How H&M, GAP and Pinko are pushing forward the interaction between E-commerce and fixed location retailers
Click&Brick. Or Brick&Click? The distinction between them is becoming increasingly irrelevant. This is because fixed location retailers are considering opportunities offered by multichannels and online retailers are now present in fixed location retail. There are some interesting concepts particularly in the fashion industry which cleverly combine on- and offline shopping by using an omnichannel. Here are three examples:
H&M High Tech Flagship Store on Times Square: payment in the changing room
There is less and less to choose between fashion & technology. The new H&M Flagship Store which has recently opened on Times Square is an interesting example. With 42,000 qm² it is the world’s biggest H&M Store. In order to be cost-effective with such a high rent, the customer can expect a much better shopping experience through the use of digital technology. Along with the giant LED panels and interactive shop windows, the most interesting thing is a new system which allows customers to make payments from iPads to purchase their goods in the changing rooms. The new concept is called ‘try&buy‘ and should make shopping a much better experience.
Opening of the new high tech temple with Lady Gaga on 14. November
GAP is testing the ‘Reserve Program’: reserve online, buy in store
There are more and more Click&Collect concepts. Similar to the ‘Click&Collect Drive Thru’-offer from the London department store Selfridges, the fashion retailer GAP with its ‘Reserve Program‘ is also offering its customers the possibility of reserving goods online, trying them on and buying them in the store. GAP is hoping to curb the increasing amount of showrooming, to increase store traffic and to encourage customers to make further purchases. The system is not new and will surely not be a game changer, but GAP is offering customers a much better service and a better shopping experience.
“Eighty percent of our customers actually want to go try on a product in a store”
Reserve online, buy in a GAP Store
Pinko with a hybrid shop in Milan: no storage room in an expensive location
During Milan Fashion Week, the fashion label Pinko opened a so-called hybrid store in Milan’s Corso Venezia. Customers can select their goods in store and order them online on large touchscreen panels. The items are then delivered to their home address. At the same time, salespeople offer advice on the right accessories which can also be ordered straight away via the webshop. As the CEO Pietro Negra says in textilwirtschaft, the 75m² hybrid shop should have a higher unit productivity than traditional stores. The label has around 150 shops worldwide and generated about €160 million in 2012.
CEO Pietro Negra: “The motivations for buying voluptuary products like fashionable clothes have radically changed with the advent of the digital age. In fact, the exponential multiplication of the offer and its channels, together with the lessening of actual needs, has led to a constant speed-up in turnover”.
Conclusion: the interplay between fixed location and online traders is becoming more and more important. In the fashion industry, an increasing number of technology driven strategies are being implemented. Macy’s, Nordstrom, Saks Fifth Avenue. And of course Burberry. They are all way ahead of GAP, for example. What they have in common with their different approaches is that they offer the customer a smooth shopping experience with all markets and channels at their disposal.
Where the Omnichannel is already up and running: the innovative shop-in-shop E-commerce concept from the London fashion retailers farfetch.com
Luxury online shopping boutiques like Net-à-Porter, Stylebop or MyTheresa. High end fashion brands like Burberry or Roland Mouret. They are all very much a part of luxury fashion E-commerce. Platforms like Farfetch, Luxodo, FashionHub or Kleidoo, on the other hand, are (still) attracting much less attention. They are also adopting a very interesting concept which links on and offline shopping in a clever way through a real omnichannel: as a full-service provider, they are offering small, owner managed boutiques the chance to use an online platform as a new sales channel – including development, care and support for the online shop as well as handling transactions. The contractual partner for the purchase is still the individual retailer. The platforms have no goods risk. The platforms are distinguished by what they offer but a common feature is that the boutiques (and not just those in the high end sector) have a nationwide presence, and with the example of Farfetch also an international one, and can thereby reach more customers.
Example Luxodo: the market place, founded in Hamburg in 2011, according to its own estimates now brings together around 600 brands, over 4000 products and 62 retailers . In an interview with etailment, Managing Director Mathias von Bredow talks about the goal of internationalization and states that he aims to generate up to 20% of the turnover abroad by 2014. The Luxodo share of the respective retailer’s sales is currently around 5-10%. Like the fixed location shop-in-shops, retailers pay a sales commission as well as a kind of ‘rental fee’. According to textilwirtschaft, Luxodo along with DN Capital from London and b-to-v from St. Gallen has won over two new venture capitalists.
Example FashionHub: the position of the market place founded in 2010 is also in high end fixed location retail. The profile of participating boutiques, however, is relatively low.
It is a different story with the example of Farfetch: the pioneer from the UK founded in 2008, which Condé Nast among others provided with another 20 million investment capital in April (total funding $42.5 million), made turnover of $129 million (+145% YoY) and highlighted its collaboration with 250 regional stores worldwide. A bigger and faster growing market is the USA. The range is enormous and includes around 82,000 products from over 2,000 brands: “The big websites, they don’t have the stores. To do this on a global level, you need a network of independents, and at the present we’re the only network.” … “Our goal (is) to build a unique curated global franchise in online designer fashion.” All the products are also available in the respective boutiques.
Conclusion: this is a very interesting omnichannel approach which can also been seen as a benchmark for other sectors to measure success by. For local retailers, such as multibrand boutiques, it will no longer be a question of whether they should be online. Customers simply expect it. The question retailers need to answer is how they can be most successful. Competition in E-commerce is fierce. Few boutiques or retailers have the means to make the interplay between E-commerce, technical developments, marketing and logistics profitable on their own. The shop-in-shop E-commerce market place model gives local retailers a higher profile online and the chance to find customers nationwide. It will be even more exciting when – as Farfetch is currently doing – mobile devices are brought into play more.
App of the month: with ‘MicroMappers’, the UN is focusing on digital support for disaster operations
Aid organisations are always being pushed to the limit with major natural disasters. Logistical aspects are often difficult to coordinate for efficient international aid. How to get water, food or accommodation to those who need it most? With ‘MicroMappers‘ the UN and the Red Cross are now adopting a promising new digital approach through social media and crowdsourcing.
Any internet user can become a humanitarian volunteer. Shortly after Typhoon Haiyan had struck, there were already thousands of tweets, posts and pictures on the net – some relevant, some irrelevant or even incorrect. In cooperation with crowdcrafting ‘MicroMappers’ collects all this information, has it categorised by internet users as relevant or irrelevant and evaluates pictures of the damage. This data can then be graphically displayed on a map, a ‘Crisis Map‘. According to the Stuttgarter Zeitung several thousand tweets and pictures were analysed in the days after the disaster and aid organisation was better coordinated. Digital support was first used after the earthquake in Haiti.
MicroMappers has shown how digital organisation can help improve international aid.
Screenshot: MicroMappers, 2013
One of the initiators of the project is the North American Patrick Meier who works for the Qatar Computing Research Institute. He presented the first version of MicroMappers in April 2013. As he emphasised on Wired, he is aware that these kinds of digital tools are still in their early stages: “this has not been perfect, we are learning by doing. … It’s really an open-source platform for this kind of real-time teaching of an algorithm. And what we want to do with this and other platforms is really to empower our digital humanitarian volunteers to be able to do what they do hundred times better and 100 times faster and with 100 times better user experience as well, so that people don’t burn out.” Here is an interesting video by Patrick Meier about the challenges of digital humanitarian aid in a TEDx presentation:
Conclusion: MicroMappers is an impressive example of how much social media has changed our communication and how humanitarian aid for international relief can take full advantage of digital technology in the future. Big (false) data will also play an important role in international aid.
In the USA Black Friday and Cyber Monday are what Singles Day is in China: huge amounts of turnover for E-commerce. The Christmas season for Americans traditionally begins on the Friday after Thanksgiving. It is the day of the year that generates the most turnover. In 2012, the E-commerce turnover for a single day broke the billion dollar mark for the first time. The US market researcher from ComScore states that turnover rose by 26% compared to 2011 (2011: 816 million US$). Altogether 57.3 million (+18% YoY) Americans clicked their way through different online shops on Black Friday in their search for bargains. On ‘Cyber Monday’, the real answer to the ‘Black Friday’ of fixed location retailers, the E-commerce turnover then rose by 30% to 1.5 billion US$ – also a new record. The share of mobile traffic increased dramatically to 18%, the share of turnover for mobile purchases was around 13%.
The Black Friday surge is coming to Germany
Christmas is online time. Even in Germany, more and more people are making their Christmas purchases online: according to a prediction by the German Retail Association (HDE), this year the Germans will spend €8.5 billion on Christmas purchases online. That would be an increase of 15% compared to last year. That means one in four E-commerce euros will be spent between November and December.
In Germany up to now Black Friday, particularly Amazon, was known for slashing its prices like in America. And the Cyber-Monday Countdown begins from today. Yet more and more people are also talking about Black Friday to increase the number of online purchases before Christmas. When Apple offered its deals from the USA for the first time in Germany back 2009, it was not really a big event. Then in 2011 there were already many separate offers from different retailers. But still no port of call like blackfriday.com or bfads.net in the USA which give an overview of the offers.
Now things are really getting going: Many of the top 100 German shops are taking part in the discount campaign and are offering
special Black Friday or Cyber Monday deals for bargain hunters. The first platforms in Germany are built similar to the U.S. ones. Both Black-Friday.de and Black Friday Sale are offering overview of the special offers in the German online market
Turnover hoping to be made from the Black Friday campaign in Germany: 30 million €
Screenshot: Black Friday Sale
The response of the retailers? Click&Collect drive through at Selfridges, London
Retailers have to take into account the increasing importance of online shopping just before Christmas. The department store Selfridges in London is offering an interesting combination of the two this year with a Click&Collect drive through offer as part of its multichannel strategy: at a Drive-Thru counter products ordered online by 4pm can be collected the following day. Wind down the window, take the bags and drive off – ideal for all those taken by surprise by Christmas each year. However, that’s only if the traffic in central London on the 24.12 doesn’t prevent you getting there …
A clever on- and offline combination of on- and offline shopping in London
Screenshot: Selfridges Click&Collect Drive-Thru
Conclusion: the weeks before Christmas are the most important period for online retailers, even more important than for the stores. What is the case in the USA will also happen here more and more: short E-commerce campaigns like a Black Friday Sale or the bargain offers of a Cyber Monday week will be an important driving force for the whole of the Christmas trade. The shift in turnover towards E-commerce is making the current changes in retail even more significant.
The 11.11. is for Chinese singles what Valentine’s Day is for Americans and Europeans. Chinese students had the idea about 20 years ago: the ’1′ stands for single, so the number obsessed Chinese found the 11.11 to be perfect for a Single’s Day. Since China‘s E-commerce giant Alibaba came up with a huge promotion five years ago, it is not just restaurants and bars which are happy but also retailers who have recorded turnover worth billions. To make it interesting for all the non-singles as well, Alibaba has renamed this day the “11/11 Shopping Holiday”.
This means that the 11.11. has gradually become a day for bargain hunters and that it sets standards for online shopping around the world which even surpass those of the famous Cyber Monday in the USA. With free gifts, special bundle offers only for that day, discounts and enormous reductions of up to 70%, online shops advertise to win over the customers. Turnover for the Alibaba group on this day in 2012 was an unbelievable $3.1 billion – double the turnover from Cyber Monday. The forecasts for today put it at around $5 billion, an increase of 20%. About 100 million packages are expected to be delivered. Since less than half the packages last year could be delivered within three days, with many arriving weeks or even months later, Alibaba has been investing heavily in logistics.
UPDATED: according to updated company data , thanks to huge promotions, these estimates were easily exceeded – turnover was a phenomenal $5.7 billion – in just one day. 152 million packages were sent. 21% of purchases were made on mobile devices. 402 million individual users visited the company websites (2012: 213 million).
How more and more western brands want to take advantage of the Chinese spending spree
Tmall started out five years ago with 27 brands – in 2013 there are more than 20,000 brands present on Alibaba‘s platforms alone and all of them want a piece of the giant cake. There are more and more western brands to be found among them. For example, Microsoft: in March the Redmonder opened its first online flagship store on TMall and is taking part today in the craziness of Single‘s Day. The website traffic has apparently already tripled in the last five days. Clarins, the French luxury cosmetics company, has been on TMall since September and today it is offering customers a free gift worth the same amount as their online purchase. They are aiming high: “We have an ambitious sales target, up to a month and a half’s worth of sales in a single day,” said Julien Chiavassa, Asia Pacific Regional Digital and E-commerce Head, according to Advertising Age.
Conclusion: the figures are incredible. And a huge marketing success for the Alibaba group whose 2014 IPO is hotly anticipated. Unlike in the USA, the E-commerce giant has a market share in China of around 80%. Yet more and more online shops are jumping on board and out-bidding one another in the war of discounts. This can be explained by the enormous potential of the Chinese online shopping market: with 538 million people, China has the biggest number of internet users in the world. Around 200 million people shop online. The more western brands take part, the more they can take advantage of this opportunity. Single‘s Day is well-suited for such a move.
The most important key figures for today’s stock market debut by Twitter or why Facebook is in another league
Today Twitter is making its debut on the time-honoured New York stock exchange. Quite a few people have mixed feelings about the imminent IPO. The short messaging service has not recorded a profit since its launch in 2006 and its future depends on advertising as a main source of income. This is an area in which heavyweights like Google operate with a perfect grasp of the advertising business. Conversely, the loss in the first nine months alone of this year amounted to almost $134 million – from a turnover of well over $422 million during this time.
The market research company Statista has put together interesting infographics to show why Twitter is no Facebook. While Facebook has generated turnover of around $5.3 billion so far in the first nine months of this year, that of Twitter only comes to $422 million. Facebook is also way ahead of Twitter when it comes to the number of users. Around 1.2 billion people use Facebook every month, with Twitter, it is ‘only‘232 million. Here is an overview of the most important figures:
And now a comparison: Apple with around 600 million (paying) accounts
In order to have a frame of reference, it is interesting to have a brief comparison of the user numbers for other technology firms: Apple, the most valuable brand worldwide in the current brand rankings, is the undisputed leader as far as user numbers are concerned according to the Silicon Valley Business Insider with around 600 million accounts. That is phenomenal as users have already paid a considerable amount for an iPhone or an iPad and most accounts are linked to credit card information. This is not the case with Twitter whose business model is based on advertising and selling data. In contrast, the E-commerce giant Amazon has around 224 million accounts worldwide – with the average number of users per month like Twitter. And how is it with the free services? Yahoo, still one of the best known platforms, has around 700 million accounts. Apple is not far behind this but Twitter is.
Conclusion: Trading is based – like so often – on hope. Does Twitter’s business model really justify a billion-dollar valuation? Whether it is the number of users or the average time spent on the site, the income per user or the share of mobile advertising: Facebook is so far ahead of Twitter in all categories that nothing can really be expected to change in the near future. Despite this Facebook shares needed over a year after the IPO to exceed the issue price of 38 dollars. It is hard to understand then why Twitter has been valued at this amount. Yet ultimately, it is also down to the belief of the investors that Twitter will fulfil their expectations. In any case, it will be interesting to see how things develop.
Disruption to the training system: digital studies and the ‘Flatrate’ College degree from the University of Wisconsin
Is the university system in the USA starting to totter? For three years, more and more universities and start-ups financed by venture capital have been offering so-called MOOCs. And even if the name which stands for Massive Open Online Course doesn’t sound particularly appealing or revolutionary, there is a vision of making higher education accessible behind the offer of free course available worldwide.
What MOOCs are offering: a gold rush for online course within companies
The former hedge fund manager Salman Khan is considered to be a pioneer with his Khan Academy, but the hype around interactive lectures lead to the former Stanford Professor Sebastian Thrun to found Udacity. He was the one who recognised the scale of his business model: in terms of costs, it makes no difference whether a video is requested by two or two million students. At the same time, two other Stanford professors were experimenting with online courses and founded Coursera in 2012, based on a slightly different model: the start-up signed contracts with universities who could create their own courses using Coursera Software. The latest financing round in July brought $43 million, the total investment amounts to $65 million. Venture capitalists even invested $40.5 million in the start-up UniversityNow, listed by Forbes as one of the 12 most disruptive business models of 2013. At the same time, established universities are investing in digital studies: for example, the MIT and Harvard have founded a non-profit company, edX, for marketing their online courses. This is an investment of around $60 million.
Most of the offers are financed from the still overflowing investor funds but more and more different business models are also being tried out; this could be exams for which a fee is required, software licences or exclusive access to data for graduates.
A flatrate model for a degree
As WSJ and FastCompany have reported, the University of Wisconsin among others, is starting to offer so-called ‘Flexible Option‘ degrees in November which is an interesting experiment: the student buys an ‘All-you-can-eat’-Flatrate for $2,250, valid for three months. During this time they have unlimited access to all teaching materials and support from research assistants and most of all, thy can take any of the final exams. It is not necessary to physically take part in the courses. The offer should particularly appeal to those who have broken off their studies, around 700,000 former students, who can finally complete their degree bringing their skills learned from the workplace with them. The course is limited to 10 people per degree and positive results should lead to it being offered throughout the country. The programme should break even within six years.
A flatrate for a college degree
Conclusion: the system of higher education has not really changed in a hundred years. The change has now arrived with the digitalisation and the increased use of mobile devices. It is still too early to tell how far-reaching the effects of most MOOC business models will be. A deciding factor for many will be what kind of qualifications the students can get from them and what value these will have, particularly in the workplace. Here the experiment from the University of Wisconsin might take things in a new direction. The important thing to understand is that no higher education institution can afford to ignore the experiments with technology based teaching concepts and the current mood in the training sector.
And the winner is: quite clearly Vine. According to analysis by GlobalWebIndex the video app Vine 2013 is the app with the biggest increase in users. Vine users can create videos six seconds long and share them on Twitter or Facebook. Compared to the first quarter of 2013, the number of users for this application has increased by 403% to 23 million. This means that Vine has moved to 14th place in the most used apps: 3% of all mobile internet users have it. The most used app remains Google Maps. One in two users has it and its usage growth is around 82% – no signs of stagnation then.
In second and third place are Flickr and Instagram, two photo apps. With WhatsApp (+123%), Skype (+111%) and the Facebook Messenger App (+107%) there are three messaging apps in the Top 10. YouTube, Twitter and Foursquare complete the Top 10.
The success story Vine
Founded in June 2012 in New York, Vine was already taken over before the launch in October 2012 by Twitter for $30 million. According to Twitter boss Dick Costolo it is ‘the next big thing’, an ‘Instagram for Videos’. The aim: to notch up another record number of users in the move towards Twitter’s IPO. In January 2013 Vine was made available in the App Store, in June came the Android app. For weeks the app was one of the most popular in the iTunes-Store. Apparently around half a million tweets per day were posted with links to Vine videos. Its rival, Instagram, bought last year by Facebook for half a billion dollars, reacted quickly and also introduced videos on Instagram at the end of June.
How can brands use Vine?
Vine’s business model is based on advertising. The app is still less than a year old and gaining a large number of users is the clear goal. However, some brands have already started experimenting with it. The online marketplace AirBnb put together a short film, ‘Hollywood & Vines’, from individual Vine videos for a promotion, online fashion retailer Asos is using an Unboxing Vine competition in order to get users to follow their orders through to the checkout and stay loyal to the shop and Urban Outfitters has now created a giveaway with Converse for which users have to create a video documenting a day in the life of their chucks.
Conclusion: Apps are very much part of the mobile ecosystem. The speed at which they are able to generate a high number of users is staggering. The user numbers show that more and more users consider mobile apps to be part of their daily lives. For companies it means this – they can avoid using mobile channels less and less. It is very much down to the individual brand strategy, however, to decide which platforms should be used.
Top 3 of the most innovative distribution models for e-books: will books have to be sold individually in the future at all?
Almost one in five Germans reads digital books. There are few publishers not offering e-books. Their turnover will double in 2013 to €286 million according to a recent study by PricewaterhouseCoopers. The reason behind the enormous growth is the rapid increase in the use of mobile devices in Germany. E-book reading devices are booming; the interbranch association BITKOM is expecting an increase of 22% to 832,000 devices in 2013. This growth shows no signs of slowing down.
This structural change means there are exciting innovations underway in the book market, one of which concerns the selling of e-books: will books have to be sold individually in the future at all? In the age of Spotify and Netflix which stream music and films for a flat rate, there are also distribution models for e-books – similar to short-term lending for a monthly subscription price. The new models also raise a key issue, namely the feeling that actually owning e-books is not that important as books are rarely read more than once. Since October 2012, even Amazon has been offering a free book a month with no deadline for returning it as part of its Kindle lending library in Germany. The offer is limited, however, to owners of a Kindle and Prime members.
Here are the Top 3 most interesting e-book distribution models:
- All-you-can-read for $9.95 – a flat rate model from Oyster, Scribd and eReatah
Set up in September, the New Yorker start-up Oysterbooks is offering its users unlimited access to around 100,000 e-books for a monthly fee of $9.95. For this fixed monthly fee, customers can read as many e-books as they like. Among the publishers taking part are Harper Collins and Houghton Mifflin Harcourt, but there is also content from the biggest US Self-Publishing-platform Smashwords. In order to become the Spotify of the book market, Oysterbook is focusing on the so-called “People Powered Book-Discovery” – a social reading stream which shows the reading status and recommendations by friends.The document sharing service Scribd has also set up a kind of art e-book flat rate available in Germany. For €7.99 (US price: $8.99), you get access to more than 40 million e-books and documents. Scribd is found in over 100 countries and 80 languages around the world. Alongside it is the flat rate service eReatah, also set up in September, which is offering a similar but more expensive model. You can choose between a basic package of ‘2 books for $14.99’ or a premium package of ‘4 books for $29.99 per month’. Around 80,000 titles will be on offer, among them also several books from the major US publisher Simon & Schuster.
- Taking out e-books online – the bookshop model from Skoobe and Onleihe
Read it once, then return it. Public libraries have worked this way for years. In Germany more and more public libraries – there are currently around 1,300 from a total of 2,500 – are offering digital versions of books with Onleihe. For an annual subscription, books can be taken out for a limited period. When the time limit is reached, the e-book is then automatically deleted from the user account. The range of titles on offer depends on the size and budget of the library. The drawback is that most titles only have a single licence which means that an e-book can never be borrowed by more than one user simultaneously. Skoobe, a joint venture from 2010 by the publishers Holtzbrinck and Bertelsmann, has taken things a step further: since April 2012, up to 3 books can be borrowed at any one time for a fixed monthly subscription price of €9.99 for the Basic Version. A Plus- and a Premium-Version extend the range on offer to around 25,000 books from over 400 publishers. The e-books can be read via the App on Smartphones and Tablets as well as on the Kindle Fire. There is no returns deadline for the user, nor must they wait for the books they want to read as the number of copies available is unlimited.
- Only pay for the pages you actually read – the ‘Pay-as-you-Go-model from TotalBoox
There is another exciting distribution model from the young Israeli company Total BooX which presented its concept back in 2012 at the book fair and has been offering an App on Google Play for a short time now: “Read first – Pay later”, which means that the customer only pays for the pages of the e-book that they actually read. As TotalBooX was already our App of the month in January, you can find out more about it here.
Conclusion: there are new business models to accompany the structural change in the book market. Several providers are now offering a whole range of flat rate and lending arrangements for e-books and want to achieve the same success as the streaming provider Netflix in the book market. Not all providers or models will manage to do this – the market is simply changing too fast. And even if a ‘full’ subscription service is difficult to apply in Germany due to its retail price maintenance of books, there is still the question of what would happen if Amazon extended its lending service which up to now was only available to Prime customers and Kindle owners. Just to ‘wait and see’ in a market changing so quickly would not be the way to move forward.