Differentiated Commerce: The OmniCommerce Imperative

How the Convergence of Digital and Physical Commerce is Driving the Future of Commerce

Contents
Creating One Experience for Customers Brand Consistency Real-Time System Of Reference Continuous Customer Engagement with Mobile Open Foundation OmniCommerce Maturity Model Services Lifecycle Global Localized About hybris 2 2 2 3 4 4 5 5 6 6 7

Physical and digital commerce are converging at an incredible pace driven by highly connected customers who demand experiences that adapt to their mode of purchasing and shopping. This opens the door for a new imperative known as OmniCommerce, which favors a customer-centric approach over channel-specic processes. Success in commerce now depends on real-time views of customers, inventory, and data to build an intimate understanding of their commerce behavior. Implemented correctly, an OmniCommerce business model and platform boosts order amounts, optimizes lifetime customer value, and fosters gains in loyalty and customer intimacy. Emerging commerce technologies that are robust, exible, scalable and channel agnostic are enabling companies to capitalize on the physical and digital convergence, and deliver a differentiated commerce experience. This paper explores how OmniCommerce enables businesses of all types and sizes to keep up with today's highly demanding customers and describes growth opportunities that are available through embracing a new way of conducting commerce.
Differentiated Commerce: The OmniCommerce Imperative 1

Creating One Experience for Customers

In moving from channel-centric business models to one where customers can expect a relevant, contextual and consistent experience across every channel, companies need a single commerce technology platform that:

must distinguish itself consistently wherever a customers engage the brand and companies are investing heavily and changing business models to respond to that change. In the retail industry, this change in customer relationship is being acknowledged (see left side of the figure below). Silos are out, brand consistency is in. Brands need to be consistent across all physical branding elements: in-store signage, shelf labels, catalogs, and product displays; their digital counterparts: product content, visual assets, price and promotions on own sites and marketplaces; and across all accessible via smartphones, tablets, PCs, and kiosks.

Enables brand consistency, in terms of the context of

underlying assortments, offers, promotions content and policies, across all customer touchpoints

Provides a real-time system of reference that enables

single views of product, pricing and promotions, inventory, orders and customers

Real-Time System Of Reference

Customers now demand immediate response, want offers served up when they want them, and expect companies to be responsive to their preferences, not just their purchase history. Just as brands want a single view of their customer, the customer wants a single view of them; including products, pricing, promotions (even comparisons to a companys competitors!), inventory availability at preferred locations, their own orders and their recorded preferences. How businesses respond to these demands are key in determining the winners in commerce. Even though these requirements are seldom supported, even in part, by legacy commerce platforms, companies need not face a daunting rip and replace systems approach; instead, companies need an integrated system of reference that sits above traditional transactional and less agile systems of record, such as ERP. An integrated system such as this shares the required information in real-time at the point of need to the customer, sales associate or fulfillment person. It also is a workhorse which synchronizes with older, legacy systems around basic transaction elements, and can provide much richer customer engagement without requiring immediate displacement of established systems.

Incorporates mobile as essential for continuous customer

engagement

Is built on an open foundation that easily integrates legacy

systems as well as emerging touchpoints and experiencefocused technologies All of these platform functionalities are needed to achieve optimum levels of customer engagement and commerce effectiveness.

Brand Consistency
Establishing consistent brand messaging and differentiation is becoming more difficult as consumers develop impressions about brands from inputs and influencers outside a marketers control, such as social communities, forums, and product ratings and reviews. Further, companies traditionally have been able to offer distinct channel (whether physical or digital) assortments, prices, and promotion policies while remaining in-step with individual channel competitors. But customers are forcing a change: they dont see channels; therefore, a brand

Crosschannel Opportunities "Very Important"

The Opportunity Defined Customer vs Product
Create a single brand identity across channels Allow the customer to purchase, take delivery, or return the product through the channels of their choice Improve operational execution across all channels Allow inventory allocated for one channel to be used for another channel's fulfillment Winners Others

85 % 74 %

74 % 82 % 70 % 79 % 58 % 74 %

Leverage customers knowledge and information assets across channels Use the digital channels to provide rich content about our products and services Use the digital channels to build a sense of "community" around our Brand

79 % 69 % 74 % 57 % 56 % 50 %

Omni-Channel 2012:Cross-Channel Comes of Age2012 Benchmark Report RSR Retail Systems ResearchNikki Baird and Brian Kilcourse, Managing Partners June 2012

Differentiated Commerce: The OmniCommerce Imperative

Consumers Now Expect OmniCommerce Capabilities

Recently, hybris commissioned a survey of more than 500 consumers in the U.S., across income levels and ages, with an equal distribution of genders. The survey found that shoppers now routinely expect that their favorite retailers will be accessible to them anytime, anywhere, via any channel:

Continuous Customer Engagement with Mobile

According to Mobile Commerce Forecast, 2012 to 2017, by Forrester Research1, the exponential growth of mobile commerce is transforming customer shopping habits. The report found that mobile retail and travel spending increased by 80 % in 2011 and is projected to more than double by the end of 2012. It also shows that retail represents mobile commerces fastest growing category, generating $ 25 billion in 2017. There are 3 major roles for mobile in an OmniCommerce future:

Almost half (45 %) of respondents indicated that

in-store pickup options for online purchases were most important.

Provide a touchpoint for on-the-go customer when they

want to research, decide, and locate products and services

Nearly a third (28 %) of consumers selected in-store

returns for online purchases as most valuable.
Source: hybris 2012 Order Management Consumer Survey

Bridge all possible touchpoints for continuous on-line and

off-line engagement with customers

Open commerce pathways that are time and location

aware but gated by person or machine Mobile devices can enable and accelerate competitive intensity; they weave together your offline and online customer activity but also position your competitor only a click away.
1 Forrester Research, Inc., August, 2012.

This means rich support for both, internally and externally sourced product content, access to large data stores of structured and unstructured data, and unified order processes that synchronize with underlying fulfillment and supply chain systems. It also means that fulfillment moves beyond channel silos. As shown in the right side diagram page 2, retailers see the need for seamless channels, either to save the sale in the case of a stock-out in a store, or fulfill a sale made online.

As Facebook seeks to translate its social media users into a social commerce users, some relative newcomers, like Pinterest, have received more favorable ratings. Forrester Research noted, user receptiveness to product marketing on Pinterest is about double (42 %) that of Facebook (22 %) in usefulness for product discovery. Regardless of which is more effective in social commerce, integration to social media and social commerce sites are often required for todays brands. The chart bellow illustrates how mainstream integration such as sharing via social media has become. It also highlights how relatively new platforms such as Pinterest and Facebooks Custom Open Graph gain adoption quickly in todays market.

E-Commerce Site Integration in IR 500

77 %
Ratings & Reviews

64 %
Like Button on Product Page

61 %
Twitter Share Button

51 %
Pin It Button

36 %
Google+ Button

12 %
Facebook Login either Website or Social App

4%

4%

Facebook Social Website Expression Social App (Custom Open Graph)

Source: Social Commerce IQ: 8thBridge, December 11, 2012

Implication? Future commerce platforms must connect easily to evolving applications and networks as there will always be a rising star in any given year, just as many of the hot brands engaged their customers on Pinterest for the first time in 2012.

Differentiated Commerce: The OmniCommerce Imperative

Open Foundation
OmniCommerce strategy requires a strong and open foundation that consists of two key elements: operation with periodic updates. Endpoints, such as point-ofsales devices or a sales reps order book, are now migrating to new, end-to-end processes and platforms. Ease of connecting is also key to the next generation of commerce platforms, whether it is integrating with older enterprise systems or linking with fast evolving technologies. When customers discover a compelling experience through a new technology, their pace of adoption and that of sellers can be extraordinary, as happened in Social Media with Pinterest. Supporting both legacy and emerging technologies requires commerce platforms to have open, flexible architecture built on modern technology.

Native support by the commerce platform for all physical

and digital touchpoints

Ease in connecting to new and legacy external applications, networks, and data stores A common core that seamlessly executes across a variety of rapidly evolving devices, form factors, and selling tools is essential to serving customers in the manner they demand. Many location-specific technologies were built for standalone

OmniCommerce Maturity Model

In a relatively short period of time, commerce has seen significant changes and advancements from traditional selling strategies of the past decades. It has moved from big box formats (stack it high and let it fly) that streamlined supply chains and economies of scale to drive down prices (while simultaneously expanding assortments), to Internet-only models without a physical component but with equally efficient supply chains focused on personalized delivery of individual orders. In the diagram below, the horizontal arrow under the pyramid depicts traditional physical relationship sellers on the left retailers, distributors, and manufacturers who operate brick-and-mortar stores, branches, wholesale warehouses, or distribution centers. Some may also use printed catalogs or direct sales personnel targeting consumers and businesses. On the right are newer, digital, e-commerce or m-commerce enterprises that dont have many physical assets, stores, or branch locations. These include web-based digital properties, kiosks, and television-based shopping channels where customer interaction is 100% virtual. As internet penetration has ramped up, there has been movement upward and across this continuum as traditional brands have transformed more narrow channel-centric models into multi-channel, cross-channel forms to differentiate themselves using combinations of physical commerce and digital commerce such as buy online, pickup in store (BOPIS). However, physical and digital businesses now need to move beyond multi-channel and cross-channel formats, and disparate technology platforms. In order to secure their position one of the commerce leaders of tomorrow, companies must differentiate their commerce offerings by implementing an OmniCommerce business model.

OmniCommerceTM Maturity Model

OmniCommerce
- Services - Lifecycle - Localized - Global

One Experience Commerce Differentiation

Multi/Cross-Channel
- BOPIS - Endless aisle - Customer linkage

Traditional
- Store/branch - Catalog/Flyer - Sales Reps

Evolving
- Website - Mobile - Kiosk

Channel Centric

Selling Vehicles Physical Digital

Differentiated Commerce: The OmniCommerce Imperative

Differentiating Factors for Greater Growth

Just as there are four core elements for creating one experience for customers, there are four key elements that can can assist businesses in amplifying their growth and establishing differentiated commerce:

Services

Lifecycle

Global

Localized

Services Offering high-touch personal services to

customers, staves off commoditization.

Lifecycle Greater focus and interaction on the customer

journey throughout the entire product lifecyle.

and information previously only used in call centers centers which in turn are becoming robust solution centers that can operate in both assisted and self-service modes. Either way, services can be the deciding factor for the increasingly time-starved customer. The commerce platform must enable service offers as it:

Global Compelling revenue growth opportunities lie

beyond most companies home markets.

Localized Capturing customers across every stage of

the purchase lifecycle and serving up highly personalized, interactive and localized experiences.

Enhances connection to customers during and after

the product purchase

Simplifies the process for configuring, pricing, and quoting

Services
Commerce based on high-touch personal services (such as call center, concierge shopping, etc) offers companies a path to combat the commoditization of products resulting from e-commerce transparency and site proliferation. Brands can bundle services to differentiate products warranties, installation, subscriptions, automated replenishment orders, design services, remote video chat, among others. For some industries, such as mobile telecomm providers, Maintenance Repair and Operations (MRO), and Do-It-For-Me in home improvement, the service offer can be key to a sale. Often, the services offered may not have a discrete price; rather they are part of a total customer service experience as customers are supported with sales associates armed with technologies

products/service bundles

Offers an extension of the brand relationship that may

be hard for competitors to replicate

Addresses the relatively underserved commerce support

for this huge, complementary market

Lifecycle
Companies today have many models for managing product lifecycles, from full vertical integration to a dedicated focus only on manufacturing, wholesaling, or retailing. But as consumers use social media and other emerging communication vehicles to engage with brands, and as brands begin to collaborate and connect more directly with end-consumers commerce activity is increasingly moving from B2B or B2C toward B2B2C.

Services Market as an Untapped Opportunity

According to the U.S Bureau of Economic Analysis, $ 10.7 trillion of the $ 15.1 trillion produced in 2011 went toward personal consumption, of which goods contributed just under a quarter, or $ 3.6 trillion (split among non-durable goods at 16 % and durable at 7 %). However, more than $ 7 trillion in services was produced in 2011, reaching 46 % of GDP.

B2B plus B2C

The spectacular rise of consumer facing internet companies such as Amazon, Facebook, Google, and other smaller consumer web companies has kept attention on B2C. Nonetheless, Forrester estimates that by the end of 2013, customer-facing front-end B2B eCommerce will reach $ 559 billion, more than double the US B2C eCommerce at $ 252 billion.

Differentiated Commerce: The OmniCommerce Imperative

It is easy to see this transition with established brands like Amazon soliciting feedback and crowdsourcing digital content production for their Original Instant Video content or with services like Kickstarter or Quirky who function to establish these engagements with emerging products and startups. Major brands, who previously sold their products exclusively through dealer networks and whose websites were focused on product information, now offer highly interactive brand-focused experiences that allow consumers to purchase from them directly. The same sites also now offer consumer-like experiences to their dealer networks. Key to moving toward a higher level of active lifecycle engagement:

Consistent, global commerce assets suited for rapid expansion in any country or region

Easy access to key technology support in-country or through

a follow the sun remote model

Partners who support local greenfield operations, e. g. for

local fulfillment, until scale is achieved. Global growth is becoming one of the fastest ways for a company to capitalize on new sources of revenue, as companies can establish a commerce presence even prior to a physical location presence. Nonetheless, effective brand management requires global consistency. A commerce platform must enable management of languages, pricing, currencies, payments, taxes, product lines, channels, and delivery methods as well as local customs, habits and brands that differ from region to region.

Customers provide input into product design or assortment Product visual and content assets are shared across web
sites and users generate content

Upstream brand owners increasingly have direct connections to end customers This same consumerization is changing the B2B landscape rapidly: B2B customers expect to be served with the same ease of access and the same kind of control that consumers are demanding. So whether you are a business in a B2B setting who wants upstream control or are vertically integrated and want to share assets across your operations, the commerce platform you choose must support a lifecycle view.

Localized
Localized commerce revolves around capturing a customer across every stage of the purchase lifecycle and using data-driven intelligence to serve up highly personalized offers based on GPS-defined customer location or expressed preferences. It is the ideal practice for brands interested in achieving a highly integrated level of OmniCommerce maturity, and can help businesses launch targeted marketing initiative based on a sharp understanding of buyer behavior.

Global Growth
Global business-to-consumer e-commerce sales will reach $ 1.25 trillion by 2013, base on a report by the Interactive Media in Retail Group (IMRG), a U.K. online retail trade organization. B2C e-commerce sales in 2011 were $961 billion, an increase of close to 20 % from a year earlier Chinas e-commerce sales grew more than 130 % in 2011. The United States remains the worlds single biggest e-commerce market, IMRG says, followed by the United Kingdom and Japan. IMRG estimates that growth rates in those countries will be approximately 10 15 % a year.

Prof. Alex Pentland on Reinventing Society in the Wake of Big Data

Recently I seem to have become MIT's Big Data guy, with "Forbes" calling me one of the seven most powerful data scientists in the world. I believe that the power of Big Data is that it is information about people's behavior instead of information about their beliefs This sort of Big Data comes from things like location data off of your cell phone or credit card, it's the little data breadcrumbs that you leave behind you as you move around in the world. as quoted in Edge, December 5, 2012 There is no denying that local is having a transformative impact on commerce even with niche solutions and social networks of today. But the right commerce platform needs to provide not only a base to for big data insights across multiple touchpoints; rather, localized commerce should:

Global
Revenue growth opportunities available from moving beyond the home market are so compelling that manufacturers, brands and retailers cant afford to wait to make globalization a top priority. The ability to develop a global in a box template for worldwide expansion is key to initial and ongoing replication of global growth. Gone are the days when the assumption was that an international brand would be a winner by default in a new country. Given the intensity of market pressures and growth imperatives, companies need a platform that has:

Set a context in time, such as a point in a purchase cycle Provide the context of a product solution for a local market Aggregate local demand to enable scale efficiency for
physical commerce locations
Differentiated Commerce: The OmniCommerce Imperative 6

The Future of Commerce is OmniCommerce

According to B2C Commerce Suites, published by Forrester Research2, 56% of businesses are accelerating their investment in scalable commerce technology platforms, with 18% increasing this more than 20% in 2012. Interestingly, 46% of companies are planning to upgrade their commerce platform in the next two years a statistic that highlights the industrys commitment to systems that support an OmniCommerce strategy. Technology is only one piece of the puzzle. True OmniCommerce maturity can be achieved only if companies display a wholehearted commitment to the customer experience across every aspect of the business. For commerce enterprises, this requires adapting organizational structure to support and champion this new strategy, and prioritizing the brand over disparate, channel-specific processes. It also means embracing systems that offer inventory visibility, real-time information and a single customer view, and adapting emerging technologies that respond to diverse customer needs. Ultimately, OmniCommerce maturity depends on an agile, scalable approach and the desire to embark on a business evolution where the customer truly is the highest priority, and the sellers core raison d'tre.
2 Forrester Research, Inc., September, 2012.

About hybris
hybris helps businesses on every continent sell more goods, services and digital content through every touchpoint, channel and device. hybris delivers "OmniCommerce": state-of-the-art master data management and unified commerce processes that give a business a single view of its customers, products and orders, and its customers a single view of the business. hybris' omni-channel software is built on a single platform, based on open standards, that is agile to support limitless innovation, efficient to drive the best TCO, and scalable and extensible to be the last commerce platform companies will ever need. Both principal industry analyst firms rank hybris as a leader and list its commerce platform among the top two or three in the market. The same software is available on-premise, on-demand and managed hosted, giving merchants of all sizes maximum flexibility. Over 400 companies have chosen hybris, including global B2B sites Starbucks, W.W.Grainger, Houghton Mifflin Harcourt and Thomson Reuters as well as consumer brands Bridgestone, P&G, Toys R Us, Levi's, and Galeries Lafayette. hybris has operations in 15 countries around the globe. hybris is the future of commerce. For more information, visit www.hybris.com

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Differentiated Commerce: The OmniCommerce Imperative Version: May 2013 Subject to change without prior notice hybris GmbH hybris is a trademark of the hybris Group. Other brand names are trademarks and registered trademarks of the respective companies.