Top 5 Alternatives to Google Analytics, for Ecommerce

Say you’re running an online store. Chances are you are using or plan on using Google Analytics. It’s free, it’s popular and there are tons of info out there to help you get started and optimize your sales stream.

But there are downsides too. First one – Google already knows a lot about you and your customers. You might want to keep some things discreet, right?

Second – Google Analytics is an one-size-fits-all type of product. Sure, it has plenty of features but chances are you’re likely to get lost in some of those features. Even if you don’t get lost, you’re likely to spend a lot of time digging through somewhat useless data, while at the same time, missing out on very important bits of information.

Third – real time reporting is pretty limited, if you’re running the free version. Once you get over 10 million views you’ll have to switch to the paid version, costing you north of $150 000. But then you can also try some more advanced reporting tools.

Of course, there are plenty of traffic analytics tools out there. Some have really great interfaces and features. But as an online shop owner or manager, you have to look at what works best for your store. Have a look below:

1. Mixpanel

Mixpanel Funels

Mixpanel Funnels

Mixpanel is great choice for small and mid-sized business that sell. Whether we’re talking about an online retailer, a hotel selling reservations or an iPhone game developer selling game upgrades - it is a great tool.

Even the way Mixpanel tracks actions and charges users is a great fit for online retailers. Ecommerce sites don’t really need too much intel on page views. What really matter are actions – the number of times sometimes has clicked the “buy” button, the number of times users download a brochure or the number of Google Ad visitors that turn into customers.

Mixpanel calls these actions data points, and this is a great news for startups and mid-sized businesses.

It’s tailored around five basic functions:

  1. Segmentation – allows for better understanding of user behavior and splits user groups according to actions.
  2. Funnels – you might be familiar with funnels from GA. But once you get to know Mixpanel’s take on the funnels, it seems that something has dramatically changed. Funnels can be added on the fly and viewed retroactively, easily.
  3. Retention – it’s not just how much you sell, but also – who keeps coming back.
  4. People – unlike GA’s confusing take on users, Mixpanel builds profiles ecommerce store owners can understand. The system collects data that can be browsed individually or segmented. One great feature is the notifications option, where you can mail, send SMS or push notifications to users, based on automated or manually segmented profiles.
  5. Notifications – mentioned above, it is a great tool that improves the analytics platform, allowing you to also communicate directly to consumers.

Pricing

Pricing is free for less than 25 000 data points and it can go up to $2000 / month, for companies with more than 20 million data points.

 

2. GoSquared

The redesigned GoSquared app

The redesigned GoSquared app

GoSquared is a great piece of engineering and with its redesigned interface – easy to use. It serves over 40k businesses and it has a special area developed strictly for ecommerce owners.

When it comes to ecommerce, GoSquared packs a lot of power in a simple interface. Just like most other applications on this list, it puts a strong emphasis on the targeting users as potential customers and tracking their actions and behavior.

The Metrics work toward providing clear insights on how revenue is doing. The analytics tool provides info on social media influence on sales and data on best performing products.

One really useful set of tools is what GoSquared calls Predictive Analytics. Previously discussed on Netonomy.NET, predictive analytics can mix past and present data to determine possible outcomes in the future. It can be used to predict traffic, sales or best selling products, to name a few.

GoSquared also mentions their ability to send Differentiated Reports, based on specific team member’s needs. One for the CEO, one for the marketing team, one for the … well, you get the idea.

But if there is something that really sets GoSquared apart – this is the Developer API. Using this, developers can build truly dynamic online stores, that respond to customer behavior and profile. From info on previous purchases, location, language and others, online stores can be set to respond to specific customer needs.

Pricing

Pricing can be configured here and starts at $32 / mo for 100k pageviews and 100 transactions. It can go north of $640 / mo for more than 10 million pageviews and more than 10k transactions. You can test the application in a 14 days trial.

 

3. FoxMetrics

analytics-foxmetrics

Foxmetrics has some nifty features when it comes to ecommerce and online retail related options. It is light and easy to set up, it works on both web and the mobile and it is focused on helping you increase conversions.

Although Foxmetrics is not 100% focused on ecommerce related (they also provide support for online publishers), it does have some great features you can use:

  1. People – using this section you can understand customers and their actions and can sync this data into company CRM software;
  2. Ecommerce – Foxmetrics provides support for useful KPI’s and advanced reporting dashboards. Using customer data, it can build  product relationships, shopping cart reports and can respond with automated actions;
  3. Subscription is an useful tool for companies working with periodic purchases. The product can report user data, conversion and churn rate, as well as detailed info on separate plans;
  4. The Marketing and Triggers options allow for personalized marketing and response, based on referral and user actions.

Pricing

Although Foxmetrics does not provide a free option, it does provide a 14 day trial to test the features. Plans range from $50 to $120 per month and beyond, for enterprise users. However, as an ecommerce user, you’ll be stuck with the $120 plan.

 

4. Woopra

analytics-woopra

Woopra  is a great way to understand your customer and their history browsing your store. You’ll be able to get behavioral insights from customers, run advanced or preset analytics reports.

By tapping into Woopra’s Funnel reporting section you can discover bottlenecks in the conversion path.

The product also promises a good segmentation on best performing customer groups and even build segments based on funnels.

Pricing

The pricing starts with a free version that allows 30 000 actions (similar to Mixpanel’s data points). The small business plans range between $79.95 and $1199.95/mo.

 

5. KISSMetrics

analytics-kissmetrics

KISSmetrics follows a simple assumption: you must get to know your users … ahem … customers. That and the fact you should pay attention to their brand name.

The promise KISSmetrics makes is that all your data will be connected to real people, with real actions. Once setup, you can see where people are, what and why they buy your products and in some unfortunate cases, why they don’t.

Features include funnels, cohorts (groups with similar interests), revenue in real time and the metrics you’re familiar from GA. The things that really set the product apart is the data export feature for further analysis and its A/B testing options, both a great fit for customer profiling.

Pricing

Pricing for the KISSmetrics product starts at $150/mo for up to 500 000 events and goes up to $500/mo, when your webstore reaches more than 1 million events. Once you pass the upper threshold, just like all others, you get to negotiate your pricing.

 

Wayfair.com files for $350 million IPO after 49.8% growth

Wayfair announces what is expected to be one of the most important market moves in the US online retail landscape: its IPO. The company previously raised $157 million this year, valuating it at $2 billion.

The online home-furnishing retailer has shown consistent growth in revenue throughout 2013, as well as the first half of 2014. Total revenue for 2013 was $915.8 million (52.4% increase from 2012). This fast-paced growth was maintained in 2014, as revenues reached $574.1 million, up 49,8% from the same period last year.

wayfair

The company was founded by Niraj Shah (CEO) and Steven Conine (CTO), in 2002. It was first headquartered in Conine’s home and was then named CSN Stores LLC. The company grew to operate around 240 individual ecommerce sites, such as bedroomfurniture.com or racksandstands.com (first one online).

Wayfair reached $100 million in revenue in 2006 for the first time, after adding more and more product categories to its catalogue. It now features products for home deco, institutional, furniture and many more. It has more than 7 million products listed and over 2.6 million customers in the first half of 2014 (75% increase from last year).

In 2011, most of the niche webstores were consolidated in Wayfair.com. The company changed its name to Wayfair LLC and continued its aggressive expansion. It is now the largest online-only retailer for home, and number 45 in the largest US online retailer’s list.

Although the company consolidated its brand on the Wayfair platform, it does operate other subsidiaries under different brands. Joss and Main is a flash sales store for home, Dwell Studio features upscale home furnishings and AllModern sells affordable design items.

The largest company shareholders are founders Niraj Shah and Steven Conine, who own 57.8% of the company. Next notable shareholder is private equity company Great Hill Partners (11.4%).

This upcoming  IPO was greatly expected yet slightly overshadowed by AliBaba upcoming IPO in the States.

It is worth mentioning that, despite increasing revenue, the company booked a $15.5 million loss in 2013.

Interview: Thoughts on The Future of Retail

Jochen Wiechen, Intershop CTO

Jochen Wiechen, Intershop CTO

A very select group of companies lead the way when it comes to omnichannel retail solutions. Intershop is one of these companies. Having unveiled its first online shop in 1994, it’s also one of the most experienced and innovative. Now more than 500 mid-sized and large companies benefit from its solutions. Among these you can find Hewlett-Packard, BMW, Bosch, Otto, Deutsche Telekom, and Mexx.

We’ve reached out to mr. Jochen Wiechen, Intershop’s CTO, for a few thoughts on the future of retail. Previously a VP of ERP powerhouse SAP, mr. Wiechen holds a PhD in Physics and has a very interesting view on the future of retail.

 

Netonomy.NET: What are the biggest changes in retail you have noticed in the past 5 years?

Jochen Wiechen: Clearly online is the main disruptive technology that has fundamentally reshaped the entire industry, not only retail by the way. Ubiquitous bandwidth availability, multi-media developments and mobile technologies allow for completely new business models and customer experiences.

The customer journey nowadays starts in the Internet, around the clock and everywhere. Sophisticated online marketing activities trigger more and more personalized buying processes that start with extensive research and lead to process innovations such as click and reserve or collect.

Rising online stars such as Amazon, Zalando and Alibaba grow extremely fast and challenge classical retailers who simply cannot ignore these developments and start embracing those concepts by embodying online into their cross-channel concepts. The winners in this game will be the ones who understand the changing customer profiles and associated behaviors as well as the potential of integrating online into an optimized omni-channel system instead of shying away and sticking to the old offline world.

 

N.: Which retailers do you believe are leading the change in global retail?

J.W.: Out of the blue Amazon has developed to the leading global online pure play as well as a relevant player in the retail industry. By consequently embracing the online concept into their channel strategy Walmart is currently showing an even faster growth rate of their online channel than Amazon and is a perfect example of a winner in the overall online transformation. Other relevant players in this game are Nordstrom, John Lewis or House of Fraser, for example.

 

N.:Do you expect Chinese retailers to increase their market share globally? Do you believe Alibaba Group’s expected IPO in the US is a step in that direction?

J.W.: Alibaba is projected to pass by Walmart in overall sales this year, the latter being the largest retailer worldwide. In the US alone, Alibaba is expected to grow 30% this year and although its development in Europe is still in its infancy, also here surprises will have to be expected.

 

N.:How important is technology in addressing the consumer needs now and in the future?

J.W.:As stated above, nowadays most customers start their journeys in the Internet which is a profound change compared to classical retail. Already at this stage they are able to browse for any categories and products from anywhere at any time with any device, to compare prices, select within huge collections, take advantage of intelligent recommendations and potentially use fitting engines before they buy either online or in the store where they might collect the selected product.

In order to provide large target groups with these services a highly complex, highly scalable, and highly available IT-infrastructure is a prerequisite. Viewed from the other way around, technology is simply key in the paradigm shift that is currently taking place in the retail industry.

“[...]technology is simply key in the paradigm shift that is currently taking place in the retail industry.”

 

N.:Which technologies do you believe are shaping the future of retail?

J.W.:Based on the speed of the disruptiveness that the combination of high Internet bandwidth availability and the development of multi-media capabilities on a plethora of end-user devices has caused in the retail industry it is expected that the evolution of further technologies will continue to reshape the industry.

While Big Data has already gained substantial market share in order to analyze and predict consumer behavior we also see a rapidly growing demand for indoor proximity systems in order to support omni-channel transformations. In general, we agree with analysts that the Internet of Things is the next big thing in not only this industry. Devices, gadgets and sensors of all sorts interact amongst each other as well as with human beings in order to reach a new level of communications and interactions. The winners in the upcoming retail industry battle will be the ones who take advantage of this technology development that will lead to today possibly unimaginable customer journey innovations.

 

N.:How will mobile devices impact retailers and shape consumer behavior?

J.W.:On the one hand, mobile devices allow for ubiquitous browsing and shopping which removes any local stickiness of the consumer, who can even choose the best offer while walking through a mall. Recent search engine analytics reveal astonishing portions of regional references in search requests.

On the other hand, this is an opportunity for retailers thereby taking advantage of location-based services by sending ads or promotions to consumers walking by a store, in which a sales person might then use a mobile shop assistant app in order to lure the customer into a well-educated sales pitch that is not only consisting of more or less good guesses based on gut feelings or superficial conversations that help shying away the customer.

N.:Will 3D printing technologies be used in improving tomorrow’s supply chain?

Amazon's 3D Printing Store points to new developments in retailing.

Amazon’s 3D Printing Store points to new developments in retailing.

J.W.:While the usage of the technology on the consumer side is still in its infancy, Amazon just recently already opened a shop for products coming out of 3D printers and has again proven its leading role in the industry. It is hard to say how far the technology will be able to be pushed in terms of product complexity which then will determine the extent to which it will be used in supply chains.

N.:What are the next steps in Intershop’s evolution, in terms of innovation?

J.W.:Based on a research project we have been carrying out together with local Universities we are currently rolling out a commerce simulation engine (SIMCOMMERCE) that falls into the category Predictive Analytics and that allows for outstanding optimization capabilities for commerce operators.

Apart from that, we are closely working together with our customers and partners to explore various process innovations by integrating new technologies, devices and gadgets with our platform. With our SEED initiative, with which we scan the market for commerce-relevant leading edge technologies that we can incorporate into our offering we are looking for ways to help our customers to substantially improve their traffic, conversion rates as well as sales and delivery processes. We agree with leading analysts that the Internet of Things will play a dominant role in those developments.

Book Review: On China, by Henry Kissinger

How do you describe China? How could one understand a land with historic roots that spawn for almost 4000 years? No easy task, that’s for sure.

Henry Kissinger, the statesman credited for opening the US ties to Communist China in 1971, tries to do just that in its book “On China”.

On China, Henry Kissinger

On China, Henry Kissinger

The book is a framework for anyone willing to dive in the complex culture that China has carried throughout the ages. It is a vast exposition on what makes China so enduring and so different from the type of empire we have come to know in the west.

The reason “On China” is reviewed here, a blog on the future of retail, goes beyond the obvious (manufacturing). By reading Kissinger’s masterpiece, we will get a glimpse into the future, through the lens of the past. We can see China is not a rising power. It is a returning power. It is a land that fostered the strongest economy in the world through 18 out of the previous 20 centuries.

China predated the Roman Empire. It survived it and lived on to be reached by the British Empire. It survived this one as well and now it survives another one. The fact that its economy keeps rising and rising, its retailers take the world by storm and the country has moved beyond its Mao Zedong legacy shows the quiet force this country packs.

The Wei Qi principle

Henry Kissinger proposes the Wei-Qi game as a start point to understanding China. As opposed to the oldest western strategy game, Chess, Wei Qi has some key differences.

First of all – there are a lot more pieces that have to be used in the game. The pieces are all equally valued. As opposed to chess, the Wei Qi pieces are all just as valuable. There are no knights, no bishops, no king and no queen. All pieces are equally important and equally effective.

The point is not to find the pivotal action to winning the game. The point is to avoid being surrounded. Throughout China’s troubled history, generals have discovered how costly defeats are, when the enemy surrounds the troops. The war strategy has shifted from direct engagement to battles that are won before they are even fought, through good preparation, as the mythical Sun Tzu general would have noted.

These simple yet powerful differences and others such, have shaped China’s destiny throughout the centuries. Western history barely mentions the Chinese Empire, yet the court viewed itself as ruler of all that is “Under the Heavens”. The Chinese Empire rarely fought outside its borders (viewing such act as a crime). It nevertheless encountered its fare share of troubles with barbarians outside its borders, constantly being attacked. Unlike its western counterparts, it used diplomacy, rather than force to subdue weaker civilizations. The court was well taught by centuries of rich history on how to negotiate alliances, resisting attacks, integrating barbarians or even using politics to break alliances between its closest enemies. Sometimes using the enemies farther away to control those closest to the empire.

The fall of the empire

Throughout the centuries diplomacy and politic skill has been enough to keep the “barbarians” at bay. Eventually, even the Celestial Empire had to run out of luck. In the beginning of the 18th century, Western colonial powers, as well as Russia, were knocking on the gates of the Empire, trying to develop a commerce relationship. Russia, being closer and in a position to threaten China, was the first country, Kissinger notes, to be allowed to have a de facto embassy. The embassy was in fact an orthodox mission but it was a lot more than the British Empire had.

The British, as well as other colonial powers, were barely allowed a presence within the empire. Commerce was carefully regulated and restricted. In time, as diplomacy failed to get results, the British decided to use force. As China previously refused to get  western military technology, it was quickly overwhelmed by better trained soldiers, using more advanced weaponry. The “Barbarians” forced their way towards the capitol, eventually being stopped by Russia’s diplomats who negotiated a temporarily redraw. But this help from the friendly Russians was costly. China agreed to a humiliating act that would offer vast territories to Russia, in exchange for its help.

This humiliating treaties, rising internal instability, and the enemies at the gates eventually lead the empire to crumble. In 1912, the last Emperor abdicated, and China became a republic.

It wasn’t for the better, as China was virtually ungoverned. Henry Kissinger lists intervention by the United States to help the forming republic, supporting the existing nationalist government. But it was not this government that eventually won the power. It was a new leader, a communist leader: Mao Zedong.

The Communist China

Kissinger lists Mao’s rise with a reverence that may seem unnatural at times. After all – Mao is seen less like an enlightened leader in the western world, and more like a power hungry criminal that lead its country, as well as the party close to imminent self destruction. Whether it is diplomatic courtesy (you have to expect reverence from a high level US statesman) or genuine interest, if not admiration – Kissinger is clearly inclined to describe Mao as a Chinese savior. Whether it is the fact that he reunited China, or that China survived the Soviet Union’s threat, Henry Kissinger sees Mao as an important geopolitical player.

Mao defied and somehow survived both the US and the Soviet Union. Unlike the weakened European countries, Mao repeatedly declared his country was not afraid of the Nuclear Threat. No one will know if he was just bluffing to resist on the world stage, or he was actually not caring if 300 million Chinese would die in a Nuclear war. The “Great Leap Forward” and the “Cultural Revolution” would later point into the second direction.

The farthest enemy

Although Mao listed Confucianism and “the old ways” as obsolete and not to be used, he did resort to one of these tactics when the Soviet Union deployed 1 million soldiers at the Chinese-Soviet border. The soldiers were not much of a problem, but the nukes were. China and USSR were no longer comrades, and the Soviet Union was likely planning a preemptive nuclear attack. Mao decided to apply the old strategy of using the enemies from afar against those closer.

In 1971 Henry Kissinger lists its meeting with both Mao Zedong and Zhou Enlai. At the time, Zhou Enlai was the prime minister for over 22 years and he left a deep impression on the US statesman: “In 60 years of public life, I have never met a person more fascinating than Zhou Enlai“. This meeting extended in the next year with a visit from Richard Nixon and it was the the start in a long relationship between the two states.  It was also the visit that probably stopped a nuclear attack on China.

Mr. Enlai was eventually replaced and Mao left its position, leading the way for a new leadership. It was this new leader, Deng Xiaoping, that turned China from a starving, barely educated country, bathing in Mao’s shadow, to a growing economic power.

His work was later continued by Jiang Zemin, that encouraged education, technology developments and eventually helped China join the WTO in 2001.

Since 2001, just 13 years ago, China became a leading manufacturer, the sourcing choice for retailers worldwide, to a dominant power that now exports not only products, but rather leading businesses.

Henry Kissinger ends the book by reminding the reader of the Crowe Memorandum,  an analysis of pre-WWI Germany and the causes that lead to war. Though he envisions a future where the Pacific Powers (US and China) can collaborate in peace, he does pose the question of whether such a future is possible. The last paragraph cites Zhou Enlai, at the first meeting in 1971, when the Chinese PM mentioned their meeting will “shake the world”. The big question, for this new century, mr Kissinger asks, is could China and the US build the world, rather than shake it?

 

Beyond the Store: Drop-shops and Pop-up Stores

There is ongoing change in the retail landscape. Both offline and online retailers now migrate towards hybrid solutions. Just as brick and mortar retailers have shifted towards online retailing, so did online pure-plays started engaging customers offline.

Retailers now need to combine the in-store pick-up options (which most online pure plays don’t have), an offline presence for information and branding purposes, as well as a way of pushing best-sellers into the market. At the lowest cost possible.

Bellow you’ll find two of the most promising directions, especially for online-first retailers:

The Drop-Shop

Not to be confused with the term “drop shipping”, the drop shop is an offline facility that handles first and foremost package pick-up from customers. Such a need arises when customers do not want to subjected to shipping schedule but rather decide when and where to pick up ordered products. When dealing with such customer requests, offline-first retailers have the upper hand, as the existing store network provides support for customer pick-up options.

Slowly moving into the brick and mortar territory, online retailers discover innovative ways to handle customer offline interaction. One such example is the Amazon Locker. Its function is to allow customers to order  products online and then pick-up the package from a near-by Locker.

Amazon Locker

Amazon Locker

As seen above, most Amazon Lockers are not exactly located in the most glamorous locations (here pictured near the lady’s room) but it does the job.

Customers could select the closest Amazon Locker, had their orders delivered there and then receive an email announcing the order is now available. To pick up orders, clients can either enter the pickup code in the central-unit computer or scan the mailed barcode.

So far Amazon tried its luck with the likes of Staples (second largest online retailer in the US),  Radioshack and 7-Eleven. The promise to these companies was that Amazon has many customers and those that will want to pick up their packages from the Amazon Locker will probably buy something else from the store. The practice was not exactly successful as both Staples and Radioshack eventually dropped the project.

However, Amazon and the likes will probably not stop here, to increase sales they need to provide the customer with an way to experience product, as well as return and buy other products from their B&M operations. So far they didn’t need to, as others catered to the showrooming need. Soon enough, however, retailers able to price match will either become serious competitors and improve their online operations and then online retailers will have to battle on unknown land.

The drop shop will be a type of small to medium shop, probably affiliated with larger retail operations, providing customers for:

  • package pick-up
  • merchandise experience and testing
  • returns and customer service

The pop-up store

The concept behind the pop-up store is a temporary location that exists for a short term, to provide marketing exposure or sell limited inventory items. It is not something that online retailers brought to the market but there are a lot using it right now.

Fleur de Mal online retailer uses Pop-Up Shops to engage customers in real life.

Fleur de Mal online retailer uses Pop-Up Shops to engage customers in real life.

Online stores that don’t operate B&M operations found the pop-up store an useful way to attract attention. It’s also a great way to provide sales outlets to customers during high sales periods, such as the holidays.

New brands, focused on retail online increasingly find that using pop-up stores is a great way to attract new customers. These customer acquisition tactic allows potential buyers to experience the brand, as well as its products.

For online retailer Fleur de Mal, setting up pop-up shops has been a great way to appeal to their fashion savvy target customers. Company representatives use pop-up shops to showcase their organic fiber fashion items to potential consumers throughout the US.

BAUBLEBAR, a fresh and innovative ecommerce startup focused on jewelry has seen brand recognition increase as soon as they started opening pop-up shops. Katherin Hill, director of offline at BAUBLEBAR outlined the main incentive to open a pop-up shop: We see about half of the people who walk in to our pop-up shops have never heard of our brand before” [Source].

There are, however, several obstacles that need to be overcome, such as offline channel connectivity to the central server, as well as store design. The biggest challenge is to find the right spot to place the pop-up shops. As most online pure plays have a hard time navigating and understanding the complex offline retail rent environment, a new startup decided to step in and help small and medium retailers find the right store spot.

Storefront is a company connecting landlords to retailers. It works as a marketplace between the two types of users. As pop-up shop demand has been on the rise, the company launched a Pop-Up Shop blog and an eBook detailing the inner workings of setting up a pop-up shop.

Both the drop shop and the pop-up shop are hybrid solutions that point to the fact that online retailers feel the need to set foot in offline retail. The pressure to reach omnichannel retailing efficiency is, thus, equally felt by offline, as well as online pure plays.

This post is an excerpt from “Understanding Omnichannel Retail – A Detailed Report”.

 

 

 

Amazon Turns 20. An Illustrated History.

Amazon turns 20 this month. Founded in July 1994 by Jeff Bezos, it has now grown into the largest online retailer.

As a sign of their appreciation, the folks at DPFOC, an online marketing company, created the infographic below. The company has also created an interactive timeline, showing the most important milestones in Amazon’s 20 year history. You can enjoy it here.

Amazon turns 20. Company history infographic

Amazon turns 20. Company history infographic

“Don’t Get Surrounded” – China’s Strategy Against US Online Retail

Chess is the oldest and most popular strategy game in the west. It’s main object is gaining superiority through a decisive move against the opponent. The chess player looks for a decisive action that can lead to victory, in as few moves as possible.

Wei Qi game. Source

Wei Qi game. Source

Unlike their western counterparts, asian states have developed their military strategy around a different philosophy. Wei Qi, or the game of Go (as referred to in Japan) is the traditional game in China. Players use 180 pieces, each having the same value, to build fortifications and capture enemy positions. Unlike chess, the players don’t have a clear view of the competitor’s strategy, as the pieces are continually laid down. Matches are hardly seen as win or loose and the score can be overturned during the match, multiple times.

While chess players look for decisive actions, Wei Qi players use continuos movement to avoid being surrounded. The game, just like its western equivalent, is based on centuries of difficult wars. Due to China’s long and troubled history, its strategic approach has become less about direct confrontation and more about avoiding defeat and gaining relative advantage toward the opponent.

Western countries are playing the wrong game

Henry Kissinger expressed his view that Wei Qi is the path to understanding China’s strategy. In his book “On China” he starts describing Chinese policies through this ancient game. Although Kissinger’s metaphor is aimed at politics and military actions, it can just as well be applied to economics and for that matter, online retail.

When Ebay tried to access the Chinese market in 2004, Jack Ma, the founder of AliBaba Group, has sensed that this move may be detrimental to his own company, then providing internet marketing options to small and medium companies in China. He felt that although Ebay addressed the individual sellers, there was no clear distinction between individual businesses and small/medium companies in China.

Ebay had just laid the first stone on Jack Ma’s Wei Qi board. He decided he had to escape this potentially dangerous situation and launched Taobao, a company directly competing Ebay in China. The companies fought valiantly, with eBay trying to form partnerships against Alibaba and Taobao and investing $100 million in its Ebay EachNet operations.

While Ebay was buying all ad spaces it could find online, in a search for the decisive move, AliBaba bought TV and radio ad space, knowing the Chinese consumers were more influenced by  traditional media at the time. Ebay focused on increasing product listing numbers, while AliBaba focused on customer service. Piece by piece, AliBaba laid down all its advantages and finally pushed Ebay out of the Chinese market, in 2006.

Unfortunately, Ebay was not playing the right game in China. It’s strategy was flawed as it wasn’t able to find the check-mate move. Jack Ma made sure his strategy encircled and captured Ebay’s future earnings. But it was not enough. His game of Wei Qi was not just a timely thing. It was a prolonged campaign.

Chinese online retailers are far from stopping

This year AliBaba decided it will get listed in the United States. After it has managed to grow to handle almost 84% of China’s Ecommerce market, it has now decided to cross the Pacific and try an offensive move inside what is now the second biggest ecommerce market, the US.

AliBaba is not the only Chinese company reaching for the US online retail market. 58.com, a Chinese company dealing with classified ads and listed on the US market, has just received a $736 million investment from Tencent, another Chinese internet company.

Although both these companies are now tapping the capital market in the US, their long term intentions are probably more ambitious. Their presence in the US is a sure way to avoid encirclement. Whenever their position will become endangered, they will push farther.

While the Chinese – US economic dynamics are far more complicated and it cannot all be reduced to a game, one thing is for sure. The Yangtze crocodiles have crossed the Pacific and they are not there to play chess.

Showrooming Markets

Showrooming is a trend more and more retailers recognize. Most online retailers piggyback on consumers trying on merchandise in physical stores, only to search for the best price and then purchase the product online.

Although hard to fight, the trend might be actually beneficial for larger retailers that need to attract customers to their online stores and can afford price matching.

On one hand we have large retailers fighting to keep customers purchasing. Walmart for example, rolled out Savings Catcher in 2014 and now its pushing it across US. The tool allows users to compare prices on Walmart.com to those of its comepetitors. Any difference found is stored as store credit for the customer.

The likes of Amazon are trying to allow showroomers even more space to find the best prices online. Its recently launched Fire Phone has a built in mechanism that allows users to scan products (not just barcodes) and find the best deals online.

Showrooming around the world

Showrooming around the world

In this battle the ones that suffer most are the small retailers or retailers unadapted to omnichannel operations. This companies cannot afford customers trying on merchandise only to buy it some place else, while still keeping the shop open. It’s not just a passing thing either. 33% of customers worldwide report being showroomers, with 21% using their mobile phones to do it ( Source ).

Even more, markets that are earlier adopters of this trend seem to be even more into it. 71% of shoppers in developed Asia, 60% in North America and 54% of European consumers report showrooming practices.

As probably small to medium retailers won’t just roll over and disappear a new type of partner will probably appear in the near future

Showrooming markets as outsourced product display

Traditionally, retailers evolved to outsource everything that didn’t make sense handling within the company. Things as manufacturing or logistics are now commonly outsourced to reliable partners, companies that handle more than one retailers.

It’s not just manufacturing or logistics. If you think about it, most retailers outsource vital areas of their operations. Financial reporting, IT services and sometimes even human resources are outsourced to partners providing reliable service and economies of scale. Globalization has helped push this trend as companies can find cheaper, reliable work offshore.

But so far stores were pretty much left untouched. Retailers still feel the need to control and manage stores as they see fit, even if sometimes it is not the most economically reliable thing to do. As showrooming decreases the need and efficiency for the self-managed store, as online retail becomes increasingly popular and outsourcing gains traction in the future product display in store will also be outsourced.

[Article extracted from "Understanding Omnichannel Retail". Download the report here.]

Millennials as well as older demographics still favor B&M stores. They also like to see and touch the products they are buying. But they don’t always buy from the shop displaying the product. There is a solution that will probably become commonplace in the future, especially for small and medium retailers.

As retailers need to optimize their pricing in order to compete to only pure plays and online retailers need to establish a physical presence, a new type of company will emerge. The showrooming market.

The showrooming market is a place that aims to provide customers with extended information on the product, as well as the full product experience. The concept is already available online, with markets such as Ebay providing product display space for smaller retailers, as well as online pure plays willing to try an additional sales channel.

The primary function for the showrooming market is product display, rather than sale. Its revenue sources would be retailers paying and competing for shelf space, but generally paying less than they would displaying the products  on their on. Retailers, on the other hand, would benefit from an affordable B&M space, as well as a logistic point in product delivery, outsourced to companies that can do it better, due to economies of scale and process optimization.

Omnichannel Payments – Battle Between Giants

What comes to mind when you think digital payments? That would probably be PayPal. We all know Ebay subsidiary PayPal leads the game in digital Payments but now the game is set to change.

Paypal bets big on POS integration

Paypal bets big on POS integration

Although it does have the first mover advantage and has been going strong into omnichannel retail, PayPal is threatened by the largest tech companies in the world:

  1. First of all, company president David Marcus has resigned (or has been fired as rumor has it) to join Facebook. His mission – building a new type of … messaging tool. And by that I mean Facebook Payments.
  2. Google is pushing hard on its Google Wallet, a mobile bridge between online and offline sales. It is a fully NFC compatible payment system, which now accepts all major credit and debit cards, loyalty cards and discount cards. It also allows customers to save offers and buy using touch-to-pay systems.
  3. Everyone raved about the Amazon phone but the actual big news is … Amazon Payments. With over 200 million credit cards stored and the ability to pay with one click (for a very long time Amazon held the patent on that), Amazon is probably the biggest competitor to Ebay’s PayPal.
  4. Apple also has a huge database of credit cards stored on its server. It also has a massive database of customer options, customer history and a fully featured Keychain app built into Safari, ready to help customers do a quick checkout. Its wide device adoption allows it to become one of the most important players in the omnichannel payments area.
  5. Let’s not forget Ali Baba Group, the organization that controls over 84% of the fastest growing and biggest ecommerce market: China. AliPay is the group’s payment system, fully featured with the Yue Bao savings account. And now the company is set to have its IPO in the US.

Now this is the real Game of Thrones in the omnichannel world. Five tech monarchies are reaching for our wallets.

 

 

Amazon vs Walmart Comparison in one Essential Chart

Two companies have redefined retail in the past 50 years. One is a company founded by Sam Walton in 1962. Mr. Walton opened the first Walmart in Rogers, Arkansas. The other is an Internet company, founded by Jeff Bezos in his small garage in Bellevue, Washington. This second company is Amazon, the largest Internet Retailer.

Both companies went on to be huge successes but in terms of revenue, Walmart has the upper hand. With $469 billion in 2013 revenue and 10700 stores opened worldwide, Walmart beats by far Amazon’s $74 billion 2013 revenue. If you look at the raw data Amazon is no match for Walmart. But pull back just a bit and the picture is changes. By comparing the track records for the two companies an interesting insight becomes clear:

Amazon vs Walmart - 17 years revenue comparison

Amazon vs Walmart – 17 years revenue comparison

The chart above is a comparison in terms of historic revenue. On one hand you have Walmart – the biggest and most successful retailer in recorded history. Employer of 2.2 million people, crusher of markets and destroyer of mom and pop shops. On the other hand you have Amazon, the brave new world of online retail. Both redefined their markets and both are leaders in their respective fields.

But one is unlike the other. See – I couldn’t even put together figures from the first years in Walmart’s history. Walmart’s revenues starts 6 years after the first Walmart opened, in 1968. That’s when the company reached a figure ($12.6 million) comparable to Amazon’s first year with recorded revenue (1996 – $15.7 million). 17 year after the company launch, Amazon registered $74.4 billion in revenue, while Walmart registered “just” $6.4 billion.

Both the trend and evolution show one thing - Amazon is on its way to become the biggest retailer in the world, a type of retailer the world has never seen. This might probably be a good time to reconsider your stock choices.