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The recession is over, if you're in business with ecommerce. Online shopping figures have been consistently rising over the last decade reaching 8% of all retail sales in America and Asia, Europe is at 5%.° The Internet Retailer Online Retail Index of 25 ecommerce stocks on NASDAQ from 2009 to 2010 have soared up 91%. 2011 is going to be the transition for online retail from toddler to teenager- the internet is maturing. And what makes 2011 the difference? Three things: frugality, ease of use and cloud computing are the driving forces that will shape ecommerce scenarios.
MILLENIALS are FRUGAL
Millennials are ages 10-28, and they make a $200 billion contribution to the economy each year. They have become the largest generation, bigger than the baby boomers; there are about 82,900,000 Millennials. Resource Interactive has researched Millennials since 2006 and has uncovered key defining traits of Millennials, notably is an aversion to credit. Having grown up in wealthy times and then seen their parents struggle with towering credit card debt, Millennials have developed a genuine reluctance to spending more than they have°. Furthermore, they are always online. Have you been to a lecture theatre in a university lately, well when the lecture hall lights go down the glow of Facebook blue is readily seen across many connected faces.
Fact is, this is the generation born with internet and mobile phones- one interpretation you can make from this is that they are not inhibited by the notion of purchasing directly online or via the mobile because they haven't built a pre-internet shopping history. Furthermore, in pre-internet times just as now, a personal recommendation was the driving factor in making a purchase. In an average smart phone there are 50 contacts, and those contacts of contacts have another 50 contacts each. That implies that there is a significantly larger amount of consumer recommendations in our pockets where ever we are. This is changing shopping dynamics.
RECOMMENDED by WOMEN
Sellers know that recommendations from friends or autonomous consumer groups are the ultimate sweet spot for sales. 77% of women are influenced by peer recommendations and about half (51%) of female shoppers are already following their favorite brands through social networks like Facebook and Twitter. But the figures from a recent study by SheSpeaks has uncovered what my mother and her friends already knew back in the 70's- cut out coupons. They all used to pull them out of their purses at the till, often mixed with cash and plastic. Coupons still have their sway, they're just not cut out of the newspapers on Saturday morning anymore. Women are less likely to make a purchase because of a social product page. Instead, women are looking for coupons (68%), online product reviews (61%) and company emails (45%) to help them make purchasing decisions.
"When it comes to building preference and motivating in-store sales, digital is emerging as a strong contender. If brands can motivate trusted customer recommendations and couple them with a 'call to action' such as a coupon, it's a powerful one-two punch that drives sales and advocacy," said Aliza Freud, CEO of SheSpeaks.
MOBILE MAKES it EASY
Organizing the World's Information for Shoppers Sameer Samat, Director of Product Management, Google, at the Social Commerce Trends Report Summit 2010 highlighted three industry trends that drive Google's strategy: online-to-store shopping, mobile, and social. Samat suggests making these trends part of a company's operational plans. For example, retailers should make sure they have 3G mobile coverage in all stores, making it easy for customers to bring information from the web directly into store aisles. He also suggests that UPC codes for products be prominently displayed, so people with mobile phones can easily scan them to get online information with new smart phone applications. However, Mitch Joel author of Six Pixels of Separation, believes that, with the increasing connectedness of everyone, search will actually be less pervasive in shopping. He believes people will get information from friends, then purchase immediately, such as through their smart phones. Currently two thirds of the world's population have mobile phones, and smart phones are expected to eclipse PC sales by 2012. Samat tells that Google's internal data has shown a 3000%+ growth in mobile "shopping" queries in the 3rd quarter of 2010; mobile queries to Google now exceed online queries in some geographies, and the number of queries issued to Google Maps products has grown substantially°. Layering the internet on top of your real-time experience is why Augmented Reality has tremendous potential, as long as our smart phone batteries can keep up.
Augmented Reality (AR) will redefine 'pop op' stores and guerilla marketing. Layar, a Dutch developer announced at Picnic, Amsterdam 2010 that they will be able to provide 'branded' apps on their AR platform which, until now was horizontal platform open to the public. With an AR app in the retail industry, effectively one person can hold an entire store inventory in a portable device and open it to reveal all the products in an immersive environment. This could range from an AR car dealership, fashion show to a Tupperware party. Right now viewers will need to have an app on their smart phone to see the projection, in 2011 you'll start to see AR glasses entering a price range that would constitute a consumer product. Either way, with the phone or glasses you'll see celebrities and brand champions walking down the street or into select events and pop-up an AR store. The right product at the right place in the right time. Think about it, retailers will need dramatically less retail space driving down price and shifting budgets to customer relationships. In the recession climate a major strategy for retailers is to keep supply chains as lean as possible to reduce costs associated with storage. AR might be a big jump for some traditional retailer but times are changing. Even the fashion industry is shifting from the traditional 4 season cycle to 16 cycles per year. Uncertainty and volatility in the consumer market demands on a flexible supply chain, by having 16 cycles a retailer dramatically reduces the risk of picking the wrong trend while simultaneously reducing storage costs. Five years ago only Zara, a Spanish clothes retailer, followed such a strategy, but firms such as J.C. Penney, Saks and Macy's have since adopted it too.°
Integrating back end supplies with front end operations is an area where Microsoft Dynamics solutions, particularly verticals in retail and supply management will profit, especially on the shop floor. To-Increase, a global ISV working closely with Microsoft on their retail strategy for Microsoft Dynamics is developing Mobile Store Apps (MSA) for the Microsoft Dynamics AX retail solution. MSA plans to deliver the connected retail experience between shopper, salesperson and the back office by optimizing store processes and enhancing the user experience. It´s designed to enable an intuitive platform for the store employees that supports daily workflow from any part of the store and acts as a rapid training device. Using a central mediator to receive and present information it connects and performs requests in a service-based environment that supports open and closed cloud technology. To stay competitive with mobile app technology the ideal users for MSA will be running Microsoft Dynamics AX 6 and Retail Chain Manager R2 or the future release of Microsoft Dynamics AX for Retail. These Retailers will be able to leverage:
THE BIG GET BIGGER and the NICHE GET NICHER
What is ecommerce doing to our economy: it intensifies price competition and exonerates niches. This results in large firms getting larger simply because they can leverage economies of scale. Take for example the travel industry: In the ten years to 2003 the number of travel agencies that employed more than 100 people grew by 60%, from 109 to 174, and the number of tiny ones fell by a third, from 18,186 to 12,865°. Today we are witnessing intense price competition for e-readers. On June 21st Barnes & Noble, a bookseller, dropped the price of its Nook e-reader to $199 in America. Within hours, Amazon cut the price of its Kindle product to $189- and with 5 major brands releasing their own e-tablets in 2011, expect a buyers' market.
When price wars are on, experience and service attached to products becomes the competitive advantage. Yup- enter social media. We're already approaching the third generation of social media strategy and to recap the success of gene two noteworthy examples are Vente Privee, a French flash seller and Groupon, a literal combination of group and coupon that equates to collective buying for lower unit prices. The pioneer of flash sales, Vente Privée, grew out of the French apparel industry (the name means "private sale"). Founded in 2000, it organizes hundreds of designers, photographers and hairstylists for its online sales events. Its five local sites in Europe have more than 12m members and are expected to bring in about €800m ($1 billion) in revenues this year°. Groupon is an early bloomer, since it's 2008 arrival it already operates some 230 local websites in 29 countries with a flourishing 15m subscribers. Growing with money from investors, it affords a global strategy buying Groupon clones in other countries, such as Germany's CityDeal. The core of what social media in relation to ecommerce drive sales on is the social graph- the network of friends spun on social networks that turn purely transactional interactions into personal recommendations.
Luxury brands will eventually be the new gated communities online with waiting lists to get in, but for now, they are content with growing sales. Prada now says that within five years, some 40% of its revenues in America will come from the internet. Louis Vuitton, a maker of leather goods and clothes, is one of the few luxury brands to have prospered online. Unlike many of its peers, it offers nearly all its products on the web. The internet brings in as much money as one of its biggest bricks-and-mortar shops, says Antoine Arnault, the firm's communications director°. However Louis Vuitton's parent, LVMH, was forced to shut down eLuxury in 2009, a website founded in 2000 that sold a wide variety of luxury brands, because it lost money by the suitcase-full. According to insiders, it failed mainly because it lacked focus: it sold expensive products alongside relatively cheap ones. 2011 is the year ecommerce matures and retailers start treating commerce in electronic terms first instead of bricks and mortar. The first commercial on TV was a minute long still image with a product name and address of where to buy it, more or less a newspaper ad on TV. This analogy applies to the last decade of ecommerce, retailers have been approaching online shopping in traditional terms and have now finally started losing their milk teeth, watch out for a big bite in retail sales online. Leading the way for
Defining Scenarios for Ecommerce
Cocooning versus going out
Going to an online shop versus purchasing out of a conversation in the real world.
Cocooning is term that explains the dynamic of having a real preference for staying home; downloading a movie versus the cinema, gaming instead of meeting at the pub, watching sports on TV instead of going to the match, cooking versus restaurant. Needless to say, these preferences are generally economical ones that slot in nicely with persons trying to save money. But what if staying in was actually the hip thing to do? Are immersive 3D TVs and hands free game systems like Xbox Natal and interactive online shopping malls actually a good or better than some of their real world counterparts? With Google TV in 2011, you'll notice proactive product placement- everywhere in the world we watch the same programs except now the add on the taxi cap driving by, or the billboard on the side walk during your favorite program is actually a local advert from the business around the corner. Product placement doesn't have a big impact in the gaming world but now with hands free interfaces a much wider range of players find gaming interesting without button bashing. Interaction with friends and like-minded thinkers transforms gaming and surfing the net at home into the outlet to the rest of the world. The couch becomes the center of the Youniverse again.
At the same time these technologies could also be implemented and integrated in the outside world experience shifting the scenario from the coach to the cafe. The technologies are there but often a hindered by license agreements which, seem to be getting ironed out. When there is a vertical integration in the back end one can start Imagining buying strategically placed products on online TV, during sports matches and movies in the cinema- or even offer a gaming experience on top of the live sports event. The idea is layering the online world via smart phones on to our experiences and integrating online shopping functionality in our TV programs and movies. Like the famous cafe scene where women gather round over coffee and cake to talk about life experiences and consumer products, in 2011 with tablets and smart phones in the mix we will start seeing that this is the place where a greater percentage of online purchases take place, among friends and in public. Men not excluded of course- let's just shift the apple pie with cream to a beer and a big screen TV with sports.
Cloud versus Battery
Ecommerce from home or on location.
When the scenario describes cocooning versus going out what technological infrastructure will make it all possible? All online shopping and gaming has to deal with data transfer, accessibility and scalability. This is where cloud computing and battery life will be a practical determinant in how far this online world will take us out of our homes and emerge our public experiences. We all have had a regular sense of urgency regarding our smart phones and laptop's battery life, well guess what- our apps our out passing our battery life technology. Not an issue when at home but in terms of mobility there is only so much cloud computing can to do shift the computing demands of our phones to the virtual server in the sky.
Mobile ecommerce in 2011 is limited to battery power, currently batteries can't deliver more than 20 minutes of quality AR shopping or online gaming interaction from our smart phones, hence it won't be a major factor in retail purchases. The other side of the scenario means we are using our laptops and tablets more for online retail than phones. It's no surprise that Microsoft has invested so heavily in Azure, there is going to be a surge in online purchasing and data transfer for the foreseeable future. In this reality sales and product configurators will make a big bang in 2011 - the ultimate answer to customizable products at a mass scale. Now with touch screen technology consumers can slide their outfits, home furnishings, bike, computer and car parts together to make their own creations. Sana Software together with eCon Sales and Product Configurator offers an out-of-the-box web store for Microsoft Dynamics NAV that delivers 24/7 convenience and customer satisfaction in one easy-to-use package. With the To-Increase e-Con connector for Sana, companies using Microsoft Dynamics NAV can equip customers-whether they're business partners or individual consumers-to configure products that meet highly specific needs.
Together, To-Increase and Sana span a wide range of B2B and B2C scenarios for industrial products-for example, pumps, compressors, coolers, machines, and cranes-as well as consumer products such as home computers, audio and hi-fi systems, mobile devices, bikes, clothing, and accessories. Both the Sana web store and e-Con integrate seamlessly with Microsoft Dynamics NAV, so information about all custom products created in the web store flow into the ERP system for quick, easy access. There's no need to stitch together products with additional programming or re-enter data. Updates to information synchronize automatically across Sana, e-Con, and the entire ERP system any time, from any location with a web browser.
How does it work? Components are represented as a graphical interface and are linked to a table that has product information like price, availability and compatibility. Affectively what's happening is as you slide pieces together, the software is computing the order and contacting all logistic and external vendors needed to get your creation home. In the moment you press: send, buy, compose, create or build the product order has been processed. Respectively, if the combination you put together wasn't possible or out of stock you would know instantly. Don't try this on your mobile, yet.
In 2011 the battery issue will not be solved, but that doesn't stop retails and hospitality from catering to customer battery needs. Like airports in the last few year, why shouldn't stores and cafes install charging islands for our smart devices. It makes business sense because it keeps us in the retail space longer and connects us to added value and peer recommendations. As the scenario shifts away from online at home to online on location it will be social media that makes a big impact on retail, yes AR pop up shops hovering around celebrities is wow, but still niche. Online shops and consumer groups will increasingly be using twitter and Facebook to drive sales, elect brand champions and push personal recommendations. And our older population will join in heavily because let's face it, unlike tiny mobile phones they can actually see what's written on a tablet.
Carl KerchmarMarketing AssociateT O I N C R E A S E2010 Microsoft Dynamics Outstanding ISV of the Year, Inner Circle & President's Club Member
v e-tail in America Bleak Friday Nov 26th 2009 | NEW YORK the
Commerce Trends Report Summit 2010 April 19-21, 2010
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2010 issue of the Economist “America’s Shoppers” Paul Leinwand, a consultant at
Booz & Company
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Hortaçsu, Chad Syverson and Önsel Emre. Economic Journal, June
firms are digital laggards, but some are catching up Jul 22nd
2010 | berlin
and paris. Economist Intelligence Unit
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