The e-retailer spends at least 50% of its monthly display ad budget on the highly targeted, data-driven—and often cheap—ad placements using programmatic platforms.
The year ahead in online retail also will include steeper shipping fees and more competitive pricing, according to a new report from Forrester Research Inc.
If Forrester Research Inc. is right in its predictions, retailers will want to get to work on beefing up their mobile and global offerings, exploring ways to save on shipping, and keeping a close eye on how their prices compare to those of their competitors.
The Forrester report, “Predictions 2014: US Retail eBusiness,” says mobile commerce will continue to grow and that retailers would be wise to beef up their mobile sites and apps. For example, store retailers should explore incorporating store inventory data or store maps into their mobile apps to aid shoppers browsing in stores.
Retailers that responded to the annual State of Retailing Online Survey, a joint study by Shop.org, the online commerce unit of trade group the National Retail Federation, and Forrester, finds mobile commerce is retailers’ top priority for 2014. The full study will be released Wednesday, Forrester says.
Indeed, on Black Friday, or the day after Thanksgiving, which is considered by many to be the unofficial kick-off to the holiday shopping season, one in five web purchases were made with a mobile device, according to web measurement firm comScore Inc. The following Monday, Cyber Monday, 17% of online purchases were made with a tablet or smartphone, comScore says.
Because of ever-increasing mobile sales, Forrester encourages retailers to invest as much as they can in mobile. Retailers should think about mobile offerings that make sense for their businesses, Forrester says. For example, pharmacy apps might make sense for drugstores, while flash sales may generate revenue for department stores or apparel merchants.
Forrester also forecasts an increase in shipping fees for e-retailers, thanks in part to the U.S. Postal Service’s financial woes and the shipping hiccups that delayed deliveries during the 2013 holiday season. “Surge pricing will become more likely after 2013’s well-publicized shipping disappointments during Christmas week,” the report says. Retailers with stores can potentially keep rising shipping costs at bay by fulfilling from stores or expanding their in-store pick up programs.
Companies like eBay Inc., Google Inc. and Amazon.com Inc. are piloting same- or next-day delivery services in which couriers pick up products from local stores or distribution centers. For example, Google last week expanded its same-day delivery pilot, Google Shopping Express, to Google employees in Santa Monica, CA. Google launched Shopping Express last March in San Francisco in a limited test and then rolled it out more broadly in September to consumers who live in the region from San Francisco to San Jose.
Additionally, some retail chains are testing eBay Now, an eBay service that provides one-hour deliveries of online orders from stores. EBay in October bought UK-based Shutl, a specialist in same-day delivery, to accelerate the rollout of eBay Now.
However, the Forrester report says such efforts will not have a meaningful impact on the long-haul deliveries that account for most online orders and which are vulnerable to price increases.
While battling rising shipping costs, more retailers will also likely be multitasking by exploring ways to sell overseas. That’s because overseas markets have huge potential, the report says. For example, Forrester predicts that by 2017 Chinese shoppers will spend nearly twice as much online as U.S. consumers. U.S. retailers and brands are moving to compete for a portion of those growing web sales. “A number of U.S. companies now have partnerships with Asian behemoths that may be able to support their international expansion plans,” the report says.
And those U.S. behemoths are also looking to expand in the U.S. market. For example, China’s leading e-commerce company, Alibaba Group Holding Ltd., has established a U.S. investment group to back entrepreneurs working on e-commerce and emerging technologies. Alibaba has financed three U.S. web businesses, including sports merchandise seller Fanatics, membership-based two-day shipping provider (and Amazon Prime competitor) ShopRunner and mobile search technology company Quixey. Alibaba is No. 1 in the Internet Retailer Asia 500.
China, Japan and South Korea rank among the highest countries in terms of e-commerce readiness worldwide, according to another recent Forrester report that looks at such factors as shipping and technology infrastructure and disposable income to rank 55 countries on their e-commerce potential.
Finally, as showrooming, becomes a frequent activity among U.S. shoppers, price competition will only increase among e-retailers. Showrooming goes by a couple definitions, including consumers using a mobile device in a store to check prices and get other information, and also as consumers going into a store to check out a product and then going home and searching for the best price online. To compete with the likes of Amazon.com, which changes its prices on products several times per day, according to Forrester, retailers will increasingly use services from vendors such as 360pi and Ugam Solutions to see how their prices compare to the competition.