Ruble Trouble: Apple Shuts Down Online Sales in Russia, Before it’s Forced to Do So

Apple announced online sales in Russia will stop due to the ruble’s volatility. Indeed, the Russian currency has taken a blow recently as it plummeted to an all-time low against the dollar.

The Russian Apple online store has been taken offline while prices are reviewed and commercial activity on iPhones, iPads and other Apple products has been halted.

But how did Apple went from more than $1 billion in sales in Russia in 2013 to pulling out in 2014?

Tim Cook, 2013: “Our activations in Russia for iPhone set a record last quarter — our highest quarter ever. We’re really happy.”

The Gold Putin iPhone, a really shinny gadget.

The Gold Putin iPhone, an object of desire for any oligarch. Source.

In 2013 Apple failed to reach an agreement to local mobile operators so it went straight to retail chains and selling online. It didn’t go too bad. iPhone sales doubled to 1.57 million units. After seeing huge spikes in demand, the local operators finally gave in and agreed to Apple’s terms. Nevertheless, almost 80% of all sales came directly from retail, skipping carriers.

So basically Apple sold $800 million worth of unsubsidized products without any help from local carriers, a surprisingly good result for the Russian market. “We’re really happy“, said Tim Cook in 2013.

Yes, the ruble drop may be a problem for Apple. But why close the store? Why block sales? Why not just switch to foreign currencies only? Why leave such a huge market? Sure, Russia is struggling with an economic a crisis but on a smaller scale – so is Europe. You don’t see Apple stopping sales there.

It may be that Apple was bound to leave Russia anyway and it figured this is the best moment to do so without worrying investors.

What happens in Russia, stays in Russia

Starting January 2015, Russia will pass a law forcing tech companies to keep Russian users’ data in Russia. That means Apple will have to move some of its servers to Russia and keep them there.

Now this is obviously an unacceptable situation. With tensions between Russia and the US, privacy and data security concerns will force the company outside anyway.

It may be that the ruble collapse is the best Apple can go about a bad situation: leaving a billion dollar market and still look like its saving the day.

Three Luxury Retailers Shinning on Instagram

They say a picture is worth a thousand words. Add a cool filter in Instagram and it may be worth more. So luxury retailers have taken up on the chance of showcasing offline products in the most popular photo-sharing app in the world.

It’s definitely worth it. With more than 300 million Instagrammers, the social network is a colorful powerhouse, just waiting for fashion retailers to tap into it. And it’s not just the numbers. From Taylor Swift to Robert Downey Jr everyone who’s anyone is walking the red carpet of Instagram.

Along these stars came the most popular and desired luxury brands in the world. With social incentives, aspiring fans can become customers and customers will become brand lovers. So photo sharing on Instagram is a go for brands looking to connect online and offline sales and marketing.

Let’s have a look at these three most effective brands on Instagram:

3. Hermes

Hermes on Instagram

Hermes on Instagram

Hermes is unconventional and creative, focusing on outlining the brand identity without being too pushy. It’s rather “modest” fan base of just over 670k followers shouldn’t be bigger either. After all, Hermes addresses a special kind of audience – the kind that doesn’t come busting doors in look for discounts. They discreetly shop online for $11.300 leisure bicycles and $7.600 bags.

2. Tiffany’s

You’ve spotted that special kind of turquoise and the must-have diamond ring that’s globally recognized. 1.8 million Instagrammers are constantly connected to the stylish social media outlet Tiffany’s employs.

The Instagram page is a mix of colorful illustrations, products showcased in glamorous yet simple and stylish photos and fashion advice from models and designers. The whole philosophy is outlined by Francesca Amfitheatrof, Tiffany & Co. design director: “I believe there is great power in simplicity.” 

Just like its brick and mortar stores, as well as the online store, the Instagram page is a stylish, simple and elegant work of art.

1. Burberry

Burberry is almost unbeatable in terms of using technology to connect to its esteemed audience. Digital retail is so important to Burberry that they’ve designed a flagship store that resembled their website, in 2012. Talk about omnichannel.

Digitally connecting to their customer has been the main ingredient to Burberry’s recent growth and Instagram was not bound to be left behind. The 2.4 million followers can get a glimpse in the lives of the rich and beautiful through Burberry’s Instagram channel.

Models, carefully crafted products and celebrities all mix to give followers, customers and aspiring Burberry product owners, that warm “I’ve got to have this” feeling.

And once that feeling kicks in, the monogramed scarf is just a step away in the online store, ready to be picked up in the closest store. Or sent home. Worry not, there’s free shipping and returns.

The Future of Retail with Mattias Pihlström

Mattias Pihlström

Mattias Pihlström

What better way to get advice on implementing and improving omnichannel retail than asking the experts. So we did ask the experts and we started with Mattias Pihlström, founder and omnichannel consultant at Brightstep AB.

Mattias is experienced in implementing ecommerce, multi-channel and omnichannel processes with industry leaders such as ABB, Apoteket, Ericsson, SCA, Indiska, Interflora, TeliaSonera and many others. He specializes in integrating internal processes, in terms of logistics, financial flows, user experience, loyalty, analytics, increased conversion rate and order value.

You can follow Mattias on Twitter or get in touch with him on LinkedIn but for now – let’s have a look at his insights on omnichannel retail:

Netonomy.NET: What do you think is the essential difference between multi-channel retail and omnichannel retail?

Mattias Pihlström: Multichannel for me was the first phase for retailers, meaning getting up new parallel sales channels (e-commerce, m-commerce etc). Omnichannel retail is the next phase where retailers start getting this channels to work together seamless to the consumers.

 

Netonomy.NET: What do you think is the biggest challenge for retailers in implementing omnichannel retail?

Mattias Pihlström: I think these are the main challenges:

  • Enterprise architecture and integration of IT systems, master data management (consumer data, products, orders etc)
  • Logistics
  • Organization and reward systems
  • Competence

 

Netonomy.NET: What technology vendors would you recommend for companies interested in implementing omnichannel retail processes?

Mattias Pihlström: There are many leaders in this area and too many to mention all, but SAP/hybris, Oracle, Adobe, Intershop, IBM are a few I would like to mention as niche players.

 

Netonomy.NET: How do you think omnichannel retail will impact online pure-plays?

Mattias Pihlström: Here in the Nordics we see many pure-players setting up physical stores, both pop-up and normal stores. I also think a pure-player should have an omnichannel strategy in place even if they don’t have physical stores. There are so many other channels and touch points that should be part of such a strategy (like e-mail, social media, customer service etc).

 

Netonomy.NET: How much do you think smartphone and tablet adoption have changed consumer purchase habits and decisions?

Mattias Pihlström: Very much.

 

Netonomy.NET: What is the most interesting innovation you have seen retailers implement in the past 2 years?

Mattias Pihlström:  Reserve online and pick up in store (meaning not sending goods from central warehouse, but fulfill orders directly from store).

 

Netonomy.NET: As a consultant – what do you think is the biggest challenge in helping companies get results?

Mattias Pihlström: Change management and getting the understanding from top management.

Reducing Shopping Cart Abandonment – Infographic

Shopping cart abandonment is one of those dreaded issues both online and omnichannel retailers hate. There are many reasons for customers to just leave a webstore after they have picked their products, instead of completing the order.

Some customers find better prices elsewhere, some fail to navigate the store but most (56%) give up on their order when they are presented with unexpected costs.

Data gathered and compiled by the Payroll Blog shows that 68% of all consumers abandon their cart, leading to $18 billion in revenue lost each year but there are ways to avoid this. The infographic below outlines some of the most effective ways to avoid shopping cart abandonment and increase conversions.

shopping cart abandonment infographic

Staples Opens Marketplace, takes aim at Amazon

The second largest online retailer, Staples, announced the launch of its inhouse developed marketplace, Staples Exchange.

staples-store

Previously, the company used Commercehub’s marketplace technology to connect its vendors to its Ecommerce sales channels. With this new development there are two big things happening:

The number of products available on Staples has increased dramatically

The number of products available on Staples has increased dramatically

The first and most important, Staples moves technology development in house. This is a clear sign the company is shifting from a brick-and-mortar centric strategy to a technology centric strategy.

Staples has also reduced store space in the previous year on one hand and has invested in technology services its offering to its partners.

With its legacy store network already in place, growing online sales and the new marketplace, Staples can compete with Amazon on an omnichannel level. Its vendors can now access its online sales channels but with future improvements, their products will be probably ordered offline as well.

The second biggest change is in Staples’ logistics strategy. So far the company relied heavily on its own fulfillment centers. Now orders are increasingly shipped by vendors through drop shipping. This is the most efficient way for Staples to increase its product count and it seems to be working: Staples increased its product count from 30 000 in 2012 to 200 000 in 2013 to a whooping 1.5 million SKUs in 2014, according to Internet Retailer.

As Internet Retailer reports, Staples is still curating the vendors’ offers but it will soon switch to a fully integrated platform in 2015. Even now the new tool allows vendors to receive orders, see real-time alerts, access analytics data and manage inventory, without the cost Commercehub’s technology implied.

Do Consumers Like Waiting for Online Purchases to Arrive?

Maybe drones are not such a great idea

Maybe drones are not such a great idea

Could waiting for online orders to arrive actually be a pleasant experience? What about all those next day delivery and in-store pick-up features retailers brag about? What is the point in that?

Apparently not only is it pleasant but it may sometimes be more fun than buying products in store. The anticipation of orders arriving at our doors keep us on our toes. As a recent Razorfish report mentions, 76% of American consumers and 72% of UK consumers are more excited when their order is delivered at home than when they buy it in store.

Let’s stop for a moment and really look at these numbers: 3 out of 4 customers in the US, UK, Brazil and China would rather wait for purchases than receiving them right away.

This are amazing findings. It shows that instant gratification may no longer be the optimum trigger in marketing messages. It also means that what we thought was a liability for online sales is actually an asset, if used properly.

Building anticipation and delivering items on time is making customers happier than receiving it right away.

The distinction between online and offline is already irrelevant thanks to the smartphone

The smartphone is increasingly important in omnichannel retail. Source.

The smartphone is increasingly important in omnichannel retail. Source.

But don’t think that customers have lost their interest for offline OR online purchases. The channels have started blending with the help of smartphones. The same study reveals that:

1. Digital has a major impact on the retailer’s brand: Almost all those interviewed responded that a bad web store negatively impacts their opinion on the brand. 84% of consumers in Brazil, 92% in China, 73% in US and 79% in the UK are turned off by lousy digital experiences.

2. Customer journeys are not delivering what the customer wants: a cross-channel experience that works. Retailers are not yet delivering on the omnichannel promise. This leads to frustration and a growing gap between what the consumer wants and what the retailer delivers.

3. There is a huge difference between Gen Xers and Millennials, in terms of shopping. That difference lies in how much they rely on their smartphones. Millennials use their phones at least twice as much as Gen Xers when shopping offline (see figure above).