The writing is on the wall: brick-and-mortar (BAM) retailers have to do something radical if they want to keep their market share, because online retailers are dominating like nobody's, er, business! Don't believe it?
According to Forbes, BAM retailers made only half the sales they expected during the holiday season in 2013. This is apparently because the initial paranoia shoppers had about buying online has all but disappeared. Nowadays it is far more convenient to browse and click, rather than dress up and go.
Shopping in stores has become a side bar when going out with friends or family for the occasional mall excursion. Most shoppers find they save time by shopping online, where they can easily compare prices and find information simply by using an app on a mobile phone, or by browsing through different e-commerce websites.
The e-commerce phenomenon is not confined to the US market. According to one study by the Centre for Retail Research, the e-commerce industry is actually growing comparatively faster and stronger in the UK than it is in the US, although actual sales value is higher in the US. That figure is projected to reach $306 billion for 2014. The UK together with Italy, Poland, Spain, France, Sweden, Germany, and the Netherlands is expected garner $212 billion in sales..
The numbers bear this out. Gotta love that good old American capitalist consumerism
It is estimated that more than half of U.S consumers use mobile apps to find and compare products at home. Almost 40 percent look to see if the product is available, while 34 percent comparison-shop using mobile apps inside an actual BAM store. It all has to do with fulfilling expectations.
Shoppers have become much more demanding as the online checkout process becomes more sophisticated. A majority of online shoppers (71 percent) expect that they can check a BAM store's inventory online and about half presume they can buy online for an in-store pickup. If the BAM store is slow to wake up and smell the coffee, most consumers (62 percent) will go elsewhere, to more proactive retailers.
Of course, online stores are under even more pressure. With 62 percent of US consumers buying clothes, electronics, or whatnot online, e-tailers are no longer dealing with a clueless market. These savvy consumers know what value they can get because of the massive competition for their business. Online retailers have to be constantly on their toes and looking for ways to outperform each other. Better deals, better service, better products... these are what consumers want and expect to get.
Here is an illustration of what drives consumers to click the checkout button, according to a Walker Sands report:
In another survey of US consumers by Dimensional Research, 90 percent of participants said that they are more likely to purchase an item if they find positive reviews about it online. This is a major reason why Amazon encourages buyers to post reviews of the products they buy and discourages retailers from posting bogus ones.
Doing so dilutes the site's credibility when reviews are found to be unreliable. This is something that all online retailers should keep in mind when choosing their products and dealing with customers. Negative feedback stinks a lot longer and reaches a lot farther than positive feedback, so it should be avoided as much as possible.
This survey revealed another intriguing bit of information: the source of reviews that about 67 percent of respondents had read.
You can see that Facebook leads the way in positive reviews (44 percent compared with 38 percent) but online review sites is where more negative reviews (39 percent) could be found. This means that social media is an excellent medium for marketing a product, but consumers will gripe about a bad product on a more focused venue.
However, when it comes to the customer experience, social media is where they are more likely (45 percent) to share a negative experience. This isn't as common on online review sites (35 percent). This may be because the customer experience is a more personal and subjective factor, so they prefer a more personal venue for airing their grievances. This is an important distinction because customer experience is considered a more important sales factor than either the price or brand of a product when consumers buy online:
This may have a lot to do with the element of trust that is fostered when the retailer responds quickly and appropriately to customers. Customers feel that there is an element of good faith behind the transaction, and any problems they encounter will be dealt with in a fair and professional manner.
In response, according to this report, businesses are planning to increase customer management expenditures by 68 percent in 2014. And this data snapshot reveals that 78 percent of sampled businesses will put more focus on improving the customer's experience online.
Amazon reported more than $36 million in sales for Cyber Monday alone in 2013, and the retail site expects things to get even better as its fulfillment services improve. While nearly all of the participants (95 percent) in another 2013 survey reported buying online on Amazon, only 40 percent would not hesitate to purchase any product from the site regardless of category.
For 2013 overall, electronics topped the list of the most common items bought online, with 69 percent of people buying them on the e-commerce giant's site. Books were a close second at 67 percent; clothing came in at 63 percent, housewares at 38 percent, and office supplies at 30 percent.
Below is a complete list of how product classes sold for 2013, a good indication for e-commerce store owners of what products are most likely to sell well for 2014 and 2015.
With these facts and numbers in hand, it is easy to see the way the wind is blowing. Here are the points you can take away from this article:
With that said, you shouldn't be sitting there any longer. Get cracking!
What place do you think BAM stores will have in a future dominated by online retail? Leave your hypotheses in the comment section.