Online retail sales topped $200 billion in 2011, and most industry forecasts point higher. Market-watcher Forrester Research, for one, predicts that e-commerce will account for 9 percent of overall retail sales by 2016, up from 7 percent in 2011.
Sure, that’s a small percentage of overall retail sales, but if your company doesn’t have an e-commerce plan, it could lose out to new competitors.
From 2004 to 2009, entrepreneurs and startups created online “sales presences” at a much faster rate than established businesses, according to a report by the Ewing Marion Kauffman Foundation. These new enterprises had greater financial capitalization from the outset than older businesses like them — up to $80,000 more if they had a website that supported online sales.
Trends to Watch
- Free shipping has impact. Free Shipping Day during the annual holiday shopping blitz has become pretty darn influential, with sales topping $1 billion during the 2011 holiday shopping season. ComScore reported that at least three out of every five transactions on Free Shipping Day used the free-shipping option, the highest percentage ever. It’s a reminder that not every consumer needs or wants their purchases immediately, and being flexible about delivery options can make or break a sale.
- Facebook rises as a storefront option. Even though larger retailers have had mixed results with Facebook e-commerce storefronts, the concept seems to be a natural progression for small businesses that sell on eBay. Close to 90 percent of the 1,200 small retailers and merchants using the Goodsie e-commerce platform, for example, are using the Facebook storefront feature. Need another point to consider? Facebook has 845 million active monthly users, compared with about 100 million for eBay’s online marketplace. Should your business extend its retail real estate into the social network?
- Social giving gets a test. Social gifting is the practice of contacts within a social network passing along a free electronic gift card for use at given retailers. The concept got a big boost in late April, with the U.S. launch of Wrapp. Since the Swedish startup launched in November 2011, nearly 180,000 people have used its application to share more than 1.5 million promotional gift cards with their Facebook friends. Early data suggests each card inspires an average sale that is 4 times to 6 times the card’s original suggested value. Think of it as a form of mobile marketing.
- Website design matters. Increasingly, cyber-shoppers use tablet computers and smartphones to visit online shopping sites. Some consumers deploy them in malls or retail locations to investigate whether or not they’re getting the best deal; others complete purchases via their mobile devices. Overall, Forrester believes about a third of sales are influenced by “pre-shopping” on the internet. That’s why any small business investing in e-commerce needs to ensure its site is easy to use and backed by a reliable internet hosting company (for when web traffic spikes).
- Smartphones and tablets are shifting shopping habits. More than half of mobile-phone owners told Pew Research Center they used their phone at least once during the 2011 holiday shopping season to call a friend for advice about a product, to read reviews, or to check prices. What’s more, close to half of tablet owners interviewed by Forrester have placed an order for physical goods online using their device. If your e-commerce site isn’t optimized for mobile access, you could be turning off potential customers.
One Trend to Ignore
Bricks-and-mortar stores will go away. There are two big reasons this won’t happen anytime soon: People are social, and they still love touching, seeing, or smelling what they are buying.
In-store sales still account for more than 90 percent of total retail revenue, according to multiple market forecasts. Of the 30 categories tracked by Forrester, only eight had online penetration of more than 20 percent. Smart retailers will find a way to make the shopping experience seamless for their customers, regardless of the consumer’s mood on any given day.
However, e-commerce technologies will change what buyers expect from the in-store buying experience. As mobile technologies wield increasing influence, rigid store designs with dedicated checkout counters may become a thing of the past.