In case you missed Catalyst Europe 2017, ChannelAdvisor’s CEO David Spitz opened the event with an eye-opening keynote that included a few retail lessons and predictions for the year ahead. Here are five major takeaways from his session.
E-Commerce has not finished changing
The e-commerce landscape has changed dramatically in the last few years. Only a decade ago, who would have believed that shopping would be about phones, drones and Echos? But there’s still so much to come, with a lot of this change comes from the marketplace giant Amazon. 95 percent of the questions David Spitz gets are about Amazon — and for good reason. Retailers must look at what Amazon is doing, and continuously find new ways to keep pace. David’s keynote looked at how ChannelAdvisor can help retailers get connected.
Keep up with regional trends and stats
E-commerce has continued to grow and gain share around the world, from the UK to China, India, US, Brazil and Russia. Latest estimates from eMarketer put e-commerce at a $1.9 trillion industry in 2016. And eMarketer also predicts it will grow to $4 trillion by 2020. A good reason to keep up with trends!
The UK IMRG estimates that UK e-commerce sales were roughly £133 billion in 2016, up around 16% year-on-year. eMarketer Retail estimates German e-commerce sales were 67 billion euros in 2016, growing 12%. So what does it all mean? It means the trend of worldwide e-commerce growth as a share of overall retail spend has continued unabated.
And rest assured, there’s plenty of room in the UK for growth. eMarketer reports the e-commerce share of overall retail sales in the UK was 14% in 2016, up 1% from 2015. As e-commerce becomes more convenient for consumers, this trend will only increase.
Who is growing the fastest? Asia. Although Western Europe is doing well, Asian countries account for the vast majority of e-commerce sales. eMarketer anticipates China will be the first country to hit $1 trillion in e-commerce sales this year. And Venture Beat predicts India will grow more than 30% compounded over the next few years — offering big growth opportunities.
E-Commerce retailers: Keep an eye on China
In China, Forbes puts Alibaba at 80% of the Chinese market, with 400 million users. Alibaba drives over half a trillion dollars in gross merchandise sales. To give you an idea of its vast scale, Alibaba is three times the size of all UK e-commerce, much bigger than Amazon and eBay combined. Alibaba estimates mobile currently represents 65% of gross merchandise volume (GMV) in China, with two-thirds of e-commerce happening on a smartphone.
Alibaba recently bought Lazada, a marketplace in Southeast Asia, to expand their mobile strategy. The US beat records in 2016 with a $1 billion mobile day on Cyber Monday as reported by MarketWatch, but Singles Day in China achieved fifteen times that number according to Bloomberg!
Why is Amazon so good?
According to Slice Intelligence Amazon accounted for 53% of all e-commerce growth in the US during 2016 — and we think it could drive the majority of all growth moving forward.
The majority of product searches now start on Amazon, growing from 44% to 55% last year per Recode data. This is a leading indicator for retailers and a remarkable gain. An essential lesson for retailers lies within Amazon’s success: With Amazon, the customer is always right. The marketplace giant is a customer-centric business and focuses not on profit, market share or competition — but on the consumer. Amazon knows customers want great prices, convenience and selection and is happy to struggle to provide that for them. So keep up with the pace: Amazon will probably only increase ease of transactions and speedy delivery in the future, so raise the bar and team up with Amazon to compete, using options like Prime membership.
Third Party vs. First Party
Amazon’s third-party (3P) marketplace drives millions of SKUs. Competition means prices approach marginal costs of production, and third party sellers have to be aggressive on price. For the first time, we’ve seen shifting demand from third party to first party on Amazon. And now Marketplace Pulse estimates 25% of product unit volume sold in Europe is from Chinese sellers. This shows Amazon is trying to connect East and West.
With Amazon leasing cargo planes, managing ocean freight, owning patents on semi-trailers and of course using drones, the return is now seen on customer satisfaction and not on capital. This is a huge verticalization process — with the supply chain and importing industry pressured to keep up – as digital is deeply disrupting the e-commerce space.
The revolution taking place in logistics, which includes increasing manufacturer-to-consumer activity, simply reflects the continuous changes in e-commerce. Do you have a logistics plan for the future of your business?
Read more about our recap of Catalyst Europe 2017 here.