STRATEGIES FOR SUCCESSA TOPLINE VIEW OF OPPORTUNITIES ARISING FROM OMNICHANNEL RETAILING AND THE WINNING STRATEGIES THAT RETAILERS ARE ADOPTING

INTRODUCTIONThe internet and the development of mobile devices have revolutionised the retail sector, enabling consumers to research and shop at their convenience, anytime, anywhere. How this growing group of consumers approaches shopping is prompting retailers to adopt new ways to reach them.

This new system of retailing – connecting stores, e-commerce, mobile apps and social media is referred to as omnichannel retailing. This guide presents an overview of strategies that omnichannel retailers are adopting, and how eBay can help make a difference.

This guide presents findings on the following themes that are key to omnichannel retailing:

1. Omnichannel retailing: more than the sum of its parts

2. Omnichannel retailing helps capture incremental sales

3. Higher value purchases are more likely to be omnichannel purchases

4. Capturing the international opportunity

5. Retail stores and mobile play a vital part

6. Realising the omnichannel opportunities through partnership

This booklet is written and produced by eBay. Key results and retailer views are taken from the Deloitte report “The Omnichannel Opportunity” supplemented by eBay’s own perspective and other sources. The full report from Deloitte is available here.

OMNICHANNEL RETAILING: MORE THAN THE SUM OF ITS PARTS

Unconstrained by physical location, omnichannel consumers are able to access a wider range of products. Consumers can easily access niche and specialty brands; those in rural areas are no longer restricted to local stores. Consumers can buy from retailers in other countries easily too.

In the UK up to 25% of recent online purchases involved products not locally available.

Deloitte estimates this as

€9bn of sales in 2012 – that’s omnichannel sales that may not have otherwise have materialised.

UP TO

of online purchases COULD NOT have been made in a local store.

of potential new sales

That’s equivalent to

25%

€9bn

Deloitte has found that sales are materialising from the omnichannel effect of being available at every touchpoint, and being top-of-mind for customers.

Through the 3 eBay Inc companies - eBay, PayPal & eBay Enterprise – eBay can help support a seamless shopper experience and keep the retailer present at any stage of the shopper journey.

eBay Enterprise Marketing Solutions, eBay Commerce Network, Click & Collect and Shutl all help to enhance the consumer and retailer experience via relevance-enabling technology, targeted advertising, convenient collection services and optimising inventory availability.

eBay adds to the omnichannel effect too. A presence on eBay increases a retailer’s physical store sales due to increased customer engagement. Deloitte’s econometric modelling illustrates this, showing an in-store sales increase of 1.2% for certain retailers from higher customer awareness due to customers browsing eBay.

RETAILER STRATEGIES TO CAPTURE AN INCREASED MARKET

Understanding customer behaviours in the new connected environment and the different paths to purchase, with a view to enabling channels to operate flexibly and

across a breadth of channels, offline and online, in order to maximise the chances that consumers find them and engage with their brands

ALLOW CUSTOMERS TO USE THE CHANNEL OF THEIR CHOICE.

BEING PRESENT

AT ANY STAGE OF THE SHOPPING JOURNEY.

for items purchased online, and using the

for online orders, or to try out products.

OFFERING FLEXIBLE DELIVERY OPTIONS

STORE ALSO AS A COLLECTION POINT

HOW EBAY CAN HELP

for specific retailers as a result of a

Deloitte’s econometric modelling showed an in-store sales increase of

PRESENCE ON EBAY.

1.2%

“A successful online strategy can drive foot traffic to stores and increase awareness of the brand.”

OMNICHANNEL RETAILING HELPS CAPTURE INCREMENTAL SALES

Deloitte found that for leading retailers selling through multiple channels, over 95% of their non-store dress sales did not impact their store sales. Put another way:

A broad presence across channels increases the opportunity for consumers to search for, and find, brands. This increased product awareness and the associated higher share of searches increases total sales, online and in-store. Web awareness via web searches also has a positive impact on sales.

For every £100 spent through non-store channels,over £95 is incremental to store sales.

Leading omnichannel retailers are capturing incremental sales, not cannibalising sales, as Deloitte determined via econometric analysis based on 17 leading UK fashion retailers who together hold 54% market share.

Incremental value generated by every £100 spent online, by average price and type of retailer:

Women’s onlyfashion retailer

Department store

Men and women’sfashion retailer

Supermarket

£97

£97

£95

£87

INCREASES total sales by INCREASING a retailer’s relativeshare of web searches by

10% 2.1%

across own and third party sites (e.g. websites, online marketplaces and social media), to maximise opportunities to showcase the brand.

Monitoring use of

adopting those that enhance loyalty or help capture new customer segments.

BEING BROADLY PRESENT

NEW TECHNOLOGIES,

RETAILER STRATEGIES TO DRIVE INCREMENTAL SALES

HOW EBAY CAN HELP

Deloitte found that a presence on eBay can also help retailers capture incremental value by raising brand awareness: a presence on online marketplaces increases the likelihood of a retailer appearing in web search results, and some consumers search online marketplaces directly.

Deloitte determined that presence on online marketplaces (based on eBay) has a positive impact on total sales. This impact is over and above the effect of paid advertising in raising product awareness.

Relevance is key: personalised services such as Feed are inspiring shoppers on eBay and connecting them with the things they need and love.

“Omnichannel retailing means that customers engage with the brand, rather than with the channel.”

Ensuring product information and prices are

yet making use of the specific

to engage consumers and market their products.

CONSISTENT ACROSS CHANNELS,

ADVANTAGES OF EACH CHANNEL

HIGHER VALUE PURCHASES ARE MORE LIKELY TO BE OMNICHANNEL PURCHASES

Frequent shoppers spend more than average, accounting for up to 70% of total retail spending.

And these frequent, higher spend shoppers are more likely to use a range of channels during a purchase.

of shoppers used multiple channels when making orders over £100

Nearly

TWO THIRDSWhen asked about a recent purchase, 63% of consumers who had spent over £100 used multiple channels during their purchase, compared to 33% of all consumers.

Frequent shoppers are 30% more likely to do online research and use multiple websites before visiting a store; they are almost twice as likely to use mobile technology while shopping in-store.

Purchases by consumers who researched online before buying in-store were of

50% higher value than purchases made by those who shopped through a single channel.

RAISE AWARENESS OF THE RETAILER

ENHANCING SHOPPER CONVENIENCE

SEAMLESS BRAND EXPERIENCE.

OFFERING A RANGE OF FULFILMENT OPTIONS.

and increase the likelihood of frequent shoppers and buyers of higher value items learning about the retailer’s products.

Developing a broad presence across multiple channels and online platforms to help

A re-evaluation of delivery networks and partnerships – and streamlining logistics - may be appropriate to accommodate this flexibility in a cost-effective way.

Appealing to consumers who value flexibility and convenience by

Promoting consistency across channels for a

RETAILER STRATEGIES TO APPEAL TO HIGHER SPENDING SHOPPERS

by retaining purchase history across mobile, web, apps and loyalty cards, to inform opted-in shoppers of relevant services or avoid having to repeat stages of the purchase journey.

HOW EBAY CAN HELPeBay supports retailers with branded storefronts that mirror the brand experience across channels and keep the retailer in control. This is supported by promotions, advertising and various other services to help retailers appeal to omnichannel consumers.

Retailers can benefit from eBay’s many innovations such as its mobile apps which have been downloaded more than 220 million times worldwide, plus personalised feeds, Click & Collect and PayPal Here.

CAPTURING THE INTERNATIONAL OPPORTUNITY

In 2012 UK and German retailers generated over €8bn in retail exports. In an increasingly borderless world, international sales can markedly outstrip growth achieved via domestic sales. Online exports from UK can be projected to increase 26% year-on-year* and IMRG, the UK industry association for online retail, expects cross border sales to soar to a third of all online trade worldwide by 2020.

Emerging markets can be particularly attractive - the online market in Russia is expected to triple by 2015 to $36bn. In the coming years, affordable shipping and a wide range of products will prove vital in unlocking these international markets.

Omnichannel strategies can help retailers capture sales in international markets with agility.

The Russian online market is expected to triple by 2015 to

$36bn

Key markets for online exports from the UK include

Over

of cross border online shoppers in these countries have bought from UK retailers.**

GERMANY, CHINA& AUSTRALIA

40%

**Source: Paypal “Modern Spice Routes” 2013; EU Commission

*Source: OC&C Consulting and Google, “Britain’s Retail E-mpire”

HOW EBAY CAN HELP

For retailers who have yet to develop an international sales strategy, a presence on eBay offers retailers access to over 128 million customers worldwide*.

We know that 80% of our buyers would buy cross border for the product they want*.

Major brands are selling internationally on eBay without the significant cost base typically associated with marketing and promotions.

Many retailers are also partnering eBay to take advantage of attractive new shipping arrangements.

*Source: eBay research 2012-13

to help unlock the the omnichannel cross border trade potential.

LEVERAGING ALTERNATIVE PAYMENT METHODS

RETAILER STRATEGIES TO SUPPORT CROSS BORDER TRADE

Acting local through a

with presence across a breadth of channels supported by localised services such as inventory presented in local language.

Selling internationally through

combined with home-base logistics centres, through thirdparty international delivery networks, or through localdelivery/collection centres.

CUSTOMER-CENTRED OMNICHANNEL STRATEGY

ONLINE AND MOBILE SITES,

RETAIL STORES AND MOBILE PLAY A VITAL PART

Unsurprisingly, many retailers believe

While some retailers comment that consumers should be able to have the same experience across channels, others note that consistency across channels does not require uniformity – retailers can adapt their offerings in order to take advantage of the strengths of each channel. Many retailers also argue for integrated marketing and sales strategies to avoid different channels becoming siloed.

mobile will continue to be key in unlocking the full potential of omnichannel retailing.

“Consumers now expect to be able to access the same information and have the same experience across channels, and are frustrated if they are unable to do so.”

*Source: RSR, “Omnichannel 2012: Multi-channel comes of age”

A survey of leading retailers worldwide suggested that the mostimportant aspects of a successful omnichannel strategy were creating a single brand identity across channels, and allowing customers to purchase, take delivery of or return a product through the channel of their choice*.

Those who

had made

an online

purchase

Those who

had not

purchased

online

or more flexible return policies can help retailers appeal to customers who like to test out products prior to purchase.

- including same day delivery of collection from stores - can allay concerns about the delay or cost of delivery.

The option to RESERVE AND COLLECT

Offering a wider VARIETY OF DELIVERY OPTIONS

I wanted to try out or test the product I was buying

I wanted to see the range available in store

The product caught my eye while browsing

It is more convenient for me to visit the store

I did not want to wait for delivery

I did not want to pay for delivery

There was a special offer that was onlyavailable in-store

The product was cheaper in store

All retailers interviewed by Deloitte agreed that

of their omnichannel strategy but most acknowledged that their role is changing.

Some topline reasons for in-store purchases are captured here:

STORES REMAINA KEY COMPONENT

30%

20%

25%

18%

23%

13%

22%

10%

42%

19%

31%

16%

11%

14%

46%

18%

RETAILER STRATEGIES TO PROMOTE AN OMNICHANNEL MIX

that embraces omnichannel retailing, championed by the company’s executive leadership.

Re-evaluating portfolios of retail sites and making the most of stores as

PART OF THE OMNICHANNEL EXPERIENCE. For example:

PROMOTING A CULTURE ACROSS THE ORGANISATION

from marketing and distribution, to staffing and IT.

ALIGNING ENTIRE OPERATIONS WITH OMNICHANNEL RETAILING,

eBay believes that the high street plays a key role in omnichannel retailing and is busy partnering with high street merchants large and small. Click & Collect is just one example where we’re partnering the high street to support an omnichannel experience.

Through mobile, eBay is enabling anytime anywhere shopping, with $22bn business volume conducted in 2013 and over 220 million app downloads.

At any time, shoppers can browse over 550 million listed items on eBay by mobile. We also know that 40% of all purchases on eBay are ‘touched’ by mobile.

by providing in-store Wi-Fi, and equipping employees with tablets to provide a better service.

USING SOME OUTLETS AS FLAGSHIP STORES

INTEGRATING STORES INTO THE OMNICHANNEL JOURNEY

ADAPTING SOME STORES AS COLLECTION POINTS

HOW EBAY CAN HELP

Source: eBay research 2013

REALISING THE OMNICHANNEL OPPORTUNITY TROUGH PARTNERSHIP

The purchase journey has become complex as a result of the wider range of channels consumers use while shopping.

With the right partner, retailers and brands can seize the omnichannel opportunity and create significant value together.

In this environment a presence across channels helps retailers ensure that consumers can find them and engage at any stage of the shopping journey. AND PARTNERSHIP IS KEY

FOR MANY RETAILERS focused on developing a robust omnichannel solution and seamless shopper experience.

“Retailers often expressed the view that consumer demand for omnichannel retailing is ahead of most retailers’ ability to fulfil it currently.”

“There is potentially a role for partnerships between non-competitors e.g. sharing collection points, delivery networks.”

RETAILER STRATEGIES FOR SUCCESSFUL PARTNERING

PARTNERING WITH MARKETPLACES

BUILD BRAND RECOGNITION

SHARING ASSETS

PARTNERING WITHTHIRD PARTY WEBSITES

to boost online presence and maximise the opportunity for consumers to find them and engage with their brands.

as an effective way of entering new markets and addressing new consumer audiences without bearing the marketing costs associated with establishing and promoting an independent site.

with other non-competing retailers to deliver a more flexible, personal and relevant shopper experience.

Establishing partnerships to

and overcome challenges, for instance, in delivery and collection, including the use of third party physical sites.

HOW EBAY CAN HELPeBay provides one of the world’s largest online marketplaces to customers via any connected device. By making its items available on ebay.co.uk, a retailer can access over 18.5 million visitors.*

Partnering with high street merchants, eBay works with brands to succeed together. Together, we’re strongly positioned to seize the multi-billion omnichannel advantage. Partnership is key:

eBay works with retailers as a partner – never as a competitor.

Via partnerships retailers can leverage alternative payment methods that help them further unlock the omnichannel cross border trade potential, PayPal being a prime example.

With eBay Enterprise solutions such as Magento + eBay Enterprise Omnichannel Solution, Ship-From-Store in 99 days and marketing solutions including creative, search, email, affiliate network, display, retargeting, attribution, database and CRM, retailers now have the technologies to meet their customers’ needs.

*Source: eBay research 2012-13

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This is the second of 3 observation guides based on thereport “The Omnichannel Opportunity”. This Deloitte reportand the other 2 guides can be downloaded here.

For more information, or to discuss the omnichannel opportunity with eBay, please contact your account manager or email us at merchantdevelopmentuk@ebay.com