Alphabet Inc. today reports that Google’s advertising revenue rose 19.5% in the second quarter.
But a study also points to the many challenges e-retailers will face.
The web continues to outshine bricks and mortar as the retail channel offering the most growth potential, according to a January survey of 94 retailers by Retail Systems Research LLC. The research and advisory firm found that 63% of multichannel retailers expect the online channel to account for a sharp increase in the share of their total sales by 2015, while fewer than 10% expect web sales to decrease as a percentage of total sales.
“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,” RSR says in the study, “eCommerce 2012: Back to the Future.”
According to the study, the number of retailers earning 10% to 24% of sales through the web will increase to 41% in 2015 from 19% as of last month, while the number earning 25% to 74% of their sales online will climb to 22% from 3%. The number of retailers earning more than 75% of their sales through the web will inch up to 11% from 10%.
The number earning less than 10% of their sales online will decline sharply to 26% from 68%.
When asked to name the biggest business challenges to increasing online sales, 54% of the respondents that RSR defines as “winners” (those whose sales increased by more than 4% in 2010 over 2009) cited keeping up with evolving shopping patterns, including social networks and mobile commerce, getting consumers to engage more with them online, and maintaining growth rates in consecutive years. Others also cited managing an online product assortment, planning for uncertain consumer demand, dealing with the ability of consumers to compare prices through Internet search, and addressing online shopping cart abandonment. RSR did not say how many of the 94 retailers it surveyed achieved the “winner” label.
Respondents RSR defined as winners also named what they considered to be “very valuable” e-commerce opportunities. Following are those opportunities with the percentage of respondents citing them as very valuable:
● Improving online merchandising and assortment, 65%
● Providing richer product details, 61%
● Investing in cross-channel shopping capabilities, 59%
● Improving search and browse capabilities, 43%
● Targeted e-mail campaigns, 43%
● Improving the payment process, 38%
● Embedding more social capabilities in e-commerce site, 19%
● More sophisticated paid search campaigns, 24%
● Branded deal of the day/promotional offers, 14%
● Third-party deal offers (i.e., via Groupon, Living Social), 9%
Brian Kilcourse, managing director at Retail Systems Research, will speak at the Internet Retailer Conference & Exhibition 2012 in June in a session entitled “Expense ratios and margins - how you compare.”