State of the Market - The Global eCommerce Environment - PowerPoint PPT Presentation


Title: State of the Market - The Global eCommerce Environment


1
State of the Market - The Global eCommerce
Environment
Mark Iverson- Director of DR Shareware and Stephan
ie Wu- Shareware Sales Manager, DR
2
The Path of True Globalization
Going Local
  • USA
  • Minneapolis (HQ)
  • Chicago
  • Mountain View
  • San Diego
  • Pittsburgh
  • Kayesville, UT
  • Colorado Springs, CO
  • Lincoln, NE
  • Europe
  • Köln
  • London
  • Dublin
  • Shannon
  • APAC
  • Tokyo
  • Taipei
  • Seoul

1
3
The Global eCommerce Environment
The State of eCommerce Analysts Projections
  • Global eCommerce Projections
  • US eCommerce Projections

Digital River Shareware - Global Overview
  • Sales Performance on a Global Level
  • Key Findings and Trends

4
The Global eCommerce Environment
We Rely Heavily on Industry Analysts. Those used
for this presentation include
  • Jupiter Research (www.jupiterresearch.com)
  • Forrester Research (www.forrester.com)
  • eMarketer (www.emarketer.com)
  • International Data Corporation (www.idc.com)

5
Electronic Software Distribution Growth3.3 of
All Software Sales by 2009
Worldwide Software Sales Projections
(in millions )
Source IDC, 2005
3
6
Electronic Software Distribution Growth3.3 of
All Software Sales by 2009
Worldwide Software Sales Projections
(in millions )
Source IDC, 2005
3
7
Electronic Software Distribution Growth34
Annual Growth Rate Through 2009
Electronic Software Distribution by Region,
2004-2009
4
Source IDC, 2005
8
Electronic Software Distribution Growth34
Annual Growth Rate Through 2009
Electronic Software Distribution by Region,
2004-2009
  • Asia Pacific download sales will remain a longer
    term opportunity.
  • Key factors
  • Localization and payment methods remain a
    challenge
  • Broadband and online adoption expansion
    continues
  • Pricing and piracy remain a concern to publishers

4
Source IDC, 2005
9
Electronic Software Distribution Growth34
Annual Growth Rate Through 2009
Electronic Software Distribution by Region,
2004-2009
  • Western Europe will realize significant growth.
  • Key factors
  • localization
  • Broadband expansion
  • Consumer online adoption (more EU retailers are
    coming online)

4
Source IDC, 2005
10
Electronic Software Distribution Growth34
Annual Growth Rate Through 2009
Electronic Software Distribution by Region,
2004-2009
4
Source IDC, 2005
11
Electronic Software Distribution Growth34
Annual Growth Rate Through 2009
Electronic Software Distribution by Region,
2004-2009
  • The Rest Of the World (Eastern Europe, Africa,
    South America) will present minimal opportunity
    for significant software sales growth.
  • Key factors
  • Primarily economic related conditions and lack of
    broadband will lessen the need for electronic
    software distribution

4
Source IDC, 2005
12
Finding Customers Worldwide
  • Selling to US Consumers is Relatively Easy
  • One Language
  • One Currency
  • One Payment Method (Credit Card)
  • Selling to Western Europe is Much More Complex
  • Multiple Languages
  • Multiple Unique Payment Methods
  • Country-Specific Laws and Regulations (Privacy)
  • Value Added Tax (VAT)

June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
13
Forecast European Online Retail Sales By
Country, 2006 To 2011
Who to Target in Europe for Online Sales Growth
June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
14
Forecast European Online Retail Sales By
Country, 2006 To 2011
4
June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
15
Forecast European Online Retail Sales By
Country, 2006 To 2011
  • The UK will continue to be the largest market in
    Western Europe (although growth is MUCH below
    other countries).
  • Key factors
  • UK consumers are less sensitive to non-European
    Websites.

4
June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
16
Forecast European Online Retail Sales By
Country, 2006 To 2011
  • Germany remains the second biggest market with
    much great growth.
  • Key Factors
  • Germans will represent 1/4 of all EU shoppers
    online by 2011.
  • Expansion of credit card use.
  • Localization (specifically currency and payment
    methods VERY important).

4
June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
17
Forecast European Online Retail Sales By
Country, 2006 To 2011
  • The French will purchase virtually anything
    online.
  • Key Factors
  • French retailer are quickly coming online.
    Consumers are following.
  • However, their reluctance to buy from a
    non-French or non-EU site makes them a difficult
    market for outsiders to reach.

4
June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
18
Forecast European Online Retail Sales By
Country, 2006 To 2011
Until the remaining EU countries mature in size,
specific targeting and localization may not yet
be worth the effort.
4
June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
19
Forecast European Online Retail Sales By
Country, 2006 To 2011
(Same Data in Graphical Format)
June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
20
Are you Truly a Global Company?
21
How Do DR Vendors Stack Up ?
At Digital River, we classify and track EIGHT
distinct geographic groups of consumers and
software vendors
  • US
  • China
  • Australia
  • India
  • Canada
  • Western European
  • All Other (South American, Japan, Africa, etc.)
  • Russia

22
Russian Vendor Sales
Who Are Digital Rivers Russian Vendors Selling
To?
4
Source Digital River Shareware platform data.
23
European Vendor Sales
Who Are Digital Rivers European Vendors Selling
To?
3
Source Digital River Shareware platform data.
24
US Vendor Sales
Who Are Digital Rivers US Vendors Selling To?
3
Source Digital River Shareware platform data.
25
Chinese Vendor Sales
Who Are Digital Rivers Chinese Vendors Selling
To?
3
Source Digital River Shareware platform data.
26
Conclusions
Why are US vendors winning the fight for
revenue?
  • They LIVE in the largest market. They know the
    language, the payment methods, and the customs
  • They use multiple marketing methods to reach
    consumers (affiliate marketing, search, email,
    etc)
  • They understand the benefit of creating a
    RELATIONSHIP with their customers. (next
    editions of software, upgrades, renewals,
    newsletters, etc.).

27
Conclusions
What can Chinese vendors do to grow?
  • Continue grow brands and develop software for the
    US market
  • It is the largest market and fastest growing for
    ESD
  • Diversify marketing channels. (currently 60 of
    Chinese revenue comes from affiliate marketing)
  • MS Windows Market Place, Simtel and Retail
    channel
  • Learn relationship marketing
  • Stop single selling
  • Create products with the intention of following
    up with new versions, upgrades and add-on
    merchandise
  • Learn to email
  • Create a long term relationship with the consumer

28
  • US Software Trends

29
Top Publishers in the US
NPD Data
  • MS, Symantec, Intuit and Adobe have high AOVs and
    a strong presence in small business and
    enterprise sales
  • EA, Vivendi, Valuesoft, Atari, Cosmi, Acitivison
    and RiverDeep all have mass appeal software
    gaming and productivity titles at lower
    AOVs Source NPD

30
What are the US Software Categories?
  • Business MS Vista, Windows, Office, and IT
    products
  • Education Language, Math, Science and Higher
    Learning Topics
  • Finance Accounting, MS Money, Quicken, etc.
  • Digital Imaging/Graphics and Music Graphic
    Arts, Design, Professional Digital Imaging, Home
    Digital Imaging Graphics, Video and Music
  • PC Games Both Core (World of Warcraft) and
    Casual Games (Sudoku)
  • Personal Productivity Home Improvement, Arts,
    Crafts, Personal Development
  • System Utilities Anti Virus, Anti Spyware,
    Multi-media and System optimization and
    performance

31
Software Development Opportunities
NPD Data
  • Overall, AOVs are rising in the US and will
    continue to trend that way, driven by the launch
    of Vista and MS Office 2007
  • Software developers are creating new content to
    work with Vista
  • New productsnew, higher AOVs
  • Educational products are a low cost entry into
    the market, but represent the smallest piece of
    the US software business
  • Games, although they are the largest segment,
    have a high cost of development to be competitive
    in the US market
  • System utilities and digital imaging/graphics
    show the most logical entry point into the US
    market Source NPD

32
What Types of Products Sell in the US?
NPD Data
Source NPD
33
Recommendations
  • ESD in the US is the fastest growing and largest
    market globally
  • Continue to create software for this market
  • EARLY adopters of ESD in the US tend to purchase
    system utilities, security, digital imaging and
    graphics products online
  • Start making these types of software applications
  • To expand your US presence in the software
    market, start developing specialized PC security
    products, system or Vista optimization software
    and digital content creativity/management
    products
  • Digital Content is music, movies, online books
    and digital pictures
  • Make sure to create an ongoing relationship with
    the consumers with upgrades, specials, renewals
    and emails
  • US Technology Enthusiasts are ESD users and
    they like new, smart software products and they
    adopt new technologies quickly- they are a
    trusted source for word-of-mouth advertising

34
  • Thank you
  • Mark Iverson and Stephanie Wu
  • Digital River
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Title: State of the Market - The Global eCommerce Environment


1
State of the Market - The Global eCommerce
Environment
Mark Iverson- Director of DR Shareware and Stephan
ie Wu- Shareware Sales Manager, DR
2
The Path of True Globalization
Going Local
  • USA
  • Minneapolis (HQ)
  • Chicago
  • Mountain View
  • San Diego
  • Pittsburgh
  • Kayesville, UT
  • Colorado Springs, CO
  • Lincoln, NE
  • Europe
  • Köln
  • London
  • Dublin
  • Shannon
  • APAC
  • Tokyo
  • Taipei
  • Seoul

1
3
The Global eCommerce Environment
The State of eCommerce Analysts Projections
  • Global eCommerce Projections
  • US eCommerce Projections

Digital River Shareware - Global Overview
  • Sales Performance on a Global Level
  • Key Findings and Trends

4
The Global eCommerce Environment
We Rely Heavily on Industry Analysts. Those used
for this presentation include
  • Jupiter Research (www.jupiterresearch.com)
  • Forrester Research (www.forrester.com)
  • eMarketer (www.emarketer.com)
  • International Data Corporation (www.idc.com)

5
Electronic Software Distribution Growth3.3 of
All Software Sales by 2009
Worldwide Software Sales Projections
(in millions )
Source IDC, 2005
3
6
Electronic Software Distribution Growth3.3 of
All Software Sales by 2009
Worldwide Software Sales Projections
(in millions )
Source IDC, 2005
3
7
Electronic Software Distribution Growth34
Annual Growth Rate Through 2009
Electronic Software Distribution by Region,
2004-2009
4
Source IDC, 2005
8
Electronic Software Distribution Growth34
Annual Growth Rate Through 2009
Electronic Software Distribution by Region,
2004-2009
  • Asia Pacific download sales will remain a longer
    term opportunity.
  • Key factors
  • Localization and payment methods remain a
    challenge
  • Broadband and online adoption expansion
    continues
  • Pricing and piracy remain a concern to publishers

4
Source IDC, 2005
9
Electronic Software Distribution Growth34
Annual Growth Rate Through 2009
Electronic Software Distribution by Region,
2004-2009
  • Western Europe will realize significant growth.
  • Key factors
  • localization
  • Broadband expansion
  • Consumer online adoption (more EU retailers are
    coming online)

4
Source IDC, 2005
10
Electronic Software Distribution Growth34
Annual Growth Rate Through 2009
Electronic Software Distribution by Region,
2004-2009
4
Source IDC, 2005
11
Electronic Software Distribution Growth34
Annual Growth Rate Through 2009
Electronic Software Distribution by Region,
2004-2009
  • The Rest Of the World (Eastern Europe, Africa,
    South America) will present minimal opportunity
    for significant software sales growth.
  • Key factors
  • Primarily economic related conditions and lack of
    broadband will lessen the need for electronic
    software distribution

4
Source IDC, 2005
12
Finding Customers Worldwide
  • Selling to US Consumers is Relatively Easy
  • One Language
  • One Currency
  • One Payment Method (Credit Card)
  • Selling to Western Europe is Much More Complex
  • Multiple Languages
  • Multiple Unique Payment Methods
  • Country-Specific Laws and Regulations (Privacy)
  • Value Added Tax (VAT)

June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
13
Forecast European Online Retail Sales By
Country, 2006 To 2011
Who to Target in Europe for Online Sales Growth
June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
14
Forecast European Online Retail Sales By
Country, 2006 To 2011
4
June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
15
Forecast European Online Retail Sales By
Country, 2006 To 2011
  • The UK will continue to be the largest market in
    Western Europe (although growth is MUCH below
    other countries).
  • Key factors
  • UK consumers are less sensitive to non-European
    Websites.

4
June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
16
Forecast European Online Retail Sales By
Country, 2006 To 2011
  • Germany remains the second biggest market with
    much great growth.
  • Key Factors
  • Germans will represent 1/4 of all EU shoppers
    online by 2011.
  • Expansion of credit card use.
  • Localization (specifically currency and payment
    methods VERY important).

4
June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
17
Forecast European Online Retail Sales By
Country, 2006 To 2011
  • The French will purchase virtually anything
    online.
  • Key Factors
  • French retailer are quickly coming online.
    Consumers are following.
  • However, their reluctance to buy from a
    non-French or non-EU site makes them a difficult
    market for outsiders to reach.

4
June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
18
Forecast European Online Retail Sales By
Country, 2006 To 2011
Until the remaining EU countries mature in size,
specific targeting and localization may not yet
be worth the effort.
4
June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
19
Forecast European Online Retail Sales By
Country, 2006 To 2011
(Same Data in Graphical Format)
June 2006, Forrester Research, Trends Europes
eCommerce 2006 To 2011
20
Are you Truly a Global Company?
21
How Do DR Vendors Stack Up ?
At Digital River, we classify and track EIGHT
distinct geographic groups of consumers and
software vendors
  • US
  • China
  • Australia
  • India
  • Canada
  • Western European
  • All Other (South American, Japan, Africa, etc.)
  • Russia

22
Russian Vendor Sales
Who Are Digital Rivers Russian Vendors Selling
To?
4
Source Digital River Shareware platform data.
23
European Vendor Sales
Who Are Digital Rivers European Vendors Selling
To?
3
Source Digital River Shareware platform data.
24
US Vendor Sales
Who Are Digital Rivers US Vendors Selling To?
3
Source Digital River Shareware platform data.
25
Chinese Vendor Sales
Who Are Digital Rivers Chinese Vendors Selling
To?
3
Source Digital River Shareware platform data.
26
Conclusions
Why are US vendors winning the fight for
revenue?
  • They LIVE in the largest market. They know the
    language, the payment methods, and the customs
  • They use multiple marketing methods to reach
    consumers (affiliate marketing, search, email,
    etc)
  • They understand the benefit of creating a
    RELATIONSHIP with their customers. (next
    editions of software, upgrades, renewals,
    newsletters, etc.).

27
Conclusions
What can Chinese vendors do to grow?
  • Continue grow brands and develop software for the
    US market
  • It is the largest market and fastest growing for
    ESD
  • Diversify marketing channels. (currently 60 of
    Chinese revenue comes from affiliate marketing)
  • MS Windows Market Place, Simtel and Retail
    channel
  • Learn relationship marketing
  • Stop single selling
  • Create products with the intention of following
    up with new versions, upgrades and add-on
    merchandise
  • Learn to email
  • Create a long term relationship with the consumer

28
  • US Software Trends

29
Top Publishers in the US
NPD Data
  • MS, Symantec, Intuit and Adobe have high AOVs and
    a strong presence in small business and
    enterprise sales
  • EA, Vivendi, Valuesoft, Atari, Cosmi, Acitivison
    and RiverDeep all have mass appeal software
    gaming and productivity titles at lower
    AOVs Source NPD

30
What are the US Software Categories?
  • Business MS Vista, Windows, Office, and IT
    products
  • Education Language, Math, Science and Higher
    Learning Topics
  • Finance Accounting, MS Money, Quicken, etc.
  • Digital Imaging/Graphics and Music Graphic
    Arts, Design, Professional Digital Imaging, Home
    Digital Imaging Graphics, Video and Music
  • PC Games Both Core (World of Warcraft) and
    Casual Games (Sudoku)
  • Personal Productivity Home Improvement, Arts,
    Crafts, Personal Development
  • System Utilities Anti Virus, Anti Spyware,
    Multi-media and System optimization and
    performance

31
Software Development Opportunities
NPD Data
  • Overall, AOVs are rising in the US and will
    continue to trend that way, driven by the launch
    of Vista and MS Office 2007
  • Software developers are creating new content to
    work with Vista
  • New productsnew, higher AOVs
  • Educational products are a low cost entry into
    the market, but represent the smallest piece of
    the US software business
  • Games, although they are the largest segment,
    have a high cost of development to be competitive
    in the US market
  • System utilities and digital imaging/graphics
    show the most logical entry point into the US
    market Source NPD

32
What Types of Products Sell in the US?
NPD Data
Source NPD
33
Recommendations
  • ESD in the US is the fastest growing and largest
    market globally
  • Continue to create software for this market
  • EARLY adopters of ESD in the US tend to purchase
    system utilities, security, digital imaging and
    graphics products online
  • Start making these types of software applications
  • To expand your US presence in the software
    market, start developing specialized PC security
    products, system or Vista optimization software
    and digital content creativity/management
    products
  • Digital Content is music, movies, online books
    and digital pictures
  • Make sure to create an ongoing relationship with
    the consumers with upgrades, specials, renewals
    and emails
  • US Technology Enthusiasts are ESD users and
    they like new, smart software products and they
    adopt new technologies quickly- they are a
    trusted source for word-of-mouth advertising

34
  • Thank you
  • Mark Iverson and Stephanie Wu
  • Digital River
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