eCommerce. How digital is transforming retail

eCommerceHow digital is transforming

retail

II Aula Digital Business

Alex Rayón Jerez@alrayon, alex.rayon@deusto.es

October 16th, 2014

iConsumer Global Research Initiative

1) Big Bang

2) New skills

3) Omnichannel

7) mCommerce

4) Marketing analytics

6) sCommerce

5) Social Intelligence

Índice de contenidos

● eCommerce Big Bang● New skills● Omnichannel● Marketing analytics to drive growth● Social Intelligence● sCommerce● mCommerce

Índice de contenidos

● eCommerce Big Bang● New skills● Omnichannel● Marketing analytics to drive growth● Social Intelligence● sCommerce● mCommerce

eCommerce Big BangeConomy

Source: http://www.theatlantic.com/business/archive/2011/11/the-8-trillion-internet-mckinseys-bold-attempt-to-measure-the-e-conomy/247963/

eCommerce Big BangeConomy (II)

Source: http://www.theatlantic.com/business/archive/2011/11/the-8-trillion-internet-mckinseys-bold-attempt-to-measure-the-e-conomy/247963/

eCommerce Big BangeConomy (III)

Trade

Private consumption

Public expenditure

Private investment

Electronic equipment, ecommerce, broadband suscriptions, mobile Internet, hardware and software

Spending and buying by government in software, hardware and services

Telecommunications, extranet, intranet and web sites

Exports of Internet equipment + B2B services with overseas

companies

1,8%

0,5%

1,0%0,1%

eCommerce Big BangeConomy (IV)

Source: http://www.retailresearch.org/onlineretailing.php

Source: http://disruptors.mx/for-ecommerce-to-take-off-the-infrastructure-has-to-be-in-place-or-create-new-alternatives/

eCommerce Big BangDigital transformation of the economy

Transport

Utilities

Infrastructure

Finances

...

Apparel

Tourism

Electronics

Newspapers

Education

Health

Markets

* Scheduling and optimization

* Reduce consumption

* Saving time and cost for companies

* Efficient allocation of capital

eCommerce Big BangDigital transformation of the companies

Digital Digital

Digital

eCommerce Big BangDigital transformation of the companies (II)

Source: http://evigo.com/8570-mckinsey-digital-transformation-e-commerce-coming/

eCommerce Big BangeCommerce in Europe

Source: https://media.licdn.com/mpr/mpr/p/2/000/268/1b5/21f35eb.jpg

eCommerce Big BangeCommerce in Spain

Fuente: http://www.ipmark.com/pdf/CompradorOnline_ES.pdf

Fuente: http://www.hablandoencorto.com/2014/01/Perfil-internauta-Espana.html

eCommerce Big BangeCommerce in Spain (II)

Fuente: http://cnmcblog.es/2013/09/10/comercio-electronico-en-espana-it-2013-facturacion-record-para-empezar-el-ano/

eCommerce Big BangTipping point

● Traditional commerce and e-commerce are merging

● Pervasive technology → useful○ Already past the tipping point

Source: http://www.justintarte.com/2012/10/leadership-and-your-tipping-point.html

eCommerce Big BangTipping point (II)

Fuente: http://jeff.a16z.com/2014/01/15/the-tipping-point-e-commerce-version/

The Tipping Point (E-Commerce Version)

eCommerce Big BangTipping point (III)

● Implications? ○ Real-state○ Showroom○ Distribution centers○ Local economies○ Technology-enabled shopping

○ Different approach on how we engage with the customer

○ ...

eCommerce Big BangTechnology and its effects

The technology has transformed the retail industry

Coase TheoremOnline channels reduce transaction costs

eCommerce Big BangTechnology and its effects (II)

FromConsumer-oriented Internet

towards Company-oriented Internet

Source: http://antoniotoriz.blogspot.com.es/2013/08/internet-de-las-cosas.html#sthash.hAa2ha7K.dpbs

Source: http://pame95.wordpress.com/2012/11/03/mi-ensayo-planeta-web-2-0-la-intercreatividad-y-web-2-0/

eCommerce Big BangTechnology and its effects (III)

● Internet○ Tool for automation + market expansion

● Cloud computing○ Reduce the need for hefty investment in IT systems

● Online marketing○ Target specific consumer segments

● eCommerce○ Instant and direct access to consumers○ Support services such as payment and logistics

● Online price transparency○ Pressurce on margins

eCommerce Big BangShopping experience

● Shopping is no longer only an utility activity○ It is also an

entertainment and engagement

● Is a social experience● New shopping

experience○ Just-in-Time○ Service

Source: http://arstechnica.com/staff/2012/08/op-ed-apple-store-may-be-shifting-from-customer-experience-to-profit-machine/

eCommerce Big BangShopping experience (II)

Índice de contenidos

● eCommerce Big Bang● New skills● Omnichannel● Marketing analytics to drive growth● Social Intelligence● sCommerce● mCommerce

New skillsIntroduction

Where is our client?

New skillsDigital competencies

● Understand how to take advantage of the technology and how it works in order to be able to:○ Search for information○ Filter it○ Organize it○ Synthesize it○ Generate knowledge○ Communicate our knowledge○ Interact with our stakeholders

New skillsSocial networks

Source: http://sisobproject.wordpress.com/2011/07/27/social-networks-social-media-and-social-network-analysis/

New skillsQuantitative reasoning

Source: http://serc.carleton.edu/NICHE/examples_qr_programs

New skillsHow to optimize

Source: http://www.attilasystems.com/search-engine-optimization-seo/

New skillsHow to engage

The Attention Economy

Índice de contenidos

● eCommerce Big Bang● New skills● Omnichannel● Marketing analytics to drive growth● Social Intelligence● sCommerce● mCommerce

Omnichannel

Source: https://media.licdn.com/mpr/mpr/p/2/000/268/1b5/21f35eb.jpg

Omnichannel (II)

Source: http://www.i95dev.com/understanding-omni-channel-and-multichannel/

Experience Transaction

Omnichannel (III)

1. Refine Your Brand’s Digital Presence2. Search Strategies Should Come First3. Target Existing Customers Using Site

Retargeting4. Search Retargeting Will Help You Gain

New Customers5. Use Mobile To Connect The Dots

Índice de contenidos

● eCommerce Big Bang● New skills● Omnichannel● Marketing analytics● Social Intelligence● sCommerce● mCommerce

Marketing analyticsIntroduction

Source: https://media.licdn.com/mpr/mpr/p/2/000/268/1b5/21f35eb.jpg

Marketing analyticsIntroduction (II)

Source: http://www.accenture.com/us-en/Pages/insight-cmo-digital-transformation-summary.aspx

Marketing analyticsBig Data

Source: http://de.nr-apps.com/blog/2014/01/09/zukunft-des-handels-big-data-und-bitcoins/

Marketing analyticsMROI

● MROI: Marketing Return on Investment○ McKinsey review: an integrated analytics approach

could save up to 15-20% total budget■ That’s $ 200.000.000.000 worlwide

Source: http://www.thecmosite.com/author.asp?section_id=1137&doc_id=234474

Marketing analyticsMROI (II)

Source: http://www.marketingsherpa.com/charts/roi020409-1.gif

Marketing analyticsSmall data

“More data does not mean more knowledge” [Jenkins2013]

Searching for the evidence in a mass of data requires knowing what kind of evidence is

neededKnowledge of the domain and understanding

and interpretation of the patterns we see

Marketing analyticsAnchoring analytics to strategy

● How do we allocate marketing resources?○ Previous years’ budgets or products/lines that worked

well○ This situation produces “Beauty contests”

Source: http://www.thefinancialphilosopher.com/2008/05/weekend-wisdom.html

Coolest proposalsLoudest shouts

Marketing analyticsAnchoring analytics to strategy (II)

● But is should be focused on○ Most need to grow○ Defend current position

● How to measure it?○ Strategic return○ Economic value○ Payback window

Marketing analyticsAnchoring analytics to strategy (III)

1) Marketing-Mix Modeling (MMM)● Big Data to determine the effectiveness of spending by

channel

● Include external variables such as seasonality, and competitor and promotional activities to uncover

○ Longitudinal effects: changes individuals and segments over time

○ Interaction effects: differences among offline, online and Social Media activities

Marketing investments

Marketing investments

Statistical links

Marketing analyticsAnchoring analytics to strategy (IV)

2) Heuristich RCQ (Reach; Cost; Quality)● Disaggregate touchpoints into its component paths

○ target consumer Reached○ Cost per unique touch○ Quality of engagement

● More limited; but the best one when limited data is available

Marketing analyticsAnchoring analytics to strategy (V)

3) Attribution modeling

● Set of rules or algorithms that govern how credit for converting traffic to sales is assigned to online touchpoints○ Email campaign○ Online ad○ Social-networking feed○ Website

● Statistical modeling regression techniques

Marketing analyticsAnchoring analytics to strategy (VI)

● Integrate capabilities to generate insights○ DSS tool to integrate the results from MMM, RCQ and

AM

Source: http://water.usgs.gov/watercensus/delaware-dss.html

Marketing analyticsAnchoring analytics to strategy (VII)

● Analytical approach at the heart of the organization○ Data scientists○ Marketing researchers○ Digital analysts

● Question assumptions, formulate hypotheses, and fine-tune the math

Marketing analyticsData as competitive advantage

● Data is both an art and a science○ Science

■ A lot of research■ ¡But never make Data Mining alone!

○ Art■ Critical reasoning■ Business judgement■ Domain knowledge

Marketing analyticsData as competitive advantage (II)

Source: Data Mining with WEKA MOOC (http://www.cs.waikato.ac.nz/ml/weka/mooc/dataminingwithweka/)

Marketing analyticsData as competitive advantage (III)

Marketing analyticsData as competitive advantage (IV)

Marketing analyticsKnowledge discovery methods

1. Prediction methods

2. Structure discovery

3. Relationship mining

Marketing analytics1) Prediction methods

Source: Data Mining with WEKA MOOC (http://www.cs.waikato.ac.nz/ml/weka/mooc/dataminingwithweka/)

Marketing analytics1) Prediction methods (II)

Source: Data Mining with WEKA MOOC (http://www.cs.waikato.ac.nz/ml/weka/mooc/dataminingwithweka/)

Marketing analytics1) Prediction methods (III)

Marketing analytics1) Prediction methods (IV)

Source: Data Mining with WEKA MOOC (http://www.cs.waikato.ac.nz/ml/weka/mooc/dataminingwithweka/)

Marketing analytics1) Prediction methods (V)

Source: http://lawprofessors.typepad.com/legalwhiteboard/important-research/

Marketing analytics1) Prediction methods (VI)

Source: Data Mining with WEKA MOOC (http://www.cs.waikato.ac.nz/ml/weka/mooc/dataminingwithweka/)

Marketing analytics2) Structure discovery

Clustering

Source: http://inside-bigdata.com/2013/12/18/tech-tip-power-pitfalls-clustering/

Source: http://www.cs.bilkent.edu.tr/~saksoy/research.html

Marketing analytics2) Structure discovery (II)

Factor Analysis

Source: http://www.mathworks.es/machine-learning/examples.html?file=/products/demos/machine-learning/cluster_genes/cluster_genes.html

Marketing analytics2) Structure discovery (III)

Social Network Analysis

Source: http://rs.resalliance.org/2010/11/03/reading-list-using-social-network-analysis-sna-in-social-ecological-studies/

Marketing analytics3) Relationship mining

Association rule mining

Source: http://aimotion.blogspot.com.es/2013/01/machine-learning-and-data-mining.html

Marketing analytics3) Relationship mining (II)

Correlation mining

Source: http://www.bain.com/publications/articles/Growing-brands-by-understanding-what-Chinese-shoppers-really-do.aspx

Marketing analytics3) Relationship mining (III)

Sequential pattern mining

Source: http://www.mdpi.com/1424-8220/10/8/7496

Marketing analytics3) Relationship mining (IV)

Causal data mining

Source: http://www.ciberconta.unizar.es/leccion/INTRODUC/485.HTM

Índice de contenidos

● eCommerce Big Bang● New skills● Omnichannel● Marketing analytics to drive growth● Social Intelligence● sCommerce● mCommerce

Social intelligenceIntroduction

● Social Media○ Insights and how consumers think and behave

● Social Intelligence literacy● How social technologies can augment the

intelligence-gathering approaches○ How information is sourced, collected, analyzed and

distributed

Social intelligenceSocial Media approach

Source: http://www.mckinsey.com/insights/high_tech_telecoms_internet/how_social_intelligence_can_guide_decisions

Social intelligenceSocial Media approach (II)

1) From identifying data to mapping people and conversations

● Social Media → new information map○ Primary and secondary information sources

Source: http://tedescostwocents.com/social-media-models/

Social intelligenceSocial Media approach (III)

2) From data gathering to engaging and tracking

● Tools to pinpoint where information and expertise reside and track data in real time○ i.e. General Electric,

@ecoimagination + # key topics

Social intelligenceSocial Media approach (IV)

3) From analysis and synthesis to structuring and mining

SWOT

Porter 5 forces

Analytic methods to structure and

derive insight from complex

information

Social intelligenceSocial Media approach (V)

3) From analysis and synthesis to structuring and mining (cont.)

Social intelligenceSocial Media approach (VI)

4) From reporting to curating and embedding

● Automatically curate highly pertinent information○ Flipboard

● Visual mapping

Índice de contenidos

● eCommerce Big Bang● New skills● Omnichannel● Marketing analytics to drive growth● Social Intelligence● sCommerce● mCommerce

sCommerceIntroduction

Source: https://media.licdn.com/mpr/mpr/p/2/000/268/1b5/21f35eb.jpg

sCommerceSocial Networks

Social networks play the simultaneous role of portal

and link with retailers, providing a source of

information prior to purchase

sCommerceCategories

1. Options to share on the website2. Social infused onto site3. A View Into Individual Activity4. Site as it’s Own Social Network5. Six Degrees of Separation6. Social-Sourced Shopping

sCommerceCategories: 1) Options to share on the website

Source: http://www.fluid.com/e-commerce/social-commerce

sCommerceCategories: 2) Social infused onto site

sCommerceCategories: 3) A View Into Individual Activity

Source: http://www.fluid.com/e-commerce/social-commerce

sCommerceCategories: 4) Site as it’s Own Social Network

sCommerceCategories: 5) Six Degrees of Separation

sCommerceCategories: 6) Social-Sourced Shopping

sCommerceTools

Source: http://comunidad.iebschool.com/iebs/redes-sociales/social-commerce-redes-sociales-ventas-comercio-electronico/

Índice de contenidos

● eCommerce Business Models● Current situation of retailing● New skills● Marketing analytics to drive growth● Social Intelligence● sCommerce● mCommerce

mCommerce

Source: https://media.licdn.com/mpr/mpr/p/2/000/268/1b5/21f35eb.jpg

mCommerce (II)

● Reaching the tipping-point○ Technology-enabled screens○ Connected screens of all sizes

Source: http://www.slideshare.net/TNSGlobal/mobile-commerce-reaches-the-tipping-point

mCommerce (III)

The number of searches on mobile phones is booming and there is a direct impact on

purchasing behaviour

65% say that they postpone their purchase or change suppliers according to this research

Copyright (c) 2014 University of DeustoThis work (but the quoted images, whose rights are reserved to their owners*) is licensed under the Creative Commons “Attribution-ShareAlike” License. To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/

Alex Rayón JerezOctober 2014

eCommerceHow digital is transforming

retail

II Aula Digital Business

Alex Rayón Jerez@alrayon, alex.rayon@deusto.es

October 16th, 2014