Blog
June 12, 2019
In the first week of June 2019, Berlin served as the geographical hub for what is now Germany’s largest retail event: With “Endless Opportunities – Future Retail Opportunities 2025,” K5 2019 enters its ninth round and ventures a look ahead to the coming years of online retail.
Creating outstanding customer experiences is one of the most important challenges, tasks, and opportunities for companies. This applies to all points of contact, including conferences. K5 is a successful conference format focusing on the digital retail industry, innovation, and networking. The aim was not only to provide participants with exciting, useful, and inspiring insights, failures, and lessons learned from the industry, but also to make the conference itself a memorable experience.
Organizers Jochen Krisch, publisher of Exciting Commerce, and Sven Rittau, CEO of K5, opened the conference and explained that Peak Amazon was the theme this time around. Both moderators presented well-researched and data-driven topics. This year’s K5 attracted 150 exhibitors, 150 speakers, and over 3,000 participants over two days. Masterclasses were held in limited slots in masterclass domes, and separate events such as “Female in Retail” were offered after the conference. Networking, breakfast, and insights—the “women of retail” among themselves. However, the numbers alone say little, because as always in retail, it’s not about output but outcome. The question arises: What was the result?
Jochen Krisch and Sven Rittau addressed four key points: Amazon is reaching its limits, strategies of the big players beyond Amazon, mobile players have the best cards, and the second big China wave is on the horizon. The conference day began with a clear statement: there is no way around marketplaces, because that is exactly where customers are. However, entry must be strategically planned, actively managed, and carried out with full commitment in order to avoid becoming dependent.
Stefan Smalla, co-founder and CEO of Westwing, summarized his company’s findings in three points: direct sales to customers, social media is real, and brand loyalty is the only weapon. The direct channel to the end customer is essential, otherwise the brand becomes too weak; companies should not only be present on platforms but also with customers. The importance of social media at Westwing can be seen in the size of the team. One hundred editors and two photo studios are employed to generate high-quality social media content. The company can count on loyal users who visit even when they are not buying anything, and it also serves as an advertising platform for the brands on offer. A full 85% of all sales come from customers who visit the website more than 100 times a year. Ninety percent of customers are women.
Wayfair presented its own experiences in the online furniture sector. Dr. Malte Dous and Dr. Saskia Meier-Andrae spoke about the furniture platform founded in Boston in 2002, which has established itself on the market with its dropshipping model. In this model, suppliers are seen as partners, there is a seemingly endless selection of furniture, and the complete range is displayed in full at all times. This requires high-quality product data. Product data has become a competitive advantage today, and modern software is needed to reduce manual effort and bring products to market faster. Wayfair claims to have strong technical and operational capabilities, masters the delivery experience, and uses this strategy to process over 75% of purchases through its own network. This means that even the last mile of the customer experience can be shaped by the company itself.
Wayfair’s experience is that selection alone does not make customers happy; shopping must be fun. This can be achieved through technical support in the background, personalization, exclusive brands, and images; showing customers what they want, even if they didn’t know it themselves. Over 70% of sales are generated through the company’s own brand, and shopping days such as “Way Day,” celebrated in April, are always a great success. Why don’t more companies do this? Dominique Locher, industry pioneer and entrepreneur, discussed concepts in the food industry. His input on efood is that retailers should not underestimate Amazon just because Amazon Fresh is not yet functioning perfectly. Amazon is present, learning, and growing. Movement is needed in the market; otherwise, Amazon will sooner or later take market share. The online supermarket Picnic reports that the shopping cart determines that everything the customer wants must be offered operationally and that personal service is standard.
The company pick8ship presented a highlight for last-mile logistics with modular smart boxes, packaging robots, and intelligent control systems. Dr. Josef Haid from pick8ship explained that parcel logistics requires 40-60 handling steps; recycling one ton of cardboard requires 300 liters of oil and 7,000 liters of water. New packaging and shipping technologies are needed, and the solution is an efficient and sustainable reusable logistics system with a reusable SmartBox in trolleys without transport cartons and without packaging material. The optimized fulfillment would look as follows: picking takes place directly in the SmartBox, transport in the trolley, and automated sorting with RoboSort. In addition, there would be fast loading, unloading, and delivery, including returns, with 30% to 50% lower operating costs and investments, as well as up to 90% less packaging waste. That is the future of logistics. The outlook for the platform economy in Europe is less euphoric.
“This could be better; a new direction is needed,” according to opinions regarding Asia and Amazon. Jochen Kirch comments on the topic of platform business: “Make what you do best available to others.” It was predicted that Amazon would reach its limits and only very slowly reach the next level of e-commerce. Customers are happy to embrace new developments such as mobile shopping via Instagram. Bucherer AG cites four success factors for e-commerce and digital transformation in the luxury segment: (1) agility and speed, (2) data quality, (3) omnichannel services, and (4) understanding customers and delivering first-class services. Someone quoted US bestselling author and agile product development expert Jeff Patton: “Agility is a culture, not a process.” In addition to exciting developments in the furniture, logistics, and food sectors, the fashion industry reports that a lot is changing. “Multichannel is a must! Channel excellence is a bonus!” said Dr. Sven Bernhardt, CCO of Breuninger, differentiating the meaning of integration according to the quality of services. Fashion retailers with brick-and-mortar roots can make their mark online.
The premium department store Breuninger is pushing ahead with its own developments and has achieved total sales of EUR 800 million, 20% of which was generated online. What works here is the store’s own payment card, state-of-the-art multichannel integration, and a team of over 100 employees in the digital sector who take care of over 1,000 brands every day.
About You is increasingly relying on events such as awards ceremonies and festivals to keep itself in the spotlight and is being compared to Red Bull. About You calls this “Reach for Inspiration Content” and aims to digitize the Saturday stroll through town. Online retail accounts for 10% of the 165 billion global luxury market. “By 2023, it will be around 17 percent,” says Sebastian Dietzmann of mytheresa. The company wants to continue growing rapidly through curation and inspiration. Dr. Martin Schulte, who has deep expertise in retail, particularly in the areas of textiles, cosmetics, electronics, and hardware stores, made an interesting plea. His statement is that Europeans are developing too slowly. New revenue models, which were mainly developed by start-ups, only have a 4 percent market share. In Asia, the figure is just under 20 percent. Venture capital is one of the main drivers. “Growth is mainly at the expense of retail. Players who only engage in retail will have the biggest problems in the coming years. Retailers must be more than just retailers,” says Schulte.
It was an exciting event with a wealth of expertise, high-quality speakers, and numerous interesting visitors. We would like to thank the K5 organizers for a very successful conference and will be back again next year in Berlin for K5 2020.