The Undiminished Growth of E-Commerce
June 28th, 2010 by Brian Posnanski
Last week, eMarketing+Commerce Magazine and All About ROI hosted the first Retail Marketing Virtual Conference and Expo and offered up some great sessions on digital retail. Our team had the opportunity to sit in on the ”Leading Trends in Digital Retail” keynote address with Scott Silverman, the executive director of the National Retail Federation’s Shop.org, and Peter Cobb, co-founder and senior vice president of eBags.com. Silverman and Cobb offered their take on digital retail trends.
Here are some of the notable points they made:
Online retail is the hero. Even after a decade of significant growth, online retail is still growing – and outperforming brick and mortar stores. And even during 2Q09, in the midst of the worst of the financial crisis, online sales for many major retailers showed strong growth – Gap, Kohl’s and Nordstrom, to name a few, were all in double digits. And they have kept on growing. Retailers saw a growth average of 12.3% in first quarter 2010 compared to first quarter 2009. And more than half of retailers reported year-over-year growth of 10% or higher.
The Amazon juggernaut. As online sales grow, Amazon continues to grab marketshare from everyone. Amazon alone saw nearly 40% growth in first quarter 2010. This is something every retailer needs to think about: how they’re going to compete and create more loyalty. The presenters cited the great success of Amazon Prime, which has the effect of “locking people up” by committing them to get the most out of their annual membership fee.
“Disruptive” online shopping services and social media applications are increasingly popular – and powerful. Social media applications such as Foursquare and “members only” private shopping services such as Gilt Groupe and Rue La La are platforms retailers must be keenly aware of. Silverman called the rapid adoption of these services “frightening.” eBags is emulating some of these services by offering their own “deal of the day,” and also competing with them by inviting product partners to sell excess inventory through eBags rather than the newcomers. Other potential partners/competitors: Swoopo, Zynga and Groupon (we can say we’re a fan of the latter!).
Mobile bridges the great divide. Hard to believe that in this day and age so many retailers maintain a wall, or at least separation, of brick and mortar and online. The rise of the iPhone and the smartphone may finally be the great equalizer that knocks down this divide once and for all. Cobb confirmed that eBags is seeing a “decent” number of customers buying from their iPhone. Both speakers agreed: mobile is the future.
Do not underestimate the power of free (and fast) shipping. Both Silverman and Cobb agreed that shipping is a very emotional issue for buyers, and a big factor in Amazon’s success. The perceived value of free shipping can be much higher than the actual value – Cobb cited the classic case of buyers far preferring a few dollars worth of free shipping rather than a 10% sale discount that is actually worth much more. Getting stuff to people fast is also crucial. eBags gives its drop shippers daily grades of how they’re doing and how they can improve.
Our take: retailers have taken it on the chin in the last couple years, and these observations should come as welcome news. The rise of mobile computing, the innovation of services like Groupon and Foursquare and the overall increase in online sales are positive signs. Even Amazon, as Cobb points out, must balance competing with retailers against partnering with tens of thousands of them.
For those who’d like to listen themselves, the conference will be available on demand through September 28th.
Tags: amazon, e-commerce, ebags, em+c, gap, kohl's, nordstrom, online retail, shop.org, smartphones, virtual conferences