There’s no shortage of e-commerce conventional wisdom - sweeping pronouncements that online is growing at a certain rate. That one tactic works, another doesn’t. That a multi-channel strategy is increasingly important.
I love such analysis and opinion – back in the day, as a consultant at McKinsey, I performed and provided my fair share. However, I will point out the need to dig deeper. What is loosely called “e-commerce” is dramatically different in its application depending on what you are selling.
A few things to keep in mind as you digest the latest e-commerce wisdom or evaluate a vendor:
E-commerce expertise correlates with where money has been made to date, not where it will be made.
Well known e-commerce experts, agencies and technology companies become so because they’ve been doing it for a while and have been well paid for their work. As such, their experience tends to be in those categories that went online early and successfully, yielding enthusiastic clients and customers who could pay.
There’s nothing wrong with that, as long as you are also in those categories. If not, think about whether what you are being told makes sense for your business.
One example: It’s been said that 65% of e-commerce keyword searches include a manufacture name and/or model number. Most online agencies build keyword strategies around that fact. And, it works well in those categories that have dominated e-commerce in the past.
But, say you’re a furniture retailer.
Most of your prospective customers have no idea who manufactured the sofa they already own, much less the one they are thinking about buying. Model number? Forget it. Conventional wisdom is out the window - how will your agency react to not being able to rely a favorite approach?
Beware sweeping pronouncements and general statistics. Dig for what’s happening in your market.
I’m an e-com stat addict. There are outstanding analysts out there providing the pulse of e-commerce on a regular and accurate basis. That said, it’s important to pull apart e-commerce statistics and trends to find those that apply to what you do.
Some recent examples:
E-Commerce Growth Statistics
Pundits seem to be in general agreement that in 2009, e-commerce grew or shrank by single digit percentage points. In the face of brick and mortar declines, this is touted as strength – ecommerce holding its own despite significant economic headwinds.
All true – but there’s more to the story. Big ticket online took off in 2009.
Big ticket (think things that cost more and can’t ship via UPS…consumer durables like furniture, appliances, flooring) is 45% of the US Retail Economy, $550B in annual retail sales. It’s never done much online – until now.
Consumers are online and big ticket retailers are now meeting them there. Forrester reports customers feeling comfortable buying furniture and appliances online just in the last 18 months. Big ticket players Blueport works with are seeing monstrous comp increases for online sales and even bigger benefits in stores.
If you happen to be in big ticket markets, this is an opportunity you can’t miss…but easily could, if you just look at broader online growth stats.
E-Commerce by Channel Statistics
Similarly, stats show roughly 45% of e-commerce transacted by Web-only players and catalogers (i.e. pure plays), 15% by manufacturers, and 40% by retailers.
Beneath this stat is a dramatic big ticket vs. small ticket schism in who is winning in e-commerce.
For traditional (small ticket) e-commerce, pure plays have tremendous cost advantages. With no store costs, they can price low. Their products are well known, approaching commodity status, and the shipping is fast, cheap and risk free. In categories from books to shoes, pure plays are cleaning up.
Not so in big ticket. Here, consumers know less about the product. They want to touch and feel in a store. They look for trusted brands – not only for the product, but for the retailer who can deliver and service it. And, they are highly focused on delivery times and costs. Here, retail chains, with trusted brands, local stores and fast, cheap local delivery have the upper hand.
Combine these advantages with the growth noted above, and it’s a good time to be going online if you’re a big ticker player. And, if you’re a retailer in these categories, there’s certainly more than 40% of the online marketplace available to you.
The Importance of Cross-Channel Commerce
There’s significant recent buzz about “multi-channel” or “cross-channel” commerce as the next big thing. We couldn’t agree more – with emphasis on the “big”.
For small ticket items, I don’t think cross channel is that important. Anyone think that opening Zappos bricks and mortar stores is on any of the whiteboards at Amazon?
Conversely, in big ticket, cross channel is critical. The key differentiating factors in big ticket online are store based. Big ticket online and offline channels must be synchronized, as consumers move between them constantly.
This is why we’ve architected our platform to be localized. Big ticket commerce comes down to the local relationship between a consumer, a store, and the inventory in her area. If you’re in big ticket and you’re not reflecting this reality online, you’re missing the point.
Balance online conventional wisdom against what you know about your customers.
Ultimately, e-commerce comes down to a combination of persuading and enabling consumers to buy, using the internet.
Here again, how your consumers do this may not be the same as in “traditional” e-commerce categories.
To grossly over simplify traditional e-commerce shopping, it comes down to finding a product and deciding you like it. After that, the assumption is that UPS takes it from there - you will have your product cheaply, quickly, and some nice brown-shirted gentleman will take it back if things go awry.
As such, most e-commerce wisdom is focused on search and merchandising, helping consumers to find and buy (maybe getting a deal).
These areas are critical (and unique) in big ticket as well, but there’s more to the story – specifically, the part of the story that UPS takes care of in traditional, small ticket e-commerce.
With a sofa or a fridge, more goes into the shopping process than features and price. Customers want to touch and feel in a store. They may want to speak to an expert. They want to know how fast they can get something, and that delivery is as cheap as it can be. They may want financing options. They want to be sure the product can be serviced, and that, worst case it can be returned.
If these are questions your consumer is likely to ask, be sure to push beyond UPS-based ecom conventional wisdom. If you’re a retailer, you’ve got some of the best possible answers to these questions – be sure your online presence takes full advantage (see localization above).
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As consumers look to buy more products online, and e-commerce pushes beyond the simple, UPSable products that were the first wave of e-commerce, the importance of disaggregating e-commerce increases. The opportunities online have changed. E-commerce conventional wisdom soon will too.Copyright 2010, Official Blog of Blueport Commerce