Future of Ecommerce - 7 Trends Shaping the Future of Retail

John Batistich - 2021
Future of Ecommerce
7 shifts shaping the future of commerce
John Batistich
May 2021

Future of ecommerce will be defined by 7 shifts
1. Accelerated consumer behaviours
2. Retaining best customers
3. Collapsing funnels
4. Rise of meta Marketplaces
5. Lightening fulfilment
6. Invisible payments
7. Programmatic personalisation

1. Light-speed Consumer Behaviour
Structural shifts in consumer behaviour are reshaping retail
Nearly 150 Million people shopped online for the first time over the last year globally. We saw ecommerce
accelerate five years

Online sales boom
$169.9
$200.3
$231.9
$263.6
$303.0
$347.0
$397.3
$461.0
$523.6
$598.0
$861.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Digital Commerce 360, US Department of Commerce.
Total retail figures excludes restaurants, bars, cars and fuels
$8.2
$10.5
$12.8
$14.7
$16.4
$19.1
$21.7
$24.4
$28.6
$30.5
$44.2
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
US Online Sales
USD Billions
Australia Online Sales
AUD Billions
Source: NAB Online Sales Index
Online sales shifted 5 years forward as a result of covid lockdowns.

Online sales value growth accelerated
29.0%
21.9%
14.8%
11.6%
16.4%
13.6%
12.4%
17.2%
6.6%
44.9%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
16.8%
17.9%
15.8%
13.7%
14.9%14.5%14.5%
16.0%
13.6%
14.9%
44.0%
3.0%
4.9%
3.9% 3.0%
4.3% 3.9% 3.4% 3.8% 4.1% 3.8%
6.9%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
US Online Sales Growth vs Total % Australia Online Sales Growth %
Online sales grew at their fastest level in a decade partly fuelled by lock down induced store closures.

Online share of total retail steps up
6.4%
7.2%
8.0%
8.8%
9.7%
10.7%
11.8%
13.2%
14.4%
15.8%
21.3%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
US Online Share of Total Retail %
4.9%
5.8%
6.5% 6.8% 6.5%
7.1%
7.8%
8.9% 9.2%
12.6%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Australia Online Share of Total Retail %
Online grew to 12.6% share of Retail (excluding Restaurants/Cafes) but still under-indexes vs China, UK and US.

Online category sales and share vary greatly
69%
59%
42%
21%
28%
23%
40%
25%
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Category Ecommerce Growth – 2020 vs LY
Australia
10%
15%
6%
12%
40%
23%
20%
24%
T
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Ecommerce Share of Category Sales
Australia
Takeaway food grew strongest whilst Media has the highest share of digital sales.

All online categories grew
Source: Australia Post
Share of Online Sales - Parcels
Australia 2020 - $Billions
Variety,
33.0%
Fashion/Apparel,
33.6%
Home/Garden,
22.9%
Health/Beauty,
9.4%
Hobbies/R
ecreation,
13.9%
Specialty
Food/Liquor, 5.9%
2.5
4.0
4.0
5.4
5.9
6.8
Specialty Food/Liquor
Hobbies/Recreation
Health/Beauty
Home/Garden
Fashion/Apparel
Variety
Household Penetration - Parcels
Australia 2020 - Millions of Households Growth vs LY
51.1%
45.5%
69.6%
56.8%
53.6%
77%
Sales from Variety and Fashion/Apparel account for 2/3 of Sales with Food/Liquor and Home/Garden with the highest growth.

Online grocery sales have doubled
2.7%
2.9%
3.2%
3.5%
3.8%
5.5%
3.0%
3.4%
3.8%
4.2%
4.5%
7.7%
2015 2016 2017 2018 2019 2020
Online grocery as % of total sales
Source: Company Reports. Citi Research
30.0% 31.2%
24.0%
12.5%
48.3%
27.2%
40.1% 38.3%
40.9%
91.8%
1H 19 2H 19 1H 20 2H 20 1H 21
Online grocery sales growth
Households have doubled their usage of Grocery delivery over the year changing the supply chains for the major Supermarkets.
“For every 100 visits to a physical store, there are 65
visits to a Woolies digital channels”
Brad Banducci CEO Woolworths.
Woolworths Coles

Mobile leads but desktop saw a resurgence
87%
69%
56%
48%
91%
76%
61% 60%
Mobile Laptop Tablet Smart TV
How we buy online
Australia
On average, there were 4.4 devices per adult used to access the internet in 2020 up from 4 in 2019

Online driven by delivery, value and convenience
Source: Statista John Batistich - 2021
29%
38%
43%
47%
50%
54%
57%
63%
Undisturbed shopping
More product information
More possible to compare
Greater product range
Available 24 hours
More convenient
Cheaper prices
Direct delivery to home
Drivers of Online Purchases
US 2020
Online purchases have been driven by delivery, cheaper prices and convenience but this is changing.

Consumers expect to shop online post covid
Source: Global Web Index John Batistich - 2021
21.9%
26.7%
26.7%
35.1%
40.6%
43.4%
48.8%
Use food delivery services
Work from home
Use video conferencing
Use video calling
Use mobile payment services
Exercise at home
Shop online
Expected Behaviour Changes Post-Covid
US 2020
Post covid, consumers expect to become more open to new brand experiences and are expecting to shop more online.

Key opportunities for retailers
Consumers have become more open to new brand experiences and are expecting to shop more online.
Fast
Easy
Optimise
Product
Details
Immediacy
Convenience
Total blended retail
Virtual tours
Hosted live events
How to content
Experiment with AR
Upgrade
Checkout
Convert
Physical into
Digital
Automate
Promotions
Shipping
Costs
Scalable images
Free shipping
thresholds
Reviews/ratings
Alternative/supplement
ary products
Buy now pay later
Connect Checkout with
POS
Delivery options
Save payment and
shipping information
Enable one-click
Buy directly from product
page
Automate discounts
and promotions
Pre-calculate shipping
costs

2. Retaining Best Customers
Acquisition costs rise so retailers are refocusing on retaining their most valuable
customers
Driving frequency, conversion and the average order value has never been more important

Higher online penetration and frequency
18
28
2019 2020
26.5%
27.4% 26.9%
19.2%
Weekly Fortnightly Monthly Quarterly
6%
16%
2019 2020
Average Number of
Online Purchases
Shopping Frequency
Distribution
% of Weekly Online
Shoppers
75%
82%
2019 2020
Household Penetration
Online shopping growth driven by higher penetration (1.36M households) and frequency (+55%)
1.36M Households made a
purchase for the first time
More heavy users Higher average
weight of purchase
More regular shoppers who
expect to shop more frequently

Source: Company Reports John Batistich - 2021
Focusing on revenue per active customers
Retailers like Temple & Webster and Adore Beauty are increasingly focused on revenue per active customer focused on driving repeat
frequency.
178
192
204
206
213
FY17 FY18 FY19 FY20 CY20
Annual Revenue Per Active Customer $
368
375
385
400
2017 2018 2019 2020
Annual Revenue Per Active Customer $

Prioritising existing customers
Source: Shopify John Batistich - 2021
With so much new penetration, identifying best customers, determining LTV, develop rewards and evaluate recurring revenue models
become important opportunities
Earn
Loyalty
Most valuable customers
Map journey
Conversion paths
Up and cross sell
Recurring
Revenue
Models
Segment
Customer
LTV
Integrate rewards
Offer VIP exclusivity
Referral programs
Streamline billing
process
Create tiers
Personalisation
Buyer segments
Responsive moments
Predict to prevent
churn
Target
Best
Customers

Media has surged towards digital
Source: Benedict Evans via McCann, Zenith, BLS. John Batistich - 2021
US Advertising Spend
US$ Billions - 2019 Dollars
US Advertising as a % GDP
%
Google and Facebook disrupted media offering more targeted reach and more measurable ROI.

Search and social costs have risen
Source: Revealbot John Batistich - 2021
$0.85
$0.96
$0.99
$0.94 $0.96 $0.95
$0.86
$0.82
$0.78 $0.77
$0.83 $0.85
$0.71
$0.76
$0.72
$0.87
$1.01
$0.98 $1.00
$1.06
$1.14
$1.11
$1.21
$1.14
J F M A M J J A S O N D
Facebook CPC
2020 vs 2019 in USD
Cost to Acquire New Customers
Q4 2020 vs LY
17%
24%
Paid Search Social Advertising
Over the last year we have seen CPC and CAC have risen putting pressuring on ROI.

Google and Facebook dominating/strengthening
Source: IAB John Batistich - 2021
26% 25%
19% 18%
15%
-5%
-8%
-17%
-24%
-31%
-33%
-43.0%
Paid
Search
Social
Media
CTV Digital
Video
Digital
Display
Digital
Audio
Podcasts Direct Mail Linear TV Radio Print Outdoor
Advertising Spend Change 2020 vs LY
US - %
Ecommerce demand is accelerating digital ad growth. Industry data reveals increased spend in paid search, social and connected TV.

Removal of third party cookies
Third party cookies which allow retailers to recognise and target potential customers across channels will be gone next year affecting
targeting, personalisation and ROI.

Cart abandonment rates remain high
Source: Baymard Institute. John Batistich - 2021
At 69%, cart abandonment rates remain very high with retailers focused on reducing the friction/steps from averages of 5-6 clicks
Number of Checkout Steps
Top 50/100 Grossing US Online Retailers 2016 vs 2012
4%
9%
22%
28%
18%
11%
4%
3%
2% 2%
16%
28%
36%
16%
2 3 4 5 6 7 8 9
69.6%
69.2%
2019 2020
Cart Abandonment Rates
Global Average 2020 vs LY

Solve the reasons for high cart abandonment
Source: Baymard Institute John Batistich - 2021
Reasons for Abandonment During Checkout
US - 2021
4%
7%
11%
12%
17%
17%
18%
19%
24%
49%
Credit card declined
Weren't enough payment menthods
Returns policy wasn't satisfactory
Site had errors or crashed
Couldn't see total order cost up front
Didn't trust site with credit card details
Too long/complicated checkout process
Delivery was too slow
Wanted me to create an account
Extra costs too high (shipping, tax, fees)
Consumers want to the know the total price and when they will get it with ease, guest options and speed

Reduce cart abandonment opportunities
Source: Baymard Institute John Batistich - 2021
Reduce cart shock (pricing and delivery), remove barriers, build trust/reduce complexity and deliver key payment options earlier to
decrease abandonment rates
Remove
Barriers
Clear total cost
Bring delivery options and
date on product details
Build targets for free delivery
Show returns info upfront
Show final price sooner
Build Trust
+ Reduce
Complexity
Response
Recovery
Key Payment
Options +
Earlier
Option to log-in early
Guest check-out option
Move account sign-up at end
Remove unnecessary fields
Use auto-fill
Display trust signals
Visualise roadmap
Review order before pay
Offer choice
Remove steps
Bring forward to product
details
Reduce
Cart
Shock

3. Collapsing Funnels
Moving from Discovery to Purchase with a single click
Ecommerce is challenging stores by becoming more social, entertaining and experiential

Search
Find
Buy
Pay
Acquire
Use
Share
Relationship
Discovery
Shopper journeys are transforming
.
Wider discovery, faster search, invisible payments, lightening fulfilment and personalised relationships

Ecommerce appeals to needs satisfied by stores
Convenience
Price comparison
Individual
Routine/functional tasks
High levels of research
Transactional
Infinite options
Global reach
The need states served by the mall are increasingly available online which becomes more social, experiential and entertaining
Entertainment
Experiential
Social
Connection
Personal Service
Sensory
Immediate selection
Local
New
Ecommerce

Social media is adding shopping to discovery
Facebook and Instagram are building shopping tags, live shopping events, marketplaces and digital catalogues
Shopping
Tags
Live
Shopping
Social
Marketplaces
Digital
Catalogues

The discovery stage, fuelled by big social media, is adding live events, promotions, quizzes and product videos making ecommerce
more social, experiential and entertaining across Facebook, Instagram and TikTok
Live promotions AR product
visualisation
Social inspired
content
Social discovery is supporting events and product
Product
videos

Ecommerce support communities are rising
Ecommerce shopping is leveraging the power of the crowd and experts to provide service and helpful recommendations
Kmart
Home Hacks
Bunnings
Mum Group
Letmetrybeforeyoubuy
Influencer
Dan Murphys Expert
Recommendations

Influencers for all categories and segments
Online influencers help, guide and inspire customers with live video on Facebook, Instagram and YouTube. Lead shoppers are
becoming broadcasters.

Learning from the most visited sites
1938.2
648.8
370.7 341.1
228.6
176.3
124.7 77.3 60.5 60 38.1 37.5
amazon ebay walmart craigslist etsy target wayfair costco slickdeals kohls aliexpress samsclub
Source: Similar Web
Global ecommerce sales estimated at $4T. 16% of global traffic goes to Amazon, eBay and Rakuten. 1/6 online shoppers turn to
Amazon first when shopping online
Average Monthly Website Visits
2020

On-site engagement improved
6.47
7.08
2019 2020
8.1
8.0
2019 2020
37.3%
35.8%
2019 2020
Average Visit
Duration
Average Pages Per
Visit
Average Bounce
Rate
Source: Similar Web
45.8%
49.1%
54.1%
50.8%
2019 2020
Device Split
Desktop has rebounded as a split of devices. We have seen bounce rates and visit duration rise.
Lap/Desk Mobile

Source: Similar Web John Batistich - 2021
Understanding your sources of traffic
54.8%
26.4%
5.3% 5.3%
3.8%
2.6%
1.4%
54.8%
27.0%
5.5% 5.2%
3.8%
2.4%
0.9%
Direct Organic Search Referrals Paid Search Social Media Email Display
Direct and Organic Search account for over 80% of traffic whilst email and display are small and softening
Global Sources of Traffic 2020 vs LY

Traffic Acquisition Sources
12.1% 11.7%
87.8% 88.2%
2019 2020
Free vs Paid traffic
Top Sites
Source: Similar Web
A returning visitor is 70% more likely to add a product to their cart than a new visitor. A site with a low visit to unique visitor ratio has
a less engaged visitor
30.0%
29.4%
2019 2020
Unique Visitors/Total Visits

Paid, 33%
Free, 67%
Paid, 34%
SEO, 8%
CRM, 13%
Direct, 45%
Source: Company Reports John Batistich - 2021
Maximising your free vs paid traffic
Owned and earned traffic vs Paid is a key measure for ecommerce. GFG (The Iconic) and Kogan feature their high-level sources
of traffic in their Investor Presentations.

Seizing your SEO opportunities
Consumers have become more open to new brand experiences and are expecting to shop more online.
Site
Structure
Unique
Compelling
Content
Internal link architecture
Bot accessibility
Sitemaps
URL structure
Server response codes
Monitor keyword
rankings
Use high
informational and
intent words
Measure campaigns
Site speed
Domain
Authority
Measure
Test
Improve
Local
Create relevant
helpful content
Remove duplicative
or unnecessary
content
Data driven title tags
Acquire quality
backlinks
Connect with reporters,
influencers, partners,
vendors for relevant
backlinks
Disavow spammy
backlinks
Complete and up-to-
date Google My
Business
Local business listings
Local directory
submission

Faster site speed lowers bounce rates
The slower your site the higher the bounce rate and the poorer the user experience. Site speed also helps SEO rankings so
make it snap!
Site Speed (Seconds) and Bounce Rate
30%
40%
57%
62%
67%
1 3 5 6 10
Seconds per Actions

Site speed opportunities
Source: Altexsoft John Batistich - 2021
Content
Use fast ‘out of the box’
platform
Use fast reliable hosting
Unlock the browser from
parser-blocking scripts
Minify your code
Minimise the number of
JavaScript and CSS files
Features
Structure
Use content delivery network
Decrease thumbnail image size
Compress/reduce images in
size and number
Ease up on homepage hero
slides
Use lite embeds to add video
Use pop-ups sparingly
Reduce the use of web fonts
Test/optimise on mobile
Reduce the number of plug-ins
Weigh the benefits of installing
another app on your site
Use website caching
Reduce redirects
Organise Google Tag Manager
Conduct Google speed tests
Reduce redirects/remove
broken links
Database optimisation in CMS
Detect 404 errors
Platform
Customers expect webpages to load in less than two seconds. We need to improve site performance through platform, structure, content
and features.

Source: Similar Web John Batistich - 2021
Conversion rates remain low
6.34%
5.42%
4.75%
4.35% 4.26% 4.11%
3.25%
2.91% 2.88% 2.83%
2.14% 1.99%
Germany UK Poland France US Italy Australia Brazil Canada Sweden Mexico India
Average ecommerce conversion rates for top 10 countries Jan – Sep 2020
To improve the conversion rate understand whether the customer is in discovery, navigational or buyer mode and test
improvements to key product page and payment moments.

Product details page is the buy moment
Source: Adapted from Baymard Institute John Batistich - 2021
1. All Products Need At Least One ‘In Scale’ Image
2. Allow Users to Purchase Temporarily ‘Out of Stock’
Products
3. Avoid Sneaky Displays of ‘Free Shipping’ Promotions
4. 5 Requirements for the ‘Ratings Distribution Summary’
5. Provide Both Site-Authored FAQs and Community-Driven
Q&As
6. Provide a Cross-Sell Section that Only Contains
‘Alternative Products’
7. Provide a Cross-Sell Section that Only Contains
‘Supplementary Products’
8. Provide major BNPL options
82% of sites struggle to reach even an “acceptable” level for the Product Page user experience.

Conversion opportunities
Source: SEMRush. SimilarWeb. Baymard Institute
Easy
Checkout
AB test headlines
Understand users modes
and needs
Personalise emails based
on search/purchase
Own ‘buy intent’ keywords
Maximise returning visits
Be where your best
customers are during
discovery
Trust
Service
Signals
Brilliant
Product
Details
Clear calls to action
No more than 3 clicks
Autofill details
Checkout as guest
option
Add stages path
Add countdown timer
Integrate with store POS
Add live chat
Security cues
Money back guarantee
Competitive refunds
Competitive and easy
returns
Abandonment email
Carbon offsets and charity
contribution
Beautiful in scale Images
In Stock
Free Shipping
Social proof: Reviews and
Ratings distribution
Site and Community FAQs
Cross sell supplementary
and alternative
Key BNPL (e.g. Zip) options
Intentional
Visits
Retailers can drive better conversion through intentional (buying intent) visits, beautiful design, brilliant product details, easy checkout
and trust/service signals
Clear proposition
Clean mobile
navigation/design
Make initial steps really
easy
Simple registration
Remove unnecessary
form fields
Remove distractions
Site speed that snaps
Beautiful
Design

4. Rise of Meta Marketplaces
Global marketplaces are becoming search and fulfilment powerhouses
Brands are trading off data and a direct customer relationship for reach and revenue

Department stores in structural decline
Source: US Census Bureau John Batistich - 2021
The original marketplaces, Department Stores, are in structural decline and being replaced by global ecommerce marketplaces.
US Department Store Sales
USD Millions – 1993 to 2020

Source: Bloomberg. Forbes. New York Times AFR. John Batistich - 2021
Leading to bankruptcy and consolidation
We are seeing store closures, consolidation and bankruptcy for retailers who have been slow to adapt. Pure plays are even buying store brands.

Source: McKinsey. John Batistich - 2021
Marketplaces are accelerating growth
Marketplaces are leading ecommerce value and growing faster than proprietary sites
Global Ecommerce Market Platform Sales Breakdown
$ Trillion

Online marketplaces are strengthening
$2.67 Trillion was spent globally on the top 100 marketplaces in 2020 growing at 29% vs LY.
Marketplace Top 100
62% 95%
Marketplace Share of
Global Ecommerce
Share of the Top 100 Top 5 Global Marketplaces
($B GMV)
100
405
475
593
609
Source: Digital Commerce 360

Source: Company Reports. MacroTrends. John Batistich - 2021
Amazon leads the way (outside of China)
In 2020, Revenue grew by 37% to $386B, employed 1.3M and achieved a market cap of $1.6 Trillion
Amazon Revenue
(US$ Billions)
6.9 8.510.7
14.8
19.2
24.5
34.2
48.1
61.1
74.5
89
107
136
177.9
232.9
280.5
386.1
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
2
0
2
0
Amazon Employees
(000s)
34 56
88
117
154
231
341
566
648
798
1298
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Amazon Market Capitalisation
(US$ Billions)
23
60 82
118
182
143
309
355
594
774
934
1628
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: Company Reports. Statista. John Batistich - 2021
Amazon marketplace outperforms first party sales
Amazon third party sales account for +60% of GMV and growing faster than first party sales
Amazon First Party vs Third Party Revenue
(USD Billions)
117 135
190
160
200
300
2018 2019 2020
3%
34%
60%
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
2
0
2
0
Amazon Third Party Share of Revenue
3rd Party Sales
1st Party Sales

Amazon is building a huge media business
Source: Benedict Evans. Company Reports. Cowen & Co. John Batistich - 2021
Amazon is challenging Facebook and Google, building a marketplace led media business estimated to be worth $26B.
Amazon Advertising Revenue
(US$ Billions)
1 1.5
2.5
4
10
14
26
2014 2015 2016 2017 2018 2019 2020

Retailers building marketplaces with media
Major retailers are developing marketplaces where media is a key source of value.

Shopify is accelerating SMB ecommerce
Source: Shopify. MacroTrends.
Shopify GMV
(US$ Billions)
3.8
10
15.4
26.3
41.1
61.1
119.6
2014 2015 2016 2017 2018 2019 2020
Shopify Revenue
(US$ Millions)
112
189
310
465
642
909
93
201
363
608
936
2021
2015 2016 2017 2018 2019 2020
Counterweighting marketplaces, Shopify has driven explosive growth enabling SMBs to step-change their ecommerce business.
Shopify Market Capitalisation
(US$ Billions)
1.6 3.6
11.3
15.3
47.2
135.2
2015 2016 2017 2018 2019 2020

Brand concerns over marketplaces
The promise of higher revenues compels brands to have a marketplace presence. But people aren’t searching for the brands rather
searching for solutions.
24%
26%
31%
34%
36%
50%
Biased private label competition
Customers distracted from our products
Lack insight on buying behaviours
Customer owned by marketplace
Inconsistent behaviour cross marketplaces
Take cut of revenue
Concerns about selling through marketplaces
US 2018

Brands under pressure from Marketplaces
o But brands often perceive marketplaces as a necessary evil: driving sales, but pressuring margins
o Consumers are are increasingly starting their search on marketplaces
o Marketplaces are growing faster than brand sites
o Consumers have wider decision hierarchies on marketplaces
o Marketplaces are creating private label products on the best selling products
o Brands have long been concerned about ceding customer relationships and data to marketplaces.
o Brands should turn their marketplace product pages into rich, immersive experiences, while offering
unique customised products through their own channels.
Marketplaces help reach a wider range of customers but your core site should cater for your best customers.

Marketplace opportunities
Choice Automate
Optimise
Product
Page
Differentiate
Brand Site
Choose to play or not
Step-change your own
site for best customers
Decide on data
sharing
Agree fulfilment,
marketing and pricing
terms
Set up Product APIs
Dashboard syncing
inventory, product and
marketing
Automate workflow, events,
inventory management,
warehousing and marketing
Gather insights/feedback
and iterate
Delivery best images and
support reviews
Drive parity pricing and
align promotions
Test paid search media
Full brand story with
rich content
Full range
Exclusives
Customisation
Services
Deep personalisation
Brands need to choose whether to play or not with marketplaces considering the customer reach and revenue against costs
Source: Adapted from Shopify

5. Invisible Payments
How we buy and pay is undergoing transformative change
Seamless, touchless, cashless, cardless and digital wallets

Source: RBA. McKinsey John Batistich - 2021
Cash is collapsing
56% 55%
51%
99%
79%
100%
9%
23%
28%
41%
54%
89%
Sweden UK US China Japan India
Cash usage by country
% of Cash used in total transactions by volume
2010 2020E
72%
68%
56%
43%
32%
22%
44%
39%
33%
30%
18%
9%
2007 2010 2013 2016 2019 2020E
Australia Cash Usage
% of Cash used in total transactions Volume and Value
Volume Value
Cash is in structural decline globally.

Changes in the value of retail payments
Source: RBA John Batistich - 2021
9.0
26.6
31.0
35.0
39.5
66.5
ATM Withdrawals
Credit Card
Cheque
Debit Cards
Balances Outstanding of Credit Cards
New payments platform transactions
Value of Retail Payments
Australia 2020 - $ Billions
Growth vs LY
+85.7%
-25.6%
+17.8%
-32.9%
-6.2%
-13.6%
RBA data sees less cash, cheques and credit card usage and a lot more debit and new forms pf payment (including BNPL)

Source: Google Trends John Batistich - 2021
BNPL is rising amongst new generations
Afterpay and Zip are providing new mobile ways of paying to avoid interest.
Google Trends Search
Last 5 years until May 2021

Paying will become easier and more invisible
Source: Amazon John Batistich - 2021
One click payments online and Amazon go remove the payment stage of the customer journey

Future of payments opportunity
Mobile
Wallet
Less use
Less acceptance
Fewer ATMs and Bank
Branches
Touchless
Integrate POS and
Payment Gateway
Mobile POS
New store design
One/Zero click
Real time clearing
and settlement
Merges
with
Loyalty
Technology
and CX
Debit
Strengthens
Vs Credit
Wave/Pass
Contactless
Cardless
Fast and secure
Cross border
Integrated loyalty
schemes
Self-checkout
Personalised offers
POS credit financing
More Debit
Declining Credit Cards
Cheques vanish
Digital currencies
Payments are not just being disrupted, but utterly transformed by new technology. This desire for speed, convenience, ubiquity, safety
and affordability is rising.
Cashless

Cyber security threats are rising on PII
The threats of a PII data loss or DOS attack are rising rapidly.

Cyber security resilience opportunities
Human
Firewall
Security
by Design
Senior Ownership
Resourced
Phishing Training
Password control
Access Management
Policy
Playbook
Simulations
Regulators
Defence Response
Recovery
Detection
Controls
Configuration
End to end Encryption
3rd Party APIs
Authentication
Understand Risk Sources
Patch Management
Automated Updates
Back Up Files
Monitor Anomalies
Measure system
Retailers need to create a human firewall, protect, defend, detect and respond.

6. Lightening Fulfillment
Fast, free, sustainable and branded fulfilment options
Retailers are facing higher complexity and rising costs to meet rising customer expectations

Source: Amazon.com. Seattle Times
“The idea of making deliveries
faster is in the DNA of the
company. When I started writing
the concept document for Prime
Now, I wrote that I wanted it to
feel like magic for a customer to
get something right to their door
in superfast speeds and we built
from there—I assembled a great
team and we worked hard to
launch fast... The future is now.
Customers are ready for it. ”
Stephanie Landry VP Amazon Prime Now

Customer expectations for lightening fulfillment
Fast Free Branded Sustainable
Same and next day
options
Automated returns
Recycle
Reuse
Minimalist
Carbon neutral
Ethical supply
Free-shipping
thresholds
Pick Up instore
or curbside
Home delivery
Options
Special
anticipation
Personalised
Consumers want options. They want fast, free, branded and sustainable fulfilment.
Source: Adapted from Shopify

Improving fulfilment and distribution
Source: Shopify John Batistich - 2021
Customers expect fast delivery, free delivery or free shipping thresholds.
Customers Expectations on Fulfilment – US 2020
23%
34%
37%
40%
59%
64%
65%
67%
Frustrated when have to pay extra for shipping
Faster delivery would make online shopping better
Frustrated when shipping takes too long
Free returns would make online shopping better
Free delivery improves the experience
Expect delivery to be free
Check free shipping threshholds before adding to cart
Expect delivery within two days

Increased fulfilment complexity and costs
Source: Kardex Remstar via Shopify John Batistich - 2021
The ecommerce boom has pushed order fulfilment capability to the limit with higher complexity and increased costs.
How retailers’ order profile has changed due to ecommerce
23%
23%
25%
28%
31%
33%
43%
50%
86%
Processing orders from multiple facilities
Processing more returns
Fewer multi-line orders
Shipping orders to stores for pick-up
Peak shift due to time of order received
Processing more orders at peak
Dealing with more single line orders
Must process and pick orders faster to meet cutoff
Changes made to order profile

Container rates have stayed elevated
Source: World Container Index/Drewry (40 foot equivalent unit container) John Batistich - 2021
Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to
pass the extra costs on to consumers
Spot Container Rates from Asia

Returns are an increasing pressure point
Source: Statista via Shopify John Batistich - 2021
Returns are rising as more online shoppers "bracket" their purchases, buying multiple versions of a product with the intention of returning
some items.
Value of Ecommerce Returned
US – 2014-2023E
80 88
104
121
143
171
205
242
290
348
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Sustainability is rising in importance
Source: World Business Council for Sustainable Development John Batistich - 2021
Consumers globally report a greater propensity to buy from companies with a reputation for environmental responsibility.
Consumers report a willingness to pay more for “environmentally friendly” products or services
67%
52%
46%
42%
40%
34% 33% 32% 32%
28% 27%
23%
18%
China Australia Sweden US Japan Canada Italy Brazil Russia Germany UK France Spain
More Likely to purchase from company with good reputation for environmental responsibility

Different delivery logistic models emerging
Source: IRI via Benedict Evans John Batistich - 2021
Ecommerce is almost all shipped by parcel (e.g. Australia Post), but half of food is collected or delivered.
Parcels 93%
Delivery
2%
Collection
5%
Parcels 77%
Delivery
9%
Collection
14%
Parcels
46%
Delivery
16%
Collection
38%
Food
Consumer
Packaged
Goods
General
Ecommerce
Ecommerce by logistics by Category
US – June 2020

Improving fulfilment and distribution
Source: Kardex Remstar via Shopify John Batistich - 2021
Retailers are focused on improving inventory management, packing, returns management and replenishment.
Fulfilment and Distribution improvement focus over the next 2 years
US - 2020
20%
21%
23%
23%
28%
32%
35%
42%
43%
Better store and fulfilment centres
Coordinating processes across multiple fulfilment centres
Retrieval of electronic data
Order wavering or sequencing
Order customisation and value added services
Replenishment
Returns management
Packing
Inventory management

Fulfillment opportunities
Streamline
Return
Process
Fast
Local
Fulfilment
3PL partnership
Global reach
Late cut-offs for
same day
Fulfil from store
Dark Stores
Click and collect
Accurately forecast
demand
Optimise
replenishment
Rule based routing
Reduce shipping costs
Inventory
management
Returns
management
system
Local delivery
Store credit/exchange
Pre-fill return labels
Self-serve
Fulfilment can become a competitive advantage by building capability, outsourcing operations, automating inventory, streamlining
returns and create local delivery.
Automate
Inventory
Management
Outsource
Operations
Build
Capability

7. Programmatic Personalisation
Creating a direct personalised relationship with customers at scale
Retailers are focused on unified data, design, decisioning and content distribution to deliver ‘you get me’
moments. The long-awaited return to one to one shopping is now possible at scale.

One to one service is now possible at scale

Brands are going direct via digital
Source: Company Reports via Benedict Evans. John Batistich - 2021
Ecommerce as % of Sales
2020
25%
13%
10% 10%
7.6%
2%
Loreal Nestle P&G Reckitt Unilever Hershey
Brand owners are accelerating their drive towards ecommerce channels to build direct relationships with their customers.

Personalised recommendations drive sales
More than 30% of Amazon’s retail is generated by personalised recommendations based upon prior search and purchase behaviour.
Recommended for you, John

Prime personalisation drives LTV
Source: Statista 2021
600
1400
Non Member Member
Number of Amazon Prime Members
(Millions)
Annual Spend: Prime vs Non-Prime
(USD)
25
40
54
75
91
101
112
152
2013 2014 2015 2016 2017 2018 2019 2020
Amazon Prime drives higher life time value with low levels of churn.

Personalised relationship
18%
21%
26%
26%
32%
35%
42%
Siloed organisation with different approaches
Co-ordinating different delivery platforms
Lack of technology resources
Managing data quality or inconsistent levelof quality amongs data
sources
Creating a single view of the customer with other marketing
channels
Attributing marketing performance to individual programs,
campaigns or channels
Inability to track targeted customers through entire journey
Primary challenges to implement personalisation strategy and tactics
Key challenges for retailers include tracking customers through the entire journey, attribution and creating a robust single view of
customer

Developing a personalisation framework
Source: McKinsey & Company John Batistich - 2021
Decisioning
Create customer-data
platform to provide a
360 degree customer
view
Distribution
Design
Advanced analytics
and machine learning
to create customer
scoring and real-time
triggers
Deliver marketing tool
experiences across
channels and feed
response data to
customer-data platform
Content factory model,
digital-asset
management, and agile
marketing to drive
experimentation
Data
Foundation
The solutions architecture and operating model should be guided by a simple and effective framework

Developing the stack to enable personalisation
Source: McKinsey & Company John Batistich - 2021
Retailers need to develop a data and martech stack to enable personalisation at scale

Key Takeaways
So What?

7 trends shaping the future of ecommerce
1. Accelerated consumer behaviours
2. Retaining best customers
3. Collapsing funnels
4. Rise of meta Marketplaces
5. Lightening fulfilment
6. Invisible payments
7. Programmatic personalisation

Core customer needs and digital features
Make it
Easy
Protect Me
Fix issues
Rewards
Coupon usage
Recommendations
based upon past
purchases
Promo codes targeted to
my interests
Marketing opt-in for
personalised offers
Options for
returns
Refund returned
purchases
Protect my data
Fix my issues fast
and once
Live help
In-stock
Real time inventory
Easy navigation
Product details
Payment options
Price matching
Digital wallets
Create my profile
My shipping
information
My order history
My payment
method
You get me
Product reviews
Free shipping
Product
recommendations
Buy online pick up
instore
Mobile order ahead
Mobile product finding
Fulfilment can become a competitive advantage by building capability, outsourcing operations, automating inventory, streamlining
returns and create local delivery.
Help Me Get
What I Want
Value
Me
Know
Me
Source: Adapted from Akamai

Search
Find
Buy
Pay
Acquire
Use
Share
Relationship
Discovery
Lightening Fulfilment
o Options/Choices
o Fast
o Free
o Branded
o Sustainable
Invisible Payments
o Cashless/touchless
o Debit over Credit
o BNPL/Digital Wallets
o Digital currencies
o One to zero click/make it easy
Programmatic Personalisation
o Personalised content
o Know me and value me
o Relevance and exclusivity
Seamless Support
o Easy returns/refunds
o Service/live chat
o Referral
o Review/recommendations
o Protect me
Faster Search
o More predictive/faster/less time
o Help me get what I want
o Rise of Marketplaces
o Solutions over brands
Wider Discovery
o More options/time
o Social, live and entertaining
o Collapsing funnels
Shopper experience is transforming
Search terms: How,
what, where, why, best
ideas and tips
Search terms: Buy now,
best place, start free trial,
promo and get free gift
.

Sources

Sources
ABS
Akamai
Alexsoft
Amazon
Australian Financial Review
Australia Post
Baymard Institute
Benedict Evans
Bloomberg
CNBC
Cnet
Citi Supermarket Reports
Digital Commerce 360
Drewry World Container Index
Facebook
Forbes
Global Fashion Group
Global Web Index
Google Images
Google Trends
IAB
Kardex Remstar
Macrotrends
McKinsey and Company
NAB Quantium Online Sales Index 2011 – 2020
New York Times
RBA
Revealbot
SEMRush
Shopify - Future of Ecommerce
Similar Web global ecommerce benchmarks
Statistica
Worldpay – The global payments report
UBS Retailer Analysis
US Census Bureau
The Wall Street Journal
Zip Data Science

Connect
@johnbatistich
John Batistich
https://www.slideshare.net/jbatistich/

Future of Ecommerce - 7 Trends Shaping the Future of Retail

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