"State Of Retailing Online 2013" launches on Shop.org today

Forrester recently completed the “State Of Retailing Online 2013: Key Metrics And Initiatives” 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 the following facts:

  • Web sales continue to grow (duh!). Retailers we surveyed experienced 28% growth on average in 2012 over 2011. Furthermore, 72% of those retailers are experiencing double digit growth.
  • Key eCommerce metrics are improving. The retailers we surveyed generally responded that site conversion rates, average order values and the percentage of repeat shopper sales all grew in 2012.
  • Mobile growth rates are strong.  Mobile commerce grew at a triple digit pace last year for the retailers we surveyed, but off a teeny base. Furthermore, the debate remains on whether mobile traffic with its anemic conversion rates, actually hurts “the mother ship.” Retailers were split on that assessment.
  • 2013 initiatives will focus on site optimization. Of the retailers we interviewed, site conversion rate and redesigning the web experience – in other words, optimizing the overall online experience -- topped the list, yes, more than even investing in mobile. Many retailers specifically called out plans to focus on the checkout experience and to adjust their site to accommodate a responsive design framework.

Shop.org members can access the document here and Forrester clients will be able to access the document on January 28, 2013.

The Mobile Imperative During The Holidays

It’s no longer a question of whether or not consumers will adopt mobile as an interaction and transaction channel this holiday shopping season. Over the last year, mobile has proven itself to be a viable channel that will play an increasingly prevalent role this year and in future years.

Case in point: mobile retail set records this holiday shopping season with 16 percent of all online sales being conducted through a mobile device -- compared to 9.8 percent last year. In addition, 24 percent of consumers use a mobile device to visit a retailer’s site, up from 14.3 percent in 2011. Whether it’s a tablet, an iPhone, or an Android, consumers are researching more products and making more purchases than ever before through their mobile devices. A full overview of the IBM Digital Analytics Benchmark Cyber Monday data, which is a cloud-based web analytics platform that tracks more than a million e-commerce transactions a day, analyzing terabytes of raw data from 500 retailers nationwide, can be found here.

Why the mobile push? For consumers, it’s about convenience, efficiency, and accessibility, whether shopping online or in-store. Some traditional brick-and-mortar retailers, however, are still wary of mobile and hesitant to bridge ecommerce mobile initiatives with the in-store experience. That attitude has to change in order for these retailers to keep pace with the multiscreen, digital consumer. Today, four in 10 smartphone users search for an item and research prices while they’re right in the store.

Read more

Why eBusiness Needs To Rethink The Value Of Personalization

In two recent instances in public forums, I’ve heard eBusiness executives talking about some rather disturbing uses of personal data. One was the CTO of a large big-box retailer who raised the possibility that health insurance companies could track our food purchases, sending dissuading texts to us whenever we chose to eat at greasy spoons or Burger King. Another was a software CEO who said it was inevitable that our cars would send real-time data on our speeds to our car insurance agencies. Laughter ensued from the audiences, but it should have been alarm and shock. I find it hard to believe that the good that could come from sharing this sort of data with companies (which, I would argue, don’t exactly have a reputation for benevolence) would outweigh the potential for abusing the data. Even in the retail world, there are a lot of companies trying to match users across different devices based on their IP addresses to create profiles of behavior. Call it lighter versions of the FBI “forensics” that took down David Petreaus. (Btw, Paula Broadwell has been a friend of mine for years and is one of the nicest, smartest, and most generous people I know. An issue that’s been overlooked is the violation of her privacy that kicked off this whole scandal. For the record, because people have asked me, I think she's been unfairly attacked at best and irreparably slandered at worst with digital information that should have never made its way to the light of day. I just hope she gets the last laugh when Angelina Jolie plays her in the movie.)

Read more

As The Holidays Approach, Stores Need To Worry About Being “Showroomed"

As mobile Internet use has grown, so has the usage of smartphones in stores. Much of that in-store phone usage is innocuous — using store maps, for instance — but some of it is threatening to brick-and-mortar stores, particularly when shoppers use phones in stores to research prices.  While "showrooming" isn't a term that many consumers know (only 16% awareness according to com Score), it's nonetheless happening.   

The good news: Consumers with smartphones only “showroomed” prices in stores on average a few times in a 6-month period. Aprimo, an marketing service firm that surveyed about 2,000 consumers in October about their mobile price-checking behavior in stores for that datapoint.  I suspect that amounts to a very small percent (i.e., less than 5%) of shopping visits. The bad news: That survey (and comScore's) confirmed the worst of what many in the retail industry have expected -- that showrooming is here to stay. And it hurts stores. After all, most of the showrooming shoppers told us that they usually find cheaper prices online when they research them. Some highlights:

  • It’s not just consumer electronics and high-ticket items like appliances for which consumers research prices in stores. In fact, the second and third most showroomed categories: grocery (!) and apparel/accessories/footwear. Yes, I was surprised by that, too.
  • A whole lot of people say they’ll be showrooming more in the future. In fact, the segment that’s most likely to spend the most online in the future (18- to 34-year-old men) is the group most likely to do this type of mobile price research in the future.
Read more

US Online Holiday Sales Continue To Grow At A Double-Digit Pace

Forrester’s “US Online Holiday Retail Sales Forecast, 2012” launches today; in it, we predict that this November and December alone are expected to pull in $68.4 billion in online revenue, a 15% increase over 2011. We believe web retailers are well-positioned to benefit from this shopper spend if they realize that consumers are:

  • On the hunt for deals. More than half of US online adults are more price conscious than they were a year ago. As the Web channel has become synonymous with value, retailers should expect consumers to be searching for deals through a variety of touchpoints, at home and in-store on mobile devices.  Retailers need to prepare for aggressive holiday showrooming and the possibility of being undersold or being asked for a price match. 
  • Looking for free shipping. Fifty-seven percent of US online adults shop more with retailers that offer free shipping, and 27% add unplanned items to their cart in order to meet free shipping thresholds. Last year, 76% of the top 50 online retailers highlighted holiday deals on their home pages and 50% called out holiday shipping promotions. As price continues to be a top consideration for consumers, retailers must offer and prominently display holiday shipping promotions or risk losing customers to competitors that will.
  • Shopping on key dates. During the 2011 holiday season, the top 500 retail websites saw holiday traffic peak during Thanksgiving, Black Friday, and Cyber Monday, each of which drove more than 170 million unique US shoppers to the Web, and they together accounted for more than $2.5 billion in total online sales. Forrester expects that this trend will continue through 2012.
Read more

Lessons from Toys R Us and Nordstrom

The 2012 Shop.org Annual Summit, the prestigious eCommerce confab, was held this past week in Denver.  I got the chance to emcee the event and meet the keynote speakers.  And the lineup was particularly compelling this year, with Jerry Storch, the CEO of Toys R Us and Jamie Nordstrom, President of Nordstrom Direct kicking off each of the respective days of the conference.  It was an interesting dichotomy—Jerry Storch is a notorious internet skeptic  (he was the guy who reportedly was behind Target’s, uh, questionable decision to execute eCommerce on Amazon’s platform) while Jamie Nordstrom may be the industry's biggest web evangelist.  Nordstrom is heavily focused on web growth and is investing a lot of money to the channel.  Despite their differences, there were consistent themes that surfaced nonetheless: 

Read more

Who Will Displace Amazon? One Of These 3 Will

Last week, my colleague Brian Walker and I released a lengthy overview of Amazon, its role in retail, and what eBusiness executives need to do to compete with this growing retail force. The larger undercurrent of the report is that Amazon is affecting everyone’s business: its tentacles extend far into digital and physical goods, it is vertically integrated but also a distributor, it is unafraid to spend money to gain market share, and it can successfully compete on price with retailers far bigger than itself. And when disruptive forces arise, they dominate for years. So that begs an even bigger question of Amazon: if this is its decade, who will displace it? The company seems unstoppable now, and it will take a radical new business to displace it. Here are three possibilities:

  • Walmart with a monster marketplace. Walmart in its current form will only continue to lose share to Amazon. While Walmart continues to focus on aggressive pricing by pressuring suppliers, Amazon has an equally compelling value proposition for shoppers because it has a lucrative marketplace. And while Walmart has dipped its toe in a marketplace its own, it’s really been a mediocre effort. BUT if Walmart really had a bona fide marketplace, say, by acquiring eBay, it would give it an economic model more similar to Amazon’s: a high-margin business that can bolster the low-margin one. And deeper Walmart pockets mean that someone could finally out-Amazon Amazon.
Read more

Our Cross-Channel Numbers Show ‘Showrooming’ Could Be Overblown

Consumers are now in control, especially when it comes time to buy. Ubiquitous connectivity allows consumers to easily check prices and buy on the go, which should worry (not terrify) traditional retailers in competitive categories. This “showrooming effect,” which has been encouraged by Amazon, would enable web retailers to snatch some sales from the hands of their brick-and-mortar competition. A majority of sales are still happening offline, so the fear of showrooming — that most people are finding screaming deals online — is largely exaggerated. In fact, the majority of transactions still happen in stores, even when shoppers research online (yes, even when they’ve got their mobile devices in hand in a store).  Forrester’s US Cross-Channel Retail Forecast, 2011 To 2016, which launches today makes it clear just how influential and critical the web channel will be to eBusiness professionals in retail. By 2016 Forrester predicts that more than half of the dollars spent in US retail will be influenced by the Web. Already in 2011, $1.3 billion dollars in the US fall into this category.

It is imperative for eBusiness professionals in retail to adopt cross-channel best practices, including:

  • Pricing more consistently to reduce vulnerability to showrooming. The ability of shoppers to comparison-price shop and demand price matches requires retailers (and manufacturers) to reduce price discrepancies across all channels. With comparable pricing in place, this forecast suggests that many consumers may in fact nonetheless choose to purchase products in stores because of the immediate availability, service levels, or simply because products online do not have significant benefit over those in stores. 
Read more

Yet Another Dumb Move By A Bank

Until a few months ago Bank of America won the “Best In Biting The Hand That Feeds You” Award when it initiated its $5 debit card fee increase. Citibank may have trumped that in January when it decided that frequent flier miles that it gave away as promotional bonuses in exchange for getting customers to sign up for a new bank account was taxable income that needed to be reported to the IRS.  The absurdity of this move is so large it’s not even measurable.  Because if they pull this off, they will solidify a position as an anti-customer bank at a time when banks could use some customer love, but worse they threaten to kill the single most effective tactic in the entire marketing industry: the promotion. By giving away a gift in return for a customer’s patronage, and then calling it taxable income, this is the ultimate string attached. Does this mean free ice cream at Ben & Jerry's on their customer appreciation day is taxable? What about upgrades airlines sometimes give for free on flights? Or the eyeglasses that Coastal.com is giving away for free?  Most of the time your social security number isn’t captured, so there isn't an easy means to report any promotion or gift to the IRS, but let’s hope we never get to the day where we do have to give away such information in order to take advantage of a promotion. How anyone at Citi could have thought this was a good idea (and not making very clear the taxation consequences) is baffling. Marketing freebies are aimed at getting new customers or retaining existing

Read more

US Online Retail Hits $200B

eCommerce sales continue to grow rapidly, having topped $200 billion in 2011. As web shopping has been on an upward trajectory for over a decade now, these figures should shock few. We expect online sales will grow from 7% of overall retail sales to close to 9% by 2016. Key drivers of this growth include:

  • Aggressive deals, particularly during Q4. During key time periods in the last holiday season (e.g., Thanksgiving, Cyber Monday), more than 70% of online holiday buyers (in a joint survey with Bizrate Insights) say that they purchased online instead of in stores because deals online were better.

  • Innovative new business models. Among the most rapidly growing business models of the last decade were the flash sales sites, companies like Gilt Groupe and Woot. An earlier study that Forrester conducted with online shoppers showed that the majority of consumers said they spend less at traditional retailers after shopping at these daily deals sites.

  • More online loyalty programs. While over the years physical stores and brands have managed to capture greater shopper data with loyalty programs and private label credit card programs, online retailers such as Amazon.com have essentially created loyalty programs of their own with shipping clubs.  In fact, during the holiday season in 2010, 9% of online buyers said they belonged to such a program, while in 2011 12% of online shoppers affirmed the same (again, a joint survey with Bizrate Insights).

Read more