INTRODUCTION Analysis of current trends in ecommerce and

INTRODUCTION Analysis of current trends in ecommerce and possible strategies for SA retail.

OPPORTUNITY STATEMENT The advancement of technology is changing consumer behaviour and demands. This is driving retailers to consider e -commerce. How should SA Retailers respond to current trends in e-commerce?

OUR RESEARCH What are the key reasons for implementing an ecommerce strategy? What are the consumer trends? What value b 2 c e-commerce offers? What are the technology trends? Research Questions What opportunities exist for SA retailers? What are the trends in e-commerce in SA and abroad?

OBJECTIVES §To explain the value of e-commerce in the South African retail sector. §To investigate current trends in technological advancement and consumer usage. §To explore possible strategies and approaches to online retailing. §To determine and clearly articulate the cost of not having an online shopping channel.

METHODOLOGY Surveys and interviews with SA retailers Focus groups with SA consumers Interviews with ecommerce specialists Interviews with pure ecommerce retailers and with click and mortar models Desktop Research

DEFINED FERRIN TRANS GI AN CH EX SE LL IN G NG G BU YI N G It is: It is NOT: • ONLY AN IT INITIATIVE. • A REPLACEMENT MODEL FOR CONVENTIONAL SHOPPING. • FULLY UNDERSTOOD, WELL UTILIZED AND NOT YET MATURE.

THE SA CONTEXT § Slow adoption of e-com and internet § Lack of collaboration § People across LSM groups are online § Few retailers have digital strategy § Focus groups show massive growth in mobile

4 KEY TRENDS 1. Growth of online sales 2. Growth of mobile commerce 3. Growth of multi-channel retail 4. Social Media as a form of commerce

KEY TRENDS 1 1. Growth of online sales

Growth of Online Sales SA normal Retail growth 12% online retail 30% GLOBAL FINANCIAL CRISIS SA normal Retail growth online retail 30% 6%

KEY TRENDS 2 1. Growth of online sales 2. Growth of mobile commerce

3, 000 2, 500 2, 000 1, 500 1, 000 500 0 MOBILE COMMERCE & SA Many in SA have not PC & Internet Most have mobile phones

KEY TRENDS 3 1. Growth of online sales 2. Growth of mobile commerce 3. Growth of multi-channel retail

MULTI-CHANNEL From Selling the way we want to sell To the way they want to shop

KEY TRENDS 4 1. Growth of online sales 2. Growth of mobile commerce 3. Growth of multi-channel retail 4. Social Media as a form of commerce

FACEBOOK 750 million users worldwide 50% log in daily 40% follow a brand

SOCIAL MEDIA Social is not justadvertising. Media is about advertising. It’s about Customer about conversations! It’s about marketing! Relationship Management!

Social Media NEW: LISTEN OLD: SHOUT! Social is not just about advertising. It’s about people!

• Grocery & Apparel shop • Mobile Commerce Optimal • ROI • Value How to drive revenue and/or reduce costs Digital Strategy Brand Goals • Differentiation • Service • Engagement • Positioning What the business is and wants to become Flexible Distrib. Strategy E-Commerce Competence Social Media Community Product Videos Multi Format Promotion Content Management Product Search Online Sales Mobile Commerce Product Reviews Channel Integration Data Integration Media Optimization CRM Integration Strategy • Multi-Channel • Social Media Business Goals Multi Channel. Strategy Competitive Environment Consumer Goals Outcome What consumers actually want to do (Primary Research) Trends & Benefits Recommendations

Recommendations Develop a Multi Channel Retail Strategy

DEVELOPING A MULTI CHANNEL STRATEGY MEANS Creating a business centred on customer contact points Flexible supply chains – DC to customer, DC to store, Store to customer, In-store to online, Drop shipping, Collection points, etc Systems integrated to manage customer data from all contact points – one customer, many relationships

DEVELOPING A MULTI CHANNEL STRATEGY MEANS Current Channels Multichannel State Change State Internet Customer Insights • Segmentation • Customization • Trend and growth mining Enterprise Retail Wide Charge Of Comparability Internet Integration Optimization Internet Align Value Proposition • Assortments • Pricing • Compliance Retail Integrate Customer Processes • Cross channel fulfillment • Holistic D 2 C Internet New brands, banner partnerships, tests Synchronize Marketing • Cross channel calendars and traffic • Optimize spend • Enterprise wide resource allocation • Promotional parity Optimize Operating Model • Logistics enhancements • V 2 C; D 2 C • Org design Internet • • Broadest & Compelling Assortment Leverage Marketing Spend Service Solutions Cross Channel Testing Optimized Inventory Increased Purchase Power Seamless Customer Experience

DEVELOPING A MULTI CHANNEL STRATEGY MEANS The internet becomes the enabler to a multi-channel business … Customer Insights… • Linking segmentation across retail and direct • Customization of offers that are unique and/or shared across channels (push or pull strategy) • Utilize the wealth of data through a central hub to trend and mine segments of growth and opportunity to increase customer insight Synchronize Marketing… • Create a unified marketing strategy that supports cross channel calendars and traffic; leverage unique events but capitalize on joint events • Optimize corporate wide media spend based on return • Create promotional parity • Reduce ad cost ration by changing the marketing investment mix to optimize multi-channel opportunity Align Value Proposition… • Develop assortments that resonate across channels or become unique to a channel • Standardized pricing across all channels • Migrate to a multi-channel compliance model Optimize Operating Model & Processes… • • Enable the ability for cross channel fulfillment Create a true end-to-end Direct to Customer model Logistics enhancements Deploy a Vendor to Customer model to allow for SKU expansion without inventory costs • Create an optimal organization to satisfy the cross channel marketing plan • Build an open, flexible IT infrastructure

Recommendations Develop a full Digital Strategy Develop a Multi Channel Retail Strategy

DIGITAL STRATEGY Assessment Review of the business and marketing strategies Digital Best Practices Review of the current technology investments Competitive and Regulatory context (Detailed Review) People, Culture, Organization, and Capability Map Understand The Opportunity Ideation & Prioritization Roadmap Development Long Term Enterprise Digital Vision Competitive Environment Consumer Goals Digital Vision Optimal Business Goals Brand Goals How to drive revenue and/or reduce costs People What the business is and wants to become Process RETAILER Segmentation and Consumer Experience Primary Research (new) What consumers actually want to do (Primary Research) Technology Social Networking Web Development Maintenance Mobile Content Management SEO / SEM e. Commerce Portfolio Optimization Data Integration Media Optimization CRM Integration Short Term Opportunities & Pilots Operating Model Partnership Strategy (Agencies, Technology) Measurement and Analytics Channel Integration Technology Strategy Business Case Implementation Roadmap Strategic impact Capabilities assessment Gaps and opportunities Quick wins Roadmap Drive Transformation One customer – many touch points Develop the integrated systems to enable this and manage the customer data

Recommendations Develop a Distribution/ Fulfilment Strategy Develop a full Digital Strategy Develop a Multi Channel Retail Strategy

DISTRIBUTION & FULFILLMENT Route to Customer – 1 st Map your Channels Design and map the route the products take through each channel to the customer. The shorter the channel the better. Build in the flexibility needed. Identify the critical path and the points of excess.

DISTRIBUTION & FULFILLMENT Route to Customer – 2 nd Cost your Channels A good RTC process seeks to match the design with thorough data gathering, costing of each of the distribution channels and delivery of key insights about the design.

DISTRIBUTION & FULFILLMENT Route to Customer – 3 rd Use regional costs A geo-location costing structure can be delivered. Enabling deliberately plan roll-outs according to cost effectiveness.

Recommendations Develop an E commerce core competence Develop a Distribution/ Fulfilment Strategy Develop a full Digital Strategy Develop a Multi Channel Retail Strategy

E-COMMERCE CORE COMPETENCE Average Ticket (Site Relevance) Traffic (Customer Marketing) Search marketing investment Move from Cost per Click to Cost per Acquisition Community development Behavioural retargeting Retarget non purchasing customers after they leave the site Search engine optimization Remnant/display ad purchasing Shopping site expansion E-mail expansion Focus on relevance to the consumer Contesting Affiliate Marketing Cross/up selling Automated suggestions of relevant product Shopping cart improvements Category display, product discovery Home page and category page rebuilds to feature depth and breadth of assortment Site relevancy and re-targeting Buying guide program Content for consumers to explore and understand complex product purchases Conversion (Presentation/Search) § § § Product content improvements – Providing the information needed for a consumer to make the buying decision Site tweaks and testing – Agile development model that allows for many smaller changes Product review improvements – Re-launch user review program Product Q & A – Introduce forums for consumers to ask questions on products and categories Search result refinements Navigational improvement

E-COMMERCE CORE COMPETENCE Global Google Searches vs. Predicted Facebook Fans (May 2011) How do you do this? Develop a competence to use your online assets to succeed

RETAIL BEYOND 2020 Retail beyond 2020 Physical Stores no longer core 1. 6 m readership vs. 6. 5 m “likes” Copyright © 2010 Accenture All Rights Reserved.

ACTION Action Make goals. Track results. Think big. Start small. Go fast. Iterate. Socialize everything. Copyright © 2010 Accenture All Rights Reserved.

Action “I shop at your store, I spend time online daily, I’m already buying online…On Facebook some of my friends recommend products. . click. . i buy…I post about my purchase…click they buy…I might…. still shop at your store. . ” Copyright © 2010 Accenture All Rights Reserved.