wired retail 2016: key takeaways - deborah weinswig...finally, jody medich, director of design at...

1 DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

NOVEMBER18,2016

Wired Retail 2016: Key Takeaways

1) As e-commerce booms, companies are innovating to overcome the challengesinherentinsendinganddeliveringonlineorders.

2) Amazon is launching private-label products based on the transaction data itgathers—and other retailers and brand ownerswill need to “own” data derivedfrompurchaseanduseoftheirproducts.

3) Retail is set to see a dematerializing trend, with services such as virtual fittingrooms and augmented-reality apps taking the place of physical objects andservices.

OnNovember16,FungGlobalRetail&Technology’sLondonteamattendedtheWiredRetail2016conference inLondon.Herearesomeofourkeytakeawaysfromtheone-dayconference.

MAKINGLOGISTICSMORERESPONSIVETOTHEDEMANDSOFANE-COMMERCEAGE

The conference kicked offwith a session on some of the innovative logistics servicesthatcompaniesareintroducing.TwostandoutexamplesareShypandFetchr.

Shyp: Online marketplaces are booming, and Shyp focuses on the “pain point” forsellers using these marketplaces—shipping the products that they have sold. ThecompanyoffersaservicewherebysellersonsitessuchaseBaycanhavetheirproductcollected,thencentrallypackedbyShypbeforebeingshippedthroughregularcarrierssuchasDHL.ShypCEOKevinGibbonnotedthatthecompanyfocusesonthe“first-mileexperience,” which can prove a major barrier to would-be sellers on marketplaces.Reflectingthis,hesaidthathalfofShypuserswhoselloneBayhadneversoldonthatplatformbeforeusingShyp.Theserviceisnowbeingrolledouttobusinesssellers.

2 DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

NOVEMBER18,2016

HowShypworkswitheBaySource:FungGlobalRetail&Technology

Fetchr:Focusingontheboominge-commercechannelinemergingmarkets,Fetchralsopromises to help businesses overcome significant barriers—notably, the paucity offormal,recordedaddressesthatmakeshomedeliveryproblematic.FetchrusestheGPSsignal from the recipient’s mobile phone to enable its delivery drivers to locate therecipient, bypassing the hassle of phone calls to the customer to ask for directions.FetchrCEOIdrissAlRifaisaidthecompanymanages97%same-dayornext-daydelivery.

Emerging-marketchallenges,accordingtoFetchrSource:FungGlobalRetail&Technology

THEINTERNETOFTHINGSANDCONNECTEDRETAIL

Retail sees a disconnect between the highly tech-focused online channel and its low-techphysicalstores,claimedNiallMurphy,CEOofsoftwarecompanyEvrything.ThisislikelytochangeasmoreobjectsbecomeconnectedtotheInternetofThings—includingtheapproximately95%oftheworld’stotalgoodsthatare“highvelocity,”suchasfood,drinkandapparelproducts.Productswillbe“borndigital,”Murphysaid,witheachitemhavingadigitalidentitystoredinthecloud.

The conclusion? Brands will need their own data to survive and flourish. Amazon isalready launching private-label products based on the transaction data it has—and

3 DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

NOVEMBER18,2016

brandownersandrivalretailerswillneedto“own”dataderivedfrompurchaseanduseoftheirproducts.

NEWBUSINESSMODELSDISRUPTINGRETAILCATGORIES

Manyofour readerswillhaveheardofRent theRunway,a companyoffering fashionrentalsintheUS.WeheardfromitsUKcounterpart,ChicbyChoice,whoseCEO,FilipaNeto,made the argument that renting rather than buying clothes will becomemorecommon:

• Millennialsarekey: fully46%ofthisagegroupare interested inrentingclothes,withoneinfivewillingtospend£200permonthonsuchrentals,Netosaid.

• At the same time, only one-third of millennials are willing to buy items at fullprice.

• Fully95%ofapparel rentersare tryingabrand for the first time—whichmeansthatrentalcompaniesaregivingapparelbrandsaccesstonewcustomers.

Neto also outlined how Chic by Choice operates. It sources premium brands atwholesale,rentsthemmultipletimesandthenresellsthemonconsignmentsitessuchasVestiaireCollectiveandTheRealReal.

Weheard fromUS firmCasper,which has challenged the traditionalmodel of sellingmattresses.Whilemattressesmaynotbeanexcitingcategory, thecompany isagoodexampleofhowafirmcanshakeupasectorthatdoesnotworkwellforconsumers.Theexperience of buying amattress can be “terrible,” said Casper Co-Founder and ChiefProductOfficer Jeff Chapin. They are often overpriced, it is difficult for consumers tocomparepricesandstoresoftenusehardsellingtechniques.

Caspershookupthecategoryby:

• Launching as an online-only retailer, with a simple design and strong branding.Some90%ofitsproductisair,meaningthatitiseasilypackable.

• Deploying in-market A/B testing of products, including tracking returns ondifferentvariations.

• Engagingcustomersinproductdevelopment,suchasinitsCasperLabsprogram.

• Bringing online to the offline world, with a mattress showroom truck, pop-upstoresandflagshipshowroomsthatfocusonhostingeventsratherthanonsellingproduct.

Theresultisahostoffansandcelebrityendorsements,whichhavehelpeddevelopthebrand throughword ofmouth and on social media. Casper’s revenues reached $100millionin2015andthecompanyisaimingfor$200millionin2016.

NEWOPPORTUNITIESFORRETAILINDATA

Wealsoheardfromseveralcompaniesthatareleveragingtheboomindatatoimproveretailperformance.

Consumerdemandhasbecomelacklusterandtheartofsellingisdisappearinginretail.Software firmRubikloudpromises tohelp retailers shiftback toactively selling: ithashelped a Chinese buying platform build a network of 200,000 and has assisted a USretailerindrivingsalesthroughmachinelearning.

4 DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

NOVEMBER18,2016

BlueYonderclaimsitcanoptimizeupto99%ofdecisionsinretail,includingwhattypesof products to order and how to price them. The company hasworkedwithGermangrocery and apparel retailers to help them grow sales, reduce returns and improveservice.

Black Swan uses the Internet as a giant, global focus group to identify trends. It usespredictiveanalyticsthatarebasedonwhatpeoplearesaying,searchingforandbuyingonline.ThecompanyhaspredictedcoldandfluoutbreaksandforecastthepopularityofvariousDisneycharacters.

E-commercefacesabigprobleminpersistentlylowconversionrates:just3%ofvisitstoane-commercesite,onaverage,converttoasale.SentientTechnologiesthinksthisispartlybecausewebsitesrequireconsumerstodoalltheworkinsearchingorbrowsingforproducts.Thecompanyusesvisualsystemsthatbreakdownthecharacteristicsofaproductandsurfaceresultsbasedonthecharacteristicsthatshoppersbrowse.SentientTechnologies alsooffers evolutionarywebsite technologies that test thousandsof sitevariants live,whichenablesa continuousevolutionofwebsitesbasedonwhatprovesmostpopular.

VisualsearchfromSentientTechnologiesSource:FungGlobalRetail&Technology

EXPONENTIALTECHNOLOGIESANDADEMATERIALIZINGWORLD

Finally, JodyMedich, Director of Design at Singularity University Labs, outlined howdisruptivetechnologiesaresettochangeoureverydaylives.

• Augmentedrealityissettobe“ubiquitous,”Medichpredicted.Shesuggestedthatproducts such as contact lenses that can record and play backwhat thewearerseesandhaptic technology—whichallowsusers tovirtually “feel”products—willbecommonplace.

• 3D“nativeauthoring”willchangehowwerepresentinformationvisually—shiftingit from 2D images to 3D visualizations. Innovations such as Google’s Tilt Brush,AutodeskforMicrosoft’sHoloLensand3Dprintingwilladdthatextradimension.

5 DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

NOVEMBER18,2016

• Wehave seen ourworld “dematerialize,”Medich said. Objects (hardware) havemigrated into software, such as that used in smartphones:wehave seen this inmusicandphotography, forexample. Soon,wewill seea similardematerializingtrend in retail, with virtual fitting rooms and augmented-reality apps replacingphysicalobjectsandserviceswithvirtualcounterparts.

Storescouldseeadematerializingtrend,accordingtoSingularityUniversityLabsSource:FungGlobalRetail&Technology

6 DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&TECHNOLOGYDEBORAHWEINSWIG@FUNG1937.COMUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

NOVEMBER18,2016

DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comJohnMercerSeniorAnalyst

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