April 30, 2007, 12:00 AM

E-commerce: The shape of things to come

The web is permeating retail, forcing sales channels to become more interactive and appealing. And retailers better learn to play along.

With his hands already in multiple technology, merchandising and marketing projects across web and store channels, James Connell, director of e-commerce, digital marketing and new media for Roots Canada Ltd., has little time to think far into the future of retail e-commerce. “I’m so busy and technology changes so quickly, it’s difficult to anticipate what will happen five years from now,” he says.

But he anticipates change as best he can, he adds, and has a good idea what Roots, known for outfitting the U.S. Olympic Team with its official outdoor apparel, must do over at least the next two years. “It’s all about innovation,” Connell says. “As a brand, we look at innovation as key to our success. When you stop innovating, you’re dead.”

Keeping up
For Roots, as well as almost all of today’s retailers, that means keeping abreast of-and in some cases taking initial steps to participate in-e-retailing trends that are likely to grow in importance over the next several years:

  • Tighter and more customer-serving integration of information across web, store and call centers;
  • More online video and a move toward web TV;
  • Emergence of the cell phone and other wireless devices as both online shopping and payment devices;
  • Social retailing as well as social networking;
  • New web site applications such as a site search feature that, similar to Like.com for Internet search, enables shoppers to search for products based on particular characteristics like color or fabric.

No longer just another channel to sell things, the web and its derivative technology are permeating all of retailing, making stores, call centers, TV and e-commerce sites more interactive and attractive to shoppers. More important, it is eliminating differences among channels. “There will be channel obliteration,” predicts Rob Garf, vice president of retail strategies at research and advisory firm AMR Research Inc.

Ready to rocket
The next few years will see significant changes in retail e-commerce, cutting across technology, retail organizational structures, and consumer demand and interactivity. “We’ll see more changes in the next two years than we have since 1996,” says Michael Golden, who entered the retail e-commerce industry 10 years ago as a site developer and now is president and CEO of Home Décor Products Inc., a home furnishings retailer whose sites include HomeClick.com and AbsoluteHome.com.

Internet retailing, he says, is finally reaching the reality missing from the euphoria of the early days of e-commerce. “From 1998 to 2001, all the hype was about a great online user experience and how we were going to monetize the marriage of online content and community,” Golden says. “That drove the Internet bubble, but no one executed on it.”

Today’s market is fulfilling that early vision-and surpassing it. “Now this is actually happening, but there’s a lot more going on than we had expected,” Golden says. “There’s a convergence of broadband Internet access, mobile commerce, online video, consumer reviews, web TV, social networks and blogs-all wrapped up in web community and commerce.”

The onset of web TV alone offers so much promise, he adds, that Home Décor recently worked out an equity investment from Comcast Corp., the cable TV and Internet access giant. “People are paying attention to what Comcast is doing with on-demand content and that’s why we wanted them as an investor,” Golden says.

Getting married
Within two years, Golden expects his customers to wield TV/web remotes that will flick from a TV program showing a gotta-have-it kitchen to a shopping page on HomeClick.com.

Indeed, the marriage of TV content and online shopping is already happening. M2BWorld, a unit of Amaru Inc., last year introduced to the U.S. market about 10,000 M2Btv Pony Internet TV set-top boxes, which allow subscribers to access both TV programming and online shopping pages produced by M2B. Though only a small presence so far in the U.S., M2B is building on use of its Pony set-top box in Asia.

Web TV also will build on the increasingly common presence on U.S. retail web sites of video content that punctuates shopping experiences with product demonstrations and customer experiences. Web-only mass merchant Buy.com Inc., for example, says it has boosted sales tied to video presentations of new products on the BuyTV online video section of Buy.com. And BabyUniverse Inc., also web-only, recently launched its first live Internet TV broadcast showing products introduced at an industry trade show. It also hosts original video content at BabyTV.com.

Consumers rule
Whether or not merchants are ready for the changes in retailing, they have no choice because their customers already expect highly visual content and the freedom to shop however they want-online, in stores or through call centers, industry participants say. “It’s fun to think about all this because there’s been a power shift,” says Kelly O’Neill, director of product marketing at Art Technology Group Inc., or ATG, a vendor of e-commerce platforms. “It’s all about the consumer taking control.”

But predicting where consumers as well as technology trends will take the web won’t be easy.

Indeed, while retailers like Connell and Golden have their eyes set on new opportunities and challenges, the biggest challenge may be that the rate of change will increase too fast over the next few years. It will be difficult to predict what retail e-commerce will be like five years from now-or to figure out what retailers can do now to position themselves to profit from the web once it’s half way through its second decade.

“We’ve hit a level of maturity with e-commerce and we’re ready to skyrocket to a whole new level that most retailers are not prepared for,” researcher Garf says.

Take the mobile phone, now nearly ubiquitous among consumers. It is emerging as both a retail payment device and a tool for shopping online, but consumers will undoubtedly find additional shopping uses for it, experts say. With camera phones becoming common, for instance, more shoppers will use them to share product images with friends, and some may begin to pick up a common shopping strategy of photographing products and prices in stores, then using those images to comparison shop later online.

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