Ecosystem Thought — October 27th, 2012
AP Framework: The Evolution of Shopping
Author: Architect Partners
The way we shop is rapidly being influenced by scores of innovative young companies who are helping retailers, brands and consumers fundamentally reshape how goods and services are bought and sold.
Shopping is at the early stages of profound change. Our presentation below tackles “The Evolution of Shopping.” We highlight some of the key drivers of these changes, offer a framework to help understand who fits where in a very complicated ecosystem and feature some of the most innovative companies making things happen.
We, like many, are constantly deluged with the latest headlines from information sources like The Wall Street Journal, TechCrunch, Bloomberg and GigaOM. What we’ve attempted to do with The Evolution of Shopping is provide some context to the headlines.
We stepped back to the fundamentals to help us understand the innovation we’re seeing. We’ve mapped how products are bought and sold as a seven step process. From a retailer’s perspective these are 1) attract customers, 2) help them learn, 3) convert them to purchasers, 4) suggest additional purchases, 5) help them pay, 6) encourage and manage social signals and finally 7) encouraging repeat purchases. We then mapped over 300 companies against this framework.
According to the U.S. Census Bureau, annual U.S. retail sales exceed $4 trillion. Over time, much of this spending, not to mention global retail spending, is likely to be influenced by this evolution. Incumbent suppliers to retailers and brands such as SAP, Oracle, IBM, Microsoft, NCR, Epicor, Visa, Mastercard, American Express and many others have major stakes in the outcome and are beginning to see emerging competition from a new set of competitors such as eBay, Amazon, Salesforce.com, Google and Apple. Scores of young emerging companies are also likely to be important disrupters.
Marquee M&A transactions have already occurred within this area. We’d highlight eBay’s M&A appetite which has included the acquisitions of Hunch, Zong, Magento, WHERE and GSI Commerce for a total of over $3 billion just in the past 12 months. Also, the purchase of radian6 by Salesforce.com is another transaction with very interesting ramifications.
As we enter the holiday shopping season we see continued tangible signs of this evolution. According to IBM’s Cyber Monday Report 2011, on-line shopping continues to show strong growth, up 33% from 2010. Also, mobile device-initiated purchases are beginning to become meaningful, representing 6.6% of Cyber Monday 2011 sales.
Please see The Evolution of Shopping below: