Forrester’s retail forecasts chart how the changing nature of consumer behavior will have an impact on online and offline retail sales over the next five years. During a recent webinar, Forrester detailed five key trends that the forecasts have revealed:
Worldwide online retail sales are growing and varied. Asia Pacific is the world’s largest online market; it’s more than twice the size of North America. But online retail in India and China is very different. When considering your online investments, you must take into account not just retail market size but also supply (like organized retail), consumer demand, and infrastructure maturity.
Online buyers are spending more and in more categories. In mature markets like the US, online growth is coming from existing buyers spending more online. The typical online buyer has doubled the number of categories from which they buy online over the past five years.
Web-influenced sales are greater than online sales. In Western Europe, the Web will influence 45% of offline sales by 2020. Although 93% of retail sales in Western Europe were offline in 2014, an online presence is critical to retailer success — as web-influenced sales were more than three times larger than online sales.
with Allison Smith, Xiaofeng Wang and Vanessa Zeng
Chinese social platforms have started to engage in commerce via partnerships with eCommerce marketplaces, but online sales conversion rates from social traffic have been disappointing. For example, in May, 360buy (JD.com) — the second-largest B2C eCommerce marketplace — received a level-one access point on WeChat, the hottest social platform in China, but this didn’t deliver the large quantity of fulfilled mobile orders that the company expected. Haoyu Shen, CEO of JD.com, confirmed during the company’s Q3 financial earnings call that the majority of fulfilled mobile orders still originate from JD.com’s own mobile app. Forrester sees two major inhibitors of social commerce in China:
People don’t expect to see commercial promotions of products they don’t want on social media. Consumers normally blacklist friends or public accounts that push these ads, making it difficult to implement traditional B2C or C2C eCommerce models on social platforms. However, if social marketplaces can provide people a tool in those moments in which they actually want to buy a certain product, it may enable social commerce.
Customers have poor discovery and buying experiences on social commerce platforms. Social platforms in China that sell products and services online have limited search functionality, which does not make for a user-friendly customer discovery stage. Chinese consumers have gotten used to being able to compare many products and prices when making online purchases — but current social commerce platforms can’t support that.
As mobile becomes a critical component of your digital strategy and overall business, eBusiness professionals should have an answer when their executive teams ask, “Who does mobile commerce well?” Forrester has answered that question for you in our new report published today. Using a proprietary framework, we analyzed top retailers’ mobile experiences (sites and apps) and measured how well they addressed key challenges to mobile commerce sales and supported mobile-enabled commerce in other channels. We selected the best of the best for our review to highlight the strongest functionality and uncover cross-category best practices.
Our framework evaluates the strengths of these mobile phone websites and their corresponding apps across six elements:
Findability. The ease of finding a mobile site or app altogether.
Utility. How useful the site or app is for shoppers.
Searchability. How well search and search functionality like predictive text works on mobile phones.
Browsability. How easy it is to browse the retailer’s mobile site or app.
Buyability. How easy and frictionless the buying process is on the mobile site or app.
Overall design. The ease of navigating content on mobile sites and apps, as well as other mobile content that shoppers engage with including email and text messages.
In the Age of the Customer, consumers are increasingly empowered. They decide where, when, and how they engage with organizations as they shop. European consumers are using multiple devices along their path to purchase and almost a quarter are buying online from outside their home market. This is a growth opportunity for retailers in larger eCommerce markets where online retail sales growth is slowing. These cross border buyers are a valuable target group and more likely to use mobile devices as they shop.
Yet researching and buying across multiple devices and touchpoints is not restricted to those that are happy to buy online from other countries. Across the board, consumers are using smartphones and tablets more frequently and across multiple contexts. Forrester’s updated mobile and tablet commerce forecast predicts that mobile and tablet commerce combined will account for 20% of online sales in 2014 increasing to 49% of online sales by 2018.
Mobile phones, smartphones in particular, bridge the gap between digital and physical shopping experiences. In 2015, European consumers’ increasingly multitouchpoint shopping behavior will heighten eBusiness professionals’ attention on the influence of digital across the customer journey and into stores.
Forrester believes that, for Europe, 2015 will be a year of experimentation. We predict that:
2014 was a year of massive eCommerce investment in India. Flipkart raised $1 billion; Amazon announced it would invest $2 billion in its Indian subsidiary; and Snapdeal raised $234 million from private equity firms and an undisclosed additional sum from private investors. These three players are spending approximately 2 billion rupees ($33 million) this season on marketing — and a lot more on improving last-mile delivery and adding fulfillment centers to get a bigger piece of the sales pie.
If I had a dime for every time I heard the question “Isn’t eCommerce taking over retail?”, it wouldn’t make me wealthy, but I’d certainly have a few hundred dollars more than I do now. Nonetheless, it’s a question that is unfortunately misguided and has permeated our zeitgeist. The truth is that yes, eCommerce is growing - but physical retail is far from doomed. Let me take the two parts of that last sentence and address them each separately.
First, the fact that eCommerce is growing. Forrester just released the latest five-year online retail forecast and to no one’s surprise, the numbers are big. We’re projecting $294B in eCommerce sales across 30 retail categories in 2014, expected to grow to $414B by 2018. The web keeps doing what it has always done well: it provides huge assortments of products, at comparable, often lower, prices than physical stores, with 24/7 access and often free shipping. For many categories like media products or electronics, we’ve already observed a heavy shift to the web channel away from physical stores. Add to that the ubiquity of mobile devices and that drives even more shopping in more instances and places. In fact, we’re projecting that $87B of that $294B will happen on phones and tablets in 2014, and that doesn’t even include another $28B in additional mobile transactions on sites and apps like Uber and Domino’s Pizza that aren’t even in that aforementioned mobile commerce number.
But all this growth certainly doesn’t mean that stores are dying. Here’s why:
I had the opportunity to talk to nearly 50 companies working on mHealth and mWellness services and technologies in 2013. With the perspective of 13 years as a mobile analyst behind me and a career in telecom that started in the late 80's, I say with confidence that this category within mobile is more exciting and has the potential to be more game-changing, than anything since the introduction of the iPhone. Most of you reading this blog are not in healthcare - that's why the report offers a WIM (what it means) for industries outside of health and wellness.
I started this research journey with a simple mission: "what mobile engagement tactics can and do change consumer behavior?" Or, in other words, what gets people up off the couch? Is it competition, community, feedback, encouragement or coaching, a poke, or what?
How did MyFitnessPal facilitate more than 100M pounds of weight loss?
How did RunKeeper get their users to move 783 million miles?
How did Strava motivate their users to move 1.4 billion kilometers?
Mobile commerce is hot – In fact for Pizza Hut, it’s so hot that approximately 50% of all digital orders come from mobile and tablet devices. Beyond impulse purchases like pizza and cinema tickets, mobile commerce is now firmly established as a significant source of revenue growth for almost all online retailers. Last year Forrester forecasted that 5% of total online revenues would occur through mobile devices in 2013, but by the close of the year, many online retailers such as HSN are reporting that mobile revenues have in-fact broken the 10% threshold and, furthermore, some retail clients have told us that revenues via mobile devices have already reached 20% of total online sales during peak days.
Early last year, Forrester published a report profiling digital natives — youth ages 12 to 17. They've grown up in a world of rapidly evolving technology, to the extent that they can’t imagine life away from their devices. While digital natives weren’t yet heavy online buyers in early 2012, they often engaged in dialogue about products and brands and were receptive to advertising. Since then, young online consumers have continued to adopt devices and deepen their roots in the digital world; today, around 45% of this young audience uses a smartphone.
Characterized by their vibrant online presence and shaped by a culture of increasing connectivity, digital natives offer a new window of opportunity for marketers — one that stems not only from the audience’s advertising receptivity but also from their rapid adoption of digital commerce.
Forrester’s Consumer Technographics® data shows that mobile commerce among US online youth has increased over the recent years; today, nearly half of young online smartphone users purchase digital or physical products on their mobile phones: