Focus on: E-commerce Trends

Convenience, free shipping and deals drive online sales growth

Retailers should expect online purchases to become a bigger piece of retail sales, particularly in the key fourth-quarter period, where they could soon represent as much as 20% of holiday sales, according to Sucharita Mulpuru, VP and principal analyst, Forrester Research, and a leading expert on e-commerce and trends in the online shopping space.

“The pie for bricks-and-mortar retail is shrinking,” Mulpuru said during a presentation at the National Retail Federation’s 101st Annual Convention & EXPO in New York City.

Along with convenience, free shipping and promotional deals are driving shoppers to the Web. The shift is expected to persist as 55% of online shoppers now say they have come to “expect” free shipping, while 52% “expect” it for returns too, according to a survey by and Forrester.

These offers, Mulpuru explained, “are being seen as a cost of doing business, but they are also an accelerator of e-commerce adoption.”

When it comes to marketing, Web searches and email continue to be the most influential tools. In a consumer poll conducted by Bizrate Insights and Forrester, 47% of online purchasers said they learned about a deal by visiting a site directly, while 33% were informed through the retailer’s email. In contrast, only 3% were spurred to action due to a social site. With this in mind, Forrester predicts retailers will increase their search budgets, from $3.45 billion in 2011 to $5.37 billion by 2015.

With a boost from tablets, mobile shopping is expected to accelerate. Forrester projects mobile commerce will jump from $6 billion in 2011 to $11 billion in 2012 and triple to $34 billion by 2016.

While those sales numbers are significant, an even bigger impact of mobile could come from functions that leverage the in-store experience, such as cameras, speakers, microphones and scanners, according to Mulpuru. Mobile devices will be able “to push the experience in ways we haven’t seen before,” she said.

Currently, according to a survey by and Forrester, the top uses are checking store hours (30%), finding store location (23%), comparing prices (15%) and redeeming coupons (15%).

Mobile commerce, however, is also creating headaches. One of the biggest challenges involves creating content, particularly given the variety of tablet devices and smartphones that are available to consumers. Mulpuru advised retailers to follow the blueprint of technology leaders such as Amazon and Google and take a “lowest common denominator” approach to design, whereby content can be easily translated across devices.

She also advised retailers to consider adding Android and Apple teams to their staff to help. Mulpuru pointed to an approach taken by Nordstrom, which developed its own internal ‘innovation lab’ — “a little microcosm within their IT organization.” It is made up of a handful of employees who create and run experiments.

Mulpuru also observed that the impact of behemoths — Amazon, Apple, Google and Facebook — “seem to loom over our strategic decisions.

“Nearly one-third of online shoppers begin their search on Amazon, 47% of global Web visitors go to Google daily, and 43% go to Facebook daily, she reported. “In many cases,” she said, “these are not just gatekeepers, but curators of our content.”

However, Mulpuru stressed, while it is wise for retailers to “recognize game changers and adopt new business approaches when necessary,” it is also important “not to get caught up in hype.”

Despite the big expectations, social commerce is struggling. Accounting for less than 1% of e-commerce volume, it was a “negligible contributor” to holiday sales, according to Mulpuru.

“Yet, unbelievably, retailers are not heeding the obvious,” said Mulpuru, citing a survey, which found 22% of the retailers polled already had custom stores on social networks, and 61% said they were still planning to implement one.

Laura Klepacki is a Pennsylvania-based freelance writer specializing in retail.

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