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.
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:
If you work at a retailer or other merchant, is it time you accepted PayPal payments online?
If you work at a bank or card issuer, what does the growing use of PayPal mean for your relationships with your customers?
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.
Videos are definitely one of the strongest forms of media in our society nowadays, and there are 48 hours of video uploaded on YouTube per minute: from consumers sharing their creative expressions to companies uploading how-to videos about their products and brands.
These videos help many people in their purchasing process. My colleague recently had to shop for a car, and it’s been interesting to hear about her car shopping journey and how online videos helped her make the ultimate decision. She was interested in one specific car — the 2012 Ford Focus with the Sync with MyFord Touch comes as standard package. The challenge she, and Ford for that matter, encountered was that the majority of car salespeople aren’t that tech-savvy. While they are familiar with the horsepower and the smart-key entry feature, they really struggle to explain how to turn the car into a Wi-Fi hub or how the Sync system can read incoming text messages.
Trying to learn about every available optional feature, my colleague had to turn to the Internet for help. She was able to find demo videos on the Ford Focus website, on YouTube, as well as on her cable TV widgets. These online videos, produced by Ford, auto review sites, as well as tech-savvy online peers, really helped her understand how the optional features of this new product will enhance her ultimate driving experience. Forrester’s Technographics® data shows that videos created by other people are the most watched online type of video:
Following my blog post from a couple of weeks ago where I wrote about the need to take a local approach in Europe, I’d like to take a few minutes to say something about the first of our country-specific reports.
It was natural to start with the UK Online Retail Overview, 2011, for two reasons. The first is that I live in the UK, so it’s the market and retail environment that I’m most familiar with, but secondly and more importantly, it’s the largest online market in Europe. Based on the figures in our European Online Retail Forecast, the UK online retail market will be worth £28.6 billion in 2011; this represents 9.4% of the overall national retail market, almost double the online penetration of any other European country.
So there are some big numbers but also some interesting trends to examine.
The UK market is increasingly dominated by multichannel retailers. While there are a range of notable online pure play success stories (Amazon.com, Asos, Net a Porter, and Play, to name a few), we are seeing an increasing level of sophistication in how the major high-street retailers are integrating their on- and offline properties. Initiatives like Click and Collect are now commonplace, and the pace of innovation isn’t slowing, with new initiatives such as Argos’ 90 minute Shutl delivery service being a prime example. So there are plenty of examples here to be inspired by.
Recently, my colleague Jackie Anderson published a report, Understanding Online Shopper Behaviors, US 2011, and she indicated that 2010 online retail spending in the US had reached $175.2 billion and will grow at double-digit rates at least for another few years.
But among all the items that can be purchased online, some are more popular than others. We have extracted the top three and bottom three items that consumers research online and purchase online based on data from our North American Technographics® Retail Online Survey, Q3 2010 (US). The data shows that while online consumers are generally comfortable with both researching and purchasing books, hotel reservations, and airline tickets online, they still prefer to purchase footwear, consumer electronics, and household products from traditional channels.
About one-third of US Internet users aren't shopping online yet. The majority of them do use the Internet to research products but don't feel comfortable making the purchases online. The biggest barrier people mention for not buying online is their need to see things in person.
After social commerce, mobile commerce is the most heavily debated topic-du-jour among retailers these days. One thing that both social and mobile commerce have in common is that they are both small. Teeny in fact. Forrester’s Mobile Commerce Forecast, 2011 To 2016, which launched today, shows that retailers can expect 2% of their online web sales (yes, I said web sales which means a minuscule percent of overall retail) to be transacted through mobile devices in 2011. While we also expect mobile commerce sales to grow 40% each year for the next five years, we’re still talking small numbers overall (7% of web sales penetration by 2016). Why so small you may ask. After all, aren’t smartphones changing the way we consume web content? Some things to consider:
Tablets. We don’t include tablet shopping in our definition of mobile shopping, but the creation (and subsequent explosion in sales) of this device is probably the single biggest inhibitor to the growth of “mobile commerce.” Data that we gathered with Bizrate Insights (to be released separately and soon) indicates that most tablet owners also own smartphones, and many of those people naturally prefer to shop on the device that has the larger screen when given the choice.
Shopping never leads web behavior. In any list of activities that people do on the Internet, shopping nearly always ranks below things like “reading news” or “using social networks.” Even those activities are not universal among the smartphone set, so it would be premature to expect that shopping would rank high on the list (which it, of course, doesn’t).
That’s amazing. How can I get a piece of that pie?
Call it what you will -- V-Tail, vCommerce, or just plain online video -- we are seeing some pretty bold claims around the use of video in eCommerce. Claims from platform vendors, press, and even some case studies and success stories from large retailers who are seeing some significant successes when they integrate video content into the online shopping experience.
But there’s the key. Integrate. Of course it isn’t as simple as sticking a few videos on your existing dot-com site and hey presto, conversion rates skyrocket. Video needs to support the sales process in a way that makes sense to your customers, that supports your brand values, and that enhances the shopping experience.
There are a growing number of ways to source video content, and an increasing number of players in the market who will all tell you that they have the answer. From user-generated content to automatically generated video. From content delivery networks to social media. There are a bewildering number of options out there.
Video absolutely can deliver firm benefits :
It can increase page views by driving traffic to your site.
It can enhance the time people spend lingering on your site, giving you more opportunity to market to them.
Intrigued by a lot of what I’ve been reading recently, I’ve started looking for evidence of QR codes transforming how shoppers are interacting with retailers. The thing is all the evidence I see with my own eyes doesn’t back up this proclaimed uptake. I’ve never noticed a single one in a shop. Now, that could be because I’ve not been looking and if I’m honest, I’ve only had a phone capable of reading them for a few months.
Time for a quick bit of ad-hoc analysis (Health Warning: NOT OFFICIAL FORRESTER RESEARCH !!!)
In order to give this mini research project some vague semblance of credibility, I have adopted the rigorous scientific approach that Mr. Featonby, my A-level physics teacher drilled into me many years ago . . .
My hypothesis is that retailers aren’t using QR codes in the UK, and furthermore, the average shopper hasn’t a clue what one is.
I went to the local Tesco Metro and browsed the aisles, looking at every product I could find.
I’ve looked through every store magazine and free paper and at every poster I pass in London, on the Midlands Mainline train service, and in Nottingham (where I live) for two weeks.
I posted a picture of a QR code on my Facebook page and asked my friends (average shoppers one and all!) if they knew what it was.
Over the past year, we’ve worked together with the forecast team at Forrester to help eBusiness professionals understand the size of different online retail markets around the globe. Last year we published our first look at the online retail markets in some of the major markets in Asia-Pacific — this year, we’ve just published our first forecast for two of the largest online retail markets in Latin America, Brazil and Mexico. Some findings from the report include:
Brazil is — and will remain — the powerhouse in the region. With more than 40% of the online users in the region and a steadily growing economy, it’s not surprising that Brazil’s eCommerce market will outpace all others by a wide margin. Brazil’s projected 2011 sales of almost $10B put it behind other major online retail markets like France and South Korea but ahead of smaller ones such as the Netherlands and Italy.
Mexico’s online retail market is small today —but growing by a CAGR of almost 20%. With less than half of the online users of Brazil and limited online spending, Mexico’s online retail market remains a small fraction of the size of Brazil’s. Average online spending per buyer will not increase significantly over the next five years, but the sheer number of online buyers will.
1. an aptitude for making desirable discoveries by accident.
2. good fortune; luck: the serendipity of getting the first job she applied for.
Internet retailers have been struggling with a challenge since the first time a shopper clicked “Add to Cart,” and so far I don’t think anyone has really cracked it.
Recently we’ve had a number of discussions in our office (and more in the pub) about the difference between the online and offline shopping experiences, and the subject of online product discovery is one we can’t seem to get to the bottom of. It appears that many retailers are in the same place, and despite their best efforts, online retailers just can’t duplicate what we’ve termed serendipity.
That feeling of walking into your favorite bookshop and picking something up in a section you don’t normally go into just because the cover leaps out at you.
The moment when you stumble across some unutterably stylish, drop dead gorgeous dress in the store you don’t normally go into, but your friend dragged you protesting into.
That magic moment where you discover something.
Amazon has had a good go at it, and I confess I’m a huge fan of its “people like you buy stuff like this” functionality, but it does suffer from a major flaw. Like many of my Forrester colleagues, I use Amazon to buy a lot of gifts that I don’t ask to have wrapped. So Amazon thinks I’m crazily into books on vintage fashion and Waybuloo toys. Well I’m not. But my wife and 2-year-old niece are. Go figure which one likes which. So I regularly receive invites to buy more books and toys I really don’t want.