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.

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.

Top Three Most Influential Persons in Online Retail

Online retail is a fast moving sector and there are lots of outstanding business leaders out there. Among the best of the best, some really stand out. The way they’ve founded their companies and directed their investments have placed them in the higher echelon of influence in online retail.

Let’s have a look at them and their stories:

No.3 Jack Ma

Net Worth: $9.6 billion
Company: AliBaba Group

Jack Ma - founder of Alibaba.com

Jack Ma – founder of Alibaba.com

Jack Ma, a former English teacher in China, got his first taste of internet entrepreneurship in 1995, when he founded China Pages, a directory of Chinese businesses. He previously worked as a lecturer in English and International trade in the Hangzhou Dianzi University.

After founding and running China pages he briefly worked for the Chinese Ministry of Foreign Trade and Economic Cooperation, between 1998 and 1999. In 1999 he founded Alibaba, a B2B marketplace connecting Chinese manufacturers to the world.

Alibaba’s spectacular growth pushed Ma and his associates to add new companies to the group. AliBaba Group now owns Alibaba.com, Taobao Marketplace, Tmall, eTao, Alibaba Cloud Computing, Juhuasuan, 1688.com, AliExpress.com and Alipay.

The company is now only outmatched by Walmart in terms of revenue. Recent developments and an increase in online retail spending have made the Chinese market the largest online retail market in the world. The big winner: Alibaba Group. Through its subsidiaries, the AliBaba Group now handles $248 billion in transactions, 84% of the total online retail market in China.

But Jack Ma is not to be stopped. He is preparing one of the largest IPO’s in American history, after failing to reach an agreement with the Hong Kong exchange. His ambition is fueled by a sense of mission to run his company as an army conquering the world:

“I had always wished that I was born in a period of war. I could have been a general, I thought about what I could have achieved in war.” – Jack Ma, AliBaba Group

All signs point to Jack Ma building the hyper company he dreamed of. He is an effective leader, running the monopoly on online retail, in the world’s future largest economy.

No.2 Larry Ellison

Net Worth: $51.7 billion
Company: Oracle, NetSuite, Salesforce, etc.

Larry Ellison

Larry Ellison

You wouldn’t think of the fifth wealthiest man in the world as one of the most influential persons in online retail. But he is. Through it’s flagship company and different personal investments, he is in control when it comes to online retail infrastructure and software.

For once, Larry Ellison is Oracle and Oracle means, first and foremost, databases. Ellison started his career working for the Ampex Corporation in 1970, on a relational database for the CIA. His designs were based on a paper written by Edgar F. Codd, called “A Relational Model of Data for Large Shared Data Banks”. The same design was implemented by IBM, but the company didn’t have time to solidify its dominance on the market. Challengers soon began to emerge.

Database deployement - Oracle leads the pack

Database deployment – Oracle leads the pack

One of those challengers was Larry Ellison’s Software Development Laboratories (SDL), founded with two partners and later renamed Oracle, based on the database Ellison developed when he was working for the CIA database.

After a long struggle against the largest competitor, IBM (which would push its DB2 and SQL/DS products) and other challengers (Informix, Sybase, Microsoft) – Oracle eventually took lead in the database war. In 2010 the European Union approved Oracle’s acquisition of Sun Microsystems. One of the most important assets Oracle got was the wide-spread, popular MySQL database.

So for one - Oracle now dominates the database market, the underlying infrastructure of connected systems and retailers worldwide.

And that’s just the begging – Oracle is currently on a purchase streak, aiming to build a strong multichannel retail presence. It is second only to Adobe Systems, with its customers registering over $200 billion in revenue in 2013.

It’s presence is split between Social marketing, ecommerce platform software, site search, customer service, personalized content and transportation management.

To give you a glimpse on how serious Oracle is about its investments in multichannel retail – they paid $1.5 billion in 2011 for Right Now Technologies, a company providing customer service software and services to the likes of Overstock.com.

Larry Ellison is also one of the major shareholders in Netsuite and Salesforce, two companies shaping the global B2B and B2C commerce future.

1. Jeff Bezos

Net Worth: $30.1 billion
Company: Amazon

Jeff Bezos

Jeff Bezos

Jeff Bezos is the one man we all picture when we think about ecommerce. He is a Princeton graduate with a degree in Computer Science. After graduating from college he pursued a career in investment banking in Wall Street, which he left to found Amazon, after noticing the fast growth in Internet usage.

He set up his company in the proverbial garage with few employees and in 1995 launched the beta version for 300 friends. Days after the launch the book selling eshop managed to ship books across US and 45 foreign countries. Yearly sales in the first year reached $510 000, much more than Bezos envisioned. The company grew and grew, survived the dot com and went on to register $74.5 billion in 2013 revenue.

By expanding the initial book selling operations into CD’s, videos and later clothing, toys, electronics, home & garden, jewelry and even art, Amazon essentially became the “everything store”. Amazon is now the biggest online retailer and a disrupting force in retail.

Everything from the ecommerce revolution to online payments, shipping and marketing has been heavily influenced by Amazon and guided by Jeff Bezos, both a star-gazing visionary and a focused micromanager.

kindle dx

The Kindle DX

In 2007 Amazon launched the Kindle which soon became a revolutionary device that changed the way we think of books and digital content. In 2013 the company hinted at the idea of using aerial drones to enable faster shipping and in 2014 it announced that it’s now testing its 7 and 8 generation aerial vehicles.

But beyond his influence in online retail and retail at large, Bezos is a special human being. A libertarian, he invested in projects most of us would consider unreal and unattainable. He was one of the first investors in Google, financed a clock that would run 10 000 years and a company that’s working on lowering space flight costs, to allow humanity to explore the great unknown.

This short list, headed by Jeff Bezos, is prone to change. The world around can change as well, partly due to these people’s and efforts. To get a deeper glimpse on how they did it and what motivates them, have a look at Jeff Bezos’ Princeton graduation address, “What matters more than your talents”:

China Passes US in Terms of Online Retail. Europe Lags Behind with 12% Growth Rate

China’s Ministry of Commerce released data showing huge growth in terms of Online Retail. Chinese consumers spent $296.57 billion online in 2013, 13% more than their American counterparts ($262.51 billion in 2013). That means China is now the biggest market for online retail.

China showed a 41.2% growth YoY and is now the largest online retail market

Chinese online retail market showed a 41.2% growth rate from 2012, a result of a) an increase in online spending and b) an increase in the total number of internet users. The number of internet users in China grew 8.5% to a total of 618 million users at the end of 2013. As a result, China showed an increase of 52.4 million in online consumers.

Chinese B2C ecommerce expected to grow even faster in 2014.

Chinese B2C ecommerce expected to grow even faster in 2014. Source.

Although China surpassed the US in total online spending, one must not ignore the fact that the US still spends almost twice as much online than China. The total number of internet users in US, according to Internet World Stats is 277 million, 54% less than internet users in China.

As such, American users spend 945$ per year online, whereas Chinese users spend 478$ per year. Moreover, online retail in China is more or less a monopoly ran by the Ali Baba group, a company preparing for an american IPO. With  $248 billion in transactions handled in 2013 through its many subsidiaries, Ali Baba accounts for 84% of all Chinese online retail. That is NOT a balanced market.

Although the numbers amount in favor of Chinese online retail (large growth rates, increased number of consumers and a lot of room to grow) Ali Baba’s dominance does not paint a pretty picture. Whereas US online retail is a competitive and balanced market, the Chinese behemoth has clay legs. Sure – it had a astonishing growth and there certainly is a market there, but can the Chinese leaders take on mature, innovative markets? My bet is on NO. The centralized, planned uber-organization can work pretty well in China but in the competitive world of global markets it might run into trouble.

Europe lags behind and is expected to reach $318 billion in 2018

Europe shows a healthy, double-digit growth rate in terms of online retail, yet still lags behind the US and China. Forester shows that Europe will grow with a CAGR of 12% until 2018, when the market is expected to reach €233.9 billion ($318 billion).

This is neither good nor bad. Europe is still making peace with it’s new-found unity. The European Union still has to battle inequality between countries, has had a rough time battling recession and has just recently considered online retail as a viable alternative to classic retail.

Northern Europe is more mature in terms of online retail development, thus shows smaller growth. Southern and Eastern Europe has increasingly adopted online retail as means to reach its uncovered consumers and shows larger growth rates.

Make no mistake, however. Europe is a large market. It has 518 million internet users and there is still room to grow. There are more money to spend and surely Europeans will get moving soon. Just as soon as they get over this recession thingie.

 

Ebay Lost 233 Million Accounts. Could It Be More Than Hackers?

In what could be the biggest security breach in history, Ebay may have lost personal data for 233 million accounts. Long story short – hackers got access to employees’ corporate network credentials, probably by phishing. They than accessed and extracted user data saved on Ebay databases, including addresses, date of birth, usernames, emails and passwords, which Ebay officials mentioned were encrypted. There is yet no report of hackers stealing credit card info from PayPal (an Ebay subsidiary).

A totally unrelated Ebay product

A totally unrelated Ebay product

Ebay was “quick”  to notify its users on the breach - it only took them three months to discover and communicate what could now be the largest cyber-attack on an American company.

Is there more to this security breach and others?

One can only notice the similarities between this breach and the one that previously put Target CEO out of job. In the previous biggest cyber-attack on an American company, Target lost personal data for more than 110 million of its customers, some of which included credit card info.

In the aftermath the company was heavily investigated by law enforcement as well as the secret service. The company hired a new CIO following the security breach, Bob DeRhodes, a former security analyst for the US Department of Homeland Security, US Department of Justice and the US Secretary of Defense.

The fact that Target customers’ credit card info later showed up on Russian underground forums, as well as involvement from national security specialists, points to something closer to cyber warfare than your everyday phishing.

There will be others

The shady practices employed by the NSA to gather intel have probably left the Internet a less secure place. If it weren’t for Heartbleed, a vulnerability the agency has allegedly kept secret, or other backdoors, tracked and harnessed in the interest of “national security” – probably Ebay wouldn’t report losing more than 200 million accounts today.

Now I’m not saying that some groups left american tech companies with heavy security gaps. And I’m not saying that some former agent / analyst of theirs is halfway across the globe in a country known for its history of espionage and overall unfriendliness toward US. But probably someone should say it.

 

Target CEO Resigns Over Security Breach. Gets Paid Millions to Leave.

Last year american retailer Target was the victim of a security breach. The hack compromised personal data for over 110 million customers. What is now known to be one of the biggest security breach in corporate history has not left the company unscathed.

The Backstory

target-storesOn December 13th, 2013, Target executives meet with the US Justice Department. The reason: discussing a hack that exposed credit and debit card data for over 40 million customers. On December 18th security analyst  Brian Krebs breaks the news. The Secret Service is involved and Target gets investigated.

On Dec. 27, 2013 word’s out that PIN numbers for the stolen cards were accessed. Target acknowledges PIN’s were accessed but says they were not decrypted. Meanwhile Russian forums get flooded with millions of credit cards.

And then it gets worse: Target declares an additional 70 million customers were affected by the security breach. The company reveals poor Holiday sales. Lays off 475 employees and reports costs associated with the data loss topping $200 million.

Fortunately, employees get to wear jeans and polo shirts.

The breach left Target in a disastrous situation as profits dropped 46% in the last quarter (-$440 million), compared to the year before.

First the CIO, now the CEO

After the blast, some heads were sure to fall. First was CIO Beth Jacob, the obvious … target. To show it means business, the company brought Bob DeRodes on board, as new CIO and executive VP. DeRodes, 63, started on May 5th and now oversees the adoption of secure technology, with the help of $100 million worth of tech investments.

The new CIO is a tech security veteran, his previous endeavors including being a senior IT advisor for some organizations you might have heard of: the US Department of Homeland Security, US Department of Justice and the US Secretary of Defense.

gregg-steinhafel

Gregg Steinhafel

But that was not enough. Chairman, President and CEO Gregg Steinhafel announced his resignation. The breach left both Steinhafel and the company in a vulnerable position. 

The company announced the parts have reached a settlement that will probably allow the ex-CEO to walk out with over $11.7 million salary and incentive pay. Not bad for a CEO leaving a company that lost $941 million in its Canadian 2013 expansion, is under heavy fire from Amazon and Walmart and was just exposed to the biggest card robbery in history.

But than again, the man did work for Target for the past 35 years.

Fastest Growing Online Retailers in the United States – an insight

In 1972 an young man, then 22, would join his father in their family owned small tailor shop. After graduating from Waseda University he tried his hand at selling kitchenware in a Jusco supermarket but that didn’t really worked out. So after one year in the kitchenware sales business he was back to the family shop.

It took him 13 years of hard work and one day, in 1985, he opened the first unisex clothing store in Hiroshima City. The brand our young man built would soon become a global multi-billion company and in 2014 – the fastest growing online retailer in the US.

The brand you will see towering at number one in the fastest growing online retailers in the United States is proof that the Internet is indeed a leveled play field. As many economists, investors and analysts showed – the Internet is clearing the way for a border-less economy.

InternetRetailer’s top retailers list clearly shows the fastest growing retailers are a special breed of companies. From foreign investors to Google, from mom-and-pop stores turned fast growing retailers – these companies show that we’re living extraordinary times for a ever-evolving breed of new retailers. Their growth and many others’ amount to a 16.9% growth in ecommerce sales in the US. That’s one big number but it gets even bigger when you have a look at the growth rate for the five fastest growing online retailers.

 

No.5: Google Play – Growth rate – 162%

Google PlayGoogle’s entertainment ecommerce business has been growing rapidly with the extended adoption of Android based mobile devices. In terms of android app sales is second only to the largest online retailer in the world, Amazon, but it seems the gap is closing fast.

The company is now one of the biggest digital goods retailer online, selling anything from music to movies, apps and games. It is also heavily pushing Android – powered mobile devices such as those manufactured by Samsung or HTC and the much praised Chromebooks.

Google Play closes in on the App Store, according to Distimo

Google Play closes in on the App Store, according to Distimo

Google Play, originally named Android Market, was launched on 22 October 2008, as an Android alternative to Apple’s App Store.

In July 2013 Google Play listed more than 1 million apps available and over 50 billion downloads since launch. The number is growing fast and it has already surpassed the App Store in terms of submitted applications and downloads. With gamers worldwide switching from PC and gaming consoles to hand-held devices, the app sales market becomes more and more attractive, thus the increased growth rate.

Google Play Sales Figures

Here are some key take-away figures to get a glimpse into Google Play’s sales:

  • estimated $1.3 billion in revenue in 2013
  • 75% of all downloaded mobile apps run Android
  • top 200 grossing apps are cashing in on $12 million /day

 

 

No.4: Alex and Ani – Growth rate – 250%

alexandani

Alex and Ani was founded in 2004 by Carmen Rafaelian. The company designs, manufactures and sells its own line of bangles, earrings, necklaces and rings.

A factory originally built by Rafaelian’s father in 1966 was home for the first manufacturing operations. Now Alex and Ani has 40 brick and mortar stores and an online store that reported a 250% increase in YoY sales.

The one thing that sets the company apart from its competition is its focus on a virtuous company ethos. Alex and Ani, originally named after its founder’s two daughters, takes pride in designing and manufacturing long-lasting, beautifully designed, hand-made jewelry. The products are somehow filled with positive energy, using carefully designed symbols thatcarry their own energy and are accompanied by thoughtfully crafted and meticulously researched meaning. Buyers are of course empowered by the jewels, which “reflect the unique qualities of the individual“. All materials and manufacturing is “Made in America With Love”. And positive energy.

I don’t know about the esoteric power of its products but the company is definately ahead of its game when it comes to customer experience. Besides adopting a multichannel approach to product sales, Alex and Ani adopted a mobile checkout process in store. The company partnered with Mobiquity to create a mPOS (mobile Point of Sale) solution that lets store associates handle payments and answer customer questions independent of fixed POS. The hardware solution is part iPod and part mobile payments processor. Each Alex and Ani store now comes equipped with up to 25 such devices. As a result store associates (or Bangles Bartenders) can bond with customers and quickly answer their needs.

Alex and Ani Sales Figures

  • Alex and Ani opened their first retail store in 2009. Sales that year were $2.9 million
  • In 2012 sales had reached $79.8 million, showing a staggering 3 years growth of 3569%
  • In 2013 sales reached $230 million

 

 

No.3: NoMoreRack.com – Growth rate – 250%

nomorerack

 

NoMoreRack.com was founded in 2010 by Deepak Agarval, now CEO. The company sells women, men, home, electronics, kids, and lifestyle products, through a combination of daily deals and flash sales.

Although the company has had a successful increase in sales, possibly due to it small pricing and short-term sales policy, the customer service still needs work. The Better Business Bureau lists no less than 2590 closed complaints in the last 3 years, most (1335) in the last 12 months. Customers complained about product and service, as well as delivery issues. The company seems to be improving its customer service and is willing to resolve ongoing complaints.

What might be harder to solve, however, is the fact that both Overstock and Nordstrom, retail heavyweights, are suing Nomorerack for copyright infringement. The former claims Nomorerack is bidding on the “Overstock” keyword on Google Adwords and the later claims NoMoreRack infringes on it “The Rack” store brand name.

Be that as it may, the old saying “sales cure everything” may hold true, as NoMoreRack’s 250% increase in sales shows. But just in case – the company has a pool of cash to help it get through rough times, thanks to series A investment by asian G-Market ($12 million, 2012) and series B investment lead by Oak Investments ($40 million, 2013).

NoMoreRack Sales Figures

  • $325 million in 2013 sales
  • $78 million sold Nov 1, 2013 through Dec 2, 2013 (Cyber monday). Yes, that is one month.

 

 

No. 2: TheRealReal.com – Growth Rate – 297%

therealreal

 

Although it may not be number one on the list, The RealReal is probably the most interesting business model on it. It is a mix between luxury sales, flash sales and consignment sales. The company was founded in 2011 by Julie Wainwright and is now the top online resale outlet for luxury goods. Flash sales cover a wide array of luxury products, ranging from clothing to jewelry to art and beyond.

One of the products you can get on The RealReal

One of the products you can get on The RealReal

Previously to being the founder of The RealReal, Julie Wainwright, 57, served as a CEO to high profile consumer dot com ventures such as Pets.com and Reel.com, as well as a board member for the San Francisco Art Institute, Baker and Taylor and more. She was named among the top 50 Most Influential Business women in the Bay Area.

As impressive as that sounds, it may be possible The RealReal is her greatest achievement yet. Companies such as Reel.com or Pets.com folded at times she held top management positions, most likely due to the dot com crash. She outlined the challenges and mistakes that lead to these failures in her book ReBoot: My Five Life-Changing Mistakes and How I Have Moved On.

The RealReal Business Model

Consignors sell their goods through TheRealReal and get up to 70% the end price. The company curates the product listing and authenticates all products with the help of professional gemologists, art experts, horology consultants and authentication experts.

Because all sales happen during a 72 hrs time-span customers can upgrade to a 24 hrs advance to sales, by purchasing a “First Look” subscription for 5$/month. Right now only 0.6% of all members have upgraded to the First Look subscription, but founder Julie Wainwright is optimistic about the future.

The company considers itself as holding the “top products from Ebay and the bottom of Sotheby’s and Christie’s”. Unlike Ebay, consignors earn 60% of the sale price and can work their way up to 70%, with repeated sales. The RealReal thus built a gamification system that encourages sellers to repeatedly use the platform.

The RealReal Sales and Membership Figures

  • Over 750 000 members
  • Over 1.5 million visits per month
  • 2012 Sales: $15.1 million
  • 2013 YOY growth in sales: 297%

 

 

No. 1: Uniqlo – Growth Rate – 341 %

uniqlo

 

Remember the young man we were talking at the beginning of this post? The one that opened a store in Hiroshima City in 1985 and went on to become the leader of one of the largest retail chains in the world? His name is Tadashi Yanai, the wealthiest man in Japan ($17.6 billion in 2014) and the founder of Uniqlo, now the fastest growing online retailer in the United States.

Uniqlo may not have the biggest number of stores but it does a great job with online retail.

Uniqlo may not have the biggest number of stores but it does a great job with online retail.

It stands as a sign of the times that a brand founded in Hiroshima went on to become the leader in a redefining area of retail, in the largest economy in the world, almost 30 years since its birth date.

In may 1985, Unique Clothing Warehouse was opened as a unisex casual wear store in Fukuro Machi, Hiroshima. It later on changed its name to Uniqlo, a contraction of “unique clothing” and became increasingly popular as it opened store after store in an effort to extend its retail reach.

Uniqlo, now a wholly owned subsidiary of Fast Retailing, is a contender to global casual wear behemoths GAP, H&M, Limited Brands (best known for Victoria’s Secret brand) and Zara (a brand owned by the Inditex Group). Its first urban store opened in the fashionable Harajuku district in november 1998. It was quickly followed by approximately 780 stores in Japan and later throughout the world.

The company entered the chinese market in 2002 and the US market in 2005. Since its debut in America, Uniqlo continuously opened stores and plans to open up to 200 locations by 2020, with a sales target of $10 billion. Right now the total store count is 18, way behind its presence in Japan (790 stores) and China (260 stores). Still not bad considering the fact that many american retailers are actually closing stores.

Uniqlo plans to become the biggest company in its market, by growing at a 20% rate until 2020, when it expects to report $61.2 billion in revenue. The company’s track record so far shows that is possible.

Uniqlo US Online Sales Figures

  • YoY increase:341%
  • 2013 sales: $22 million

 

 

Book Review: The World is Flat, by Thomas Friedman

“In China today, Bill Gates is Britney Spears. In America today Britney Spears is Britney Spears. And that’s our problem”. These three sentences perfectly describe the point I believe Thomas Friedman tries to get across in “The World is Flat“.

the_world_is_flatThe world has been radically transformed by politics, technology and economics in the past five centuries. The industrial revolution helped western countries and than companies rule the world. It all lead to a disparity between developed and underdeveloped countries. In the past century the force of governments was overcome by the force of companies spreading globally. And that is about to change.

The past three decades or so, the companies themselves helped a new entity rise above, in a connected world: the motivated and empowered individual.

“The World is Flat” is about the global individual and how he can rise above his own limits, when given the chance. Thirty years ago the birthplace was a pretty good predictor on the chance one has for success. Not anymore. Things have changed and Friedman shows the ten factors that lead to the new status quo:

The ten Flatteners (Forces that Flattened the World)

Thomas L. Friedman

Thomas L. Friedman

This global change didn’t happened all at once. Neither was it caused by one single force. Thomas Friedman lists ten factors that made the world a flat (or more connected) world:

No.1: 11/9/89 – The day the Berlin Wall fell became the day when communism started to crumble. Following the fall of the Berlin Wall, countries grew closer together and the world became smaller.

No.2: 8/9/95 – The day when Netscape went public. We know that the world wide web changed the way computers talked to each other and how people connected to these computers. Few of us know how important Netscape, the company founded by Jim Clark and Mark Andreessen, and its Mosaic browser were when Netscape had its IPO. Before Microsoft embeded Internet Explorer into Windows, Mosaic was the tech wonder that allowed people to access websites in a friendly manner.

No.3: The Workflow software. We are now all familiar with some kind of workflow software, be it Microsoft Word, Adobe Photoshop or some 3D rendering software. But at some point such things didn’t exist. When people started using them they could split parts of business processes and outsource them

“Open-source is nothing more than peer reviewed science. Sometimes people contribute to these things because they make science, and they discover things, and the reward is reputation” – Marc Andreessen on open source software

No.4: Uploading – the power of communities. When people first got online they were using the web just like they were using the TV or other “old media” – consuming. But the Internet was a two-way highway – it allowed for downloading, as well as uploading. Soon people started building websites, writing blogs and developing open-source software. It allowed for better collaboration and a new type of empowerment for the individual that was previously nonexistent.

No.5: Outsourcing. In 1999  three seemingly unrelated but soon to be very important events started to converge in India. The first – the country started producing more and more software developers in its IIT college. Second – fiber optic extended all across the globe and reached Indiay. Third – the Y2K scare was pushing every large company to update its software. As India’s software support was way cheaper, companies started hiring new people to help with the update. The outsourcing movement accelerated and then spread throughout the world.

No.6: Offshoring. On December 11, 2001, China joined the World Trade Organization. By doing so it agreed to the WTO terms governing exports, imports and foreign investment. That became one of the biggest steps in global commerce in the past millennium. Companies started offshoring companies to China where they could manufacture products at lower costs, lower taxes and export them worldwide.

No.7: Supply Chaining. What do Walmart, Amazon, Zara and HP have in common? Probably a lot but one of the most important things that makes these companies what they are is their supply chain. When the world got connected companies such as these spread their supply chain all over the world, to the places where products can be manufactured cheapest and at the best quality. Their supply chains brought the world together in a way governments and armies never could.

No.8: Insourcing. While you might not know this, companies such as UPS or FedEx are doing a lot more than just moving things from point A to point B. Of course, they do that but they also fix your Toshiba laptop, pack, inspect and deliver your Nike shoes and all in all handle logistics for many of the companies you love. How do they do that? They get inside the companies that contract them and help them be better at delivering value.

No.9: Informing. We take Google for granted. We can navigate to the answer for any question. We can access content written all over the world. Information became accessible as never before in human history, to anyone with access to a computer and Internet. Google, Wikipedia and others allowed information to flow everywhere in the world.

No.10: The steroids. Digital, virtual, mobile. When the book came out in 2005, the author listed the HP’s iPaq as a steroid for flattening the world. The device was supposed to be omnipresent allowing for constant connectivity. The irony is that the iPaq is now dead and another i-something (the iPhone) became the revolutionary device HP went for. These steroids are the digital enhancements that allow all the others to converge constantly and empower the individual.

The World is Flat is a book that might feel unpopular …

…especially for anyone in the western world, people that were told all their lives that they will have a job, they will have a house, they will drive a good car and they will have a happy family. And then comes Thomas Friedman and says – not so fast. There is a kid in China, or India or Eastern Europe that will work 3 times as hard for half your pay and he will be happy about it.

Thomas Friedman gets some very unfriendly reviews on this book and sure, some may be true (the writing style tends to get a little boring and repetitive at time) but most are unfair. It is not Friedman’s fault that jobs are outsourced. You shouldn’t blame the book for having to work harder for the same pay. The world IS flattening (it is not yet flat) and soon we will all need to run a little faster, just like a gazelle and a lion in Africa ….

“Every morning in Africa, a gazelle wakes up. 

It knows it must run faster than the fastest lion or it will be killed. 

Every morning a lion wakes up. It knows it must outrun the slowest gazelle or it will starve to death. 

It doesn’t matter whether you are a lion or a gazelle: when the sun comes up, you’d better be running.”

 

The book is a must read for any retailer looking into understanding how the global world shapes the global commerce and what ecommerce has to do with it. Before long – it might become mandatory to understand retail on a global scale if you’re willing to survive in business.

Top 7 Live Chat Software Vendors for Ecommerce

While customer support is one of the most important aspects of running your ecommerce business, it is also one of the most expensive and hard to manage.

When you’re talking customer support, you probably picture people with headsets in a huge open space, taking phone calls and answering questions. Maybe you picture something a tad relaxed, somewhere along the lines of a Zappos call center. Either way call center involve human resources, technology to set up, management and others. If you think that gets expensive – you are right. Fortunately, there is a growing alternative to this.

Enter the Live Chat Software.

bold-chatIn a recent study by BoldChat customers worldwide responded to the question “Have You Ever Engaged in a Live Chat?”. Results showed that more than half the respondents did engage in live chat, with more 65% respondents in the US saying yes.

prefered-form-communicationAlthough email is still the leading form of communication throughout the world (see left), live chat is catching up really fast , especially in the United States, Canada and Mexico.

One of the most prominent companies to use live chat is UK based  Virgin  Atlantic Airways Ltd. The company reports a 23% conversion rate for customers using its live chat feature. That is approximately 3.5 times higher than the conversion rate for users not engaging in live chat.

Virgin also reports that live chat also tends to increase average orders value, with customers spending 15% when chatting with an operator. Not only is live chat useful when trying to increase sales but it can also boost productivity, with one live chat operator doing the work of 15 email operators.

Who are the top live chat vendors?

If you’ve ever happened to look for live chat support software, you’ve probably stumbled across dozens to hundreds of different solutions. Some of them free, some open source, some paid. To help you get through the noise, I’ve put together a list of 7 of the most reliable live chat software solutions, from the easiest to implement to full-blown enterprise software suites.

The list is based on the clients size and profile, data regarding cost of implementation and solution reliability. Let’s start with number 7:

7. Zopim

zopim

Zopim is probably the youngest company on this list and a very promising one, for that matter. Its live chat application is easy to setup, light and very customizable. It offers a wide array of options and reporting information and can be used to integrate fully with sales operator teams.

The company, based in Singapore, has recently been acquired by Zendesk, a leading customer service solutions provider.

Features

Among its many features, Zopim lists:

  • Visitor visualization
  • Real time visitor info
  • Email chat transcript
  • Multi-device support
  • Visitor webpath tracking
  • Customizable greetings
  • Developer ready API

Pricing

Pricing ranges from free (demo account, one chat agent only) to $20 / agent (unlimited chats, departments, widget customization etc.)

 

6. Website Alive

website-alive

Website Alive features live chat, mobile chat and click to call solutions to retailers. One additional service that stands out is the “Concierge” service that includes the live chat software but also dedicated operators by Website Alive, for retailers willing to outsource customer care.

The Live Chat app is feature packed and allows integration with the “click-to-call” option, allowing customers to ask for support on the phone. Retailers can customize their widget look and feel, aligning it with the store’s branding.

Features

  • Chat transcripts
  • Visitor tracking
  • Invitation Pop-ups
  • Chat collaboration
  • Communication records
  • Call Routing
  • Multiple chat lines
  • Call transfers

Pricing

Pricing starts with the basic pack of $29.95/month, with 2 operators included, and goes up to $97.95/mo for the full pack.

 

5. BoldChat

bold-chat-img

 

BoldChat, a product of Bold Software, features the usual live chat support systems as well as some other, more advanced tools. Among them - multiple customer support interactions, click-to-call services, co-browsing and SMS communication.

In 2012 the company was acquired by LogMeIn, a company focused on providing online support for computer, smartphone and tablet owners. Price tag: $16.5 million.

BoldChat invests heavily in research, some of its resources being available online. The company is focused on midsize to larger online retailers, making it one of the more reliable tools out there.

Features

Among others, Boldchat lists some features targeted at larger online retailers, such as:

  • Cross-domain implementations
  • Passive browsing sharing
  • SMS, Email and Twitter management
  • iPhone app
  • Mobile-aware windows
  • Post-chat survey
  • Salesforce integration

Pricing

Pricing starts at $599 / year / agent.

 

4. Moxie Software Live Chat

moxie

Moxie Software is a provider of integrated customer support systems. It’s enterprise products are integrated and used by companies such as Dell, 3M, Epson, Crocs and others. Its Live Chat system allows text dialogues, co-browsing, reactive chat and proactive chat.

The company extended its products to handle social media requests, mobile browsing, click to call features and others. One very important aspect of Moxie Software is its Knowledge Base support center and self-service applications.

Integrations

The live chat solution can be integrated with company CRM solutions such as Microsoft Dynamics, Salesforce.com or Nuance.

Pricing

Pricing varies by project

 

3. Right Now Technologies (Oracle RightNow)

oracle-right-nowIn 2011 Oracle acquired Right Now Technologies, for $1.5 Billion. At the time Right Now Technologies was handling over customer relationship management systems, as well as call center software, for over 2000 SMB’s. After being acquired, the company was integrated to Oracle and rebranded as Oracle Rightnow Cloud Service.

The division handles live chat, among others for some well known multichannel and online retailers, such as Overstock.com, BeachBody.com and others.

Features

Oracle Rightnow handles many critical aspects of customer service, among which larger companies can find:

  • Live Chat
  • Web Self Service
  • Mobile Live Chat
  • Email management
  • Contact Center integration and software

Pricing

Varies by project

 

2. LivePerson

livepersonLivePerson is one of the leading companies providing online customer care solutions. Its LiveEngage platform integrates live chat, social media, voice, content applications, mobile customer support, CRM software as well as advertising and marketing.

The company boasts more than 1.8 billion web visits observed each month. To handle this kind of traffic, the company also launched LP Insights, monitoring a complex set of customer analytics, such as behavior, sentiments and buying patterns.

Its live chat interactions allow contextual customization, so visitors can have meaningful interactions with operators.

The company handles communication needs for some of the largest online retailing brands, such as The Home Depot, IBM or Virgin.

Features

  • Conversion improvement
  • Cross-channel communication
  • Personalized experience
  • Agent productivity tracking
  • Automated customer offers

Pricing

Pricing ranges from $500 / mo for small and mid-size companies to $5000 – $15000 / mo for enterprise users.

 

1. Oracle Live Help on Demand

Oracle-logoOracle made heavy investments in the ecommerce area. Before Oracle acquired no. 3 on our list, it had already bought ATG (Art Technology Group) for $1 billion in 2010. Recent moves show Oracle Live Help on Demand moves toward integration with Oracle Rightnow. Until that happens, Oracle’s Live Help technology still powers some really big retail brands such as Costco, The Home Depot and Procter & Gamble.

Oracle Live Help features live chat, voice and email integration, providing tools for multichannel integration.

The Live Help solution tracks customers, analyzing data left behind, thus improving chat support by personalizing the experience.

As you can see, whether it is the Live Help solution or the Rightnow environment, Oracle is leading the way in online retail live chat and customer support systems. The others, however, are moving fast, are flexible and companies such as Liveperson are soon to challenge the big red.