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9 Radar For The Ecommerce Market VF PDF
9 Radar For The Ecommerce Market VF PDF
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With the E-Commerce Observatory, on incumbents to quickly identify and The Observatory runs a daily analysis on
companies can stay abreast of competitive assess these new competitors and to a set of 250 to 1,000 keywords or search
developments in the fast-changing online strategize accordingly. terms for each retail category (keywords
retail arena. for the furniture category, for instance,
But how can retailers and consumer com- would include sofa and bed). Using a
The spectacular rise of German shoes- panies keep track of their online competition? complex algorithm, the tool identifies and
and-apparel retailer Zalandofrom a With hordes of new entrants, how can they ranks the top 100 e-commerce players in
start-up to a 1.2 billion business in five tell which ones could pose a serious threat? each retail category measured by share
yearstook many companies by surprise. One approach that has been eye-opening for of search traffic, taking into account both
Zalando, which now has a presence in more companies relies on sophisticated analysis of organic and paid search.
than a dozen European countries, seemed search-engine data.
to materialize out of nowhere, leaving The Observatory can generate a number
established retailers wondering, How Search traffic as a proxy for sales of useful reports. One is a detailed
did we not see it coming? We have found that a websites search market scorecard that shows the growth,
traffic (which we define as the number of attractiveness, and maturity of the market
Indeed, in an increasingly crowded market- visitors who arrive at the site via search and identifies the types of players that
place, its easy to missand dismiss engines) is a reliable proxy for online are gaining or losing ground (Exhibit 1).
newcomers. As more product categories sales; in other words, the growth of a Another valuable report is a competitive
migrate from physical stores to online, websites search traffic is indicative of its overview that ranks the top 100 players in
e-commerce is attracting many new players: sales growth. In partnership with data- the relevant product category and country.
in Germany alone, for example, more than analytics firm Xamine, McKinsey has Insights from this overview can help
400 new e-commerce businesses were developed the E-Commerce Observatory, retailers answer a number of questions:
established in 2012, according to Deutsche- a tool that uses search-engine data to Who are our current and emerging online
Startups.de. Market-research firm Forrester help companies keep a close watch on competitors? Which players are gaining
estimates that online retail in Europe will competitive developments in e-commerce. search-traffic share, and are their gains
grow at double-digit rates for the next few The Observatory currently covers 40 due mostly to paid ads or search-engine
years, reaching 191 billion by 2017. The retail categories in five countries: France, optimization? Which companies are
emergence of Zalando and other innovative, Germany, Spain, the United Kingdom, and potential partners for us, and which
aggressive online players puts pressure the United States. are potential acquisition targets?
Perspectives on retail and consumer goods 2013 Winter
E-ommerce Observatory
Exhibit 1 of 2
70
Market growth
Generated traffic, Share of sales by player,
millions top 50 players, July/Aug 2013, %
Market maturity
Number of new players Search traffic share, Cost per click
in top 100 %
July/ July/ May/ July/ May/ July/ May/ July/ May/ July/ May/ July/
Aug Aug June Aug June Aug June Aug June Aug June Aug
Displays appeal Shows weight of bigger players in segment, thereby indicating the Illustrates market
of market entry degree of consolidation maturity via price level
1Search-engine optimization.
2Search-engine advertising.
Source: Xamine; McKinsey analysis
Perspectives on retail and consumer goods 2013 Winter
E-ommerce Observatory
Exhibit 2 of 2
71 71
14 14
12 12
10 Amazon 10
8 8
Baur Otto
IKEA IKEA
6 6
eBay
Otto Amazon
4 4
bonprix
2 Heine 2 Zalando
bonprix Schwab
Fashion for home Living 24
0 0
25 20 15 10 5 0 5 10 15 20 25 40 20 0 20 40 60 80 100
1Search-engine optimization.
2Search-engine advertising.
3Share of search traffic among top 100 players; partial list of the top 10.
Source: Xamine; McKinsey analysis
In Germanys furniture market, for instance, perhaps by acquiring or partnering with for example, when a new entrant appears.
IKEA is the offline market leader, but its faster-growing e-commerce businesses. They This timely knowledge about the dynamic
position is being challenged by online-only could study the assortment, pricing, services, e-commerce landscape can give companies
players such as Amazon (Exhibit 2). The and other features of successful new entrants a crucial competitive edge in the battle for
Observatory analysis also shows that while and adjust their own offerings in response. online customers.
traditional furniture chains like IKEA and mail-
order companies like bonprix and Schwab The Observatory also identifies the companies The authors wish to thank Silvana Mller
are investing the most in search-engine investing in search-engine optimization and Sina Sattler for their contributions to
advertising, Zalando is looking to become and search-engine advertising. A European this article.
a contender in the category. Similarly, in chocolate manufacturer, for example, found
that the companies with the highest share and Karel Drner is a principal in McKinseys
the pet-food industry, Observatory analysis
growth in organic-search traffic were mostly Munich office, Nicol Galante is a director
showed that the largest pet-food retailer
traditional chocolatiers, while the leaders in in the Paris office, and Carina Kauter is an
in one European country was under threat
paid-search traffic were newer pure-play entities associate principal in the Frankfurt office.
from pure-play online companies with
such as World of Sweets and Amazon. These Copyright 2013 McKinsey & Company.
unique strategies (such as an online retailer
insights helped inform the manufacturers All rights reserved.
specializing in customized pet food).
e-commerce strategy.