E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
E-retailers face rising expectations for fast and easy online ordering.
The number of online shoppers continues to grow, but more slowly than online sales. The annual growth rate in the number of U.S. web shoppers will be 3.6% from 2009 to 2015, says research firm eMarketer Inc., while the U.S. Department of Commerce says web retail sales grew 15% last year. That means more of the buying is done by consumers who have shopped the web before—and who expect every e-commerce site to be as efficient and easy to shop as the very best ones.
Regardless of the size of a retailer or the type of product they are selling, these savvy online consumers want to receive their purchases fast, and they want options in terms of how they get it and how they pay. Amazon.com Inc. is considered the gold standard for fast order processing and delivery, and the features that Amazon and other top e-retailers offer put pressure on small and mid-size web retailers to keep up, says Michael Kleinman, president of MK Consulting Inc. and former president of underwear retailer Fresh Pair Inc.
"Customer expectations have changed," Kleinman says. "If the shopping experience is at all cumbersome or unpleasant, you will not have repeat customers."
With thousands of new web stores emerging every year, no niche is safe. If a customer at a retailer's site notices something is missing—a 30-day return policy, real-time inventory, an order online/pick up in store option—there is nothing stopping her from checking out a competitor's site.
"With so many competitors, we feel the constant need to keep up," says Joe Yakuel, president of fireplace and lawn-and-garden products retailer FireForLess.com. "We offer daily inventory management and we update it as often as we can, but this year we'll be moving to real-time inventory." Yakuel hopes that will reduce the number of orders he cancels because items selected are out of stock.
Seth Newman, president of Envelopes.com, says consumers are always uncertain when buying online. "People never know exactly when they're going to get their order," he says. "Amazon's customer confidence is remarkable, and their recent actions are game-changers," Newman says, pointing to initiatives such as Amazon Prime, the $79-a-year service that affords subscribers free two-day shipping on all Amazon.com orders. "Everyone is striving for that level of confidence."
Newman says that his business has come a long way in the last year. 95% of orders placed on his site, he says, are shipped on the same day they are ordered. While he lists speed as the top priority of his customers, he says fraud and real-time address correction are two of his biggest order management worries.
Every time a customer incorrectly enters a shipping address, he says, the company's shipping carrier charges him five dollars to fix it. These changes can be anything from the suite or apartment number not being formatted correctly to the ZIP code not matching up with the city. A priority this year for Envelopes.com will be deploying software that alerts customers to any formatting errors in shipping addresses before they complete their purchases.
"Customers expect their address to be fixed for them," says Kleinman of MK Consulting. "They expect return shipping to be free, depending on the product. They expect a same-day shipping option. Small retailers need real-time inventory on their site. If they don't have it, someone else will. The bottom line is: Buying online needs to be easier."