Some Observations On The Evolving eCommerce Landscape In China

Last week I joined a few of my colleagues in China to meet with a variety of eBusinesses in both Beijing and Shanghai. We met with online retailers, technology companies, and other players in industry. For those used to selling online in countries other than China, some of the takeaways included:

Multichannel remains in its infancy. With the leading online retailers in China being pureplays, multichannel remains at very early stages. In-store pickup or returns are not widespread – however, there are emerging multichannel initiatives. In a recent, high-profile online-to-offline expansion, for example, Taobao opened a new furniture showroom in Beijing to enable consumers to experience different furniture brands sold on the site. The furniture sellers rent out space in the showroom to display their products. We had an opportunity to visit the huge showroom, which was somewhat quiet when we were there – terminals stationed throughout the showroom (see below) enabled consumers to insert a card and select products online, then proceed to checkout to pay.

    

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Reducing The Call Center Cost of Login Recovery Should Be A Top eBusiness Priority

Several weeks ago, I blogged asking for insight into the contact center costs of login recovery to help inform a project I was working on. Many companies responded — for which I thank you  — and I wanted to share some of the insights that were provided.

In the words of one eBusiness executive, “Helping customers resolve login issues is by far the largest call driver to our contact center. The costs are high — probably higher than we fully realize. But we look at it as the cost of doing business.”

Among the companies surveyed, the percentage of login issues among B2C contact center contacts ranged from  3% to 40%. Only one company was on that lower end and, while their 3% may seem small at first glance, their call center receives more than 10 million calls per year so 3% represents a hefty number of contacts. The higher end  of 30 to 40% of call center volume related to login was more common. Overall, among the companies who responded to my request for information, the operational cost of login issues ranged from $250,000/year to well over $1,000,000 per year.

These high dollar figures do not have to be the cost of doing business. Instead, eBusiness leaders should:

  • Ensure their login recover adheres to best practices. My document called “Mastering Login Issues” will hopefully provide helpful insight.
  • Consider social login, which lets users log in to your site with their social identities from Facebook, Twitter, and other social sites. This may be particularly useful for news, retail, media, entertainment.
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Target.com Crash Not A Site Failure But A Failure To Forecast

Much has been made over the last two days of the Target.com crash and availability issues following its Missoni promotion that launched on Tuesday. Coming on the heels of the site’s relaunch on IBM Websphere Commerce after many years on the Amazon enterprise solution led many to speculate that there was a serious mistake made in the building of the new site. But this is not a failure of the new site, this is a failure to forecast.

When Target's marketers planned the media blitz and direct marketing around this Missoni promotion, launching the collection with great fanfare — and at the same time online and in-store— they likely planned on a web traffic response and resulting sales of 2-3x normal. That would be a terrific outcome, no doubt justifying the expense and effort of the multichannel promotion. I am sure no one forecasted a 10x normal response, and peak traffic 3x Black Friday traffic peaks. And beyond just the click-through, the consumer behavior on the site after click-through was unusual. This was not a product they were promoting, but a collection, and consumers were placing many, many items in their cart, well beyond the typical 1-2 items per cart a B2C site like Target's would expect.

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“State Of Retailing Online 2011” Part Two Launched On Shop.org Today

Forrester recently published the “State Of Retailing Online 2011: Merchandising, Headcount, And Global Strategies” report in conjunction with our friends at Shop.org. It is available on Shop.org (with a subscription) now.

Some of the reports highlights include:

  • Online retail continues to steal market share from other channels. “The State Of Retailing Online, 2011” survey shows an average growth rate of 28% for online retailers over the past year — this has been driven by improvements in retail execution including higher conversion rates, higher average order values, and strong repeat shopper revenue.
  • Investment in site merchandising drives conversion increase. While some tactics such as “ratings and reviews” are perennial merchandising investment favorites, more retailers now also are investing in merchandising through new channels, such as mobile. This report categorizes each of the 80 tactics reviewed as an industry standard, area of opportunity, investment area, or unproven tactic.
  • Headcount growth lags as overall eCommerce growth charges forward. Retailers maintain conservative growth plans — less than 10% — that largely don’t match up with the year-over-year growth of web retail overall. Focus currently is on mobile, marketing, merchandising, IT, and analytics.
  • Global expansion will be an investment focus, but not top priority. While 37% of retailers cited international commerce as very important, most global businesses still haven’t fully committed to that lofty title — remote management of global services, accepting returns shipped only to their home country, and English-only sites and customer service are still common practices for these “global” online retailers.
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Time to Optimize For The Era of Agile Commerce

Hard to believe, but it has been six months since our report “Welcome to the Era of Agile Commerce” has gone live on our site. Since that time I have had the opportunity to have countless conversations with eBusiness and multichannel leaders about what this new era of consumer connectivity, technology advancement and the changing relationships they now have with their customers. We’ve talked about how their technology strategy, organizational approach, business metrics, supply chain, and customer experience have been evolving and what they have been learning along the way. We’ve talked about strategies to drive business transformation. We have talked about how to get started. And we have talked about how difficult it can be to change the way companies work.

Just the other day I had a conversation with a senior eBusiness exec, and I thought she summed it up very well. She said, “The thing is, the customer is already there. No matter how much we want to think things are the same, they are not.”

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Enter the Commerce API

 

Today Demandware announced their much anticipated Open Commerce API. While many clients may not be in a position to take advantage of this immediately, the value of APIs like this extends well beyond the typical feature release. That value will be in enabling their clients to extend the customer touchpoints they can manage with the core commerce platform well beyond their web and mobile commerce sites. In the era of agile commerce, commerce platforms like Demandware’s will increasingly be leveraged to power many consumer shopping and buying touchpoints  such as mobile apps, kiosks, in-store/branch solutions, interactive TV, social commerce, and embedded commerce. You can look to Tesco’s mobile shopping solution in Korea, or Ralph Lauren’s embedded commerce in their New York Times iPad App ads to see how a commerce API can be used. Robust, secure, well supported APIs will enable examples like these to be done in developer friendly ways to streamline development, enable innovation, and ensure quality customer experiences that leverage a consistent back-end commerce solution.

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The Value of Live Video Chat

I have to confess, I was skeptical when I first encountered the idea of live video chat. I didn’t see how the value of seeing the person I was chatting with; after all, not seeing the person I’m speaking to on the telephone has never been an impediment to my ability to trust my bank, insurance company, or favorite retailers.

But when deployed in the right circumstances – specifically, when it leverages the value of a visual element into the chat interaction – live video chat has some potentially compelling use cases:

  • Retailer Lands’ End offers live video chat with a personal shopping assistant who can show products. In my interaction, I was able to see the size of a handbag more meaningfully than just reading its measurements.
  • Live video chat can offer a private in-person consultation. For example, specialty pharmacy ITSRx.com implemented a webcam-based video chat program that allows customers to have demonstrations on topics such as how to inject medication properly.
  • Live video can help develop relationships. For example, a hotel offering could offer live video chat between its most frequent guests and the concierge at hotels they visit frequently; or a financial institution could use video chat between preferred customers and their financial advisors.
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Quick take on eCommerce in Brazil

I recently joined two of my analyst colleagues - Jennifer Belissent from Forrester's Vendor Strategy role and Jan Erik Aase in Sourcing & Vendor Management - in Brazil to speak with companies in our respective coverage areas. It was a fantastic trip: Well organized and incredibly useful in better understanding the business landscape.

On the eBusiness side, we had the opportunity to meet with a wide variety of companies in São Paulo and Rio, ranging from online retailers like Sacks and Comprafacil to eCommerce technology providers such as IBM and hybris to others like FedEx and Google. We also spoke at events organized by content optimization provider Arizona as well as Brazil’s eCommerce Committee.

We are working on a report that summarizes some of the key findings from those conversations – in the meantime, a handful of high-level takeaways from the trip:

Multichannel functionality has not arrived, but is coming. Multichannel came up in almost every conversation I had with companies in the online retail space in Brazil. While there are few options like in-store pickup or returns currently available on leading retailers’ eCommerce sites, the fact that many of the large traditional retailers are active in eCommerce means that multichannel functionality is poised to be a core area of investment going forward.

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Ascentium, Cactus Commerce, And The Evolution Of Commerce Systems Integrators & Agencies

Today Ascentium, a US-based independent digital agency announced its acquisition of eCommerce services provider Cactus Commerce. In the past, Cactus specialized in Microsoft Commerce Server solutions, often paired with SharePoint and its CommerceLive framework. The newly combined company with 500+ staff, offices in the US, Canada, and United Kingdom, and more than $65 million in annual revenue will focus on the design and delivery of commerce and content solutions. Among the many other acquisitions over the past year, this deal stands out as a bit unusual. It brings together a creative agency and a commerce and marketing systems integrator (though arguably Cactus has been more than that to many of its clients). In some ways, this marks the beginning of something we will see more of in the near future — the combining of agency and integrator to become commerce solution providers. 

This is the evolution of system integrators, consultancies, and agencies into something a bit different. We are now calling these firms global commerce service providers (GCSPs). These firms are adapting to the changing needs of clients for integrated services across channel strategy, interactive design, and technology capabilities in order to support the changing business needs in the era of agile commerce. Future services providers like the new Ascentium will combine:

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Is It Time You Accepted PayPal?

We've just published some new research on online shoppers' payment preferences in Europe. Payment habits across Europe remain diverse, with shoppers in different countries using different, and sometimes entirely different, payment methods to shop online.

One of the findings that struck me most during our research was the growing popularity of PayPal. That PayPal is used by many online shoppers across Europe is well known, and partly explained by the success of eBay. What struck me as new is how many big European online merchants now accept PayPal, among them leading fashion retailers and airlines. Perhaps I didn't spot that sooner because the British merchants have been much slower to adopt than those in Italy, Germany, France and Spain.

The growing acceptance of PayPal raises questions for two groups of eBusiness executives: 

  1. If you work at a retailer or other merchant, is it time you accepted PayPal payments online?
  2. If you work at a bank or card issuer, what does the growing use of PayPal mean for your relationships with your customers?
  3. For both groups, what payment methods are customers likely to want as they start buying from tablets and mobile phones?

What do you think?

If you are a Forrester client, you can read the full report here.