Forts de performances économiques et financières toujours plus impressionnantes, les Gafam s’attaquent à de nouvelles frontières.

Les arbres ne montent pas jus- qu’au ciel », selon le vieil adage boursier qui dissuade les investisseurs naïfs de penser que les actions peuvent battre record sur record. Pourtant, la vague de résultats financiers que viennent de publier Apple, Microsoft, Facebook, Amazon et Alphabet, la maison mère de Google, laisse songeur.

Source: Le Soir – Le Figaro

Les cinq géants technologiques américains ont tous affiché des taux de croissance de leurs revenus compris entre 14 et 27 % en 2019 et de confortables profits. Le chiffre d’affaires annuel de Google a dépassé les 161 mil- liards de dollars, celui de Microsoft 125milliards et celui d’Amazon 280,5milliards. Ces performances ont propulsé les capitalisations boursières d’Apple, Amazon et Microsoft à leur plus haut historique. À l’exception de Facebook, tous sont entrés dans le club fermé des 1.000 milliards de dollars de valeur en Bourse.

Screenshot 2020 02 14 at 22 21 10

Si chacun de ces groupes a ses particularités, son domaine d’activité dominant (publicité, e-commerce, smart- phones, etc.), ces résultats valident la puissance de leur modèle économique et de leurs écosystèmes respectifs, qui s’enrichissent et s’étendent avec l’exploitation de la matière brute et précieuse que sont les données. Leur capacité à innover sur un marché, avec des effets de réseaux très importants, et à dégager des marges importantes leur a permis d’investir massivement dans d’autres technologies et de pénétrer de nouveaux domaines.

Screenshot 2020 02 14 at 22 25 09

Un cercle vertueux
Apple a ainsi construit un système d’abonnements à des services de contenus vidéos, de jeux et d’applications aux détenteurs de produits Apple. Google, Amazon et Microsoft multiplient les services aux entreprises basés sur leurs capacités de stockage informatique de leurs données. « Nos investissements dans l’informatique profonde, y compris l’intelligence artificielle, l’informatique ambiante et le cloud computing, fournissent une base solide pour une croissance continue et de nouvelles opportunités à travers Alphabet», a ainsi expliqué le PDG de Google, Sundar Pichai, aux analystes financiers, évoquant ainsi les perspectives futures du groupe. Pour les géants de la tech, un cercle vertueux s’enclenche, que rien jusqu’ici ne semble pouvoir freiner.

Cette puissance financière et commerciale leur donne une certaine maîtrise de la concurrence sur leurs marchés, au travers de rachat de sociétés prometteuses ou de pratiques parfois dénoncées. En début d’année, le fabricant d’enceintes Sonos, qui a attaqué Google pour avoir violé des brevets, ra- contait, exemples à l’appui, comment certains géants utilisaient leur pouvoir de marché pour imposer leurs conditions ou tordre le bras de plus petits compétiteurs. «Aujourd’hui, les groupes dominants ont tellement de pouvoir sur un éventail si large de marchés et profitent tellement de ce pouvoir pour se développer sur de nouveaux marchés que nous avons be- soin de repenser les lois et réglementa- tions existantes», a témoigné Patrick Spence, le PDG de Sonos, lors d’une audition au Congrès américain le 17 janvier.

Fin des tabous
Car l’appétit des Gafam est loin d’être rassasié. Leur hyperpuissance leur per- met aussi de s’attaquer une à une à de nouvelles frontières. Champions dans leur domaine respectif, concurrents sur certaines plates-bandes, alliés
quand leur intérêt l’exige – ils travaillent ensemble à définir un standard de communication commun pour la maison connectée –, tous sont d’ores et déjà concentrés sur des gâteaux en- core plus grands : l’argent, la santé et la sécurité. La réaction vive et mondiale au projet de monnaie numérique Libra annoncé par Facebook en juin dernier a démontré la sensibilité du sujet pour les États, mais aussi qu’aucune frontière n’était plus taboue.

Jusqu’ici, les géants américains de la tech ont rencontré peu d’obstacles à leur expansion. Très présent dans les débats, l’appel à de nouvelles régulations tarde à se traduire dans les faits, aussi bien sur les questions de concurrence que d’éthique. Ces sujets n’ont pas été des thèmes forts de la cam- pagne américaine. Les différents manquements en matière de protection des données n’ont pas détourné les utilisateurs. Les plus importantes sanctions financières prononcées ont été rapide- ment absorbées. Et les multiples en- quêtes en cours peuvent encore prendre des années.
Aucune concurrence n’est aujourd’hui en capacité de les défier, si ce n’est celle d’autres géants technologiques en pleine expansion en Chine. Un chiffon rouge d’ailleurs régulièrement agité par les dirigeants des Gafam à quiconque souhaite les entraver.

FOCUS 1: RETAIL

De son nouvel entrepôt de Brétigny- sur-Orge, Amazon livre ses clients plus rapidement encore. En 24 heures, voire en 12 heures, ils peuvent réceptionner chez eux leurs commandes. Et pour livrer un nombre croissant de consommateurs dans les temps, Amazon ouvrira en mai un nouveau centre de distribution à Senlis, le 23e dans l’Hexagone.

En France comme ailleurs dans le monde, Amazon investit continuelle- ment pour améliorer l’expérience d’achat de ses clients… et conserver une longueur d’avance sur ses concurrents. Cette stratégie porte ses fruits : grâce à la multiplication des centres de stockage autour des métropoles, Amazon a multiplié par quatre, au dernier trimestre 2019, le nombre de ses livraisons en moins de 24 heures et conquis à ce jour
150 millions d’abonnés.

En habituant les consommateurs à être livrés dans ces délais, Amazon crée de nouveaux standards. Il contraint ses concurrents à lui emboîter le pas et à se lancer dans de lourds investissements, sans rentabilité immédiate. L’activité commerce d’Amazon n’est pour l’instant pas rentable en Europe, contrairement aux États-Unis. Lorsque ses clients européens se seront habitués à la livraison rapide, le géant américain relèvera probablement ses prix et parviendra à y gagner de l’argent. Le coût de l’abonnement prime a été relevé de 20 dollars en 2018 aux États-Unis, sans qu’Amazon ne constate d’hémorragie chez ses abonnés.

Un Golden Globe, davantage de chaussures
Mais « Amazon peut se permettre de perdre de l’argent à court terme, sur trois, quatre ou cinq ans, pour en gagner à long terme », explique Julien Dutreuil, associé chez Bartle. Ce luxe n’est pas à la portée de tous les distributeurs physiques, encombrés par de coûteux magasins en durs, et par ailleurs contraints de tenir leurs prix.
Amazon dame aussi le pion à la concurrence en incitant les clients à s’abonner à son offre prime. Lorsque celle-ci a été créée en 2005, le montant de l’abonnement a été fixé pour qu’il soit « engageant » : puisqu’ils paient une somme conséquente, les utilisateurs de prime ont intérêt à recourir largement à Amazon. Et de fait, ils dépensent 130 % de plus que les non-abonnés. Amazon offre désormais à ces clients privilégiés un accès à son catalogue de livres et de films en streaming. « Lorsque nous gagnons un Golden Globe, cela nous aide à vendre plus de chaussures », considère Jeff Bezos. Tout est fait pour que le consommateur vive dans l’écosystème Amazon, sans aller voir ailleurs.
Le livre a été le premier secteur secoué par le géant américain. « Les loisirs, les jouets et l’électronique restent les secteurs les plus touchés », relève la fédération du commerce spécialisé. Les distributeurs traditionnels ont d’abord été pris de court. Ils ont voulu croire que l’essor de l’e-commerce ne représentait pas un danger pour leur activité, avant de se rendre à l’évidence. Aujourd’hui, «ils peuvent tirer parti de leur spécificité, de leur connaissance produits pour conserver leur clientèle », estime Grégoire Beaudry, associé chez Bain.

La partie n’est pas perdue. Malgré l’excellence de l’expérience client d’Amazon, les enseignes physiques restent appréciées des clients. Amazon a été l’enseigne préférée des Français presque sans interruption de 2012 à 2016. L’entreprise est désormais reléguée à la 9e place du classement d’OC&C, tandis que Décathlon, Picard et Grand Frais sont en tête. Amazon lui-même, qui a racheté la chaîne Whole Food Market aux États-Unis et a ouvert des supérettes automatisées Amazon go, croit à l’avenir du magasin…

FOCUS 2: Les Banques

Longtemps redoutée, l’irruption des Gafam dans la banque est en train de devenir une réalité. Amazon serait ainsi sur le point de s’associer à Gold- man Sachs pour proposer aux États- Unis, sur sa plateforme, des prêts aux petites entreprises, selon le Financial Times. Seules les sociétés vendant leurs produits via son site d’e-commerce
pourraient en bénéficier.
Un moyen efficace pour trouver des
clients et limiter les risques, puisque Amazon dispose de beaucoup d’informations financières sur ses fournisseurs. Goldman Sachs, qui veut se dé- ployer dans la banque de détail, a déjà noué un partenariat avec Apple et lancé outre-Atlantique, l’été dernier, l’Apple Card. À l’automne, c’était au tour de Google de dévoiler un projet de compte courant pour les particuliers en 2020, en partenariat avec la banque Citigroup.
Jusqu’à présent, les Gafam ont poussé leurs pions dans le paiement avec des technologies embarquées dans les smartphones de leurs clients. À l’image d’Apple Pay ou de Google Pay, qui permettent de payer dans les commerces avec son téléphone portable. Cette offensive pourrait leur rapporter (ainsi qu’aux start-up de la finance) 280 mil- liards de dollars en 2025, selon une étude d’Accenture.

Nouveau canal de propagation d’une crise financière ?
« Il est logique qu’après le paiement, les géants de la tech se développent dans les services financiers », explique Thierry Mennesson, « partner » chez Oliver Wyman. C’est d’ailleurs ce qu’ont fait les géants chinois de la tech comme Tencent (avec WeChat Pay) ou Alibaba (Alipay), qui proposent désormais, en plus du paiement, de l’épargne ou du crédit à la consommation. «Ces groupes cherchent à entretenir une relation de plus en plus profonde avec leurs clients. Leur objectif est de récupérer leurs données sur les revenus, les dépenses ou les enseignes préférées, et de les monétiser », ajoute Thierry Mennesson.
Parce que s’attaquer au marché bancaire très réglementé est lourd aux États-Unis ou en Europe, les Gafam contournent – pour l’heure – l’obstacle en nouant de nouveaux types de partenariats avec des banques. Certains de ces établissements financiers sont peu présents dans la banque de détail, à l’image de Goldman Sachs. D’autres au contraire seraient prêts à se positionner comme fournisseurs de produits financiers à grande échelle. En prenant le risque de voir leurs offres cannibalisées par celle des géants de la tech.

« Les Gafam sont une menace très si- gnificative pour les banques aujour- d’hui », estime Bruno de Saint-Florent, associé chez Oliver Wyman. Une me- nace prise très au sérieux par les pou- voirs publics. En décembre, un rapport du Conseil de stabilité financière (FSB), émanant du G20, estimait que l’arrivée de ces nouveaux acteurs faisait peser un risque sur la stabilité du système financier. Le G20 s’inquiétait surtout du nouveau canal de propagation d’une crise financière.

How Aldi boosted retail traffic while reducing its flyer drops (‘Most effective use of Mobile’ / DADI Awards 2019 / Havas Media Group Danemark)

Havas Media Group won the ‘Most effective use of Mobile’ category at The DADI Awards 2019 with its ‘GPS data/customer mapping’ campaign for Aldi. Here, the agency reveals the challenges faced and the strategies used to deliver this successful project.

The challenge

In Denmark, the distribution of flyers was poised to be taken over by one single company, creating a monopolistic situation that would inevitably translate itself into a steep price increase, calculations put the increase at 40%.

source: https://www.thedrum.com/news/2019/12/17/how-aldi-boosted-retail-traffic-while-reducing-its-flyer-drops

Seeing that flyer distribution was a massive operation in which Aldi was ‘carpet flyering’ (dropping a flyer in every household in any given neighbourhood) in every city where there was an Aldi supermaket without any regard to targeting, the 40% increase would not be sustainable. Moreover, a recent survey in the country revealed that more than 80% of Danes don’t read Aldi’s weekly printed leaflet.

Closing the Flyer distribution operation was out of the question because despite a low share of readers, sales modelling demonstrated a positive ROI for Aldi and other discount / retail chains, despite the low share of readers.

Taking all of this into consideration, we came to the conclusion that we needed to develop a much more intelligent and cost reduced way to distribute our flyers, we needed to find a way to distribute the flyers in areas where we knew they would convert in business for Aldi, where people would read them and use them, we needed to pinpoint and target our distribution.

Moreover, we also needed to move Aldi into the 21st century with a digital flyer that would attract younger readers, reducing their dependence on printed flyers.

The strategy

We used data and technology to provide insight to optimize the distribution model for printed retail flyers. This optimization would in turn allow us to reinvest savings into the production of a digital flyer and its subsequent promotion.

This strategy would allow us to intelligently reduce the distribution of leaflets in areas with low or no potential/customers, or ad new area if relevant for each of the individual shops. The idea was to match the distribution area with the actual Aldi customers.

With the savings from reducing the printed leaflets, we initiated a digital transformation for Aldi to give them an online presence – specifically against a younger and more connected target group.

Along with increasing the number of digital readers, the online presence also had the objective of raising Aldi’s general awareness levels, and thereby also increase the number of readers of the printed version.

The campaign

We started by digitally mapping customers that shopped at each of Aldi’s 189 stores with the help of geo-data. We did this by using mobile app-data from those customers. Once they were mapped pinpointed where they lived thanks to a key insight: their night-time location – if you remained on the same location from 02-04 am, chances where that you were sleeping at home.

We were able to pinpoint where our customers lived, including at the granular level of distances from their closest ALDI Shops: :

Before the operation, the number of flyers that where being distributed numbered 1,227,656. In Q2 we reduced flyers by 310 000, this had such a minimal impact on sales that we could not really link it to the operation. In Q3, with the knowledge, experience and evaluation from the first reduction we applied a second reduction plan (we eliminated 175K) now bringing the distribution down to 742,922 households.

With close to a 50 % reduction in flyering compared to the previous year, some stores did however experience reduced turnover, so after a detailed evaluation of every single shop, including a competitive analysis and other local influential factors, the distribution was raised to approx. 860,087.

We also developed all digital assets for the digital flyer – And launched it all the while updating and optimizing products, visuals, animations etc. on a weekly basis.

The results

  • We dropped the number of flyers being distributed from 1,227,656 to 860,087, a 33% reduction.
  • We saved ALDI a significant amount of distribution budget.
  • The number of readers of the printed flyers increased for the first time in four years by 4.9%.
  • The number of readers of the digital version of ALDI’s leaflet increased by 24.1 pct. (9.1 pct. point above target/objective, 60 pct. above target).

Additionally, we managed to reach a totally new segment thanks to the digitalization of the flyer: a much more modern, younger, urban family segment that spends more than the traditional Aldi customer. In this process it instantly became very clear that urban areas had a much higher performance, when being targeted with Aldi’s digital leaflet.

This project was a winner at The DADIs 2019.

Retailers will demand practical examples of AI (Author: Kurt Heinemann)

By Kurt Heinemann, CMO, Reflektion

source: https://www.retailcustomerexperience.com/blogs/4-trends-retailers-should-be-prepared-for-this-year/

2017 was transformative for the retail industry. Brands that have been household names for decades closed their doors or filed for bankruptcy at a time when pure play e-commerce newcomers entered into the fray and found immense value in opening up their own physical stores.

The term “retail apocalypse” also became ubiquitous, and artificial intelligence was once again touted as everything from the savior of retail to the reason civilization will collapse.

As we hit mid year, some of these factors will influence what we expect will become important retail trends in 2018 and beyond.

Individualization will go from buzzword to urgent initiative

Apps and other cutting-edge technologies have engaged shoppers on a personal level for years. Comparatively, retailers have lagged behind. The cost for retailers is not only revenue, but also a widened gap between what they deliver and what consumers expect.

At the same time, individualization is increasingly expected. Whereas segmentation sought to lump individuals into segments (e.g. by age or gender) and engage accordingly, and personalization sought to get the right content to the right user, individualization seeks to understand the user and their context. It’s one thing to know a customer likes button ups, but displaying these when they’re shopping for their trip to the Bahamas isn’t helpful. The technology exists, as does the customer expectation, and the proof of greater revenue is clear; retailers have no excuse but to adapt and offer individualized experiences.

To succeed, retailers must embrace omnichannel. This means fully understanding the moment-to-moment experiences of the customer journey, and beginning to replace the segmentation they’re comfortable with for the individualization customers demand.

Retailers will demand practical examples of AI

ai-in-retail-key-themes-aug-2017-final-21-638

One of the most important factors is retailers’ interest in AI, which peaked in 2017. In fact, a Forrester study from last year found that more than half (51 percent) of brands are implementing, have implemented, or are expanding their use of AI.

In the emerging technology hype cycle of 2018, we will discover whether or not artificial intelligence is at the peak of inflated expectations, the slope of enlightenment, or both. We’ll also learn if the available AI-powered solutions are blowing smoke or actually solving retailers’ personalization challenges.

We can expect that the companies shouting the loudest about AI will be forced by retailers to put up or shut up. They’ll need to show accessible and transparent examples of how AI is driving revenue, stronger customer engagement, and better customer experiences on-site and off.

For many reasons, this is why practical AI — i.e. the valuable application of intelligence rendered by machines and rooted in present-day use cases — is so important; it breaks free from the fun-to-discuss future manifestations to offer an immediate look at what can help the public (including consumers and vendors) right now.

The battle between Amazon and Walmart will continue

Throughout this year, both retailers will continue to play their advantages and likely acquire more companies — or expand in new ways — that shore up gaps in their weaknesses.

Take for instance, the spread of Amazon Go. With the wealth of customer data Amazon has access to, Amazon is able to provide a fully integrated and engaging experience for the customer — engaging them online, offline and in-person using this data. Other retailers should take note and ask themselves questions rooted around the customer experience — such as “what other customer pain points exist?” and “how can I try to solve them?” To get to this point, retailers will need to think empathetically from the perspective of their customers. Collecting customer data will be invaluable to this process.

Similarly, we also expect that both behemoths will redefine the concept of an all-encompassing department store in the digital era, and in doing so, they’ll set new customer experience bars that retailers will be forced to compete with. These changes won’t happen in silos. Every punch the other retailer throws will ripple through the entire industry. Instead of just tuning in, retailers should be taking notes.

Direct-to-consumer strategies will insulate established brands and launch new capabilities

Department stores will likely continue to close retail locations in 2018 and beyond. Most recently Toys R Us announced plans to shutter all stores — causing established brands to quickly realize they need more direct relationships with customers to protect themselves from the potential lost revenue of closed stores.

This desire for retailers to own more of their destiny by not building their house on fragile land will cause the industry to invest heavily in direct-to-consumer strategies. This will drive customer engagement innovation and will continue to upset the brand/wholesale relationship.

At the same time, we expect new direct-to-consumer brands to launch, which will only further disrupt the retail industry. Brands entering the space, such as Allbirds, Casper, Warby Parker and others, will disrupt retail brand verticals through their unique product offerings and expanded footprint of well-executed stores.

In this highly digital and social-media driven product world, this new era of brands will continue to redefine both what it means to be a consumer brand and how brick-and-mortar stores should operate.

Retail Revolution: Inside Amazon Go, a Store of the Future

The technology inside Amazon’s new convenience store, opening Monday in downtown Seattle, enables a shopping experience like no other — including no checkout lines.

Source: https://www.nytimes.com/2018/01/21/technology/inside-amazon-go-a-store-of-the-future.html?partner=IFTTT
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A row of gates guards the entrance to Amazon Go.CreditKyle Johnson for The New York Times

SEATTLE — The first clue that there’s something unusual about Amazon’s store of the future hits you right at the front door. It feels as if you are entering a subway station. A row of gates guard the entrance to the store, known as Amazon Go, allowing in only people with the store’s smartphone app.

Inside is an 1,800-square foot mini-market packed with shelves of food that you can find in a lot of other convenience stores — soda, potato chips, ketchup. It also has some food usually found at Whole Foods, the supermarket chain that Amazon owns.

But the technology that is also inside, mostly tucked away out of sight, enables a shopping experience like no other. There are no cashiers or registers anywhere. Shoppers leave the store through those same gates, without pausing to pull out a credit card. Their Amazon account automatically gets charged for what they take out the door.

On Monday, the store will open to the public for the first time. Gianna Puerini, the executive in charge of Amazon Go, recently gave tours of the store, in downtown Seattle. This is a look at what shoppers will encounter.

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CreditKyle Johnson for The New York Times
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CreditKyle Johnson for The New York Times
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There is no need for a shopping cart. Products can go straight into a shopping bag.CreditKyle Johnson for The New York Times

There are no shopping carts or baskets inside Amazon Go. Since the checkout process is automated, what would be the point of them anyway? Instead, customers put items directly into the shopping bag they’ll walk out with.

Every time customers grab an item off a shelf, Amazon says the product is automatically put into the shopping cart of their online account. If customers put the item back on the shelf, Amazon removes it from their virtual basket.

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The only sign of the technology that makes this possible floats above the store shelves — arrays of small cameras, hundreds of them throughout the store. Amazon won’t say much about how the system works, other than to say it involves sophisticated computer vision and machine learning software. Translation: Amazon’s technology can see and identify every item in the store, without attaching a special chip to every can of soup and bag of trail mix.

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CreditKyle Johnson for The New York Times

There were a little over 3.5 million cashiers in the United States in 2016 — and some of their jobs may be in jeopardy if the technology behind Amazon Go eventually spreads. For now, Amazon says its technology simply changes the role of employees — the same way it describes the impact of automation on its warehouse workers.

“We’ve just put associates on different kinds of tasks where we think it adds to the customer experience,” Ms. Puerini said.

Those tasks include restocking shelves and helping customers troubleshoot any technical problems. Store employees mill about ready to help customers find items, and there is a kitchen next door with chefs preparing meals for sale in the store. Because there are no cashiers, an employee sits in the wine and beer section of the store, checking I.D.s before customers can take alcohol off the shelves.

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CreditKyle Johnson for The New York Times
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CreditKyle Johnson for The New York Times
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CreditKyle Johnson for The New York Times

Most people who spend any time in a supermarket understand how vexing the checkout process can be, with clogged lines for cashiers and customers who fumble with self-checkout kiosks.

At Amazon Go, checking out feels like — there’s no other way to put it — shoplifting. It is only a few minutes after walking out of the store, when Amazon sends an electronic receipt for purchases, that the feeling goes away.

Actual shoplifting is not easy at Amazon Go. With permission from Amazon, I tried to trick the store’s camera system by wrapping a shopping bag around a $4.35 four-pack of vanilla soda while it was still on a shelf, tucking it under my arm and walking out of the store. Amazon charged me for it.

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CreditKyle Johnson for The New York Times
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CreditKyle Johnson for The New York Times

A big unanswered question is where Amazon plans to take the technology. It won’t say whether it plans to open more Amazon Go stores, or leave this as a one-of-a-kind novelty. A more intriguing possibility is that it could use the technology inside Whole Foods stores, though Ms. Puerini said Amazon has “no plans” to do so.

There’s even speculation that Amazon could sell the system to other retailers, much as it sells its cloud computing services to other companies. For now, visitors to Amazon Go may want to watch their purchases: Without a register staring them in the face at checkout, it’s easy to overspend.

Nick Wingfield is a technology correspondent based in Seattle. He covers Amazon, Microsoft and emerging technologies and has written on technology’s impact on economies in the Pacific Northwest. He was previously a reporter at The Wall Street Journal. @nickwingfield

A version of this article appears in print on , on Page B1 of the New York edition with the headline: Inside Amazon’s Store of the Future. Order Reprints | Today’s Paper | Subscribe

Americans go to buy products from Amazon before Google online (Business Insider)

Source: Americans go to buy products from Amazon before Google online: CHART – Business Insider

If you’re an American buying a product online, you’re probably going through Amazon.

Online marketplaces, a category that includes everything from eBay to Amazon, are the first stop for 38% of online shoppers in the US when they search for a product, according to a recent UPS survey charted for us by Statista. And Amazon itself is by far the most popular such destination, with 29% of the 5,000 shoppers surveyed heading to Amazon first.

That’s nearly twice as many as those who use search engines like Google, and equal to the total number of those who said they use specific retailers’ various channels.

The figure is yet another reminder of how much of a necessity Amazon, a  data-drivencompany, is becoming for companies who want their products to reach consumers.

That growing dependence creates a convenient all-in-one marketplace for consumers, but given Amazon’s ability to make and heavily promote its own versions of popular products, the ongoing shift toward online shopping, the ever-increasing number of Amazon Prime members, and Prime members’ tendency to only shop on Amazon, it’s also raised questions of how healthy the trend would be for consumers if it were to keep up in the coming years.

COTD_7.6

 Here’s How 5 Tech Giants Make Their Billions – Alphabet & Facebook: Advertising

Source: Chart: Here’s How 5 Tech Giants Make Their Billions

on May 12, 2017 at 1:03 pm

Chart: How 5 Tech Giants Make Their Billions

The Revenue Streams of the Five Largest Tech Companies

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

Last year, we published a chart showing that tech companies have displaced traditional blue chip companies like Exxon Mobil and Walmart as the most valuable companies in the world.

Here are the latest market valuations for those same five companies:

Rank Company Market Cap (Billions, as of May 11, 2017) Primary Revenue Driver
#1 Apple $804 Hardware
#2 Alphabet $651 Advertising
#3 Microsoft $536 Software
#4 Amazon $455 Online Retail
#5 Facebook $434 Advertising
TOTAL $2,880

Together, they are worth $2.9 trillion in market capitalization – and they combined in FY2016 for revenues of $555 billion with a $94 billion bottom line.

BRINGING HOME THE BACON?

Despite all being at the top of the stock market food chain, the companies are at very different stages.

In 2016, Apple experienced its first annual revenue decline since 2001, but the company brought home a profit equal to that of all other four companies combined.

On the other hand, Amazon is becoming a revenue machine with very little margin, while Facebook generates 5x more profit despite far smaller top line numbers.

Company 2016 Revenue (Billions) 2016 Net Income (Billions) Margin
Apple $216 $46 21%
Alphabet $90 $19 21%
Microsoft $85 $17 20%
Amazon $136 $2 2%
Facebook $28 $10 36%

HOW THEY MAKE THEIR BILLIONS

Each of these companies is pretty unique in how they generate revenue, though there is some overlap:

  • Facebook and Alphabet each make the vast majority of their revenues from advertising (97% and 88%, respectively)
  • Apple makes 63% of their revenue from the iPhone, and another 21% coming from the iPad and Mac lines
  • Amazon makes 90% from its “Product” and “Media” categories, and 9% from AWS
  • Microsoft is diverse: Office (28%), servers (22%), Xbox (11%), Windows (9%), ads (7%), Surface (5%), and other (18%)

Lastly, for fun, what if we added all these companies’ revenues together, and categorized them by source?

Category 2016 Revenue (Millions) % Total Description
Hardware $197,020 36% iPhone, iPad, Mac, Xbox, Surface
Online Retail $122,205 22% Amazon (Product and Media Categories)
Advertising $112,366 20% Google, Facebook, YouTube, Bing ads
Software $31,692 6% Office, Windows
Cloud/Server $31,396 6% AWS, Microsoft Server, Azure
Other $60,177 11% Consulting, other services (iTunes, Google Play), etc.
$554,856 100%

Note: this isn’t perfect. As an example, Amazon’s fast-growing advertising business gets lumped into their “Other” category.

Hardware, e-commerce, and and advertising make up 76% of all revenues.

Meanwhile, software isn’t the cash cow it used to be, but it does help serve as a means to an end for some companies. For example, Android doesn’t generate any revenue directly, but it does allow more users to buy apps in the Play Store and to search Google via their mobile devices. Likewise, Apple bundles in operating systems with each hardware purchase.

The Future of Data Analytics for Retail

Source: The Future of Data Analytics for Retail

Late last year, Amazon premiered a system that may well be the future of shopping. Nicknamed Amazon Go, it looks just like a regular brick and mortar store, except there are no lines, no self-checking machines, and no cashiers. The items you buy are checked by sensors, your account is charged through your mobile Amazon Go app, and you can just walk out of the store whenever you please.

Amazon Go is a revolutionary spin on retail, commerce, and the experience of going to a store. What’s really special about Amazon Go, however, is what it represents in terms of data.

All across the retail universe, the rapidly widening Internet of Things is becoming equipped for high-frequency event analytics. Across the board, that means faster decision-making, more helpful data, and smarter, more cost-efficient businesses.

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Retail and event-driven analytics

The “event-driven” company, according to VC Tom Tunguz, is one that consumes events as they occur, in real-time, from whatever data sources are available.

Rather than record data manually—making all your data liable to corruption—event-driven companies have set up the pipelines they need to always be collecting up-to-date, quality information.
event-driven saas

(Source: Tom Tunguz)

The first stage in this process—“events occur”—is the most important one to consider in the retail context.

On a website, those events are fairly easy to understand. They might be clicks, button-presses, or scrolling behavior. We’ve been trained to think about the web in terms of events—not so with brick and mortar. And yet, the amount of events that could conceivably be collected as data from a single retail experience is tremendous.

When people enter the store, what items they pick up, which they take with them and which they put down, what order they shop in, even how they navigate the store down to the most infinitesimal of details—all of this is information that could help companies increase revenues, lower costs, and build more efficient businesses. That’s also just the front-end of the retail experience.

The new retail Nervous System

The Internet of Things has spread rapidly up and down the production supply chain, laying the foundation for the future of retail.

RFID chips on products allow companies to track their inventory with an unprecedented degree of precision, even as their shipments rattle around in shipping containers, cargo ships move in and out of port, and trucks travel across the country.

Companies like Flexport make it possible to manage and visualize those complex supply chains, many of which were barely even digitized years ago. Others help optimize last-mile delivery, manage the capacities of warehouses, and plan out routes for truck drivers bringing goods to market.

In stores, the same tags that help track goods as they move around the world can be used to optimize pricing given alterations in local conditions or sudden surges of demand.

This network of physical/digital infrastructure is just the substratum, however, of the true analytics-enabled future of retail.

When data analytics meets retail

Event data is the foundation of all behavioral analytics.

When you’re tracking every discrete click, scroll, or other web action, you can start to look for patterns in the data that you’re collecting. You can see which pieces of content on your blog engage the most users, which version of your checkout flow is the best for conversions, and so on.

There’s already technology out there to help investors like those at CircleUp analyze data around small businesses and predict those that will succeed based on a large corpus of historical data.

With the infrastructure of the Internet of Things in place, the same kind of analysis becomes possible on a physical scale. You can start to find patterns in what people buy, when people order, and how to build a more efficient goods-delivery system.

The possibilities are extensive and powerful. In Amazon’s concept store, you can easily imagine sensors that take notice whenever your gaze rests on a particular item for longer than usual, or when you pick something up only to put it back down afterwards.

The decision to not purchase an item would be just as important for Amazon’s recommendation engine as a confirmed sale—that data could even be fed back to the supplier for their marketing team to analyze the lost sale. Visual recognition systems could be used to show you an ad in the evening for that dress you were eyeing at the store in the afternoon.

That’s just scratching the surface of an extensive universe of possibilities. Already today, IoT-enabled retail is allowing companies to:

  • identify fraud before anyone from Loss Prevention even notices it’s happening
  • systematically reduce shrinkage by analyzing exactly where it’s coming from
  • give estimated delivery times in as small as 10-minute windows

A few years ago, Amazon patented the idea of “anticipatory shipping”—moving goods around based on their predictive analysis of likely consumer behavior. Because of your history, in other words, Amazon could predict that you were about to order a pack of toilet paper—and make sure it was in stock at the closest distributor well before you even clicked on the order button.

In the retail world of the future, innovations like these won’t be cutting-edge. In the age of data analytics, they’ll be little more than table stakes.

The data analytics long tail

The free flow of event data in retail depends on the proliferation of data sources. The more sources of data that can be cross-referenced, the more patterns that can be found and the more intelligence that can be produced.

Fortunately, the retail space is in a great position for data sources. There are not only a massive number of in-store sources of data, from sensors to registers to RFID tags, but there are complementary online sources as well.

big data sources

(Source: IBM)

For businesses that exist only as brick and mortar, the proliferation of IoT components and data analysis will mean a massive step forward in terms of business intelligence.

For those that are both brick and mortar stores and online, the confluence of the IoT and traditional behavioral analytics will mean an unprecedented wealth of data and an unprecedented set of options for customer engagement.

For those of us who have thrown in our lot with data, it is an exciting and fascinating time to be around.