Heinemann: “Europe is at risk of losing touch”

Impressions from the TrendArena (Day 1)

In 1997 Helmut Kohl entered the penultimate year of his term as Chancellor, Borussia Dortmund won the Champions League after goals from Karlheinz Riedle and Lars Ricken – and the first INTERNET WORLD EXPO took place in Munich. This long history already illustrates the outstanding position of the event in the German e-commerce landscape. This year again, more than 18,000 visitors flocked to the Munich exhibition centre to find out about the latest trends in online retailing at the trade fair and associated congress. The thematic spectrum was enormous. From influencer marketing via omnichannel and online grocery through to platform economy – all challenges were discussed on numerous stages and at the booths of around 450 exhibitors.

An exciting potpourri of these topics could also be experienced at the TrendArena, the largest stage at INTERNET WORLD EXPO. I would like to review a few impressions and notes from selected lectures on this stage for all those who stayed home. This contribution will initially focus on the first day of the event. A follow-up report on the second day can be found here.

The Future of Shopping: Discovery and Purchasing on the Customers Terms

Phillip Raub, founder and CEO of b8ta, who had travelled to Bavaria from Silicon Valley, provided an interesting insight into his business model on Tuesday morning.

  • Raub sees some enormous upheavals in the retail sector:

o On the one hand, the online boom has forced many brick-and-mortar retailers to close in recent years. This is lowering rents in city centres.

o Secondly, with D2C brands such as Away and Casper, new players are establishing themselves in the market that completely bypass brick-and-mortar and online retail and own the entire supply chain from manufacture to sale themselves.

  • The D2C brands are growing in their initial phase primarily thanks to strong social media marketing and uncomplicated online sales. However, in order to continue to grow and develop new customer groups, more and more brands want to enter the brick-and-mortar business.
  • With its own stores and shop-in-shop locations, b8ta offers the right platform for this, Retail-as-a-service so to speak, and brings the brands to the city centres. Different brands can share the costs for a retail space and together offer their customers an attractive range of products.
  • b8ta thus positions itself as a middleman who satisfies both the needs of the brands and the real estate companies and department stores that have come under pressure.
  • At the same time, b8ta enables brands to precisely analyze their brick-and-mortar tests through appropriate PoS technology.

Brands & Platforms: A win-win relationship?

In an insightful talk, Alexander Otto, Head of Communications at Tradebyte, and Felix Jahn, Head of eCommerce Europe at sports goods manufacturer Puma, spoke a little later about the often difficult relationship between brands and platforms.

  • From Felix Jahn’s point of view, marketplaces and platforms are a “triple win”: the customer gets more variety and comparison possibilities, the brands more reach and the operators a good business. For this reason, the marketplace trend will continue.
  • The question of cannibalisation is therefore of secondary importance for Puma. Although Puma has its own web shop, it can’t force marketplace customers to shop there. Therefore you have to be present in both channels in order not to lose the customer completely. The overall result matters.
  • Puma is selective when it comes to marketplace options. Since there are no technical standards in e-commerce, it also plays a role how long an integration would take and how much effort it would generate.
  • – With regard to Omnichannel, Puma wants to be seen as an entity. The aim is to “meet the most frequent requests on the most diverse channels”. For this, structures must be created so that the departments can work together efficiently. This is a holistic and long-term project for a group that has grown over decades.

Are you interested in the effects of the platform economy on B2B retail? Then you will find some starting points in this article.

Transformation and Disruption: How Philip Morris Reinvents Itself

The tobacco manufacturer Philip Morris, which wants to open a new chapter in its company history with its e-cigarette IQOS, is less in a digital than in a corporate transformation. Thorsten Scheib, Marketing Director, described the impact this will have on the company.

  • In 2016, Philip Morris CEO André Calantzopoulos declared: “I hope that one day we won’t sell any more cigarettes”. Instead, Philip Morris wants to help design the smoke-free future. Philip Morris is thus consciously transforming its business, which is currently still doing well.
  • One product to achieve this goal is the IQOS e-cigarette. The fact that the tar in this product is only strongly heated and not burned significantly reduces the risk of cancer – but a certain risk remains. IQOS is therefore also marketed as a healthier alternative for only those who would otherwise continue to smoke in a traditional way.
  • In contrast, the Marlboro cigarette brand, for example, is no longer advertised at all.
  • This transformation poses great challenges for marketing, among others.

o The product has changed completely. Instead of tobacco, electronics must now be marketed.

o With regard to commercialization, new paths must be taken and tried and tested strategies are abandoned. For example, bar marketing, which had been practiced for a long time, was abandoned, while IQOS set up its own stores in inner-city locations.

o Society is very critical of the tobacco industry. For this reason, Philip Morris must open up completely and disclose all details about IQOS in order to build trust.

o Marketing messages must change. Instead of the earlier emotional address (e.g. Marlboro Man), almost scientific statements are now necessary. The product has become in need of explanation.

o Philip Morris used to be a B2B company that sold its products to trading partners. Now it’s time to talk actively to the end customers. A huge amount of data has to be managed.

How online grocery retailing becomes profitable

On the eve of the INTERNET WORLD EXPO the online grocery company Picnic was named “Retailer of the Year” by the magazine “Internet World Business”. On the stage of the TrendArena, Frederic Knaudt, Managing Director Germany, explained the underlying business model.

  • The traditional milkman is the rolemodel of Picnic.
  • Customers can order food until 10 pm. Picnic then orders the ordered goods in exact quantities from its suppliers. A large warehouse is therefore not necessary. Waste is reduced.
  • Based on the orders, a fixed route is planned for the next day. In this way Picnic can reduce the delivery lot to 20 minutes. The customer only has to be available for a short period of time for the delivery, but cannot select the delivery lot individually.
  • Picnic has examined the advantages of the milkman model over the free slot selection by the customer. The result was a time saving of 50%, a 60% shorter route and twice the delivery density. According to Knaudt, these results lead to less traffic, greater reliability in meeting delivery deadlines and lower costs per delivery.
  • Thanks to the cost savings (no supermarkets, no garbage, efficient route planning), Picnic can offer its customers free delivery.

The GAFA-TAB-ZERO scenario for 2019 – especially in the cross-comparison Germany vs. China

Prof. Dr. Gerrit Heinemann from the Niederrhein University of Applied Sciences, on the other hand, compared Germany’s e-commerce landscape with the competition from the Far East and the USA. In the competition with the GAFAs (Google, Amazon, Facebook, Apple) and the TABs (Tencent, Alibaba, Baidu) he gives Germany and Europe a bad report.

  • So far, Germany cannot boast a digital company that can compete with these corporations.
  • Only SAP is playing in a similar league. However, SAP is particularly concerned with the challenges of digitization 1.0 (process automation, etc.). Digitization 4.0 in the sense of the above-mentioned companies, on the other hand, is hardly taking place in Germany.
  • This is also due to the fact that digitization is interpreted quite differently in Germany than in China and the Middle Kingdom also has other prerequisites. Heinemann gave various examples of this.
  1. GER: Existing infrastructure to transform – CHN: No existing infrastructure to built up
  2. GER: Product driven digitization – CHN: Application based digitization
  3. GER: Data security afraid customers – CHN: More open-minded customers
  4. GER: Payment with Cash – CHN: Payment with Alipay
  5. GER: Government as a protector – CHN: Government as a supporter
  6. GER: Big Data as a challenge – CHN: Big Data as an opportunity
  7. GER: 6 unicorns – CHN: more than 100 unicorns
  8. GER: Slow but perfect solutions – CHN: Fast with trial and error
  9. GER: Consensus based compromises – CHN: Uncompromising leapfrogging
  • According to Heinemann, the next disruptions will take place in the area of AI. Here, too, Germany does not appear to be able to march ahead. Instead, the German mittelstand – the often invoked backbone of the German economy – often still struggles with digitization 1.0.

Online marketplaces from a dealer’s point of view – how happy do Amazon, eBay and Co. make their sellers?

In another talk, Michael Atug, CEO at MAW Werkzeuge and operator of the Facebook group “Multichannel Rockstars”, Stephanie Oppitz, owner and founder of the WindelManufaktur, and Oliver Lucas, co-founder and managing director of ecom consulting, discussed meaningful marketplace strategies from a dealer’s point of view.

  • Atug argued in the discussion that retailers should position themselves strategically broadly and not rely on just one channel. He knows numerous dealers who make 90 % of their turnover on Amazon. As a result, their business has no planning security, as Amazon alone determines the algorithm.
  • In addition, there is always the danger that Amazon will enter a market with its own brands. According to Atug’s conviction, Amazon is specifically cherry picking.
  • From Lucas’ point of view, retailers often underestimate the danger of a lack of diversification. At this point there is still a lot of ignorance in the market.
  • Oppitz, on the other hand, is convinced that the hurdle for players such as Amazon is very high for products in need of explanation such as the cloth diapers she sells. A lot of content has to be built up and trust created, which makes it difficult to enter the market quickly.
  • A suitable marketplace strategy therefore depends very much on the product. For high-end brands such as hers, eBay, for example, is not an option because presentation options are largely lacking there.

Mobile first vs. Instagram: Where and how to sell today?

In a joint talk, Alexander Graf, founder and CEO of Spryker, and Elias Vides, CEO of MOON IDEA, focused on the ever-changing customer journey.

  • Alexander Graf first gave an insight into current developments in e-commerce.
  • Looking at desktop e-commerce, Amazon has won the battle in many categories. But: We are just leaving the desktop world.
  • New devices and channels are emerging more and more rapidly, so that even Amazon has problems using them all adequately. This opens up new opportunities.
  • The challenge, however, is to identify relevant devices and channels and connect them quickly. Trying it out is the only way. In order to do this, it is crucial to have your data and processes under control. Then you can build and test any frontend.
  • Elias Vides then focused on the exemplary area of social commerce.
  • Many companies tend to secondarily exploit existing marketing content in their social media channels. Instead, companies must learn to communicate in the context of the respective social media platform. Content and strategy must therefore be designed individually for each channel.
  • However, social networking trends are changing rapidly. Many companies therefore ask themselves how they should present this fast-paced nature with their limited capacities. For this reason, MOON IDEA develops for customers, among other things, Micro Campaigns on a monthly basis, which together pay for a larger annual objective.