Sleepless in Seattle
Where American internet entrepreneurs comment.
Seattle has the look of a city under construction. Cranes, building new offices for Amazon,
the Government increases the boulevard to prevent the many floods of the lower town.
Seattle looked beautiful in the first week of October. The research trip by shopping 2020
went looking for trends and innovations by specific companies to visit, to attend shop.org
Summit Congress, Chief among them being much to talk with successful entrepreneurs.
The rescue of Seattle was the arrival of Amazon to the city center. Expedia, Starbucks and
Microsoft all have their head offices outside the city, half an hour drive from the city.
Amazon chose to settle in the city and as a result right away to bring a lot of life in the city.
The rescue for Seattle, without more, suddenly became the city attractive again for live,
work and shop. Maybe this is search for a social platform, a social environment, the
challenge for every entrepreneur?
The feeling
With a mixed feeling at the end of the week it was just picked up. There was not really
anything new. The feeling was that we do not all that bad in the Netherlands. Of course
Americans talk about when we talk about millions, billions, but it's also 20 x larger. A
conversion-calculate how soon learned that the success of America in perspective with it
falls. The many success stories forget that there were many more failures are, yet. There
was a consensus on the trends and structures and that was without worth more worth the
visit. Realised during the week that there is still a lot to happen. There comes a new wave of
innovation, a change that can affect every aspect of our lives, this change is called Alibaba.
In my last newsletter I already ripped off a corner of the veil on Alibaba.
The change
Where last year nobody was talking about Alibaba there was now great uncertainty. What
can happen and what's going to happen? For the first time America was lost on
developments in internet and the direction that makes uncertain. All speakers agreed that
the Chinese are busy internet again to find out. Another view and other structures, which
are extremely successful. Alibaba makes profit with this new course of action and finally
new vision. During each interview was the question: Where you lie awake at night by? It
was, after all, Seattle! It came two aspects: Alibaba and customers (behavior). The central
themes that also control our trip went.
Amazon
Last year, there was suddenly a change of course at Amazon. After a long period of profit
were the blinkers. Investing went for profit. Last september it was announced that there
would be new markets intensively and that there is a strong focus came on fast delivery.
Netherlands also was more or less taken as a country that remember would be, if only
because of the tax incentives. All signals point out there now that Amazon will come within
a few weeks in Netherlands. Meanwhile there is a strong focus on logistics. No longer a long
wait, but "next day delivery" is seen as normal, with a strong need for "same day delivery".
Amazon wants to go to a new market only if it is supported by a good collaboration with
logistics service providers to realize. In England is already 100 million invested in new
warehouses and a fast service. Netherlands also has a tax advantage for Amazon able to
settle here. The impact of Amazon on e-commerce and retail in whole cannot be
underestimated. But Amazon is not threatening to other shopping sites (like Amazon.com),
but internet sales are stimulated by Amazon! Stores have to adapt!
Amazon is threatening to physical stores
Americans talk a lot about Amazon and Jef Bezos, founder and CEO. There is respect but
perhaps also hatred, envy. Amazon has a high completion percentage of staff so that
everyone in Seattle called Amazon as ex employer has on his or her CV. Amazon has
become the norm of disruption; sets the standard, the rest follows. Perhaps that is also
called the merit, paving the way for all e-commerce followers. Because by Amazon is the
acceptance and confidence in the internet great. In the slipstream walk all those other
companies, also in Netherlands. Watch, learn and apply what Amazon is doing and what
successful failed: "lessons learned". Increasingly indicated that Amazon is not so much a
threat to e-commerce companies, quite the contrary. That benefit from the acceptance of ecommerce for their own business. Amazon is threatening to shops. This year, 45,000 stores
closing in America. The principle of optimal focus on customer service and low prices,
proved to be a golden formula is at the cost of high street stores. But also the stores can
benefit from Amazon by joining their market place. Of course there should then be a
Commission paid by an average of 10%, but it's a good driving force to generate cash.
It was totally not talked about the losses from Amazon. Why should it also? The stock price
leaves a resistant growth, the market is still growing with "double digits" and confidence in
e-commerce is great. In addition lead to investment growth. These investments are also
taken, whereby the loss as operating loss a bit has been cost. The vision, that there should
be especially focused on growth was expressed by everyone, only after the growth go focus
on efficiency: cost reduction and profit increase. A "tipping point" where every business
owner is looking for. The tipping point from growth to profit, certain right away the "sale"
ability of the enterprise. Several "serial enterpreneurs" talked about the companies, which
they had set up and had sold after the tipping point was reached. Amer Greaves have a
huge strong focus on money making, that we ask ourselves if they still sober Dutch life.
Examinations indicated (Sham) security
As part of this money making is the need for knowledge and certainty in size. Never before
I heard on a Congress so many figures from surveys. Each figure was used for the own
advantage or as the basis for the chosen strategy and presented as the truth. The
Americans are also not tedious. It was done no further validation of the tests. Most
investigations are of dramatically bad level, where you really can know no value to it. For
instance, there was a (Dutch artist) who showed that the developments of e-commerce in
the various countries. The success of America was almost tranentrekkend. We recognized
us not into these figures, on inquiry appeared to be only the convert of electronics on the
internet, while the internet was presented as a convert. That was situated in the same place
as Denmark Netherlands we also forgive them but then. But each and every conversation
went on to introduce some research.
The study population, the calculations, the underpinning, things did not matter if the
figures but exactly knocked at the presented vision. Yet, despite the lack of validation and
despite further substantiate these investigations were now leading the way and left often
see the same trend. This was valuable. See below for a list of figures.
Physical retail
Not, of course, let the existing retailers by sitting. Stores remain important and leading in
retail, but should be adjusted. In addition to the 45,000 shops that close, including 15% of
the malls their doors. It's getting harder to draw people to centres and shops if no changes
are made. These adjustments exist in America only from technological applications is the
conclusion after spending a week Seattle. Like the selection of the chosen companies, it was
maybe at the chosen theme of the Congress, but technological applications and successes
were predominant in all the contacts, maybe it's also known as typical American, focus on
those issues where they are leading. Despite the large growth of the internet, most
purchases made in the shop continue to take place. Only it will no longer be the classic
stores with a counter and sales personnel. The integration of technology will provide less
and less staff store inventory, but more integration of technology. Examples were on
display at the shop Hointer where the leading smartphone is in the buying process, also in
the fitting room. Self search for the right size and the right accessories, while going through
the store runs or in the fitting room are. The chosen garments come via a hatch. The owner
tries to copy this Amazon, but now in a physical store. (She too was ex-employee from
Amazon).
Microsoft showed a retail experience with interactive mirrors, with smartphone support,
with beacons, which customers can immediately recognize and allowing you to advise with
the smartphone. Many new applications, which certainly increase the shopping experience,
but also the efficiency by the lower costs and to increase the sales incentive. Through all of
these applications can be integrated the typical advantages of internet, such as suggestions,
associations and further sale support with information and video. But still, the new store is
no techno-shop, the selling staff is there for advice and support: actually a combination of
the best of both worlds.
Alibaba
But always there was the talking point of this trip, the impact of or the Chinese Alibaba
Web shops in particular. The comment that China is going to invent again the application of
internet and restructuring also puts the Americans thinking. Of course disruption is also
difficult in America, that initially showed Amazon though, and now so Alibaba. Why all the
separate websites, so that search engines to bring order and structure to come again? Why
should the customer picture with all the problems and irritations that this entails. Search
for information, comparison, best buy addresses, payment facilities and all choices for pizza
home delivery. Tricky, complicated and unnecessary according to Alibaba. Line this just in
an integral platform and you have a "one stop does all" facility. Just on one site (Alibaba)
look, choose, compare, buy and pay for it. Alibaba controls everything, but does not
produce itself. Alibaba combines all the providers that the buyer needs. Alibaba facilitates
only and is therefore a "connector" pure sang.
Last year wasone of our conclusions is that there is a future for connectors (which connect)
and aggregators which connect based on themes and needs and add value. The conclusion
that more and more large companies with this vision of investing in new concepts was
clear to us at Google and Ebay. Ebay now and Google product search were examples of how
independent companies and Web shops were linked to the platform of these companies.
The orders were directly linked to local shops so that 1 hour delivery possible became
(through a local store). The enthusiasm sparked by the successful experiments in various
cities in America. Now a year later are the only successful experiments still is rolling out a
lot slower than when it was thought. The complexity of cooperation with local shops and
local service providers, within the context of 1 hour delivery, is still tricky proven.
Sleepless in Seattle
Only Amazon (again) seems to be successfully made a further expansion of units and a
strong control on logistics. This also explains in part the success of Amazonfresh, fresh
articles via refrigerated freight cars; can be delivered quickly. Of course, apply the
American circumstances, many frozen, few greengrocers and a different pattern of
consumption. But still, connectors and aggregators have a future because consumers no
longer have to search the Web, the work is already done for him or her. Last year we could
not predict that there is suddenly a new player would come, that this does successfully in
China for 15 years. Not a webshop running, but running a platform in which all Web shops
and suppliers can join. A Commission between 8% and 12% is a good business model for
everyone. In addition, the unprecedented domestic and unprecedented opportunities to
produce at low cost: a giant is born. For the first time attacked the Americans on their
home country and that's troublesome. Many providers also spoke about the opportunities
that China offers for their companies, even passing to the fact that many companies already
had their teeth piece prayers on Chinese culture and regulatory environment. They also
ignore the potential possibilities of Alibaba in America.
That is where Jeff Bezos awake now by: Sleepless in Seattle
On the offices should not be spoken on Alibaba, investments with unprecedented power
intensified and there is a lot of pressure on innovation in any form; Logistics first. The rest
of America is watching this fight is going to survive, pending how Amazon Jeff Bezos as
Savior of e-commerce in America?
Conclusion
Perhaps we have heard nothing new during this trip, but many trends are confirmed:
1. Mobile applications are essential to survive and to have contact with customers.
2. Mobile is the new platform! The new competition comes from platforms,
marketplaces, theme and Association driven. This is a "reinvention" of the
internet. China is leading in, US runs far behind on this development.
3. Make profits should again, but investing must: first market growth than profit!
4. There was totally no longer talked about Facebook, but rather about the impact of
social media and the impact on buying habits.
5. Shops continue to dominate in the future, but need to adjust very quickly by
investing in technology, new services and mobile applications.
6. Should the cost of shops down ! The number of visitors takes off quickly, the goal
of the visit changes (showrooming) but still the receipt amounts rise
strong.
All in all an inspiring journey with many answers, a new vision on the internet and a new
perspective of opportunities for Web shops, internet service providers and physical
retailers.
Sleepless after Seattle!
Comments about Amazon and Alibaba
Amazon
-All focus on customers and processes
-Fully data driven
-Strong focus on innovation
-Work in small teams
-Everything in "real time experience",
no batch
-Strong development in additional
services such as Web services
-Customer Growth, experience and low
cost/price proposition
-Strong mobile strategy as flywheel
Focus: fall to the existing world with a
better proposition
-Cooperation with providers by
providing a platform.
-Strong focus on Christmas sales
Impact especially on physical stores
Alibaba
-All focus on connections
-Focus on needs and possibilities offer
Chinese customers (small providers)
-Integrated platform
-No own stocks
-Close cooperation with providers by
connecting (connector)
-Integration of social media and payment
facilities.
-Instant live support during buying process
-Different platforms for different users
(BtoC and BtoB)
-11 november (single day) busiest day on
internet in the world!
Impact especially on Web shops
Figures quoted from "investigations"
Amazon
Alibaba
Development
40% of all business (ship and sold) goes through affiliated
providers
Growth in US and international 18% 24% per year
74 billion turnover: 29% 14% 5% international, technology
services, advertising
Sell through T-mall 300 billion
100 million buyers per day
40% of online Chinese also buy online
36% of the retail sales are influenced by social media grows to
52% in 2018
growth bricks & clicks 25% pj
Growth online only retailers 17% pj
be loaded per minute 41.667 photos on instagram
Online revenue in 2018 414 billion worldwide
Alibaba, eBay and Amazon are good for 90% of the internet
business
90% of sales through a market place in China place
Sell: mobile en 16%, United States 19% 38% 37%, Africa, Asia,
world-wide 25% (last year 14%)
40% of online Chinese also buy online, US 85%,
UK 80%
60% of the emails are opened on a mobile device
49% of the shop sales are influenced by online (especially
technology and toys)
16% uses a pick up in the store as this is offered
25% does this sometimes
31% of sales of Toys "R" us is omnichannel
A smartphone is on average 150 times per day
Physical retail
Stores will always remain dominant in sales despite high
growth e-commerce
The future is in hybrid shops, integral application of internet in
stores and when shopping.
Closer cooperation between supplier, retailer and customer
Market places offer many opportunities for retailers (click and
collect)
Shop visit is between 2010 and 2013 halved, but store sales
increased by 13% (online 57%)
Amount per shop visit increased from $ 17 to $ 42 now:
So more aware visit!
Shop more often source of information (5% visitors in 2010,
2013 12%)
Dynamic pricing 12% in 2010, 2013 50%
Embrace price comparison, but show added value
A Zara customer visits the store average 12 x per year
Return on invested capital (ROIC) rising sharply as the stores
are more digital: look, see, touch, but order online (in the store)
and let the articles delivered.
Facebook does not cause more visits to the website.
75% of expenditure in Retail happens near
14% of internet sales is done in a shop
54% of the visitors in the shop wants to use an interactive
mirror
Some notable statements
Amazon is obsessive about customers and customer experience
What is the flywheel of your company?
Retailers are good in vendor contracts and have to grow new capabilities
Your margin is our challenge (Amazon)
CEO do not understand completely different markets or market changes
Take the complete customer journey as your brand not only the product
The art of marketing is lost online
Retailers need a single technology platform for physical and online (virtual) shopping
Experience online will drive the sales in the future
Alibaba will disrupt Amazon
Amazon will attack shops not webshops
Alibaba will attack webshops
Never be afraid to fail
Online shoppers because selection, value, convenience and confidence
Look for a "lightbulb" moment
Mobile is driving change
First there were websites, than search engines, now search engines (marketplaces) then
websites
Marketplaces are not necessarily the model for US like in China or Japan.
Embrace price comparison but show added value
Technology will change the expectation or consumers
The present retail model is just moving goods around the world
The era of the rise of the individual: social media and mobile
Physical stores have to change quickly to stay in business
Retail is storytelling
Invent your own future by copying Amazon
Always be afraid of new innovations and disruptions!
That should keep you awake at night: also in Seattle!