One of every five beauty purchases online is made via the Amazon marketplace, according to a new report.
The latest Internet Retailer survey examines integration of online and offline systems.
Whether it’s internally developed and maintained or a third-party application, an e-commerce platform is the engine that powers a web retailing site. An e-commerce platform turns the retailer’s site into a true commerce-enabled web store that enables the merchant to market and merchandise products, process orders, perform customer service and measure and analyze visitor information.
Originally an e-commerce platform was used only by most retailers as a back-end system to support their web channel. But the results of Internet Retailer’s latest Survey on E-Retailing-this one on multi-channel e-commerce systems-show that chain retailers, catalogers, virtual merchants and consumer brand manufacturers are using their e-commerce platforms to generate and support sales and brand management across diverse channels.
The survey also shows that web merchants are purchasing and building new platforms, extending the number of back-end systems linked to e-commerce applications and finding ways to leverage their web systems to support multi-channel marketing and merchandising. For instance, 74.8% of retail companies now have integrated their e-commerce platforms with their fulfillment and order management systems, according to the survey. The survey also reveals that more merchants are extending their e-commerce systems integration to support other multi-channel programs, such as universal customer service, catalog quick order and buy-online-and-pick-up in store.
The survey was e-mailed in early April to all subscribers of IRNewsLink, the magazine’s newsletter, and more than 160 responses were collected and analyzed using Internet survey technology by WebSurveyor Corp., which has partnered with Internet Retailer in a series of surveys of the e-retailing industry.
The results demonstrate that web merchants of all sizes are installing new systems or preparing to swap out current e-commerce platforms for new applications. For example, 48.3% of companies taking part in the survey have installed a new e-commerce system within the past year and an additional 14.6% expect to do so within two years.
The survey reveals a robust market for new e-commerce platforms, with 65% of manufacturers, 52.9% of pure-play web merchants and 46.7% of chain retailers operating e-commerce systems that are 1-year-old or newer.
Maintaining an e-commerce system isn’t cheap-retailers’ e-commerce systems budgets range from $300,000 to $3 million per year, depending on the size of the company and the order processing volume, says Jupiter Research. Yet the Internet Retailer survey demonstrates that web merchants have a healthy appetite for upgrading their hardware and software. Specifically, one-third of all respondents expect to purchase a new system within 12 months and an additional 16.7% within 24 months. By type of merchant, 38% of chains expect to add or swap out old e-commerce applications for new technology followed by 32.1% of catalogers, 31.4% of virtual merchants and 30% of consumer brand manufacturers.
The survey also shows that most merchants are very hands-on with their web platform operations-only 31.1% outsource to a third-party versus 68.9% who maintain their e-commerce systems in-house.
But whether they are maintained internally or by a third-party service company, e-commerce systems are being used extensively to support additional channels such as stores and catalogs, the survey says. For instance, 62.9% of retail companies taking part in the survey have integrated all of their e-commerce applications with a centralized inventory management system. Among store-based merchants, 52.1% also link their web operations with their store point-of-sale systems, thus giving store employees more access to SKU levels and other inventory and stocking information.
Survey recipients clearly see a need for integrated e-commerce technology that supports multiple channels and provides managers and employees across all departments with better and more complete data. 75% of all retailers already have their e-commerce and fulfillment and inventory management applications linked, according to the survey.
The results also demonstrate that web merchants across the board still have plenty of integration work remaining, beginning with customer service. Almost all web merchants regardless of size operate a customer service program-and most established retailers have contact centers. In a well-integrated call center, service reps have access to a central repository of information that can help them respond quickly to incoming calls and e-mails.
But the Internet Retailer survey shows that only 44.4% of companies have integrated their e-commerce systems with customer information across all channels. And just over half-51%-also have linked their e-commerce systems to their call centers.
Surprisingly, the survey reveals that consumer brand manufacturers, usually the category that lags others, operated the most networked call centers. 60% of manufacturers taking part in the survey indicated that their call center is integrated with their e-commerce platform, followed by catalogers at 57%, virtual merchants at 51% and chain retailers at 44%.
Many retailers see their networked e-commerce system as a marketing and merchandising tool that can build sales and brand awareness across all sales venues. But the survey shows that web retailers are using their integrated e-commerce systems to build their multi-channel retailing programs in stages, beginning with customer service, fulfillment and inventory management. Next in the business development pipeline is leveraging e-commerce platforms to support buy-online-pick-up-in-store, catalog quick order, integrated gift registries, cross channel gift cards and product recommendations.
Of those cross-channel initiatives, the survey indicates that most retailers are farthest along in catalog quick order and buy-online-and-pick-up-or-return-in-store. However, the research also finds that a majority of customers aren’t taking advantage of these features. The Internet Retailer survey shows that 64% of retailers allow customers to return online purchases to a store. But 74.5% also note that less than 2% of all online returns happen at a bricks-and-mortar location. At the high end, only 6% of respondents report that more than 8% of their customers use that option. The percentages are similar for retailers who allow customers to pick up their online purchases in stores. 58.6% of participating web retailers with stores say less than 3% of all online orders are picked up in a store. Surprisingly, 20.7% of respondents say that more than 10% of online purchases are picked up in a store.
On the quick-order front, the survey finds that 57% of catalog-based retailers have e-commerce systems that support catalog quick order. However, the proportion of web sales that are quick order is a fraction of total web sales. Fully two-thirds of catalogers say that catalog quick order accounts for 10% or less of their web sales.