Digitizing An Extensive Product Catalog with Handshake

Digitizing An Extensive Product Catalog with Handshake

Case Study

How three brands with a high volume of SKUs and product variants were able to make the switch to digital catalogs and sell more eeffectively.

Click here to view the case study

Google will use self-driving cars to compete with Uber — California’s proposed regulations for self-driving cars — Z-Wave’s new security protocols

Google will use self-driving cars to compete with Uber — California’s proposed regulations for self-driving cars — Z-Wave’s new security protocols

BI Intelligence

ALPHABET’S SELF-DRIVING CAR PROJECT WILL BECOME INDEPENDENT COMPANY NEXT YEAR: Alphabet’s business plans for its ongoing self-driving car project are becoming clear: the project will spin off next year into its own business, and that business will compete directly with Uber. Rather than selling self-driving cars to consumers, Alphabet (formerly Google) is going to offer a ride-hailing service similar to Uber with its self-driving cars, Bloomberg reported.

Uber has been working hard to develop self-driving cars for its own ride-hailing service. Self-driving cars would drastically lower costs for Uber rides to the point that it would be less costly for many consumers to take Uber rides everywhere instead of owning their own car. Asset management firm ARK Invest estimated earlier this year that self-driving cars would cut the cost of Uber rides to only 25 cents per mile. Uber has even hired a number of former Google employees to help with its own self-driving car efforts.

As Uber and others pour resources into developing self-driving cars, they’re all playing catch up to Google, which has been working on self-driving cars the longest. In the last six years, cars equipped with Google’s self-driving software have driven more than one million miles on the road. That means that Google’s software has more experience handling real-world obstacles and situations on the road than any other company’s self-driving technology right now. So Google is likely closer to delivering a ride-hailing service using self-driving cars than Uber is.

Although this could be bad news for Uber, it might be even worse news for automakers. If self-driving cars make ride-hailing services like Uber as cheap as ARK Invest predicts, it could make auto sales fall off a cliff. A Barclays analyst note earlier this year predicted that ride-hailing services combined with self-driving cars could reduce US auto sales by 40% in the next 25 years.

CALIFORNIA RELEASES SELF-DRIVING CAR REGULATIONS FOR THE PUBLIC: California’s Department of Motor Vehicles released a draft of proposed regulations that would allow self-driving cars to be used by the public on the state’s roads. This makes California the first state to propose legislation that would give consumers the right to ride in self-driving cars on public roads. Tech Insider provided a rundown of the proposed rules:

• The regulations won’t allow fully autonomous cars without a steering wheel: somebody would have to sit in the driver’s seat at all times, prepared to take the wheel if necessary.
• Anyone who wants to drive a self-driving car would have to take additional training beyond what’s included in normal driver’s license exams.
• The public also won’t be able to buy a self-driving car – they’ll have to lease them from the car manufacturer.
• Self-driving cars will also go through additional screening beyond normal safety certifications. Once a car passes the additional screening, it will get a three-year permit to operate in the state. During that three-year term, the manufacturer will need to provide a monthly report on the car’s safety, usage, and performance.

California was early in allowing self-driving car tests on its roadways. Google started testing self-driving cars in Mountain View, California back in 2009. The state is clearly trying to lead the way in becoming the first to propose rules to regulate the use of self-driving cars by consumers. Other states might look to California’s rules as a blueprint for their own self-driving car regulations. However, companies currently testing their self-driving cars in California might find these rules restrictive, and could look to take their self-driving car projects elsewhere if other states create more lenient regulations.

SMART HOME MESH NETWORK Z-WAVE IMPLEMENTS NEW SECURITY FRAMEWORK: Research has shown over the past year that many smart home devices are vulnerable to common cyber attacks. Z-Wave, one of the more popular mesh networks used to connect different smart home devices, is looking to relieve some of these security concerns with a set of new security features in its latest software development kit.

The security protections Z-Wave is issuing will help prevent hackers from compromising IoT devices to infiltrate home networks and steal consumers’ data. Those protections include strong encryption for any data sent over a Z-Wave network and secure exchange protocols that prevent hackers from stealing the encryption keys that protect that data. Without such protections, a hacker could infiltrate the home Wi-Fi network via the hub to steal data such as the homeowner’s financial credentials.

Z-Wave is already installed on more than 50 million smart home devices throughout the world including smart lights, smart thermostats, smart plugs, and hubs. Z-Wave is the second oldest mesh network designed specifically to serve the smart home besides Zigbee, it’s biggest competitor. Earlier this year, security researchers found a vulnerability in Zigbee’s communication protocols that allowed them to steal the encryption keys used to protect data sent over Zigbee networks. Z-Wave could be angling to promote its security as a competitive advantage over Zigbee, which has gained far wider acceptance so far than Z-Wave has.

 

How self-driving cars will disrupt auto parts suppliers — Can self-driving cars make ethical choices? — Jasper integrates with IBM

How self-driving cars will disrupt auto parts suppliers — Can self-driving cars make ethical choices? — Jasper integrates with IBM

BI Intelligence

SELF-DRIVING CARS WILL UPEND THE AUTOMOTIVE SUPPLY CHAIN: With the rise of self-driving cars on the horizon, traditional auto parts manufacturers will face increasing competition from new suppliers and startups that specialize in components for self-driving cars. This new group of suppliers is already helping companies like Tesla and Google build self-driving vehicles. Here are some of these new suppliers featured in a recent article by re/code:

• Canada-based Magna International sells technology and components for driver assistance features like lane departure warning systems. Those driver assistance features are considered precursors for self-driving cars, and require some of the same hardware components like sensors and radar. Magna has a full vehicle-assembly subsidiary, so it could potentially assemble a self-driving car for Google, Apple, Uber, or other companies looking to develop self-driving cars.
• Velodyne has been producing LIDAR systems for a decade. LIDAR systems help self-driving cars measure the distance between themselves and other objects, like other cars or pedestrians on the road. Velodyne provides parts for the LIDAR systems in Google’s self-driving cars, and produces three different LIDAR systems: an $80,000 unit for trucks, a $32,000 unit, and a recently released “Puck” unit for $8,000. The company expects the two cheaper units will be in high demand as adoption of self-driving cars grows.
• Israel-based Mobileye provides a high-tech camera that can serve as an alternative to LIDAR systems. Tesla uses its cameras, and GM is testing them with new models of the Chevy Volt. The camera is part of a full software and hardware package that provides a 360-degree view around the vehicle and costs less than $1,000.
• Nvidia is the leading supplier of chips that provide processing power for cars right now. Tesla and Google are already using its chips, which can process streaming data from up to 12 cameras, as well as from LIDAR systems and sensors. Nvidia’s automotive unit grew annual sales by 85% in its last fiscal year, although it faces growing competition from other chips suppliers like Qualcomm and Samsung looking to jump on the huge market opportunity in computing chips for vehicles.

AUTONOMOUS CARS AND ETHICAL CHOICES: One of the significant challenges still remaining to the adoption of fully autonomous vehicles is how they will make choices to minimize damage in an accident, a recent MIT Technology Review article said. For instance, if something goes wrong and an autonomous car is about to hit a group of pedestrians, should it swerve out of the way, even if it could hit a wall and kill the car’s occupant? In other words, should the car minimize loss of life by avoiding the pedestrians, or risk the life of the occupant?

This question might seem like a faraway, abstract exercise, but with several automakers lining up to launch self-driving cars over the next few years, it will soon become a real dilemma for automakers and their customers. The question also goes to the heart of how much the public really trusts autonomous vehicles: will they trust them even in life-threatening situations?

It turns out they don’t. Researchers at the Toulouse School of Economics in France asked hundreds of people whether they think an autonomous car should swerve out of the way of 10 pedestrians even if it guaranteed that the car would crash and kill its owner. In general, the respondents said that the car should be programmed to minimize the death toll, even if it killed the occupant. However, the majority of the respondents said they wouldn’t drive themselves in a car programmed to do that.

This is why many industry experts expect that even though self-driving cars will hit the market relatively soon, it will be many years before steering wheels are removed from them. Consumers will want the ability to take control of the car in a dire situation. If consumers want to do that, than automakers will likely require that they keep their hands on the steering wheel when the car is self-driving to avoid liability in the case of an accident, just as Tesla is doing with its Autopilot mode.

JASPER INTEGRATES WITH IBM’S IOT FOUNDATION: Jasper, an IoT platform provider, announced this week that it is integrating its Control Center with IBM’s IoT Foundation platform. This will tie together the Control Center’s device management and task automation capabilities with IBM’s application development, data management, and analytics tools.

This combination will help enterprises bring services for their IoT devices to market much faster by combining all of these capabilities into a single solution. For example, an enterprise could manage a fleet of vehicles using the integrated solution, automating alerts and notifications for predictive maintenance while gathering and analyzing vehicles’ speed and location data to optimize routes and cut fuel costs.

Jasper has already integrated its platform with several other major enterprise IT providers including SAP, Microsoft, and Salesforce to offer device management and task automation capabilities for IoT devices through those providers’ platforms as well. Adding Jasper’s capabilities helps these providers offer a one-stop shop for IoT device, network, and data management and analytics.

Top 5 barriers to IoT adoption — Tesla Model S crosses the US in Autopilot – How the IoT can help emergency responders

Top 5 barriers to IoT adoption — Tesla Model S crosses the US in Autopilot – How the IoT can help emergency responders

BI Intelligence

TOP BARRIERS TO ADOPTION OF THE IoT: The Internet Society, which advocates for public policy and standards that help develop the internet, released a white paper last week detailing the top five barriers to the adoption of the IoT.

• The most significant obstacle to adoption is security, and the paper points out that security vulnerabilities that leave consumers open to attacks will wear down consumers’ trust in the IoT and the internet over time. Studies and hacks by security researchers have demonstrated that IoT devices currently on the market including smart home devices, wearables, and connected cars are rife with vulnerabilities that make them easy targets for hackers. The paper correctly placed the blame for these vulnerabilities at the feet of device manufacturers that often cut corners in regards to security to reduce development costs and get their products to market as soon as possible.
• Privacy is another issue that can damage consumers’ trust in the IoT. Consumers will likely consider data from IoT devices — like health data from medical devices — as very personal, and will want that data to remain private between themselves and their service provider. Additionally, devices like IP cameras or voice-controlled devices could monitor consumers and their conversations without them even knowing it. Legal and regulatory frameworks need to be developed that ensure companies are transparent about what data they collect from IoT devices and how that data is shared with third parties.
• Interoperability is the ability for different devices from different manufacturers to communicate and share data with each other, and it is an imperative if individuals and organizations are to gain the full benefits of their connected devices. The white paper cited a McKinsey study from earlier this year that said that a lack of interoperability would cost trillions of dollars in the potential overall economic impact of the IoT. A number of different companies and organizations are developing different open and proprietary standards that can deliver interoperability between different IoT devices, but these standards have limited adoption right now. Until these standards are more widely tested in the real world and prove themselves technically sound and scalable, this issue will continue to plague the development of the IoT.
• Legal and regulatory barriers still exist to the adoption of the IoT. A good example of this is the lack of standardized regulations around self-driving cars that is inhibiting the development of that technology, as it is unclear who would be liable if a self-driving car were involved in a crash. Data privacy regulations also differ widely across different geographies, making it impossible in some cases to transport certain types of data outside of some jurisdictions. That could make enterprises hesitant to deploy IoT technologies in such jurisdictions if they don’t have the infrastructure in place to locally store and analyze data from their IoT devices.
• The IoT has uniquely urgent applications in the developing world, but economic and regulatory barriers could limit IoT adoption in developing markets. For example, connected cars and connected road infrastructure could help overcrowded cities reduce traffic congestion and air pollution, and smart grids could help cut down on power outages. However, many of these developing economies lack the resources needed to invest in IoT technologies to gain these benefits. Additionally, many developing countries need to improve their internet infrastructure before they can connect billions of new IoT devices.

BI Intelligence agrees that these barriers represent the chief obstacles to the development of the IoT. However, we expect that the enormous economic potential of the IoT will push governments, enterprises, and consumers to deploy billions of connected over the next five years despite these obstacles.

THREE DRIVERS CROSS THE UNITED STATES IN A TESLA ON AUTOPILOT: A trio of drivers set a record for the fastest cross-country trip in an electric vehicle on Wednesday. They drove a Tesla Model S from Los Angeles to New York in 57 hours and 48 minutes, and they drove 96% of the trip in Autopilot, according to WIRED.

The drivers said that they used the Autopilot mode at speeds around 90 miles per hour, which almost led to a couple of accidents. There were a few instances where the car almost spun out and went off the road taking highway bends at such high speeds.

One of the drivers admitted that they set the car’s speed too high, making it difficult for the Autopilot to compensate during turns. However, the drivers also pointed out that the car shouldn’t be allowed to go so high over the speed limit on Autopilot either. The Autopilot software can adjust speed to follow other vehicles at a safe distance, but apparently doesn’t prevent the car from pushing well past speed limits.

Tesla’s Autopilot software beeps at the driver if the driver doesn’t touch the steering wheel every few seconds, and drivers can quickly take back control of the vehicle by turning the steering wheel slightly with both hands. Tesla has also told its customers that they need to keep their hands on the wheel while the car is in Autopilot in an effort to avoid any liability if a Tesla vehicle crashes while in Autopilot mode.

Regulations are still hazy around liability and self-driving cars, with different states setting their own regulations. If an accident occurs, Tesla could still be on the hook, and could have to recall its cars equipped with Autopilot, one legal expert told WIRED. This liability issue is the reason that many automakers that are also working on self-driving cars haven’t released their self-driving technology yet.

HOW EMERGENCY RESPONDERS CAN USE THE IoT: Gemalto announced a new cloud-based platform this week that collects data from IoT devices like sensors and IP cameras to generate insights for law enforcement and emergency responders. Through a mobile app, the platform can provide first responders with alerts about the location and timing of an incident, and continuously update them with more data as they rush to respond.
The platform was developed in cooperation with Intrado, which provides technology solutions for emergency responders, Prodapt, an IT services company, and Commnet, a networking provider that helps connect the sensors and devices back to Gemalto’s platform.

The solution is already being used in parks, where sensor data can provide real-time information on weather conditions and visitors’ location within the park. Visitors can report emergencies to park rangers through SMS texts, and IP cameras can be used to find visitors who are in an emergency or detect trespassers in the park. If someone gets lost or loses their child, geo-fencing technology can be used to help locate them. Additionally, the platform can send real-time updates to visitors about developing emergencies such as a wildfire or approaching storm.

The companies involved will look for more emergency response use cases beyond parks, and as cities begin to connect their infrastructure with sensors and IP cameras, it’s easy to imagine this type of system finding favor with emergency responders in smart cities.

Verizon launches IoT platform — Connected cars could cost consumers’ privacy — AIG offers insurance for enterprise drones

Verizon launches IoT platform — Connected cars could cost consumers’ privacy — AIG offers insurance for enterprise drones

BI Intelligence

VERIZON LAUNCHES IoT PLATFORM: Verizon became the latest major tech company to launch an IoT platform for managing IoT devices and building IoT applications on Wednesday, according to a press release. IBM, Amazon Web Services, Salesforce, SAP, and Microsoft have all launched IoT platforms as well.

Verizon’s platform, called ThingSpace, provides tools for developers to create, test, and deploy applications for IoT devices. It also provides tools for managing IoT devices and the data they generate, as well as Verizon’s own internal analytics engine to help gain insights from that data. Verizon will hold a hackathon in December in Boston where it will make the platform’s APIs available to developers.

Along with the platform, Verizon announced initiatives to lower the cost of providing connectivity for IoT devices through its 4G LTE network:

• Verizon introduced a new chipset that connects IoT devices to Verizon’s 4G LTE network that costs half as much as traditional 4G chipsets used in smartphones and tablets. It also said that it would be rolling out more 4G chipsets for IoT devices in 2016 that will be even cheaper. This will help lower the cost of IoT devices that use 4G LTE connectivity.
• Verizon also announced a new network core for IoT devices leveraging its LTE infrastructure. This will help Verizon offer an alternative network that will be launched in the first quarter of 2016 for connecting low-power IoT devices like sensors. Normally, it isn’t worth paying for a 4G data plan to connect such devices because they transmit very small amounts of data at intermittent periods. The new network that Verizon is building will be designed to handle those smaller data transmissions at a lower cost to Verizon and its customers, creating a more cost-effective network.

Verizon has already made nearly $500 million in revenues from its IoT and telematics businesses already this year, according to their latest earnings report. The new platform and cheaper networking offerings should help Verizon grow those businesses over time.

THE PRIVACY IMPLICATIONS OF VEHICLE-TO-VEHICLE COMMUNICATIONS: Vehicle-to-vehicle (V2V) communications can help cars on the road relay their precise location to each other to help avoid collisions, but the technology could also make it easier for governments, enterprises, and hackers to track connected vehicles’ exact location. Researchers from two European universities recently demonstrated how they could track cars using V2V communications protocols with radio modules and antennas as the cars traveled around a college campus, according to WIRED. With more radio modules and antennas, someone could track all of the vehicles traveling around a small city at the cost of less than half a million dollars, the researchers said.

V2V communications could prevent up to 81% of car accidents, according to a study by the National Highway Traffic and Safety Administration (NHTSA) that was cited by WIRED. The NHTSA announced last year that it is looking into mandating V2V communications in all new vehicles by 2017. BI Intelligence estimates that 22 million connected cars will be shipped in 2017 that could be covered by that mandate if it’s enacted.

V2V communications will also be one of the foundational technologies for the development of self-driving cars, allowing self-driving vehicles to communicate their position and speed on the road to prevent collisions.

Privacy remains one of the biggest barriers to IoT adoption in general, and this example shows how that applies to connected vehicles. Although V2V technology offers clear safety benefits, it could also open the door for governments, enterprises, or even criminals to track cars’ locations. Other IoT devices like sensors, wearables, connected cameras, and voice-controlled smart home devices could be used to constantly monitor consumers’ movements and conversations without their consent or knowledge. That potential for constant monitoring and eavesdropping could turn consumers off to IoT technologies unless regulations and penalties are put in place that prevent the collection and sharing of data from these devices without users’ consent.

Graph: Estimated Global Connected Car Shipments

AIG OFFERS INSURANCE FOR DRONES: AIG is now offering insurance to enterprises that use drones for commercial purposes, according to Fortune. The insurance policies cover physical damage to the drones if they’re involved in a collision, and covers liability expenses resulting from a collision. It also offers optional coverage for damage caused by hacked drones.

Right now the policies will cover drones that weigh up to five pounds and have a wingspan of three feet or less. AIG is covering drones used for aerial photography and other commercial done uses, as well as drones used by government organizations to perform tasks like search and rescue missions in natural disasters.

Very few insurers currently offer coverage for drones because there is little historical data about drone collisions and accidents to help determine the cost of premiums for drone coverage. This could be a barrier for enterprise drone adoption, as enterprises will likely be hesitant to fly large numbers of drones without insurance coverage to protect them from the potential costs of an accident.

Samsung’s Q3 squeeze — Smartphones approach saturation in US — Google’s Project Loon plans trials in Indonesia

Samsung’s Q3 squeeze — Smartphones approach saturation in US — Google’s Project Loon plans trials in Indonesia

Bi Intelligence

SAMSUNG CUTS PRICE OF SMARTPHONES, SEES SHIPMENT GROWTH: Samsung’s third quarter revenue was up 6% sequentially to $45.6 billion in Q3 2015, according to its earnings call Wednesday. Most of that gain came from the firm’s semiconductor and display panel businesses, aided by favorable currency rates.

Samsung’s mobile business struggled to compete with higher-end Apple products as well as lower-end vendors like Xiaomi. The Korean tech company saw a significant increase in sales of its Galaxy Note 5, S6 Edge Plus, Galaxy A and Galaxy J handsets. However, while it shipped more mid-tier smartphones, the average selling price (ASP) of its smartphones dropped due to a price cut to its flagship Galaxy S6 and S6+ devices.

Here’s a rundown of some of the key takeaways from Samsung’s third quarter:

• Samsung is still the smartphone shipments leader, with 23.8% global market share. Samsung shipped 84.5 million units during Q3 2015, up 6.1% year-over-year (YoY), according to IDC. Comparably, Apple, in second place globally, shipped 48 million units, and Huawei shipped 26.5 million units during the three months ending September 30, rounding out the top three.
• The earlier-than-normal releases of the Note 5 and Galaxy S6 Edge Plus in mid-August—ahead of Apple’s iPhone 6s launch—helped boost shipments of these devices.
• A majority of Samsung’s smartphone shipments in key emerging markets such as India were of Samsung’s mid-tier devices (priced less than $200).

Samsung finds itself in a rough spot in the smartphone industry as it faces tough competition from vendors at both ends of the price spectrum. On the premium end, Samsung’s flagship devices compete directly with Apple’s iPhone 6s and 6s Plus, largely in mature markets like the US and UK. In the low- to mid-tier categories, the company face both Huawei and Xiaomi, which are the number one and two leading smartphone vendors in China, respectively.

Looking ahead, the company stated that it expects Q4 smartphone shipments to increase over the holiday season. However, the global smartphone market will likely slow in 2016 as key developed smartphone markets saturate and upgrade cycles slow. In response to this, the company may double down on its efforts to sell entry-level devices in emerging markets. Samsung will also look to its lucrative semiconductor and display panel divisions to keep it afloat.

SMARTPHONE OWNERSHIP APPROACHES SATURATION IN THE US: Smartphone ownership is nearing a saturation point with some age groups in the US, according to latest data by the Pew Research Center. As of October 2015, 68% of American adults have a smartphone, up four percentage points from the 64% of US adults who were smartphone owners this time last year. Specific sub-segments of the US adult population see smartphone penetration rates much closer to full adoption; 86% of US adults aged between 18 and 29 years own a smartphone, as do 83% of those between 30 and 49 years of age.

Rising smartphone penetration in the US market has made some technologies redundant, including devices like MP3s, e-books, and portable gaming devices. The wide range of tasks that smartphones can be used for will help cannibalize more niche consumer electronics, and is likely to have a trickle down effect on ownership rates of other devices.

• The total number of MP3 owners in the US has remained relatively flat since 2008, at around 40%. However, the number of people that own an MP3 between ages 18-29 years has declined by double digits in the past five years from 78% in 2010 to 51% in 2015.
• The number of people in the US who own e-reader devices has fallen to 19% in 2015. This is a dramatic decline from the 32% of e-reader owners in early 2014.
• Only 14% of US consumers own a portable gaming device. Meanwhile, the North American mobile gaming market is expected to grow 51% year-over-year, according to data from Newzoo.

Finally, the number of computers — both desktop and laptops — owned in the US has steadily declined since its high point of 80% in 2012. As of October 2015, 73% of consumers in the US own a laptop or desktop, which remains largely unchanged from the 71% who owned a computer or laptop in 2004. Smaller computing devices like smartphones and tablets are cannibalizing sales of their larger more cumbersome counterparts. The mobile-only portion of the US population is now larger than the desktop-only segment.

Graph: Device Ownership

PROJECT LOON WILL BEGIN TESTING IN INDONESIA: Google announced Thursday that Project Loon will begin a testing phase in Indonesia sometime in 2016 after partnering with Indonesia’s three leading mobile network operators. Project Loon aims to bring internet connectivity to “unconnected” communities in developing countries.

Only one in three people are currently connected to the internet in Indonesia, according to Google. By using what are essentially hot air balloons as floating cell towers, the tech giant hopes to bring high speed LTE internet to about 100 million Indonesians in the near future. Doing so will require partnerships with some of Indonesia’s mobile carriers including Indosat, Telkmsel, and XL Axiata.

Indonesia represents an important future market for Google. The country touts both a rising middle class and a growing smartphone user base. Forecasts suggest that 40% of all phones in Indonesia will be smartphones in 2015, according to the Internet Society’s Asia Pacific regional director Rajnesh Singh. The Indonesian government has also expressed its intent to invest large sums of money into developing its communications infrastructure over the next five years.

Google has rolled out similar efforts in other emerging markets to achieve its goal of connecting the next one billion internet users. This includes launching Project Loon in Sri Lanka earlier this year, as well as its Android One program, which aims to make smartphones (sub-$100 devices) accessible to first time buyers in emerging market countries. Similar programs by rival companies like Facebook’s internet.org are active in developing markets as well. These are all clear efforts to establish a footprint in some of the most lucrative mobile markets of the future.

Counterfeits still persist on Alibaba’s Taobao — Online ads effective with luxury shoppers — Beacon usage in sports arenas

Counterfeits still persist on Alibaba’s Taobao — Online ads effective with luxury shoppers — Beacon usage in sports arenas

BI Intelligence

INDUSTRY ASSOCIATION WANTS ALIBABA’S TAOBAO BACK ON COUNTERFEIT MARKET LIST: Alibaba’s popular customer-to-customer (C2C) online marketplace, Taobao, is facing some serious doubt from the US’s American Apparel & Footwear Association (AAFA) and wants it put back on the “Notorious Markets” list. The office of the US Trade Representative compiles the annual list to readily identify online marketplaces that enable selling of counterfeit goods, and the AAFA fully believes Taobao belongs on there.

• The US Trade Representative office removed Taobao from the Notorious Markets list in 2012 on the condition that it improves its practices to fight counterfeit goods and listings on its marketplace.
• Even since its removal, multiple US brands have been in contact with Alibaba in reference to imitation goods being sold on its marketplaces, but have seen little done to stop it.
• Brands like Columbia Sportswear, Dahon foldable bicycles, and D’Addario guitar strings all have seen imitation products listed on Taobao.

While the AAFA cites Alibaba’s persistent lack of cooperation to fight counterfeits, Alibaba claims that the US Trade Representative office has refused to meet with the company in order to work together on cleaning up its marketplace, reports Internet Retailer.

One potential course of action for many of these brands claiming that Alibaba is not vigilant enough in taking down counterfeit listings is to reach out to the company itself. Taobao’s business-to-consumer (B2C) branch Tmall.com has also come under fire for counterfeit listings. In order to combat this, luxury apparel brand Burberry agreed to a partnership with Tmall.com in which it would list a curated selection of its items for sale on the site in exchange for Tmall to take down the counterfeit ones. As a result, Alibaba removed 23,000 illicit Burberry products from Tmall this past April, reports Bloomberg.

Across Alibaba’s multiple marketplaces, consumers spent $105 billion in the second quarter of 2015, representing a 31% year-over-year (YoY) increase.

Chart: Alibaba Global Gross Merchandise Volume

LUXURY SHOPPERS ARE MORE LIKELY TO REMEMBER ADS SEEN ONLINE THAN IN PRINT: Luxury brands allocate the majority of their holiday ad spending on print advertising, but those ads aren’t resonating with shoppers, according to data sent to us by Shullman Research Center.

• Only 34% of luxury shoppers recall seeing an ad in a magazine in the past 30 days, despite luxury brands pouring more than 50% of their holiday ad budget on the medium.
• Meanwhile, 41% of luxury shoppers say they recall seeing an ad online in the past 30 days, even though less than 8% of luxury brand ad budgets typically go toward digital.

This shows that many luxury brands misunderstand digital marketing channels, and in some cases it may be what’s holding them back from selling more high-priced items online.

It’s particularly important for brands that sell electronics and jewelry to understand this behavior because those items rank high on luxury shoppers’ lists this holiday season. Among luxury shoppers, 41% say they plan to purchase electronics as gifts in the fourth quarter, and 37% plan to buy jewelry, according to Shullman Research Center.

Chart: US Shoppers Who Say They Recall Seeing An Ad In the Past Month, By Channel

BEACONS ARE INVADING SPORTS ARENAS: Beacons are moving past physical retail stores and into sports venues where they can reach a whole new audience of consumers. Multiple athletic arenas have installed beacons to drive up consumer engagement.

• Most recently, the University of Wisconsin installed 60 beacons throughout its Camp Randall Football Stadium to work in conjunction with its Badger Gameday app, according to Mobile Strategies 360. In the University’s first two home football games, Badger Gameday sent out about 1,000 location-based messages per game which attained an average click-through rate of 40%.
• National Hockey League team the Pittsburgh Penguins installed beacons last month in its Consol Energy Center, according to Mobile Marketer. Beacons will greet fans with an exclusive video when they enter the stadium, push content while at their seats and at a Mario Lemieux statue, and be presented with offers and discounts for concession and the team store.
• Ahead of the 2014 Major League Baseball season, the organization partnered with Qualcomm to install beacons in 20 different MLB team stadiums, including the San Francisco Giants, San Diego Padres, Boston Red Sox, and the Milwaukee Brewers. The beacons work with the MLB In the Ballpark app allowing guests to store digital tickets and access special deals on concession and merchandise.

As beacons expand into the sports realm, this opens up brands to huge audiences of consumers — especially for brands that sponsor sports teams. For example, Coca-Cola sponsors the New York Yankees and Party City sponsors the New York Islanders. Beacons can be seen as another marketing space that brands should be considering when laying out marketing strategies in order to leverage a dedicated population of sports fans known for consistently purchasing team merchandise. BI Intelligence estimates that $4.1 billion worth of in-store sales in 2015 for the top-100 US retailers will be influenced by beacon-triggered messages.

Chart: US In-Store Retail Sales Influence by Beacon Triggered Messages

COMPANIES IN THE NEWS

• eBay is running a limited-time promotion to entice merchants to open an online store. The offer includes opening a Basic Store on the eBay marketplace for one month free from the date of signup. The promotion ends on October 31 and is aimed at helping merchants set up storefronts in time for the upcoming holiday season.
• Electronics e-tailer Newegg has opened a new distribution center in Western Canada, reports Internet Retailer. The Los Angeles-based company is furthering its reach into Canada, with its new facility cutting delivery times by up to two days in to Alberta, British Columbia, Manitoba, Northwest Territories, Saskatchewan and Yukon Territory. Newegg also has a distribution center in Toronto, and just two months ago opened up its Canadian marketplace to non-Canadian retailers.

Beacon adoption rates continue to grow — Apple takes advantage of growing m-commerce — Online marketplace growth slows

Beacon adoption rates continue to grow — Apple takes advantage of growing m-commerce — Online marketplace growth slows

BI Intelligence

BEACONS ARE MAKING THEIR WAY INTO MAJOR DEPARTMENT STORES: Beacons — low-cost devices that communicate with smartphone apps — are making their way mainstream. Retailers are quickly adopting them as they are proving to be a powerful tool for targeting offers, driving sales, and collecting data about customers’ in-store shopping behavior.

• Macy’s installed 4,000 beacons in all of its US locations in the fall of last year, according to MediaPost. Lord & Taylor rolled out beacons in 130 stores across the US and Canada, reports Umbel. The technology is even becoming popular for airport infrastructure as aviation technology firm SITA reported that 44% of airlines plan to install them over the next three years, according to The Economist.

The latest retailer to jump on the beacon bandwagon is Target, which announced an initial testing phase in 50 stores and plans to go nationwide by the holiday season, according to TechCrunch. The beacons will serve to work alongside the Target Mobile App and push notifications to shoppers based on their location within the store. As with all beacon-enabled apps, the user must opt-in to receive push notifications and have their Bluetooth enabled before entering the store. Target’s first round of beacon testing will happen in 50 stores throughout Chicago, Denver, Minneapolis, New York City, Pittsburgh, Portland, San Francisco, and Seattle.

This year, beacons could influence up to 7% of sales at US retail stores operated by the top 100 retailers. That’s equivalent to more than $138 million in sales. In 2016, we estimate beacons could influence up to 26% of in-store sales at those same retailers. That would be equivalent to more than $555 million in sales.

Graph: Percent of US In-Store Sales Potentially Influenced By Beacon Messages

TAKING NOTICE OF MOBILE COMMERCE OPPORTUNITIES: Consumers are increasingly shopping on their mobile devices, and this is presenting a huge market opportunity for advertisers to reach consumers. Apple has taken notice of this trend, and it plans to leverage its large user base to give the company an advantage in this space. The company recently filed a patent for a system that would allow e-commerce brands to use iTunes’ customer data to target shoppers on mobile devices, Business Insider reports. In other words, the system would assess the status of iTunes users’ credit/debit card accounts (i.e. their available funds and balances), and advertisements would promote items that users can afford. Previously, targeted advertisement was segmented based on demographic information or online activity. The ability to promote items that users can most likely afford opens up a new avenue for retailers to target audiences.

Mobile commerce spending reached $11.1 billion in the US in the first quarter of 2015, or 15% of digital commerce, according to comScore. That’s a 52% increase year-over-year (YoY).

Graph: Share of Country’s E-Commerce Transactions From Mobile, By Device

ACTIVE BUYER GROWTH SLOWS AT TOP ONLINE MARKETPLACES: The rate at which online marketplaces are acquiring active buyers is slowing, according to our analysis of company data. The metric “active buyer” is defined as a customer who has completed a purchase on an e-commerce site in the past twelve months.

These findings are part of a series that can be found in our “Future of Retail” slide deck presentation.

• Amazon, eBay, and Etsy have all seen active buyer growth slow globally between 2013 and 2015. Etsy’s active buyer growth in particular has slowed dramatically, from 45% YoY growth in Q2 2014 to 28% in Q2 2015.

We believe current macroeconomic conditions do not favor US-based marketplaces. That’s because weak foreign currencies have made shopping US marketplaces more expensive for international shoppers. For example, the Euro has lost 23% of its value against the USD so far in 2015, which has likely incentivized European shoppers to purchase from local retailers. This is a problem for marketplaces like Amazon because it relies on globalization to help drive the company’s overall growth.

Graph: Year-Over-Year Growth in Active Buyers

COMPANIES IN THE NEWS

• India-based e-commerce marketplace Snapdeal plans to invest $100 million into its research and development division over the next three years, reports TechCrunch. The e-commerce industry is growing rapidly across India, but is still building up the logistics for providing customers with the best content. Snapdeal’s Multimedia Research Lab will focus on their recommendation engines that give customers the best results.
• After disappointing second quarter earnings, Yelp is moving into the healthcare industry, reports The Washington Post. In addition to the usual restaurant and small business reviews, users can now find out what wait times are like at a local emergency room, fines paid by a nursing home, and even how often patients getting dialysis treatments are readmitted due to infections and complications.
• Luxury apparel retailer Kate Spade reports that e-commerce now accounts for 20% of the company’s total sales, online and offline, reports Internet Retailer. The company is also planning to soon begin shipping online orders from physical stores themselves in order to increase delivery speed for customers across the US.
• eBay announced a new partnership with consumer electronics brand ROC Live Life Loud. ROC is co-founded by soccer superstar Cristiano Ronaldo and has given eBay the exclusive distribution rights for its products worldwide.
• Organic food delivery service Good Eggs is closing nationwide operations everywhere except for San Francisco, where its headquarters are located, reports TechCrunch. Good Eggs CEO Rob Spiro cited “the single biggest mistake we made was growing too quickly, to multiple cities, before fully figuring out the challenges of building an entirely new food supply chain,” especially as the grocery delivery service expands nationwide with major players like Instacart and AmazonFresh.
• Flash sales website Zulily recently reported its second quarter earnings. The company’s net sales reached $297.6 million, a 4% YoY increase. Also notable is the site’s user base grew to 4.9 million active customers, a 19% YoY increase.

THE FUTURE OF RETAIL: 2015

THE FUTURE OF RETAIL: 2015

BI Intelligence

The retail sector is undergoing a major transformation driven by digital. Technology is changing the way people shop, as well as how retailers operate.

BI Intelligence has created a slide deck highlighting the biggest e-commerce trends in retail. Some of the topics we cover in the deck include:

• The size of the retail and e-commerce markets.
• The breakdown of e-commerce sales by product category.
• How legacy retailers are faring.
• New e-commerce players.
• Disrupting last-mile delivery.

The companies mentioned in this year’s presentation include:Walmart, Target, Amazon, eBay, Google, Uber, JCPenney, Gap, Kroger, Kohl’s, Macy’s, Safeway, SuperValu, Albertsons, Blue Apron, HelloFresh, Plated, Instacart, FreshDirect, Peapod, Fresh Market, Harris Teeter, Whole Foods, Birchbox, Olay, L’Oreal, Avon, Ulta, CVS, Walgreens, Sephora, Postmates, FedEx, UPS, US Postal Service

Powerpoint

Excel

The smartphone upgrade cycle is shrinking among millennials

The smartphone upgrade cycle is shrinking among millennials

BI Intelligence

Graph: Main Reasons for Early Smartphone Upgrades

US consumers have historically upgraded their smartphones every two years, but millennials are cutting down that timeline by upgrading early, according to results from a recent survey of 1,000 millennials commissioned by SellCell. Almost 60% of millennials have had at least three smartphones over the past five years, and 12% have owned at least five. This trend is driving changes in the mobile carrier arena, which is further spurring early smartphone upgrades.

The traditional two-year upgrade has been largely driven by mobile operators like Verizon and AT&T offering promotional subsidies on smartphones at the two-year mark. This encourages consumers to re-sign their mobile service contracts in exchange for a less costly way of getting a new smartphone. But this two-year timeline is shrinking as competitive mobile operators offer consumer-friendly promotions that enable carrier changes and device upgrades more rapidly and with fewer consequences. US millennials, aged 18 to 34, are both driving this trend and benefiting from it.

• Most millennial consumers who upgraded early wanted the newest smartphones ahead of the standard cycle. Almost half of all survey respondents stated that being an early adopter of new smartphone releases was one of the most significant motivating factors for upgrading early.
• Promotional rewards was the next most significant factor. Getting a discount on a monthly smartphone subscription or the ability to finance a new device in monthly installments was deemed an important motivator by 16% of respondents.
• Less constrictive plans from mobile operators was an important factor, but to a lesser degree than the first two major motivators. Having no contract required spurred 13% of early upgrades, and the ability to switch carriers (either due to lack of a contract or an offer from another carrier to buy out an existing contract) was an important factor for 11%.

Millennials’ desire to be unhindered in their pursuit of the newest smartphone technologies, and to upgrade without penalty, is catalyzing heightened competition among the Big 4 US mobile operators (Verizon, AT&T, Sprint, and T-Mobile). For example, T-Mobile’s JUMP! On Demand Program lets consumers upgrade their device up to three times in a year and AT&T’s Bring Your Own Phone (BYOP) program allows consumers to sign up for contracts using phones purchased elsewhere at more affordable prices. T-Mobile, which has been aggressively pursuing US millennials with a seemingly endless string of no-commitment campaigns, is seeing this approach pay off. No. 4 US mobile operator T-Mobile likely surpassed No. 3 Sprint in terms of subscribers during the most recent quarter.

Graph: Big 4 Mobile Provider Total Subscribers