e-commerce: the next wave What it means for your business...
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a look at THE
NUMBERS 7%
4%
17%
E-commerce comprised 7% of total retail sales in the U.S. in 2013 1
In Canada, that number is estimated to be 4% 1
E-commerce spending in the U.S. increased by nearly 17% in 2013 alone 2
60%
$434.2 B
74%
60% of U.S. retail sales will involve the web by 2017 3
U.S. e-commerce sales are projected to reach $434.2 billion by 2017 4
74% of respondents to a 2013 Live Chat Effectiveness survey reported having interacted via social media with an Internet retailer 5
1. http://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf 2. http://www.internetretailer.com/2014/02/18/e-retail-rolls-2013 3. http://ecommerce-news.internetretailer.com/nav/cat2/ecommercesales/cat1/eretailers/0 4. http://www.internetretailer.com/trends/ 5. http://www.e-tailing.com/researchlibrary/index.html
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Back in the late ’90s and early 2000s when it was fashionable to declare the imminent death of bricks-and-mortar retail, we watched the demise of some pretty significant victims, most notably those in the music industry. And, while the dramatic prophecies of that era didn’t exactly transpire as predicted, 15 years later the big shift really is happening. A second generation of consumers that’s grown up with the Internet is coming of age — and that means make-or-break time for anyone with something to sell. So here’s the home truth none of us can afford to ignore: There’s an entire generation of consumers out there who think nothing of walking into a Best Buy store, touching the goods, weighing the features, scanning the code, walking out, and heading home to find the best price online. I’m seeing 40-year-olds do this. I’m seeing 35-year-olds do it, too. It’s why bricks-and-mortar stores like Best Buy and Future Shop are closing storefronts
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and laying off thousands of workers.
What was prophesied in the late ’90s and early 2000s is now finally showing some real impact — and it’s not just standardized goods like cameras and electronics that are flying off the e-shelves. E-commerce is finding its way into everything from beds to services to groceries thanks to a combination of competitive prices, continuing economic pressure, better delivery methods and better return policies.
It’s a massive consumer shift, sure. But it doesn’t have to be all doom and gloom. In fact the businesses that adapt will do more than survive. They’ll thrive. The fact that Amazon and now Alibaba have never been stronger is one thing. However, now the way other businesses conduct e-commerce keeps getting better too. Most consumers can use their phones to shop any time, anywhere. Shipping is often free and it is getting faster. Businesses can look to consumers beyond their borders, and there’s a renewed emphasis on content marketing. Of course it helps that fear is no longer a factor. None of the horror stories about online buying transpired, and people are now sufficiently comfortable with using credit cards online. Since the economic meltdown of 2008 — the most significant recession since the Great Depression — the economy remains sluggish. Wages haven’t kept pace, and this puts increasing pressure on consumers to maximize their dollar. U.S. consumers are already more inclined than their Canadian counterparts to buy online. 7 However, it seems Canadian retailers are starting to catch on.
6 http://www.cbc.ca/news/business/15-future-shop-and-best-buy-stores-to-be-closed-1.1307517 7 http://www.theglobeandmail.com/report-on-business/small-business/sb-marketing/sales/will-canada-emerge-from-e-commerce-dark-age-this-holiday-season/article5287329/
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So what does all this mean for your own business? It means you can’t rely on a “put it in the basket and add it to your wish list” approach. A proper, holistic e-commerce strategy can’t be just an afterthought: • It starts with getting consumers to have an online conversation in the first place • Then it migrates to the sharing of information • Only then does it migrate to a purchase decision (or a face-to-face conversation that leads to a purchase decision) Successful e-commerce also has to meet the needs of private, anonymous shoppers. Most people who are researching really personal things would rather engage privately at first, and talk to a real person only when they’ve made a decision to proceed. That final transaction can be face-to-face or online, and successful businesses will let the consumer choose.
It’s also critical to know that “virtual” competitors can spring up at any time and in any industry. Consider Direct Access Marketing’s own niche industries: pre-planning marketing, home services, retail/dealer and charitable giving. There are all kinds of “virtual” competitors in these markets that have sprung up overnight to challenge traditional ways of doing business. Canada’s no-frills Basic Funerals is a great example. This is a business that has disrupted the industry with a winning formula of “more service, less money.” It has no properties or facilities of its own, yet it’s now a dominant player. Similar examples can be found in home services. E-commerce operators providing window replacement services, for example, are springing up everywhere. They’re generating leads and handling everything online. They’re outsourcing almost every element of their work and doing it all without a factory. Other home service operators are overlaying credit options, great customer service and some element of warranty around the product in a business model that makes it easy for seniors, among others. The retail giant Home Depot is another great e-commerce success story. It’s leveraging its supply chain, reputation, buying power, generous customer satisfaction guarantees and credit options to dramatically expand the number of products offered online. For example, even though Home Depot stores are huge, I wouldn’t be able to walk in and buy a dock for my cottage. Despite this I can now go online and choose from many options…and
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suddenly Home Depot is in the dock business with premade and ready-to-serve docks. All of this puts smaller, local operators in jeopardy. Nevertheless, this addiction to convenience isn’t confined to online shopping. According to Forbes,
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online charitable giving accounts for 6.4% of overall giving. Also, online giving saw overall growth of 13.5% in 2013, which means that the most successful nonprofits might find that digital is giving the way of the future — and those without a healthy e-giving strategy could get left in the dust. So what does it all mean? Nearly anybody can be in almost any business overnight, but the challenges remain: Who’s the best at attracting customers? And who excels at results marketing? The early declaration of “goodbye bricks and mortar” may have been off by a decade or so, but now that it’s really here, businesses need to know how to generate direct relationships with online customers. When one of our clients — a global mattress manufacturer —wanted to take sales up a notch, we worked with them for over two years to establish a successful e-commerce strategy. It involved everything from direct TV and monitoring call centers to management, sales and ROI calculations, and the integration of retail stores.
We did it for them. We can do it for you. Feel like talking to us about your business? Get in touch today so we can leverage our industry expertise to create a winning business solution for you. Thanks for your interest in Direct Access. To get the conversation started about your marketing and engagement strategy, please complete click here to request your free consultation and we’ll contact you within one business day.
Or just give us a call at 1.866.632.7337.
8 http://www.forbes.com/sites/samanthasharf/2014/02/05/charitable-giving-grew-in-2013-as-online-giving-picked-up/
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