What The Education Industry Should Learn From Retailers

I did two things recently:  I saw Waiting for Superman, and I looked online for educational content/tools for my daughters. In both cases, I was appalled by how difficult it was to find teaching supplements online (and in general). I’m not an expert on education, but I am a parent, and being part of an industry (i.e., retail) that has been transformed by the Internet and has fundamentally shifted how it engaged with its consumers, I think that educators could learn a few things from retailers:

  • The Web can give good teachers scale. One of the challenges of good schools is that there are a finite number of slots, just like there’s finite shelf space in a store. Sites like Amazon.com solved that problem by making the Web their storefront.  This enabled them to sell OPM (other people’s merchandise) and not incur the most expensive investments of stores — real estate and inventory. Why can’t the Web be our schoolhouse, or at least a new one? That way, there needn’t be a cap on the number of people who can, for instance, view a video of an award-winning teacher teaching. Why don’t we use the power of the Web to make talented teachers available to more students like web retailers have managed to make more products available to more people? Why are questionable for-profit universities the only ones doing this?
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New “State Of Retailing Online” Doc Released On Shop.org

Forrester recently published the “State Of Retailing Online 2011: Marketing, Social, and Mobile” report in conjunction with our friends at Shop.org. It is available on Shop.org (with a subscription) now.

Some highlights include:

  •  Understanding which marketing tactics are still leading to growth.
  • Examining the investment in social and the returns retailers are seeing.
  • Analyzing mobile and tablet adoption and strategy.

Look for the full report on Forrester.com in early June.

Will Facebook Ever Drive Commerce?

My bearishness on F-commerce is no secret, so I may have been a little biased when I dove into my most recent research, Will Facebook Ever Drive eCommerce? Fortunately, the findings were nuanced among different types of retailers, which gave a lot to write about. Some highlights:

  • There are retailers (albeit small ones) seeing a double-digit percent of their sales coming through their Facebook stores. These companies often have unique demographics or marketing models (e.g., flash sales) that drive this behavior.
  • Facebook’s “data layer” is probably one of the most underleveraged assets that exists with respect to F-commerce. There is myriad information about fans, what products consumers are liking, and competitive insights that can be gleaned from merchant and consumer activity on and off Facebook.
  • Facebook Credits is a non-starter for most retailers. This is the “currency” that consumers can use to buy, say, potatoes on Farmville. Facebook, however, has little to no credibility with respect to financial services among consumers, and the same retailers reluctant to implement PayPal (which so many large merchants are) will be 10 times more resistant to a less-tried, less-reliable, newer payment mark. 
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Forrester’s US Online Retail Forecast Reports 12.6% Growth In 2010

Forrester’s US Online Retail Forecast, 2010 To 2015, launches today, reporting strong growth in the last year. “The Great Recession” appears to have ended as sales charge ahead, driven by ubiquitous connectivity and an increasing familiarity with the Web. Growth was driven by a few key factors:

  • Several million new web buyers. In 2010, 5.5 million shopped online for the first time.
  • Greater spend per buyer online. 70% of the overall growth came from existing shoppers simply buying more.
  • Online penetration of total retail sales. This rose to 8% during 2010.

According to our forecast, the web channel will grow steadily through 2015, with an emphasis on customer empowerment. Bricks-and-mortar stores will continue to be hampered by this web growth as people become more in tune with the Web and less interested in traffic and long lines. We’ll be continuing our online retail research with our long-standing partnership with Shop.org this year. Next up: The State of Retailing Online report in Q2.  If you’re an online retailer, contact me at smulpuru@forrester.com to participate in the survey and receive the report. 

 Want more details? US Online Retail Forecast, 2010 To 2015

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The Eerie Similarities Between Groupon And Priceline

At the risk of someone saying I can’t let this Groupon thing go (I can’t), I saw a fascinating graphic the other day. Groupon has, as its proponents like to tell everyone they meet, the dubious distinction of being the fastest company to get to $1B in sales. Why I say dubious (and what I found fascinating about the graphic) is that the second-fastest ever to achieve the same milestone was none other than Priceline. How apropos because I can’t resist pointing out the similarities:

  • Both used tacky and expensive celebrity ads to promote their quirky brands (let’s call Timothy Hutton the William Shatner of this bubble).
  • Both thrive on the thrill of finding an outrageous deal (sales and scarcity go together like a horse and carriage; they’re two of the most effective merchandising tactics that exist).
  • Both are called disruptive models (Priceline lets travel buyers name their price; whereas, Groupon essentially lets companies split marketing costs directly with customers rather than with media companies).
  • Both have a “gross merchandise value” model (that basically means a lot of mystery around what customers pay and what the company actually earns).   
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What We’ve Learned About Online Holiday Shopping So Far This Year

As retailers approach the homestretch of the 2010 holiday shopping season, we thought it would be useful to share some insights from consumers about their Web buying activity. Forrester and Bizrate Insights teamed up in late November/early December to survey online customers, and here are a few of the findings:

  • Free shipping with a threshold is most popular (though people would, naturally, prefer to have no threshold). One interesting fact is that the threshold (in addition to adding units to transactions) attracts higher-income shoppers. Households with incomes over $150k are nearly twice as likely to use “free shipping with a threshold” than households with incomes less than $40k.  
  • 9% of shoppers say they belong to some shipping club (e.g. Amazon Prime, ShopRunner) and participation skews up with income. 13% of households with incomes over $150k say they have this type of membership.
  • Email still rules. From our Cyber Monday research with Bizrate Insights, 43% of consumers who shopped online on that day found out about deals through email. This was by far the most popular way that people found out about deals, greater than search, Facebook, or even word of mouth.  The second biggest source of finding out about deals was a retailer’s own site. 
  • It’s about women and gifts during the online shopping season. Again from our Cyber Monday research with Bizrate Insights, 69% of online shoppers were women. Only about half of men purchased gifts for others that day, but 78% of women purchased gifts that day. 
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Cyber Monday Post-Mortem

Enough with the Groupon madness this week.  Let’s talk about things that actually impact our businesses.  Like holidays sales to date, and in particular, a quick post-mortem on Cyber Monday now that the week is over.  Forrester fielded some questions to consumers in conjunction with Bizrate Insights (the findings will be available in full to clients in a few weeks) and here are some quick takeaways as teasers: 

  • Most people don’t buy on Cyber Monday (though many would like to), so the Cyberweek deals like Amazon has are always a good idea.  62% of the 3,200 shoppers we surveyed said that they didn’t shop on Cyber Monday.
  • Of those who shopped but did not buy (45% of shoppers who were trolling eCommerce sites on Cyber Monday!), 28% wanted to buy but didn’t see any products that they wanted. Product selection is king.
  • Social, schmocial.  Not such a big deal yet.  Only 7% of people who found deals on Cyber Monday found them through social networks or Twitter, versus 51% who found them from emails from the retailer.
  • Some people live under rocks. Kidding. But one-fifth of the people who didn’t shop on Cyber Monday said “They didn’t know there was anything special about that day.”  How that is possible I have no idea, but I’ll give them the benefit of the doubt and assume they don’t have time in their lives to squander away time online like the rest of us.  But for anyone really wondering what this “special day” is about, check out this link (see the full slideshow here) — these are screen shots of the top 50 merchants’ home pages from this past Monday.
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Why Google Buying Groupon Is a Bad Idea

So the latest rumor is that tomorrow Google will buy Groupon for $5 billion.  You're not alone if you think that's crazy.  Here’s why:

  • $5 billion is an absurd valuation for a company that is in a business with virtually no barriers to entry and is younger than my toddler. 
  • That’s more than what they paid for YouTube, which had a heck of a lot more traffic when it was acquired than Groupon has now.
  • It’s a huge chunk of the cash that Google has on hand.  That’s a lot of money. 
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Forrester's Online Holiday Retail Forecast Projects 16% Increase Over '09

Forrester’s "US Online Holiday Retail Forecast, 2010" launches today, reporting quite a bit of optimism this shopping season. November and December alone are expected to pull in nearly $52 billion, a 16% increase over 2009. Several key factors contribute to this projection:

  • Consumers are shifting more and more to online retail.
  • Offline retail is still a significant player.

Consumers are cooperating, too. They’re looking to spend more this season and do so through a variety of means (mobile, apps, etc.).

Retailers are responding with numerous strategies, such as larger promotional budgets, honing in on key dates, and experimenting with new shipping options.

500MM Users...So Why Can't They Show You The $$??

I was so glad to read Malcolm Gladwell’s piece in the New Yorker, because as a Facebook bear, I often feel alone in the wilderness.  Finally, I thought, a widely respected contrarian on the topic of social networks!  He says the “revolution won’t happen on Twitter.”  And I say “no one's revenue will come from Facebook.” 

While there is no shortage of bragging about how many people in the world are on Facebook, sadly none of them have generated any significant revenue for other companies. That may very well be The Social Network's bane.  I spend much of my day talking with, surveying and interviewing retailers and the general consensus I hear about social networks is that they just don’t drive revenue.  Nearly 60% of retailers agree that the returns on social marketing efforts are unclear.  Retailers tell us Facebook fans don’t buy after becoming fans, they don’t click on the posts that retailers make, and no one visits or buys from the Facebook stores (unless that’s the only place where your merchandise is available).  I contrast social networks with search, which even 10 years ago was regarded as one of the most effective marketing tactics out there even when few retailers were using it.  The State of Retailing Online Report from way back in 2001 had 88% of retailers saying paid search was effective.  To this day, search continues to retain that honor.  Social networks?  Not so much.  Only 7% of retailers say it’s an effective customer acquisition source.

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