China tops list of best developing markets for e-commerce growth
New York — Large emerging markets with an active online user base and solid infrastructure offer retailers the greatest e-commerce potential in the near-term, according to a new study by A.T. Kearney’s Global Consumer Institute. The study ranks the 10 countries with the greatest potential for e-commerce growth, and China tops the list, followed by Brazil (#2), Russia (#3), Chile (#4) and Mexico (#5).
“Online retail in developing markets presents retailers with attractive growth prospects, either by adding e-commerce to already existing store networks or as a market-entry vehicle. Entry via the online channel allows retailers to build their brands and learn about consumers without having to invest in store openings,” said Hana Ben-Shabat, A.T. Kearney partner and co-leader of the 2012 Retail e-Commerce Index.
China’s current online retail market size of $23 billion is second only to the United States and is predicted to explode over the next five years, growing at a rate of 29% annually a year as Chinese infrastructure and online purchasing behaviors evolve, according to the study. While many retail sectors are popular among Chinese online shoppers, consumer electronics and apparel are the two largest categories.
Number two on the index is Brazil, whose active online user base commands US$ 10.6 billion in online retail sales, the largest in Latin America. Brazil’s online market is predicted to expand by 12% annually over the next five years as online shopping becomes more mainstream across most retail categories.
Appliances and consumer electronics are the products most commonly sold online in Brazil. Online apparel sales are marginal, as the fashion-savvy Brazilian consumer values the social experience that comes with in-store shopping.
The index examines the top 30 countries in the 2012 A.T. Kearney Global Retail Development Index, and ranks the top 10 based on the retail e-commerce potential. Read the full 2012 A.T. Kearney Retail e-Commerce Report.
Showrooming: How to Compete and Win in the New World
By Jeff Weidauer, [email protected]
Showrooming is the latest in what appears to be a never-ending series of paradigm shifts for retailers. This is the relatively new activity where shoppers visit a brick-and-mortar store, look at a product, and buy it online. Best Buy is possibly the hardest-hit; it’s been slapped with the unfortunate moniker “Amazon Showroom,” which describes just how widespread this phenomenon has become.
Product price is the obvious problem — the price difference between Amazon and a big box store hovers in the range of 10%. Most states don’t charge sales taxes for online sales (yet), but even where taxes are collected there is a significant difference in price paid. Add free shipping into the mix, and the customer shift from buying locally to “just looking” locally seems like a logical response.
Target’s recent decision to discontinue carrying Amazon’s Kindle e-reader is widely believed to have been in response to showrooming. Target is also working with some of its suppliers in an attempt to create “unique” UPCs designed to thwart easy comparison by phone-wielding shoppers.
To be clear, most of the problems brick-and-mortar stores are facing today are self-created. Thirty years of focusing on little other than price, and the accompanying required reductions in labor and inventory, created fertile ground for online stores to take root. That overarching focus on price has also created a consumer with a taste for little else, partly because there’s nothing to compare it with.
The fact is that we’ve all become accustomed to poor service — or no service — in the pursuit of low price. We’re used to doing our own research, and now we make decisions based on what a majority of strangers tell us via ratings online rather than a salesperson. When visiting a store, it’s to see the product close-up rather than to get advice from the person selling it. For someone who’s done even the minimal pre-shop research, it’s likely that they know more about the product in question than a store employee.
Brick-and-mortar retailers have another significant disadvantage when competing with online sellers: information. Internet merchants know a lot about every customer that’s ever made a purchase on their site, and even quite a bit for those just browsing. While loyalty cards have been around for a quarter-century, it’s only been in the last 10 years or so that the information they gather has been put to good use. Most are just gathering vast quantities of information with no tangible benefit to the retailer or the shopper.
There’s a line from the hit television show “Mad Men” that applies here: “If you don’t like what’s being said, change the conversation.” Simply put, this means it’s up to the retailer to take steps to change things by effectively combating the surge of online sales with a proactive and aggressive approach. Passive tactics aimed at undermining shopper habits by creating more hurdles (like unique UPCs) may work in the short run, but aren’t a long-term solution.
Competing in this new world will require a clear strategy, and the best way to begin creating a strategy is to define the problem honestly and without emotion. It doesn’t matter what used to work — let it go. A price-focused approach is what created the current problem, so let that go as well. Determine the strengths of the store, from the shopper perspective. This is the hardest part: leaving all that internal baggage at the door and looking at the company as the shopper sees it in the cold, harsh light of day.
Once that’s done — and regardless of what the outcome of that initial analysis might be — three things will have to change:
1. Find a point of difference. This is what the company brings to market, and is its raison d’être. It might be based on the company’s original charter, or it may be something completely new. But it has to be something big enough to build an identity on. And it can’t be price.
2. Hire knowledgeable employees. Or hire solid performers and train them. Either way, raise the bar and stop competing with the local fast food joint for “talent.” This will require a price increase because good people cost more.
3. Learn about—and focus on—only the best customers. Use tactics like mobile devices, databases and analytics to target shoppers based on behavior and buying history.
These are major changes for any retailer. They will take time, commitment and a clear vision of the goal, not to mention investment. They are also absolutely necessary for any retailer planning to remain viable for the long term.
“Compete,” after all, is a verb.
Jeff Weidauer is VP marketing and strategy for Vestcom International Inc., a Little Rock, Ark.-based provider of integrated shopper marketing solutions. He can be reached at [email protected] or visit Vestcom.com.
Dick’s, Drew Brees take concussion education head on
PITTSBURGH — The Dick’s Sporting Goods Foundation, quarterback Drew Brees and imPACT for PACE (Protecting Athletes through Concussion Education) have joined forces to help educate athletes at all levels of the dangers of concussions.
Parents, coaches and school officials can visit www.DicksSportingGoods.com/PACE to sign up eligible middle, high school and youth athletic organizations to receive free ImPACT (Immediate Post-Concussion Assessment and Cognitive Testing) testing software licenses, which provide baseline tests for up to 300 young athletes free of charge for one year ($500 value).
Utilized by more than three million athletes at thousands of middle and high schools, collegiate and professional sports teams, ImPACT is the first, most-widely used, scientifically-validated computerized neurocognitive evaluation system available. ImPACT begins with a 20-minute baseline test that is administered pre-season. If a concussion is suspected later, another post-injury test is administered by trained clinicians to assess the possible after-effects. The program evaluates multiple aspects of brain function including memory, processing speed, reaction time and post-concussive symptoms, assisting doctors in making return-to-play decisions and potentially reducing the possibility of long-term neurological effects.
"The Dick’s Sporting Goods Foundation has a unique opportunity through PACE to empower parents, coaches and young athletes with the right tools to make sure they’re informed and taking the necessary precautions to manage concussions," said Edward Stack, Chairman and CEO of Dick’s Sporting Goods. "Together with Drew Brees and our partners at ImPACT, our goal is to provide awareness and information so that every athlete, every team and every school can be smart about concussions."
Record-breaking pro football star Drew Brees, who suffered a concussion in 2005, will serve as the national spokesperson for PACE in 2012, participating in various marketing initiatives to support the program including online video, public relations, and social media engagement.