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Burn of Disruption

After not innovating for almost a century, tobacco industry is feeling the burn of disruption. Fuelled by the conversion on market, technology and consumer trends, market of global vapor products (e-vapor and heat-not-burn (HnB) devices) is growing at an impressive CAGR of over 15%. Expected to cross $43 billion by 2023, market is led by challengers like JUULs and self-disruptors like PMI's IQOS.

HnB Devices Change Everything

HnB devices are primarily technological devices so the basis of competition shifts to technology performance and design. Given the completely new different product lifecycle, consumers needs and expectations rise in relation to post-purchase and after sales service. Direct-to-consumer sales become not only possible, and economically viable for the first time, but within a model of continuous repurchase of tobacco sticks - also a future source of profitable growth.

Changing Consumers Expectations

New product category aligns the tobacco industry consumers' expectations with a realm of consumer goods / electronics / retail industries which are highly dynamic and highly competitive. HnB consumers will not only compare their experience against tobacco industry standards, but to a more competitive and heterogeneous shopping experiences in retail, electronics and consumer goods. Keeping up with evolving consumers expectations will especially be challenging in fast paced digital retail.

eCommerce Growth Promise

Even though initial bulk of sales of HnB devices comes from traditional retail channels, as tobacco companies primarily focus on switching existing cigarette consumers to new HnB products, sustainable future growth will increasingly be dependant on e-commerce capabilities development and e-commerce channel performance. This is especially true for refills where, once the consumers' flavour is established, he'll be driven by convenience of repurchase which is best done online.

Crucial Importance of Post-purchase

HnB brands are joining the e-commerce market at a time in which steps and rules have already been drafted on what shapes a satisfying shopping experience online as well as the average consumer expectations from it. Whether customers will choose to continue to shop with you or competitors depends mostly on post-purchase experience he has and had with your brand.

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Driving Growth by Focusing on Post-purchase

To capitalise on the future e-commerce growth opportunity, tobacco companies need to both determine the implicit customer expectations from an online shopping experience and audit their own to know where they stand in contrast to the market averages and start defining and planning corrective actions.

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SO DIGITAL GLOBAL E-COMMERCE OPERATIONS EXCELLENCE PLATFORM enables brand & e- commerce professionals to define and implement high performing customer post-purchase experience strategies by identifying the basis & dynamics of competition within a market. Our platform enables competitive cross industry performance benchmarking of best performing e-retailers across dimensions of online (post)purchase experience, including but not limited to, phases of delivery, tracking, packaging - out of box experience, and return & refunds.

Who is it for?

Leading tobacco, vape and e-cigarettes brands who want to make most of their current e-commerce performance and makes sure they capitalise on the HnB e-commerce growth potential. eCommerce leaders who oversee channel execution within a single or across multiple markets. Team leaders who have direct influence, control and responsibility for overall eCommerce continuous revenue growth.

Consumer Research, Marketing and eCommerce Operations team professionals are just some of the examples of those who can leverage insights from the market research and leverage them for tactical and strategic improvements which would create unique differentiators of the experience highly valued by customers.

Why is it needed?

As the underlying value proposition of HnB devices - technology advances, so will the consumers' expectations. Same is true for the e-commerce channel. However, technology and e-commerce expectations are established well outside vape industry - this means that both adjacent and non-connected industries will have an influence on the new tobacco category competition and consumer expectations.

HnB brands are joining the e-commerce market at a time in which steps and rules have already been drafted on what shapes a satisfying shopping experience online. Out of three phases (pre-purchase, purchase, and post-purchase) - the post-purchase phase carries most weight in defining the total experience.

How does it work?

Trained researches in target countries perform actual purchase of products from target e-commerce market players, recording their every step, while answering standardised scale based scorecard with average 200+ data points to provide insight into comparative performance on market competition defining elements of post-purchase experience : tracking, delivery, packaging (out-of-box), returns & refunds.

With yearly subscription, clients get access to benchmarked country data sets, while also being able to create reports on the platform itself to drive focused learning insights. Reporting module enables comparison of markets, retailers, data points and across completed benchmarks to discover trends.

How do you benefit?

Making sure your customers have a premium and up to e-commerce industry standard (post)purchase experience is especially important for new product categories which still may spur some uncertainty with consumers. Having insights how you (under)perform in elements of post-purchase experience will provide you with an important operational improvement direction.

Outperforming average customers expectations on highly valued yet under-represented elements of post-purchase experience will yield consumer satisfaction, loyalty and word-of-mouth. This is especially beneficial for brand equity of newly created brands and products of HnB category. Market insights provide a benchmark for internal capability development.

How long does it take?

Depending on the number of countries researched and whether it is a standardized or individual client tailored benchmark research average duration of the project lasts up to 3 months. During this time client is able to actively participate and track research progress in the platform. In case markets of your interest have been benchmarked within last 6-12 months you can gain access to this right away.

Once you gain access to the platform through subscription packages, you can use it during the period of one calendar year, after which your subscription and access to the refreshed dataset will have to be renewed. During this period client designated users have an unlimited access to the data and are able to continuously create reports of their choosing.

How much does it cost?

Standard benchmarking contains research results of 20+ leading e-commerce players from a single market. Cross-industry sample usually contains all e-commerce models (marketplaces, pure-players, brands, e-retailers, omni-channel). Access to the standard country research that details into delivery, tracking, packaging, returns & refunds with omni-channel reporting starts at 5000 EUR / retailer.

In case a client wants to tailor the research so it is more focused on his particular industry and contain additional question sets, standard pricing will be augmented depending on the size and the scope of changes and markets that are researched just for this client. On average tailoring of research criteria (scorecard or industry) entails +30% per each segment.

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Research : Understanding the Online e-cigarette market

Commissioned by the UK's Her Majesty's Revenue and Customs department and done by IFF Research in 2016 points to the fact that "based on the consumer panellist data, the online market is likely to grow further relative to the terrestrial market (many people expected their terrestrial purchases to decrease and their online purchases to increase)"

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