HEC Digital Business. E-commerce

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Digital Business2015-‐2016

E-‐business & e-‐commerce

1st Master HEC-‐UlgAndré Blavier

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1. Introduction to the course.Tools for your technology watch.

2. Introduction to the digital transformation.Data, Cloud, Social, mobile, GAFA, NATU, Giga economy, …

3. The digital platform.Web standards, API, apps, cloud based, (big) (open) data, …

4. E-‐business & digital marketing.SEM & content, permission, social, mobile, …

5. Digital business.Your company facing the digital disruption, …

6. Perspectives from the algorithmic world.Focus on the media sector and the industry 4.0, …

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Table of content (subject to changes …)

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3Source : www.statista.com/statistics/379046/worldwide-‐retail-‐e-‐commerce-‐sales

Retail e-‐commerce sales worldwide2013 to 2018 (in $ trillion)

1. Ubiquity. Internet and Web technologies are available everywhere (work, home, street, …) at anytime. The marketplace is extended beyond traditional boundaries and is removed from a temporal and geographic location. We are now inside a “marketspace”. Shopping and marketing can take place anywhere. Customer convenience is enhanced, and shopping cost are reduced.

2. Global Reach. Commerce is enabled across cultural and national boundaries seamlessly and without modification. The “marketspace” includes potentially billions of customers and millions of businesses worldwide.

4Adapted from “E-‐commerce 2013” by Laudon & Traver (Pearson)

Digital business & marketing (1)

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3. Universal standards. There is one set of technology (Internet/Web) standards that can be used as a common, inexpensive and global technology foundation for digital marketing and business.

4. Richness. Video, audio, text, social, mobile, augmented reality, … technologies are now integrated into a single but multichannel marketing message and consuming experience.

5. Interactivity. (Social) Technologies have made interaction more important than ever. Consumers are engaged in a dialog that dynamically adjusts the experience to the individual, and makes the consumer a co-‐participant in the marketing message and the business process.



6. Information density. Information processing, storage and communication costs drop dramatically. Information becomes plentiful, cheap and more accurate. Data enable companies to identify new trends “faster than real time”.

7. Personalization. Algorithms and analytics tools connected to Big Data resources make possible a “one to one” and “real time” communication. Customization is based on individual characteristics. With 3D printing, consumers will create and produce their own products.

8. Desintermediation. Crowdsourced content and social networks have changed the game. Empowered by cloud computing, data and mobile technologies, new disruptive models are emerging (sharing economy).



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Virtual = Physical !The key trend in digital business & marketing is

a seamless and optimized integrationof all digital and physical marketing channels,within a strategy based primarily on content.

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E-‐Business (electronic business). Any process that a business organization conducts over a computer-‐mediated network. Business organizations include any for-‐profit, governmental, or nonprofit entity. Their processes include production-‐, customer-‐, and internal-‐ or management-‐focused business processes.

Source : www.gartner.com

E-‐commerce (electronic commerce). The trading or facilitation of trading in products or services using the Internet. E-‐commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems.

https://en.wikipedia.org/wiki/E-‐commerce

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Digital business. The creation of new business designs by blurring the digital and physical worlds.


Digital commerce. The buying and selling of goods and services using the Internet, mobile networks and commerce infrastructure. It includes the marketing activities that support these transactions, including people, processes and technologies to execute the offering of development content, analytics, promotion, pricing, customer acquisition and retention, and customer experience at all touchpoints throughout the customer buying journey.


1. Value proposition.

2. Revenue model.

3. Market opportunity.

4. Competitive environment.

5. Competitive advantage.

6. Market strategy.

10Adapted from Pearson Education

Business Model. Key elements

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Why should the customer buy from you?

Examples of successful e-‐commerce value propositions :• personalization/customization,• lower price or/and price discovery costs,• “buy from home”,• Better/larger/easier product search,• facilitation of transactions by managing product delivery.


1. Value Proposition

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bike24.net >< xxcycle.com

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How will the firm earn revenue, generate profits, and produce a superior return on invested capital?

Major types:• advertising (Google),• subscription (www.lesoir.be),• transaction fee (eBay),• sales (www.quatuor.be),• affiliate (Amazon marketplace, www.venteprivee.com, …).


2. Revenue model

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Pricing. Set of practices and tools that allows to set a price at a given time in order to maximize sales and margins of a product. This price is the matching of supply and demand, and the amount a customer is ready to pay for a good or service.

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www.alexa.com

Harness the power of analytics to grow your business online. Alexa has traffic metrics across the web : an invaluable source for competitive

intelligence and strategic insight.

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www.pricingassistant.com

PricingAssistant helps online stores and brands maximize their profits with our

competition monitoring tool.

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• What marketspace do you intend to serve and what is its size?• Marketspace : area of actual or potential commercial value in which company intends to operate.

• Realistic market opportunity : defined by revenue potential in each market niche in which company hopes to compete.


3. Market Opportunity

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www.sellerie-‐online.fr

Wholesaler of equipment for horse riding with a traditional distribution network in Belgium. The entrepreneur believes that e-‐commerce is an opportunity and begins to start a

shop on eBay. The result is positive. He started a real online store, only in France (to protect its distribution network in Belgium). Marketing is mainly through the network of horse stables to reach parents having to equip their children for

horse riding (community).

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www.9bulles.be

A future young mother does not find “cool” clothes for pregnant women. After the birth of her second child, she decided to quit her job to launch an

specialized online store, without physical shop, but with a strong teasing 6 months in advance on

Facebook. She opens now a second physical shop.

Who else occupies your intended marketspace? Other companies selling similar products in the same marketspace.

Includes both direct and indirect competitors. Influenced by :• number and size of active competitors,• each competitor’s market share,• competitors’ profitability,• competitors’ pricing.


4. Competitive Environment

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Want to buy socks online ?What is your business model ?

Achieved when a firm :• produces superior product,• can bring product to market at lower price than competitors.

Important concepts :• asymmetries (when iTunes was launched, Spotify),• first-‐mover advantage (Netflix, Facebook, Newpharma.be),• unfair competitive advantage (brands),• leverage (Amazon).


5. Competitive Advantage

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Netflix …

Netflix has a strong “first mover” advantage and positions itself as a

“disintermediation” service, disrupting the business model of the “old” TV

content providers. The platform is also simple and the pricing is great.

But …

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popcorntime-‐online.io

… Netflix has already to face new challengers offering the same services for … free, like Popcorntime. … Of

course, don’t tell anybody about it ;-‐)

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Newpharma.be

When Europe authorized the sale of “without prescription” drugs on the Internet, member states had to adapt their national legislation. The day of publication of the law in Belgium, Newpharma was online supported by a good

digital marketing campaign. Initially, it’s a classic drugstore whose owner has done a great watch about e-‐commerce opportunities and the publication of the law. Currently, the

site generates a turnover equivalent to more than 7 “classic” drugstores, selling its products all over Europe.

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www.lesnouveauxateliers.com

Tailored (made to measure) suits. Digital in store : enter the 3D measuring cabin. In

600 milliseconds, 200 body measurements are collected through a camera.

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• How do you plan to promote your products or services to attract your target audience ? Details how a company intends to enter market and attract customers.

• Best business concepts will fail if not properly marketed to potential customers.

• Apple, www.tripy.eu, www.archiduchesse.com, www.leslipfrancais.fr, www.1083.fr, etc.


6. Market Strategy

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1083.fr

Jeans … made in France. 1083 = 1083 kilometers, or the longest distance between two places in France …

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www.leslipfrancais.fr

Also a successful “made in France” model. They started as a pure player. Now they have a real shop in Paris.

No “one” correct way. Business models according to :• e-‐commerce sector (B2C, B2B, C2C),• type of e-‐commerce technology (m-‐commerce).

Similar business models appear in more than one sector (www.etilux.be in B2B = www.quatuor.be in B2C).

Some companies use multiple business models :• eBay : B2C, C2C,• Amazon : B2C, B2B2C, B2B.


E-‐commerce models

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• Portal. Search plus an integrated package of content and services (advertising, fees, subscriptions, etc.). Horizontal or general. Vertical or specialized. Pure Search. Google, news Websites, Facebook, etc.

• E-‐tailer. Online version of traditional retailer. Low barriers to entry (sales). Virtual merchant (Amazon, iTunes), bricks-‐and-‐clicks (Vandenborre, Fnac), catalog merchant (LaRedoute), manufacturer-‐direct (Dell).

• Content provider. Digital content on the Web : news, music, video (subscription, pay per download, advertising, affiliate referral fees). Content owners, syndication, Web aggregators.Belga, Spotify, Netflix, iTunes, News Websites, etc.


B2C models (1)

• Transaction broker. Process online transactions for consumers. Saving time and money (transaction fees). Financial services, travel services, job placement services. Booking.com, zonebourse.com, references.be, odesk.com.

• Market creator. Create digital environment where buyers and sellers can meet and transact (fees). EBay, quefaire.be,etsy.com, etc.

• Service provider. Online services. Valuable, convenient, time-‐saving, low-‐cost alternatives to traditional service providers(sales of services and data, fees, advertising). Dropbox, Evernote, Google (Gmail, Maps, docs, etc.).

• Community provider. Provide online environment where people can transact, share content, and communicate (advertising, subscriptions, sales, fees). Facebook, LinkedIn, Twitter.


B2C models (2)

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www.vinted.com

Sell, swap, buy, or give away your pre-‐loved clothes, shoes, or accessories and make

friends in the Vinted community!C2B2C !

• E-‐distributor. Version of retail and wholesale store. One company seeking to serve many customers (sales of goods). www.etilux.be, www.ksl.eu.

• E-‐procurement. Creates digital markets where participants transact for indirect goods (fees, SCM, fulfilment services).www.publicprocurement.be.

• Marketplaces & exchanges. Independent vertical digital marketplace for direct inputs. Create powerful competition between suppliers (transaction, fees). www.companeo.be, www.auctelia.com.

• Industry Consortium. Industry-‐owned vertical digital marketplace open to select suppliers (transactions, fees).


B2B models

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www.auctelia.com

B2B2B platform !

1. Establish a Cross-‐Functional Strategy Team. Involve other business units such as marketing, sales, finance, operations, supply chain and customer services from the very beginning of the process.

2. Set Digital Commerce Objectives. Start by envisioning the type of digital commerce service you want to offer. Secondly, look at the business motivations for deploying digital commerce services. Lastly, define the KPIs that correspond to business goals.

3. Take Stock of Existing Assets and Resources. Look at the existing assets and resources that will impact project delivery and performance. Companies that are starting from scratch or looking to upgrade the existing platform should take stock of the digital commerce assets.


A digital commerce strategy in 7 steps (1)

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37Source : Gartner

Digital commerce project : sample KPIs Step Objective Goal KPI Target

Acquire morecustomers

Increase site traffic Site trafficUnique visitors

15% YOY increase

Increase customer conversion

Conversion rate 20% YOY increase

Increase revenueper customer

Increase average order value (AOV)

AOV More than $120

Reduce cart abandonment rate

Cart abandonment rate Less than 70%

Increase customerloyalty

Increase customer activity

Active-‐customer percentage

(made purchase in the last three months)

More than 30%

Increase repeat purchases

Repeat purchases per customer

10% increase by June16

Increase customer rating

Average rating 15% increase

4. Analyze the Business Case. Define the Project Scope.• Business models (B2C, B2B, …).• Products and services. Which product categories shall we include?

• Markets. Which regions/markets shall we cover? Shall we offer multichannel experience to our existing markets, or shall we use online channel to reach new markets? …

• Industry segments (B2B only). What industry segments shall we target?

• Channels. Stand-‐alone sites ? Marketplaces ? Retail stores ? Mobile commerce ? Social networks ?

• Time to market: When to launch the pilot? When to go live?



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39Source : Gartner

E-‐sellerTo drive transactions to the digital platform. Usually lack an extensive physical presence, but have highly sophisticated digital platforms for targeting, personalization and transaction management. They often partner with third parties, or operate an inhouse delivery force to provide top-‐notch delivery experience as a competitive edge.

Brick-‐and-‐clickerTo offer a multichannel environment for engaging customers and driving transactions. Businesses can be looking to extend the relationship to digital channels and transform the role and function of their physical presence. Startups can use the multichannel approach to disrupt established businesses by addressing customer pain points and improving service efficiency.

InfluencerTo provide information that drives traffic and relationship to those sites. Because of the authority influencers have in providing information and opinion, or creating extensivesocial circles and user-‐generated content, they have strong influence over the customer behavior that can lead to transactions on their own sites, as well as for other providers.

MarketerTo engage customers and align marketing with digital commerce outcomes using all possible means and channels. Often organize a high level of promotional marketing activities and branding to influence sales on their own sites or on partners' sites. Promotions, sponsorships, social marketing and crowdsourced designs are all part of the marketer's activities.

High level of digital transactions

Low level of digital transaction

Digitalchannelsonly

Digital &physicalchannels

5. Design the Customer Experience. By 2017, the digital customer experience will be the key differentiator of your organization. The standard of digital customer experience continues to improve because it is a key focal point of innovation initiatives. Therefore, designing the customer experience is a key step in the strategy planning process that will impact success of your digital commerce service.• Define Target Customers.• Define the Customer Experience for Key Processes.• Map the Customer Journey.



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6. Make Tactical Decisions to Implement the Digital Commerce Platform. This step helps the company define the functional requirements of the technology platform, which can be used to select the digital commerce vendor.

7. Improve and Refine the Strategy. Install analytics to continuously monitor the site's performance and overall service. Three major analytics categories are :• Web analytics.• Digital personalization engine analytics.• Customer journey analytics.



New exiting ways to improve theuser experience in e-‐commerce.Sound, quality zooms, 360 ° views,

configurators / demonstrators, interactive videos,augmented reality, real time 3D, immersive universe, …

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www.reebok.com

Navigation and search “by colors” on the Reebok website.

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www.getwear.com

Every pair of jeans you order is specially tailored and hand made

for you in two weeks time.

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www.cupboardyourway.co.uk

We don’t simply produce off-‐the-‐peg cupboards. We have taken up the cause of manufacturing special

cupboards. Not just any old cupboard : yours! According to your

specifications and your wishes!

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www.redfin.com

Redfin 3D Walkthrough™ is a feature that lets home-‐buyers tour Redfin agent-‐listed homes for sale online , helping people see a high-‐resolution view from any angle inside the

home. This immersive experience, powered by 3D technology, helps home-‐buyers better decide which homes to tour in person.

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47dailymotion.com/video/x1b95ji_exclusive-‐net-‐a-‐porter-‐launches-‐shoppable-‐magazine_lifestyle

www.redfin.com

When a pure player decides to publish a … paper magazine. But with a specific mobile app, this magazine suddenly

becomes interactive !

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Digital commerce

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• SoLoMo (Social Local Mobile). Convergence of social networks,geolocation and/or local business, and mobile devices.

• Intelligence added to location will dictate consumer experiences on mobile.

• Contextual use of time and social profile will help prioritize mobile services.

49Source : Gartner

From SoLoMo …

• Omnichannel = Multichannel / Multidevice / Interactions.• A global experience allowing channels and devices to work in orchestration.

• Multiple touchpoints increase user engagement and improve effectiveness of digital business.

• It is not just smartphones and tablets. A Web-‐centric approach, using a hybrid model will provide the broadest support for today and agility for tomorrow.

• Goal : orchestrate the customer journey.• It’s also the new global technology context for marketing.• From e-‐commerce to Connected Commerce !

50Source : Gartner

… to Omnichannel (computing)

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51Source : www.thinkwithgoogle.com

Consumers search for a varietyof local information

52Source : www.thinkwithgoogle.com

Consumers act quickly after their local search

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• The consumer uses more and more different offline and online channels to interact with vendors, to order, buy or seek advices, before, during and after the purchase.

• He will find a specific product on the Internet, and then identify online a “physical” shop that sells it, go to this shop to "see and validate" the product and to get more information, and then, place the order via ... his smartphone on an online store and, finally, have the product delivered at home! If the product does not suit him, he will bring it in a library that offers "relay point" services ... Where he will maybe pick up another version of the this product later.

• Frontiers between commerce, e-‐commerce, m-‐commerce disappear. Consumers now have a real "seemless" shopping experience, from one canal to another.

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Connected commerce

54Source : www.thinkwithgoogle.com/insights/library/studies/ho liday-‐consumer-‐intention s-‐2012

Connected commerce & ROPO

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In-‐store :

• Bar code scanning• Coupons• Consumer reviews• In-‐store navigation• Shopping lists(weddings, etc.)• Loyalty• Promotions

Competitor store :

• Coupons• In-‐store inventory• Nearest store• Pricing• Promotions

At home :

• Coupons• How-‐to videos• In-‐store inventory• Research tools• Shopping list build• Store hours• Store location

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• Change reservation• Reserve seats• View reservation• Choose food

-‐ 2 days -‐ 2 hours + 2 hours + 2 days

• Check gate• Departure time• Lounge access• Upgrade• Special offers // profile

• Arrival time• Food order• Movies• Wi-‐Fi

• Ground transportation• Lost luggage• Navigation

• Customer services• Mileage status• Reward travel• Upcoming reservations

Flight

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Four Key Moments to be There

Source : www.thinkwithgoogle.com/research-‐studies/micromoments-‐guide-‐pdf-‐download.html

58www.groupe-‐casino.fr/fr/Le-‐Groupe-‐Casino-‐premier,4362.html & youtu.be/WdE0UTZlFy4

Casino mobile application

The “2.0” customer has a stronger and more regular interaction with shops.It’s the “anywhere, anytime, with any

device shopping“. The “omni channel" mCasino NFC application offers personalization,

continuity and fluidity throughout the shopping experience, on all sales channels.

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Virtual analyse of the real world

Shopperception analyses the shopper's behaviour in

front of the shelf, generating metrics and real time events to drive more

conversions.

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Sephora : “Disruptive experiences”

Beacons. Sephora will use Beacons in stores nationwide to deliver timely, personalized alerts to shoppers who opt-‐in for offers like birthday alerts, loyalty program updates and notifications when

new beauty training events are happening in-‐store.

Augmented Reality. The retailer has an augmented reality experience for shoppers via the Sephora-‐To-‐Go mobile app for

iPhone. Consumers can interact with custom content by hovering over the faces of nine beauty brand founders that are featured in Sephora windows and display cases. Scanning each image will bring up content options such as brand founder interviews, product videos, YouTube playlists and product pages on.

Source : http://onforb.es/1EuEs34

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Sephora : “Disruptive experiences”

Source : m.sephora.com/pocketcontour

Pocket Contour. In partnership with Map My Beauty, Sephora will launch a cross-‐platform personal virtual make-‐up artist application that demystifies contouring, a growing beauty trend. By analyzing a mobile photo, Sephora can help consumers identify their face shape and offer personalized step-‐by-‐step guidance on how to apply make-‐

up for the contoured look they want to achieve.

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Augmented reality

Source : www.mobilecommercedaily.com

Omni Hotels & Resorts brings print ads to life via augmented reality. The app will detect the

ad through image recognition and automatically unveil the augmented reality technology, transforming the print ad into a

whole new experience with an exclusive video that showcases customer testimonials, virtual tours and behind-‐the-‐scenes interviews with

Omni chefs.

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HEC Digital Business. E-commerce

Technology

Transcript of HEC Digital Business. E-commerce