Shoptalk Europe 2017: Retail and E-Commerce Insights from the Inaugural European Shoptalk Conference

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KEY POINTS

The FGRT team is attending Shoptalk Europe 2017 in Copenhagen, Denmark, this week. The event, which runs October 8–11, is the inaugural pan-European version of the Shoptalk retail and e-commerce conference that launched two years ago in the US. Shoptalk Europe covers innovation in retail and e-commerce, focusing on the evolution of how consumers discover, shop for and buy products.

Shoptalk Europe is expected to draw more than 2,200 attendees, including executives from established retailers and brands, startups, and technology companies, as well as investors, media professionals and analysts. In this report, we share key takeaways from the second day of the conference, which include:

  • Dollar Shave Club will enter the European market in early 2018.
  • Retailers cannot ignore the future of artificial intelligence (AI) applications. The technology can be used to improve searches by going beyond keywords.
  • The outlook for retail startups’ exit is mixed in Europe.
  • Specialist online beauty retailers offer an effective way for beauty brands to reach consumers.

Shoptalk Europe 2017

The FGRT team is attending Shoptalk Europe 2017 in Copenhagen, Denmark, this week. The event runs October 8–11 and is the inaugural pan-European version of the Shoptalk retail and e-commerce conference that launched two years ago in the US. The conference will focus on topics such as the shopping experience of the future, the digitalization of physical retail stores, on-demand delivery and logistics, shifting e-commerce trends, analytics, consumer behavior, and cross-border commerce.

Shoptalk Europe 2017 is expected to draw more than 2,200 attendees, including executives from established retailers, brands and early-stage tech companies, along with investors, media professionals and analysts. The event features more than 250 speakers, who represent a broad cross-section of countries and companies, including Alibaba, Amazon, Hudson’s Bay Company, IKEA and Pinterest.

Below, we summarize our key takeaways from the second day of Shoptalk Europe 2017.

 

Day 2 Takeaways

1. Mobile-Focused Retail Platforms Are Emerging in Europe

Mobile commerce is booming in Europe and several mobile-focused shopping platforms have emerged that focus on different demographic groups. Depop is a mobile-first resale community that has accumulated a loyal base of 7 million members under age 25 in the US, the UK and Italy. The members developed an engaging community for buying and selling cool fashion items and sharing fashion trends. The average member opens the app six times a day. Lesara is another fast-growing e-commerce apparel company in Europe that has fine-tuned its mobile experience since launching.

 

2. Dollar Shave Club to Enter Europe in Early 2018

Dollar Shave Club Founder and CEO Michael Dubin announced that the company will offer its razor blade subscription service in Europe starting early next year. In addition to the geographic expansion, the company will expand further into the hygiene and beauty products market by launching a range of oral care products in the US by the end of the year.

In the US, Dollar Shave Club claims 20% of the razor blade market, according to Dubin. Unilever acquired the e-commerce subscription company in July 2016 for $1 billion. Dubin said that while many entrepreneurs are attracted to the subscription model because it guarantees regular revenues, the model makes sense only if the company can improve the user experience and create additional value for customers. Dubin also announced the upcoming redesign of Dollar Shave Club’s digital platform, which will give subscribers greater flexibility in managing their contracts.

 

3. Retailers Approach Innovation Differently

Disruptive technologies and shifting consumer behaviors are challenging retailers to reinvent their innovation models. Whether that means focusing on internal initiatives, launching an accelerator, partnering with startups or buying companies to access technologies, retailers must continue to invest to stay competitive.

Andreas Wuerfel, Director, Global Innovation Community, for Metro Accelerator powered by Techstars, said that Metro Accelerator decided to partner with Techstars rather than self-invest to develop technology because Techstars provided an end-to-end solution. Retailers that partner with accelerators benefit from the fact that the accelerators tend to do the work of qualifying, recruiting and supporting companies themselves. In the last three years, Metro has launched the Metro Accelerator for Retail powered by Techstars and the Metro Accelerator for Hospitality powered by Techstars, Wuerfel said. The programs are set up as separate business entities, allowing for faster prototyping with fewer constraints.

Marc Lamik, Head of Innovations and Partnerships at Germany-based online retailer Zalando, shared his company’s innovation strategy. To encourage innovation from its employees, Zalando encourages them to pitch ideas, Lamik said. If an idea is accepted by senior management, the employee is provided resources to try to build out and execute the idea during a given quarter. Zalando also reaches out to startups that work directly with its various business units.

 

4. Innovation Is No Longer Centralized in Silicon Valley

Increasingly, innovation is happening outside Silicon Valley. Several panel speakers mentioned that Alibaba is leading in terms of innovation in China, similar to how Amazon is leading in the US. In Europe, a large number of emerging retail startups are growing in a healthy retail ecosystem. John Doran, General Partner at investment and consultancy firm TCV, highlighted Brillen.de, a Germany-based online eyewear portal that has seen tremendous growth, as an example of homegrown innovation in Europe. Miguel Bagulho, Investment Manager at Sonae IM, the corporate venture capital arm of retail and telecom company Sonae, emphasized the importance of looking for innovative companies outside Silicon Valley, noting that he has seen a large number of emerging technology startups in Europe.

 

5. Retailers Cannot Ignore the Future of AI Applications

AI is becoming increasingly important for e-commerce companies. By 2020, 30% of all companies will employ AI to augment at least one of their primary sales processes, according to research firm Gartner.

eBay is looking to use AI to deliver a highly personalized customer experience whereby customers can quickly find an exact or near exact match of any product they are looking for. The company is building descriptive and predictive models based on behavioral data to show shoppers products they are looking for based on price and other factors. The company’s goal is to reduce the time users spend searching for products by enabling them to find the ideal match quickly using AI.

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RJ Pittman, Chief Product Officer of eBay, discussed three levels of AI computing: artificial narrow intelligence, artificial general intelligence and artificial super intelligence. He said that artificial narrow intelligence requires a company to be great in a specific domain. A company can integrate all aspects of a sneaker, for example, from supply and demand to unique shopper preferences, and use AI to provide personalized recommendations.

The second level, artificial general intelligence, requires the integration of all domain data and contextual data. If a consumer is planning a trip to Italy, for example, a digital chatbot can bring together domain expertise, personal details (such as the consumer’s previous purchases and size) and external factors such as the weather forecast for the region in Italy that the consumer plans to visit.

The final level, artificial super intelligence, uses AI to predict what products a consumer wants before they are manufactured. Pittman concluded by noting that digital voice assistants will play a larger role in the future by helping consumers list and sell items and even find deals without needing to open an application on a mobile device or computer.

 

6. Retail Startup Exit Outlook Is Mixed in Europe

From a venture capital perspective, the exit outlook for emerging retail startups is mixed in Europe. Fast-moving consumer goods (FMCG) brands and technology startups generally have a better exit outlook in Europe than do direct-to-consumer brands. In general, legacy retailers in Europe have less cash with which to make large acquisitions than their US retailer counterparts do. European FMCG companies are slightly more cash-rich than conventional retailers, giving them greater ability to make acquisitions. Many traditional retailers feel an urgent need to outsource their technology solutions to retail technology startups in order to catch up with tech giants such Amazon and Alibaba, and these companies are focusing on acquiring retail technology companies, rather than emerging brands.

 

7. Specialist Online Beauty Retailers Offer an Effective Way for Beauty Brands to Reach Consumers

Beauty brands are looking for new ways to reach customers, as traditional distribution channels such as concessions in department stores are not performing as well as they used to, according to Joël Palix, CEO at online beauty retailer Feelunique. Selling directly online is one solution for brand owners, but shoppers rarely purchase beauty products based on brand, making it difficult for companies to reach shoppers effectively through their own company websites. A more effective way for beauty brands to reach customers online is by selling through specialist, multibrand, online beauty retailers.

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Through Feelunique, for instance, customers can buy a basket of beauty products featuring different brands. The site also offers shoppers services that increase conversion, such as Pick and Mix, which allows shoppers to sample products to help them decide what to purchase in a full size in the future, and Finder, a search function that helps shoppers select the right foundation or other product that is typically difficult to choose online. Beauty brands benefit from selling though specialist beauty retailers such as Feelunique because these retailers offer targeted services and help cultivate consumers’ perception of brand quality, according to Palix.

 

8. Delivering a Seamless Multichannel Shopping Experience Will Drive the Future of Retail

Shoptalk Day2003Delivering a seamless shopping experience across channels will be crucial to driving retail growth in China and worldwide, according to Terry von
Bibra, Alibaba’s General Manager for Europe. The distinction between online and offline shopping is in the mind of industry players, not consumers, von Bibra said. Shoppers decide whether to buy online or offline according to which is more convenient for them at a particular time; they do not fall in love with one particular channel, so meeting shopper demand with multiple channels is key.

Retailers need to analyze the customer value chain and identify how to serve customers better, von Bibra said. Alibaba acquired a brick-and-mortar presence in China in order to better meet customers’ needs. For instance, because Chinese consumers like to buy electronics in-store, where they can benefit from face-to-face assistance, Alibaba bought a stake in electronics retailer Suning. Alibaba also expanded into shopping malls (a declining channel in Western markets) in order to reinvent the in-store customer experience. The company is integrating mobile and brick-and-mortar shopping by enabling mobile payments and eliminating physical checkouts in stores. Alibaba also launched fresh seafood retailer Hema in China. Shoppers can physically select their seafood in the Hema store, then access a dedicated app and pay using Alipay. Consumers in China like to personally select their fish before buying it, and Hema meets this need by integrating the physical and digital shopping experiences.

 

9. Prime Now Is Changing Consumer Expectations in Europe

Amazon’s Prime Now service is changing European consumers’ expectations about delivery. The one-hour delivery service is currently available in more than 30 cities, including London and Paris. Consumers can now have traditional French pastry and Italian cheese delivered to their house in under one hour in major European cities, and Prime Now is even experimenting with restaurant delivery in London.

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10. AI Improves Searches by Going Beyond Keywords

The use of AI dramatically improves the relevance of search results on e-commerce platforms, according to Amir Konigsberg, CEO and Cofounder of AI firm Twiggle. The company innovates in fields such as search and speech technology to develop solutions that mimic the way humans search for results. Regular search engines use keywords to identify relevant results, but they cannot understand the context in which the words are used, so results do not always match the request expressed by the user.

The AI technology developed by Twiggle employs natural language processing (an evolution in AI) to enable computers to understand the context in which keywords have been used. The technology mimics the way a store associate would respond to a shopper’s request. For example, if a shopper is browsing an e-commerce platform that embeds Twiggle’s technology, the shopper can voice search an item by asking for a “red dress for the summer.” The word “summer” is put into the right context by the technology, and the search will return results that include light dresses suitable for warm climates. By comparison, a traditional keyword-based search might deliver results related to summer items, but not necessarily dresses, which is what the user is actually looking for. Retailers using Twiggle’s technology have seen an average uplift in relevance of 23.5% and an average increase in conversion rate of 18%, according to Twiggle’s findings.

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