"The Changing Dynamics of Retail - MultiSupplier Marketplaces"

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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


!   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


Some of Our Clients


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


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


© 2011 Forrester Research, Inc. Reproduction Prohibited 9 © 2009 Forrester Research, Inc. Reproduction Prohibited

What Every Large Retailer Or Media Company Needs To Know About Marketplaces Sucharita Mulpuru, VP and Principal Analyst

July 12, 2011


Amazon is the new Walmart


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. “


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


…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


Lessons from Amazon’s marketplace

Key considerations

Agenda


Companies cannot ignore Amazon


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!


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


•  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


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


Some retailers have learned this the hard way, and others likely will follow


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%


Lessons from Amazon’s marketplace

Key considerations

Agenda


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


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


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

© 2009 Forrester Research, Inc. Reproduction Prohibited

Thank you

Sucharita Mulpuru

[email protected]

Q&A

Q&A

Questions from Sucharita’s presentation


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


!  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


!   Unified Catalog

!   Third Party Suppliers

!   Merchant of Record

!   Single Basket

Marketplace Definition


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 ✔


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


The Marketplace Platform


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!


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


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.


Q&A

Q&A

Questions for

Sucharita and Eugene


Twitter: #IXwebinar

Thank you!

[email protected]

Paul Kogan, VP Business Development, Ixtens Sucharita Mulpuru, VP and Principal Analyst, Forrester Eugene Nikiforov, CPO and Co-Founder, Ixtens

"The Changing Dynamics of Retail - MultiSupplier Marketplaces"

Technology

Transcript of "The Changing Dynamics of Retail - MultiSupplier Marketplaces"