It’s official: 2014 is the year of the online shopper. The explosive growth of e-commerce, and specifically mobile commerce, is lighting a fire under brick-and-mortar retailers. Even those with significant online storefronts find they have lots of catching up to do.
Major retailers have been called out in the press for struggling with customer losses, and many have acknowledged that online strategies to funnel customers into their physical locations are failing to stem the drop in store traffic. Most have announced plans to accelerate spending on their online presence.
The big-store formula is showing weakness as customer behaviors rapidly shift toward buying a wider variety of goods online including clothing and electronics. The 2013 holiday season was painful for many retailers, and the store traffic numbers don’t look better as the new year rolls on.
The rapid growth of online sales is driven in large part by m-commerce purchases — those mobile buys made from phones and tablets. According to Adobe Digital Index 2013, 18.3 percent of Cyber Monday’s sales were made on mobile devices, up 80 percent year-on-year.
Lessons for harnessing technology
1. Go mobile. Traditional retailers have a lot to learn from pure play e-tailers. The number one lesson? Get mobile. Smartphones and tablets are globally widespread and now touch every aspect of daily life.
The 2014 Global Media Consumption Report from iMobi predicts a 15 percent increase in mobile commerce in 2014, with 48 percent of worldwide respondents listing mobile media as key to their purchasing decisions. According to comScore, 55 percent of all time spent on online stores was done from a mobile device.
More importantly, the money follows: Bank of America predicts that in 2015, $67.1 billion in purchases will be made from mobile devices by shoppers in Europe and the United States.
But to really make mobile work, it is instrumental to offer shoppers an easy “one-click” seamless experience.
2. Rethink advertising. To attract the masses of savvy online customers, it’s important to adopt ROI-driven customer acquisition with an intense focus on measuring key metrics through the entire “flow.” Few retailers can make display ads work for a general audience. But in order to achieve mass-scale and hyper growth, display is important.
In the prior era, brand advertising was often the focus. But in today’s e-commerce age, being able to deliver ROI-driven customer acquisition is the key to success. This includes optimizing for high click-through rates, effectively low costs-per-click, and tracking that down to the cost-per-acquisition vs. lifetime value or the yield curve, using re-targeting and attribution modeling.
You can create the “brand” by the experience you deliver to your customers, as opposed to the “message you deliver” In this way, you can instead focus the message and advertising on capital-efficient, mass-scale customer acquisition.
3. Refine the customer experience. When customers are on your site, make it easy for shoppers to find the goods they want. Streamline your back-end and checkout processes to ensure a smooth experience — after all, you want people to browse, search, buy, return and refer.
It’s also important for traditional retailers to embrace multichannel (or integrated) marketing. Online and offline shopping experiences have to blend seamlessly. E-commerce sites must be responsive by effortlessly adapting to the screen and context of use. This also means they have to be finger-friendly — no small buttons or aggravating payment screens.
Flat design (no shadows or 3-D effects) with big product graphics and interesting fonts — all loading quickly without fail — are now expected by online shoppers and will help prevent abandoned shopping carts and frustrated click-aways.
Businesses that plan to compete for today’s savvy shoppers not only have to optimize their front end but also have to streamline their back-end processes and business models to reach maximum capital efficiency. The successful new generation of e-tailers has found that keeping suppliers happy, reducing or eliminating inventory management and connecting customers directly with manufacturers can produce compelling results.
Deepak Agarwal is founder and CEO of NoMoreRack, an online shopping destination for quality, trendy, branded and unbranded, in-demand goods at prices from 50-80 percent off retail. Founded in 2011, the company received $40 million in Series B Round funding in Oct. 2013 and $12 million in Series A funding in Nov. 2012.