across 4 models, yet Pure Play dominant
$107B
$89B
$71B
$116B
$98B
$80B
15
Customer Capabilities and First-to-Market Matter

Sets pace for how market develops & shopper habits
Item
Basket
Marketplace
General merchandise-led
Grocery/consumables-led
General merchandise-led
1 (few) item at a time
Full basket
1 (few) item at a time
National ship
Home delivery
Fragmented supply chain
16
For More Detail, And To Dig Deeper

Leverage Kantar Retails Digital Insight Centre
Source: Kantar Retail analysis, KantarretailiQ.com
17
Optimizing Online Grocery
18
Three Distinct Phases of eGrocery Capabilities

CrawlWalkRun = FixBuild-Impact
Phase One:
Retailers focused on the physical -> Website Suffers

Taking in-store product and simply listing online
eGrocery often an attachment/port of existing GM Website
Vertical Merchandising
Limited cross promotions
1. Digital Assets
2. Simple Search
3. Minimise Barriers
Source: Kantar Retail
19
Vertical Merchandising Hinders Navigation
20
Horizontal Merchandising Mimics the Shelf
21
Optimize Within the confines of the Platform

How do you convey Size and Value?
Source: Kantar Retail analysis , company website
22
Perfect Store Transcends Web Platforms

2013
2014
23

Phase Two:
Migrate to Horizontal Merchandising

Retailers begin to become more sophisticated CatMan techniques
Brute force CatMan techniques as Web Platform Less Dynamic
Wake up to Media Opportunities Often Short Term Cash Grab
Build Mechanisms for getting found Search, Favourites List
1. Navigation/Taxonomy
2. Visibility (Media options)
3. Sophisticated Search
24
Monetization Of Traffic Can Lead To Bad Retailer

Behavior
25
Brute Forcing around Merchandising Limitations
Source: Kantar Retail analysis, Company websites
26
Potential Light At The End Of The Tunnel

Data Analytics Still Poor
27
Huge Opportunity When Promotions are Tied to

I know what you like
the Favorites List
Bringing in-store data into
the online shop
28
Driving Trial to Get on The List

List Drives Habit Removes Friction from Purchase
29

Phase Three:
Strong Differentiation now between Good and Bad retailers

Dynamic Shelf Search, Favorites List
Strong cross-vendor category management
Media opportunities can be tracked
Data tying the store to online Though supplier still needs to manage
1. Digital Shopper
Marketing
2. Omni-Channel
Activations
3. Store-In-Store
30
Cross-Supplier Initiatives Can Help Inspire

Drive Recruitment into More Premium Segments
31
Robust Platforms -> Proper Shopper Marketing

Narrative Never Would Have Been Possible In-store
32
Building the Basket with Intelligent SEO/SEM

Dynamic Merchandising via Keywords
Source: Kantar Retail analysis , company website
33
Building Global Capabilities

Focus at the Global/Regional level should be on
building the organisations capabilities and platforms
to ensure the local markets can quickly serve their
retail customers
Marketing/Insight functions test & learn new
technology platforms to understand the potential ROI
of new activations.
Global brand team builds a style guide backed by
data that shows which assets (images/text/keywords)
convert the best. The global team then sends this
style guide to the local markets to ensure consistency
and optimal brand representation.
Creating a toolkit to upskill the local markets on new
trends and capabilities.
34
Partnership between Global & Local Teams

There will be some action items that the local
teams must look after themselves, but can look to
the global team for assistance and guidance to
save time and money
The global team will help the local team build
capability in-market proactively to ensure they stay
ahead of competition, and potentially educate local
retailers.
The global team will build the framework and
processes around shopper research and category
management. The local teams can then determine
how they would like to work within those frameworks.
This is to ensure consistency and comparability
across markets.
The global team will help establish global best
practice, and work with the local teams to ensure
local relevance. The local teams can then do a self
assessment to determine if there is a gap.
35
Local Capabilities Required

Once the global processes, technology
platforms, and capability toolkits are rolled
out by the global team, the local teams are
responsible for executing
Localization of keywords and search terms is
essential of successfully showing up online when a
shopper searched for our product. Use your market
knowledge to build a keyword list that can be
executed online.
Joint Business Plans can be created in collaboration
with the global team, but ongoing maintenance and
monitoring will be done by the local teams.
New product launches, and how that comes to life

across digital channels can be guided by the global
team, but will be executed by the local teams.
Social platforms and community engagement are
best handled at the local level. Global teams can
give guidance on best practice.
36
Amazon: Hardware Driving the

Ecosystem
37
2014: Amazon Aggressive Move into Hardware

New devices will make Amazon an omnipresent force in
shoppers lives, inextricably tied to Prime
Source: Kantar Retail analysis, Company website, Company reports
38
Hardware at Intersection of Content & Usage

Started with Prime free shipping to remove barriers to purchase
(Sept 08)
CONTENT
(Feb 05)
(Dec 12)
(June 14)
(July 14)
(Nov 11)
2005
HARDWARE
(Feb 11)
2008
2011
2012
2014
2007
(Nov 07)
Source: Kantar Retail analysis; Company website
(Sept 11)
(April 14)
(July 14)
39
Digital Important Piece of Prime Value Proposition

Evolves from shipping/retail to entertainment/share of life
Reason for Signing Up for Amazon Prime vs. Renewing Prime Membership
(among all primary household shoppers)
Primary Reason for Signing Up
78%
Reasons for Renewing*
70%
32%
22%
19%
14%
12%
6%
2%
10%
7%
3%
Free two-day
shipping
Free instant
Exclusive video
Kindle lending
Amazon Mom
Amazon student
streaming of video
content
library
discounts on baby discounts/referral
content
supplies
credits
*Among Prime members who plan to renew, % who say factor is very important in their decision to renew
Source: Kantar Retail ShopperScape, December 2013
40
Kindle Suite of Products

Where it all began accelerating the physical to digital shift
and eliminating barriers to purchase
"We've been working on Kindle for more than three years.
Our top design objective was for Kindle to disappear in
your hands -- to get out of the way -- so you can enjoy
your readingKindle is wireless, so whether you're lying in
bed or riding a train, you can think of a book, and have it in
less than 60 seconds. No computer is needed -- you do your
shopping directly from the device. We're excited to make
Kindle available today."
-Jeff Bezos, CEO 11/19/2007
41
Amazon Ecosystem Not About Purchase-1st

Its more aligned to what people are doing when connected
Entertainment/social is majority of connected time
Source: Kantar Retail analysis; TNS Mobile Life 2013
42
First Foray Into Subscription Access = Video

Prime Instant Video success leads into Music & Books
43
Kindle Expands to Appeal to Mom & Family

Follows 2010 expansion of Prime into Amazon Mom program
Kindle FreeTime provides a solution for Amazon

families-- giving parents control of their childs
viewing and time in front of the screen.
44
Continuing to Innovate for Family/Kids

Beyond Amazon Mom Original Content
FreeTime parental controls also available for Fire TV
45
April 2014: Hardware Amazon Fire TV

Accelerates value of subscription model with device that takes
clicks out of the experience with features like voice search
With its own device/hardware at core, Amazon applied

1-click thinking to an all-inclusive platform for content
viewing. Fire TV is aimed at the various barriers to
usage, taking an all-in approach so users can access
content from Netflix, Hulu, Showtime, HBO & more- all
in one place. The Fire TV also includes a number of
exclusive Amazon features such as personalized
recommendations, voice search technology, and
second screen capabilities with Kindle Fire.
Source: Kantar Retail analysis, Amazon.com
46
April 2014: Drive Consumables Without the Click

Handheld device removes friction from path to purchase
To add to their grocery list, shoppers can scan

barcodes from everyday items in their home, or
simply speak an item into the Dash microphone.
Source: Kantar Retail analysis, Amazon.com, YouTube
The handheld device, currently in beta, syncs

with a shoppers Amazon Prime Fresh
account. The tool will help remove friction
from the shopping experience especially in
the grocery channel, which still has many
barriers to purchase in place.
47
July 2014: Introducing the Fire Phone

3-D smartphone revolutionizes one-click retail
In terms of the Fire Phone, were very excited about
it.it can exist on its own and whether its part of our
family, if you will, to help drive other usageIts very
integrated into our various digital services including
video and games and our app store, and ebooks and
certainly Prime music. So those are all very interesting
things on behalf of customers. Its also a great way to
do physical shopping as well.
-Thomas J. Szkutak, CFO 7/24/14
Fire Phone has the following features:
Dynamic Perspective
Unlimited Cloud drive storage for photos
Mayday on-device tech support
Firefly Technology
48
Firefly Technology Embodies the One-Click

Mentality: Underlies all Hardware
49
Testing Hardware Placement on the Home Page

Leveraging the store to market & drive awareness of devices
New
navigation
tab just for
devices
50
Get it Today: Continued Innovation on Immediacy

August expansion to 6 more cities
51
2014/2015 A Pivotal Year For Amazon

Will it be successful?
Share of Life = focus on shoppers connected activity
Continued focus on innovating to remove barriers, from entertainment to
purchase
New hardware is about facilitating path to purchase, and enabling quicker
access to Amazons product database
Moving from Ownership models to Access models

Subscription models evolved with companies like Netflix and the Apple music
ecosystem
Amazon is learning to extend and profit from both of these models, the
question is which industries or products might be next?
Will shoppers give Amazon permission?

Amazon has clearly established a reputation with books, and has now
moved on to video & other content including music
Time will tell how deep shoppers allow the relationship to extend
52
Anne Zybowski
Vice President, Retail Insights
anne.zybowski@kantarretail.com
Nicole Santosuosso
Junior Analyst
nicole.santosuosso@kantarretail.com
Stephen Mader
Director of Digital Retail
stephen.mader@kantarretail.com
501 Boylston Street

Suite 6101
Boston, MA
02116
501 Boylston Street

Suite 6101
Boston, MA
02116
501 Boylston Street

Suite 6101
Boston, MA
02116
T +1 617 912 2856
www.KantarRetailiq.com
T +1 617 912 2857
T +44(0)207 031 0272
54

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Global eCommerce Innovation and

The Ever-expanding Amazon Ecosystem

Digital Webinar Series

Optimizing Online Grocery

Copyright 2014 Kantar Retail

Exploring Kantar Retails Latest

Copyright 2014 Kantar Retail

A GLOBAL VIEW AND PLANNING

Copyright 2014 Kantar Retail

In the US, 2013 eCommerce Was $264 Billion Strong

Source: U.S. Department of Commerce and Kantar Retail analysis

Copyright 2014 Kantar Retail

Yet Even in the US, Headlines Can Deceive

Others often include:

Any purchase of goods between a consumer and a

Source: Kantar Retail analysis

Copyright 2014 Kantar Retail

Lack of Clarity Compounded When Look Abroad

Source: Kantar Retail analysis

Copyright 2014 Kantar Retail

Chinas $297 Billion Includes Marketplace

Source: Kantar Retail analysis

Copyright 2014 Kantar Retail

Including C2C/Marketplace in the US Stats

Source: U.S. Department of Commerce and Kantar Retail analysis

Copyright 2014 Kantar Retail

Widening Horizons from B2C to Include C2C

Retail Stores that sell to consumers, from

Recruits sellers and sets guidelines but

Invests in acquiring the product as early

Never owns the product. In some cases

Source: Kantar Retail analysis

Copyright 2014 Kantar Retail

There are 4 Major Types of eCommerce Retail

Source: Kantar Retail analysis

Copyright 2014 Kantar Retail

The Pure Play Business Model Continues to

eCOMMERCE SALES (USD, BILLIONS)

Source: U.S. Department of Commerce, Kantar Retail analysis

Copyright 2014 Kantar Retail

eCommerce in China Dominated by Marketplace

eCOMMERCE SALES (USD, BILLIONS)

Source: U.S. Department of Commerce, Kantar Retail analysis

Copyright 2014 Kantar Retail

UK eCommerce is Developing Across All Models

eCOMMERCE SALES (USD, BILLIONS)

Source: U.S. Department of Commerce, Kantar Retail analysis

Copyright 2014 Kantar Retail

Customer Capabilities and First-to-Market Matter

1 (few) item at a time

1 (few) item at a time

Fragmented supply chain

Source: Kantar Retail analysis

Copyright 2014 Kantar Retail

For More Detail, And To Dig Deeper

Source: Kantar Retail analysis, KantarretailiQ.com

Copyright 2014 Kantar Retail

Optimizing Online Grocery

Copyright 2014 Kantar Retail

Three Distinct Phases of eGrocery Capabilities

Retailers focused on the physical -> Website Suffers

Source: Kantar Retail

Copyright 2014 Kantar Retail

Vertical Merchandising Hinders Navigation