Get ready for the barrage of bad speculation about Twitter and its imminent dominance of online retail. If you didn’t hear already, Twitter hired Nathan Hubbard, a former Ticketmaster exec, to figure out its commerce revenue stream. Interesting yes, but game-changing, no. Here’s why: startups tend to look for smart people first and figure out their jobs later. The mentality often goes like this: “We need to figure out what we’re going to do in X, this guy has a rock star background in it, let him build a team and see what happens.” And even if the person doesn't succeed, it's OK. They move on. These people have great resumes. That said, here are the biggest reasons for my question marks around Twitter’s success in commerce:
What works best in commerce is something Twitter already gives away for free, which is its tweets. For example, some of the most successful users of Twitter in a retail context are companies looking to liquidate inventory or send notes about limited supply of promotions, like the Dell Outlet or Groupon — all done effectively via a tweet. In many ways, a tweet is like an email title — it draws people into a click with a few sexy words. The challenge is that tweets have the same problem as emails: they don’t make their technology parents any money because everyone gets to use the tools for free.
I recently published a report on The European eCommerce Landscape; it shows that more than two-thirds of European online consumers are shopping online, but there are big differences among the different countries. The top categories bought online are travel, clothing and accessories, leisure and entertainment, and consumer electronics. Forrester’s European Technographics® data also reveals that European consumers increasingly prefer the Internet to high-street shops for purchases of music, computer software, event tickets, and videos:
In recent years, the Internet has become the leading channel for media products. In 2012, more European online consumers bought videos/DVDs, music, event tickets, and computer software online than offline. These online media purchases fall into two categories:
1. Digital (sold direct as a download).
2. Physical (a product that an Internet retailer delivers).
I recently received a direct mail piece from one of my favorite retailers with a massive ad in that proclaimed "We Beat Internet Prices." Now, I am a big fan of straightforward and robust value propositions, but these types of brand exclamations are antiquated and add little value to customers, mainly because they simply reward customers for being good bargain hunters. Instead of simply stating you beat your competitor’s prices, employing strategic pricing and customer engagement initiatives creates real distinct value to your customers by:
Showing them you can execute on your low price promise and not just talk about it. Employing a holistic pricing strategy meets your customer’s price expectations can indicate to your customers that you are truly ‘walking the walk’ when it comes to offering the lowest price.
Building your credibility. Understanding your customers’ needs and offering solutions that facilitate decisions and generate engagement builds credibility. Simply shouting that you match Internet prices does little to build credibility with your customers.
Helping them with real problems. Shoppers don’t need guidance on finding the lowest price -- they need to understand how your brand and solution help them compared to your competition.
I recently had the opportunity to spend some quality time with NetSuite in San Jose at its customer forum — SuiteWorld. The event gave me a long, overdue deep-dive into their current strategy and the chance to speak with many of their customers one-on-one.
The big announcement from the event was the availability of its manufacturing solution. The evening before the event started I had a good conversation with our Sourcing Analyst Liz Herbert — who spends a lot of her life focused on the SaaS providers — and asked her why NetSuite was not growing more quickly. Her response was that its lack of a manufacturing solution is partly to blame. So when it was announced by CEO Zach Nelson the next morning, it certainly helped to fill me with confidence about its future.
This is a guest post from Lily Varon, a researcher serving eBusiness & Channel Strategy professionals
Today, eBusiness professionals are struggling with how to engage their clients around the globe via a website that meets varying language and cultural needs. Additionally, they’re faced with deciding between the different technical implementation methods with language service providers. Forrester has recently published a report to help eBusiness professionals navigate the maze of solutions and vendors at hand to help implement their translation and localization strategy.
Before evaluating solutions and signing contracts, eBusiness professionals must consider these important questions:
What is the right mix of translation methods? There is no replacement for translation done by a professional translator in terms of quality output, but the sheer volume of website content, the increasing demand for quick turnaround, and the number of languages needed far exceed the capacity of using all human translation. Many enterprises use a combination of translation methods (e.g., human translation, machine translation, human-aided machine translation, crowdsourcing) to execute on their international initiatives and fulfill their translation needs while keeping project costs under control.
Coca-Cola recently announced that it is jumping into the red-hot Indian online retail arena by selling directly to consumers and small businesses, a first for a FMCG (CPG) company in India. While the Indian online retail story is still being written and Forrester is bullish about the long-term prospects for this channel, the immediate challenges need to be managed effectively.
Logistics and fulfillment are the largest challenges of them all in India, with more than half of all online retail sales being done using cash on delivery (COD). While COD is essential in a nascent eCommerce market, it can have a large negative impact on business margins. This is exacerbated in a nascent market where consumers are testing this new medium of ordering goods, as the return rates can be quite high. In India, reportedly, the return rates can vary from 5% to more than 25%, depending on the category, the demographics of the online buyers, and their online tenure (experience with the Internet).
Last week Forrester published a report on the state of online retail in Canada. We surveyed 1,103 adult online shoppers in Canada to understand what challenges the Canadian public face when shopping online. We found that Canadian online shoppers have many complaints; among them high shipping costs and lackluster product assortments. Furthermore, Canadian online shoppers are acutely aware of the gap between the online experiences of domestic sites versus those in the US. Canadian sites are missing key online capabilities like free shipping, flexible pickup options, a stress-free return policy, and omnichannel payment options in addition to the obvious price discrepancies.
Some of the reports highlights include the following facts:
Shipping costs are too still too high. Despite the eventual arrival of Amazon Prime in Canada and the increasing commonality of free shipping thresholds, sixty-eight percent of Canadian online shoppers we surveyed cited that delivery costs are their primary concern when shopping online.
Product assortment online in Canada is lackluster. Thirty-seven percent of Canadian online shoppers say they can't find the products they are looking for online in Canada. Consequently, 32% of these frustrated shoppers ultimately end up buying instead from US or International sites and incurring the cost of shipping, custom duties and Canadian taxes.
Today hybris announced it has secured an additional $30M in funding from two Silicon Valley VC giants (Meritech Capital Partners and Greylock Israel). This funding comes only 18 months after hybris took a significant funding round from Huntsman Gay Global Capital to secure their acquisition of iCongo in August 2011. Despite an unprecedented period of growth over the past two years the firm has remained profitable. So why has hybris taken this additional round of funding and what does it mean for customers, prospects and partners?
It allows hybris to retain independence while growing credibility and market share. This additional round of funding buys hybris a window of security to maintain their independence in the market, allowing them to focus on R&D and scalable expansion without the distractions of the need to do an IPO or the threat of acquisition. By adding two leading VC firms as investors, the firm is clearly signaling to the market their intent to solidify their position as a global leader in the commerce technology market.
2013 is going to be a fascinating year for retail in Europe.
When I look at what’s to come this year, I can paint a picture of what Forrester predicts by looking at a tale of two brands. Both are iconic, heritage British brands that have responded to their increasingly digitally enabled consumers in two very different ways. Naturally, this has resulted in two very different levels of success.
...but I’ve spoken to a number of eBusiness executives in luxury retail companies over the last 12 months or so, and by and large they share a similar frustration. For the most part, their senior management remain resolutely defiant in the face of the opportunity that digital brings.
Which is arrogantly short-sighted, when you consider that luxury shoppers are:
Young. Shoppers who buy luxury products online in the US are almost ten years younger on average than regular online shoppers. Globally, online luxury shoppers are more likely to be tech-savvy thirty-somethings rather than brandy-swilling boardroom bumblers.