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Publisher's letter: It's the year for e-commerce investment
It's the year for e-commerce investment.
If you're a regular reader of the daily e-commerce news on our web site, you've no doubt noticed a compelling trend regarding investment in e-commerce technology. Here are just some of the news items we've reported in the last month on this investment wave:
- Nordstrom announces that it will invest a whopping $1 billion over the next five years to develop its thriving web retailing operation.
- Amazon spends $775 million to acquire Kiva Systems, a maker of robotic equipment and software that automates warehouse operations and order fulfillment.
- Kohl's announces it will "reallocate" its capital spending in order to accelerate its investment in its online operation. Why? Kohl's web business grew 37% last year to $1 billion, compared to a paltry 0.5% growth in same-store sales at its department stores.
- W.W. Grainger is investing $40 million over the next four years in its online business, which has been growing at about a 20%-plus annualclip for years and last year reached $2.1 billion, or 25% of the company's total sales.
- Staples, the world's second-largest online retailer, announced it would build an E-Commerce Innovation Center in Cambridge, Mass., a regional hub of e-commerce innovation. In making the announcement, Brian Tilzer, vice president, e-commerce and business development, Staples.com, said the new center "will become the home to some of the world's best e-commerce talent with the goal of rapidly bringing breakthrough new ideas to market in emerging online technologies like mobile commerce and social media."
What makes such recent announcements so significant is that they are not at all unique. Virtually every major retail chain in America—faced with flat store sales—is increasing its investment in the one area of its business that is consistently delivering growth—the web. The chains are not alone. Web-only merchants, who as a group historically have been more aggressive than store-based retailers in investing in online retailing technology, have no intention to take a back seat in the latest wave of web business development. The Great Recession delivered a staggering blow to the rest of retailing, but not to e-retailing, where growth fell into the single digits for one year (2009) but recovered to double-digits a year later and last year grew 16% to $194 billion.
That type of growth amid stagnancy elsewhere in the retail sector is what's behind the hyperactive investment in e-commerce. In this environment, what retailer in their right mind would not be aggressively searching for e-commerce solutions to upgrade their retail web business and better engage the 21st century consumer who prefers shopping online?
An aggressive search need not be a frantic one. Indeed, it should be well researched to be sure that the next generation of e-commerce solutions retailers choose are right for their particular e-retailing enterprises. That means reviewing all of the e-commerce tools on the market, and there is absolutely no better way to do that than spending some quality time in the Exhibit Hall at the 2012 Internet Retailer Conference & Exhibition, coming to Chicago's McCormick Place West on June 5-8.
IRCE 2012 is by far the world's largest e-commerce event, and its Exhibit Hall easily lives up to that billing. As I write this letter, the Exhibit Hall is just two weeks away from being sold out, and when it opens its doors it will house exhibits of 575 companies that together control more than 90% of the market for e-commerce solutions. If you're looking to enhance your web business, you should plan to walk through those doors.
Jack Love, Publisher