Tag Archives: ecommerce

Is Airbnb’s $10bn valuation proof we’re in a second dotcom bubble?

Airbnb’s investors have reportedly pushed the company’s valuation to over $10bn, leading some industry commentators to claim that this type of valuation proves we are in a second dotcom bubble.

Airbnb stats March 2014Remember, the first dotcom bubble had many weak business models where pretty much any company that had a domain name was worth billions.

This time round, there are some sound business models, which are disrupting industries not rebadging it. Airbnb is a disruptor, and needs to be examined before we come back to the question whether we’re in another bubble.

Continue reading Is Airbnb’s $10bn valuation proof we’re in a second dotcom bubble?

The cross selling and upselling business model

This is the ninth part of the series on how companies can make money from high traffic websites. In this post we’ll discuss cross-selling and upselling. As we’ll demonstrate, cross selling doesn’t need high traffic to sell more products.

At Endava we work with companies who are capturing data about their visitors and attempting to personalise the experience, usually with a goal of providing superior service, or selling more goods.

It’s all about the customer (and CRM is key)

At the heart of this solution is a CRM (Customer Relationship Management) system. CRM has become synonymous with large, expensive and difficult IT programmes.

Continue reading The cross selling and upselling business model

The Advertising business model

In today’s Western digital businesses, advertising is the main source of revenue for websites, mobile sites, mobile apps and anything in between:

In the first quarter of 2013, Google advertising revenue was $11.9 bn. Advertising revenue was 92% of Google’s revenues for the quarter.

For the fourth quarter 2012, Facebook’s revenue from advertising was $1.33 billion, representing 84% of total revenue.

Personally, I believe the advertising industry is in a bubble which is ready to burst. It is a semi-self-fulfilling industry that has been growing at a rate out of proportion to the businesses revenue which support it.

Organic revenue growth of the big four advertising companies, 2010-2012
Organic revenue growth of the big four advertising companies, 2010-2012. From Statista

Continue reading The Advertising business model

Hybris Partner Conference Day Two

Hybris partner conference day two agenda
Hybris partner conference day two agenda – delivery stream

Today is the second day of the Hybris partner conference. Yesterday was about changes at a company level and the commercial roadmap for partners.

Today has been split into three streams – commercial, delivery and technical. I joined the delivery stream because a colleague is attending the commercial, and delivery is kind of in the middle of the other two streams.

Apologies for grammatical and spelling mistakes as I’m releasing this post as quickly as possible throughout the day:

Setting up for success

Hybris are often called in to problematic implementations (emergency help), which is affecting growth of Hybris because it requires significant Hybris professional services. One of the problems Hybris face is when they work on Agile projects, they ask for documentation to get started, and the implementation teams will say “We don’t have any documentation because we’re Agile”. This means it takes longer for Hybris to help with the project, and besides, Agile doesn’t mean no documentation!

5.1 Product Update

The latest version of Hybris includes a Chinese accelerator, which supports Chinese payment systems, social networks and provides a more culturally aligned front end design. This demonstrates how important China is to the organisation.

Search (supported by Solr) has a dynamic feature which lists results as the customer starts typing their keyword (like Google), and the results can be ordered, or ranked, by a number of factors. It also supports “hero products” where results can feature any number of products even if they don’t completely match the initial search. This also includes filtered, or categorised search results.

Hero products are administered by simply clicking a star, exactly the same as Twitter favourites.

Order Management Services updates include a unified User Interface (UI) for different back office administration views such as content, order management and sourcing.

The UI now uses Cockpit NG across more of the administrative applications.

The Subscription Billing Gateway has been extended to support publishing and Telco customers. It supports subscription products with multidimensional, complex offers.

Unsurprisingly some new 5.1 features includes support for Hana, also owned by SAP.

Hybris and Agile

Hybris gave a short presentation on the advantages of iterative development, especially Agile. They also recommended automated testing and continuous integration, techniques for reducing technical debt and improving quality through peer reviews. Release frequently rather than big bang releases.

We already do this at Endava and it always surprises me how many other companies don’t.

Best practices

Hybris have a reference implementation which includes best practice for ecommerce projects. This includes design patterns and documentation for partners to understand and emulate for our own projects.

Hybris gave a presentation about being ready to go live:

  1. Configuration and architectural review
  2. Monitoring is in place, both hardware, application (database, web server, etc.) and specifics, implementation monitoring
  3. Performance testing is considered mandatory, with real data, on an exact replication of the production environment.

Hybris went through some horror stories of real launch problems. A bigger problem is that a number of partners repeat those horror stories, so Hybris promoted a shared best practice across partners. Hybris already has a document listing these best practices. Clearly this document isn’t enough though, or partners wouldn’t be repeating the mistakes.

Performance Case Studies

The most common implementation issues are:

  1. Inadequate NFRs (Non-Functional Requirements)
  2. Testing too late. Not testing enough due to lack of automated testing and the inefficiency the business views manual testing.
  3. Partial testing, such as the customer view and not the administration side, or application testing without testing the production network and hardware
  4. Not using production data

Many of these issues apply to more general web implementations, not just ecommerce.

Finally, Hybris strongly recommend partners inform them of go live dates to have consultants ready. And even better, using some Hybris professional services in the implementation rather than waiting for the emergency call.

Toll Gates (consulting best practices)

In order for s successful ecommerce implementation, customers will need a level of commerce maturity.

Before implementation begins, it’s important to define the business strategy, identify key roles and responsibilities, priorities (high level business concepts rather than project deliverables) and a Plan B. All are obvious project management deliverables, but are often ignored and starts an implementation incorrectly.

Hybris showed a typical organisational structure for a new customer, with IT and business leads.

Hybris have a number of toll gates in an ecommerce implementation to avoid the common pitfalls and emergency calls later on.

Hybris recommend the partner and customer build a project on boarding process for new people coming into the project – both technical and business users. This also highlights the need for clients to step up, mature and defy their own processes.

After go live, the project needs a release management process, with Plan B and the other points listed above. Again, we do this at Endava, but I suspect many other partners don’t.

Measuring success is critical. “The difference between a good partner and a great partner is how the partner plans for and handles issues, at both a business level and technical”.

Red to Green

The reason for many clients calling Hybris is that something unexpected has occurred on a project and the partner didn’t have a plan to handle this anomaly. Hybris don’t just jump into the project and handle the current situation, they will do a complete project audit, from overall project management (roles and responsibilities, methodology) first. They will reaffirm success criteria, scope prioritisation and then do a complete (people, plan, tools, code) review on the target area(s).

In the event of an emergency call to Hybris, they create a rescue, or go forward plan. This doesn’t always have an optimistic outlook and may involve moving timelines and increased costs (more resources based on an artificially low quote to win the business).

This was all common sense, and is what gave me my grey hairs in my early days. For partners on the audience with a full head of non-grey hair, these tips were useful.

Partner Enablement

The new partner programme is multitiered, with Contractor partners and basic level (hyOn). New self-service training will ramp up the number of developers (and other functional roles) more quickly. There will also be a specific Busyness Analyst training course, and unusually for a product company, they will provide a train-the-trainer course for larger SI’s (with over 100 developers to train) such as Endava.

CMS Integration

Hybris already has some CMS capabilities, however some clients still need to use an external CMS (Content Management System) to handle complex workflow, personalised content paths including multiple languages, job roles, authentication and approvals, and promotional microsites. Best of breed, modern CMS products (e.g. Adobe CQ5 and Sitecore) can still handle content more efficiently than ecommerce platforms.

To integrate Hybris with a CMS, you need to consider:

  1. The product taxonomy, and where the content will be entered
  2. Where customer user data will be stored, for both the checkout process and marketing purposes.

As a generalisation, data that changes frequently (more regularly than every few minutes) and is time sensitive needs to be stored in Hybris.

Hybris Partner Conference Day One

Hybris partner conference 2014 - very impressive
Hybris partner conference 2014 – very impressive

I’m at a Hybris partner conference in Munich, Germany for the next couple of days.

Hybris is an ecommerce platform recently acquired by SAP, and is used by hundreds of retailers on the internet.

Hybris is one of the top-tier of ecommerce platforms. There has been a big consolidation in the market over the last couple of years, leaving pretty much three players at this level: IBM, Oracle and SAP (who own Hybris).

Here are the highlights from day one of the Hybrids conference. Apologies in advance for grammar and spelling mistakes:

Firstly, the venue and facilities were fantastic. Super swish, in a hangar with smoke, laser lighting, large screens and good speakers (both people and loudspeakers). Over 1,400 people were at the event.

Highlight of the year was clearly being bought by SAP. Hybris want to keep their corporate culture though. A third of Hybris clients are already SAP clients, but upselling to the other two-thirds is a good opportunity for the new ownership.

There’s a big opportunity with Financial Services, which is great from the SAP perspective, and provides new revenue streams from clients who have historically understood, and spent significantly, on IT.

Last year’s revenue was over 100% year on year – the exact figures can’t be released because SAP is a listed company and haven’t released their figures to the market yet. Hybris has high aspirations though, and is aiming for $1bn in the next 3 years. They signed almost 200 new deals in 2013.

Asia-Pacific is a major region with 28 new deals, 4 of which were over €1m. Hybris were encouraging partners to open new offices in the Asia-Pacific region, and even offering to help them.

Some top end brands such as Gucci and Burberry signed with Hybris in the last year. Telco went from nothing to a significant percentage of revenue, including EE. New US clients included Nest, 3M (over $20bn of their business is sold online), Amway and Aldo (with click and collect and other innovations).

Like many software companies with similar growth rates, it requires a high quality, proven partner network for implementations in order to scale quickly. Like those other software companies, Hybris’ biggest challenge is people – those professional services people who can implement Hybris for customers.

There are 6,000 delivery people across the Hybris partner network. Last year, 3,250 people took the online training courses. Last year, partners delivered 140 new projects. And that’s not enough. Worse still, too many clients are complaining about low quality, missed milestones, running old versions of the software, and asking Hybris to help the partner with implementations.

Hence Endava’s involvement supplying quality resources for Hybris implementations.

Interestingly, technical delivery issues are only about a fifth of the problems with implementations. The biggest issues are ‘simple’ project management issues such as roles and responsibilities, lack of project goals and expectation management.

Like many other companies, mobile is key to Hybris: omnicommerce. Linking together call centres, physical stores, web sites, mobile, customer service channels, mobile apps, social media, and so on. SAP will help with a large part of this stack (Hana and so on). SAP will also help with the complete lifecycle of the product, from design to manufacture, distribution and now the retail channel. Think of Hybris as the last mile of the customer journey.

I liked their analogy with Amazon – customers don’t buy from Amazon because it’s the most beautiful experience; they use Amazon because delivery is efficient, content is accessible anywhere, and the B2B marketplace enables more products on the site.

Hybris Labs

There were a number of prototypes on display, including Google Glass integration, iBeacon and indoor positioning, image recognition and sound recognition for television advertising (using a different model to Shazam). Hybris don’t just give the usual talk about being innovative – you can see their pride in their labs environment.

Hybris TV integration with real time product placement
Hybris TV integration with real time product placement
Hybris Labs product recognition through Augmented Reality
Hybris Labs product recognition through Augmented Reality
Hybris Labs demonstrating in store product locations
Hybris Labs demonstrating in store product locations

I’ll provide further updates tomorrow – I’ll be attending the delivery stream (semi-technical and business focussed).

The Titans of ecommerce – Alibaba vs Amazon

 

Alibaba billboard in London
Alibaba billboard in London

Alibaba had its record highest revenue day yesterday – a staggering $5.75bn in 24 hours during a promotional event. Or put another way, that’s $66,500 of sales per second. Alibaba is the biggest ecommerce business in China, and it will be interesting to see how it stacks up against its peers in the West.

Put into relative context, Marks & Spencer has annual revenue of £10bn per year – that’s around 3 times the Alibaba 24 hour amount.

Amazon released their annual revenue earlier this month. Their 9 month revenue (since Jan 1 2013) is $48.8 billion, of which $39.8bn is product sales – a better comparison to Alibaba.

Alibaba is planning to IPO soon, and rumours are that it’s value will exceed Facebook. And so it should. As a retailer, it has product sales and clear profits. It doesn’t rely on other organisation’s advertising and marketing budgets. Similarly to Amazon and eBay, Alibaba is a marketplace, bring sellers and consumers together, and the company doesn’t need to hold all stock itself.

On the subject of eBay, the first major online marketplace, it reported 9 months revenue of $11.5 billion.

The next major landmark will be when Alibaba achieves revenues higher than the biggest bricks and mortar retailer, Walmart, who posted revenues of $116 billion last quarter. Alibaba still has some way to go.

Why the Internet didn’t cut out the middle man

TripAdvisor stock had almost tripled in the last 12 months
TripAdvisor: Who said travel agents are dead?

There was a time when I thought that the Internet spelt the end for intermediaries, or third-party agents. Surely, I imagined, users would go and transact direct with brands – from flights to banks, from insurance to mobile phones.

Agents have comparison engines to thank for averting disaster. Comparison engines finally showed the added value that agents offer.

Until comparison engines, third parties had been purely introductory agents. Think of a recruitment consultant – they are pairing together, or introducing – a candidate with their potential future employer. Estate agents do a similar role. And the Internet looked like it would disintermediate the middle man by offering a direct service.

Along came comparison engines and aggregators (on the Internet there isn’t much of a difference). Here we could see more choice, price comparisons, and feedback from other users.

Travel agents are still having a tough time economically. In the travel sector, the real winners have been startups and companies which have completely transformed themselves into a digital company.

One of the leading startups has been TripAdvisor. This is a completely new type of intermediary. It doesn’t have any stock in a traditional sense, and doesn’t even enable customers to book directly on its site. Yet TripAdvisor is growing at 25% year on year and has current revenue of $850 million, with a healthy 25% profit margin.

Financial Services: The utilities model?

We’re seeing the same story across many other industries – in retail (think of Amazon!), recruitment, real estate and finance. Finance is particularly interesting because financial services organisations could become “utilities” where customers go to a third party agency for a financial product (e.g. a loan), the cheapest one is shown and the user goes through to complete the transaction.

This is already happening with the insurance market – Compare the Market and other comparison engines have bigger brand recognition and fundamentally, loyalty, than the insurance companies it passes business through to.

Today’s question is whether insurance and financial companies want to be, or mind being, seen as utilities or value-add services. To answer this, it would be interesting to see the transactional statistics of insurance aggregators – to compare (forgive the pun) whether customers compare insurance companies and then click on the companies that they recognise.

If users are selecting the insurance companies which aren’t easily recognisable, it’s a signal that the industry has already turned into a utility model, and agents are here to stay for a while longer.

Google: the future passport across the Internet?

Just Google Authorship improved blog traffic significantly
Google Authorship alone improved blog traffic significantly

I’ve been applying a bit of Search Engine Optimisation to this blog over the last couple of weeks (successfully I should add – visits are already up over 30%) and one of the most recommended techniques is to assign authorship to articles.

What this does, is tells Google that the web site owner has trusted this particular person to add an article to the site. You might think that for this blog, the site owner and author is the same – but Google doesn’t mind this because it just wants to know there’s a human at the end of the keyboard, not another spammy robot knocking out (or copying) content. It’s the age old sign of trust of putting someone’s name at the bottom of a document adds credibility.

The way Google trusts that the person is a real human is by linking the ‘byline’ to their Google+ account. This is clever for so many reasons:

  1. Improves Google+’s own PageRank of more incoming links (theoretically, and probably practically within Google’s control but it is now proven through this method)
  2. Gets more people using Google+ (all those authors, who don’t want readers to land on an empty Google+ profile page)
  3. It has moved Google along the journey of becoming the user authentication on the Internet.

It’s the last point that is the most valuable. The Internet needs a single sign on, centralised user authentication system to prove who we are, so that businesses can trust who the buyer says they are.

A friend of mine sells furniture online. It costs him a small fortune to deliver it to customers, and with the distance selling regulations, he often gets customers who tell him after a week of delivery that they don’t want the item any longer. He reckons he can tell who is ‘trying it on’ to check whether he’ll offer a refund without bothering to collect the item again. He estimates that these “customers” go from site to site trying to take liberties from companies.

Wouldn’t it be a better system all round if a user bought an item from a website, and that site could look in a central place for delivery and payment information, and whether this user was trustworthy or not, before dispatching the item.

Another player in the market who might try to create this central authentication system is Apple. Combining Apple ID with fingerprint recognition and perhaps phone based GPS information could be a secure system.

Hugh Jackson, director of MediaCo on Venice and Panda

Almost to reconfirm how I described how the first morning at ad:tech had been full of

It's a sobering thought that on some searches the 3rd result is below the fold!
It’s a sobering thought that on some searches the 3rd result is below the fold!

practical tips and advice, Hugh Jackson from MediaCo, an SEO company, gave a good, practical presentation on two of the latest Google algorithm changes and how to take advantage of them, despite all the bad press they’ve received.

The two algorithm changes are Panda and Venice.

Venice

Results are now based upon the local results of where the user is located. (My Note: Actually, they’ve always been local, so if you searched for ‘Spurs’ in the UK you’d end up with Tottenham Hotspur Football Club, and if you searched for Spurs in the US you’d see the San Antonio Spurs basketball team. Now, results are localise for everything, down to a far more granular level).

So if you type in say, tyre dealer, you’ll get very different results if you’re based in New York, London or Manchester.

This is the only way results are ranked organically (i.e. not paying for an ad in the results) for generic terms.

To take advantage of Venice, you need to create truly unique content for your user’s locations. National companies without local offices are at a disadvantage.

The SEO strategy to take advantage of Venice is to create landing pages and change the site structure to reflect localised pages. The example Hugh gave is Autotrader, which now has regions, and then local cities where car results are displayed for that local city or region.

The tried and tested SEO technique for Titles and Descriptions has been slightly updated, so you should now use:

Title + location + brand

for AutoTrader, the example given was:

Find used cars in Manchester – used cars | Autotrader

Also, inbound links should ideally include the location in the anchor text, although Hugh pointed out that Google sometimes perform U-turns on best practice for inbound links.

Other techniques to improve natural results include having local reviews, directions to the location, a local address for the business, and a local phone number. These are recommendations though, not necessities.

Finally, put your local addresses in the site schema.

Panda

It's [almost] always about content, content, content...
It’s [almost] always about content, content, content…
Panda uses real world, human user data to verify the quality of sites. So a site that simply provides links to other sites, and users spend a very short period of time browsing, will be hit hard by Panda. This real user data comes from Google +, Chrome usage stats and toolbars.

Use google.com/trends and adwords.google.co.uk/keywordplanner to help with your SEO terms.

You can now have a page with little text, perhaps just a couple of sentences, followed by a video, and this may perform well. The reason is that users will stay on the page (watching the video), and this gets fed back to Google, who then interpret this as a sign of a real user finding the page interesting. This is very different to previous SEO techniques where keywords were the most important SEO consideration.

To create inbound links, Hugh recommended that you create Infographics and distribute these to other websites, making sure you have credit for the work, through good quality anchor text.

It’s important to ‘announce’ new content by promoting it on social networks – Twitter, Google+ and Facebook for example. This builds authority and will help develop you as a thought leader and people will link to your page.

Another good technique, which Google has been vocal about, is to attribute content to a particular person by linking to their Google + page.

And finally, it’s a sobering thought that on some search results such as ‘Manchester United’, the 3rd result is already below the fold!

The real value

Of course, Panda and Venice are details. The main reason why natural searches are still so important is because when a user performs a search on Google (or Bing, or any other search engine) and arrives at your website, the chances are that you have a genuinely and fully qualified lead!

See the other presentation notes from ad:tech.

Mark Read, CEO WPP Digital on WPP’s digital future

WPP expect digital revenues to increase at the expense of print
WPP expect digital revenues to increase at the expense of print

This was the first keynote speech of ad:tech London. Here are my brief notes:

A key focus for WPP at the moment is China and the Internet

WPP has more staff in China than in the UK

Digital ad spend will grow from 95bn today to 180bn in 2018, at which point digital will exceed traditional ad spending

Digital will take revenue from print and other channels, not from TV. In fact, TV ad revenue may still grow very slightly to 2018

WPP will be concentrating on this [shopping] list for the next 5 years
WPP will be concentrating on this [shopping] list for the next 5 years
Key trends from Mark:

      1. Mobile. Its beyond advertising. Mobile is a CRM tool rather than another channel for banner ads. E.g. the British Airways app provides branding on a phone, alerts and transactions
      2. E-commerce will become ever more important. The uk is already the second biggest market for ecommerce to South Korea. The question is how to handle Amazon
      3. Data driven. Every website you visit will leave a digital footprint. The question is how to join these footprints and cookies together into one story, or a single customer view.
      4. Social. Many WPP clients see Facebook equals mobile. Mobile usage = Facebook usage. The top mobile apps are Facebook and YouTube (each with over 1 billion installs), followed by WeChat (in China), Google Plus, Twitter and LinkedIn.
      5. YouTube. 1 billion users consumer over 6 billion hours of content per month. That’s 6 hours per month per person. Video equipment on the high street at affordable prices, not just for professionals. Brands are joining in by supporting user generated content with product placement (e.g. Ford supplying vehicles for travellers).
      6. The Gatekeepers of the internet. Google, Apple, Amazon, Facebook and Microsoft each have hundreds of millions, and some have billions of users. Working with them, or having a strategy of working alongside them, is key.
WPP feel technology is central to their clients' digital strategy
WPP said that technology is central to their clients’ digital strategy

In the next 5 years digital will account for around 45% of WPP revenue, it’s currently in the mid-30s.

WPP have bought ecommerce provider Salmon who produce the sites for Argos and DFS.

WPP doesn’t want to be a an ad agency. It wants to become a full marketing implementation agency in the next 5 years, competing with the likes of Accenture and Deloitte Digital.

The summary was this:

Ideas + Technology = great digital marketing

You need strength in both areas.

And I couldn’t agree more.

See the other presentation notes from ad:tech.