(Caveat: Of course, there are many challenges to overcome before this happens.)
In the war between the brick and click, the click will win in 2012!
There I said it, or I should say actually the survey of 94 retailers by Retail Systems LLC said it. This seminal research concluded that 63% of the multichannel retailers expect their online sales to soar as a percentage of their total (brick and click) sales by the year 2015. On the flip side, a mere 10% of these retailers expect online sales to decline. The jury has pronounced its judgment with an overwhelming majority!
To quote RSR in the study, “eCommerce 2012: Back to the Future.” “We find the number of retailers committed to stores as a major growth strategy declining and the need to do a good job integrating the customer experience across all channels more and more of an imperative,”
Currently 19% of the retailers earn between 10 to 24 % of their total sale from clicks. This number is expected to go up to 41% by the year 2015. This means an increasing number of multichannel retailers will start earning more from the online channel as against the brick and mortar stores.
Today only 3% of the multichannel retailers earn between 25 and 75% of their revenues directly from online sales. While this number may seem small, indications are that this number will increase to 22%! During this time, (by 2015) it is also expected that the numbers of multichannel retailers earning more than 75% of their sales revenue from online sources will increase from 10% to 11%.
If one looks at the trends for retailers who are presently clocking less than 10% of their sales from the online channels, this category is set to shrink from 68% of the total to 26% – indicting that there will be fewer retailers who earn only a minor percentage of their income online.
The point that is to be understood is that online retail is trending to become a dominant part of the multichannel sales mix of retailers.
Now let’s take a look at what the winners in this group of 94 retailers (typically those whose turnovers grew by 4%+ in 2009-2010) have to say about challenges they face in sustaining their growth momentum in the future.
According to this group that comprises of 54% of the respondents that RSR categorizes as winners, their main challenges included:
• Keeping pace and adapting to changing shopping patterns such as social networks and mobile commerce.
• Getting customers to engage with them online.
• Maintaining historic growth rates in the coming years.
Challenges that were spoken about by others included:
• Managing ever increasing online assortments of products and brands
• Planning for online sales with uncertain demand
• Dealing with the increasing transparency and knowledge of prices thanks to Comparison Shopping Engines
• Addressing the issue of shopping cart abandonment
The respondents that RSR classifies as winners (due to their ability to grow their online sales by 4%+ year on year) also cite many lucrative opportunities to increase their share of the online pie. These opportunities include (in descending order of relevance based on the number of people opting for the choice strategy.)
• 65% stated that improving the standards of online merchandising and assortment would contribute to improved sales.
• 61% believed that there was a need for providing richer product information online
• 59% stated that they would seek investing in cross channel shopping capabilities.
• 43% believed there was a case for improving search and browsing capabilities.
• 43% identified targeted direct e mail campaigns as a big opportunity
• 38% felt that an improvement in the payment process would contribute to increased sales and an enhanced user experience.
• 19% identified embedding more social networking capabilities in their website as an area of opportunity.
• 24% believed that a more sophisticated paid search campaign would deliver great value and response.
• 14% stated that special offers and branded deal of the day type promotions were an area of opportunity.
• 9% felt that third party deal offers could enhance their numbers (Groupon, living social type deals)
E-tailing has brought a definite go to market strategy that is far beyond what the brick and mortar ever did. It has made retail more complex, and it has empowered the customer to the extent that was unimaginable earlier. Those who successfully navigate this new market channel will be the winners in the great retail revolution.
ChannelSale assists online retailers to manage their campaigns across multiple marketplaces and comparison shopping engines. To understand the capability of this powerful e-tailing engine, click herefor a demo.