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Retailers Can't Seem to Get Moving on Mobile
The State of Retailing Online '10: Marketing, Social Commerce, and Mobile: Most of the retail world is struggling to make headway, says a Forrester Research report.
Posted Nov 30, 2010
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The more things change, the more they stay the same. Or so says a recent Forrester Research report, "The State of Retailing Online 2010: Marketing, Social Commerce, and Mobile." In the report, Forrester asked Web retailers to share levels of interactive marketing spend, effectiveness of social commerce initiatives, and investment in mobile activity. The findings were all too familiar: Search remains the top tactic for interactive marketers, social media continues to grow and evolve, and most retailers are still without a mobile strategy.

The report's final recommendations reflect the mostly unchanged landscape:

  1. Stick to the tactics that work best: Paid search, email and affiliate marketing continue to be the most effective customer acquisition and retention tools, the report states;
  2. Recognize that on-site social is still the most effective: The most effective social tools are peer-to-peer features implemented on a retailer's own site; and
  3. Have modest expectations around mobile: Mobile-influenced purchases in stores will one day comprise an increasingly large percent of overall sales volume, however, actual mobile use in stores continues to remain small.

Sucharita Mulpuru, a Forrester analyst and the report's author, argues that the retail marketing industry hasn't changed much because the old tactics still work. "Honestly, there aren't a ton of differences [between this year and last year]," says Mulpuru. "E-commerce metrics don't change all that much. The big difference this year is that we asked for more mobile and social data."

Although interactive search remained atop the most important aspects of marketing spend, with budgets ranging from less than $1 million on average for companies with less than $10 million in revenue to more than $10 million on average for the largest Web retailers, it was affiliate marketing that really got marketers excited.

"While affiliate marketing received only a fraction of the spending allocated to paid search, retailers overwhelmingly gave it high marks as an effective tool for acquiring new customers," writes Mulpuru. "Retailers cited as drivers of success both the performance-based nature of affiliate programs and the diversity of affiliates now available."

Retailers and information technology professionals have yet to find appropriate metrics for measuring social media; as a result, the survey's respondents are "allocating just a sliver of overall marketing spend to social tactics," Mulpuru writes.

Those marketers who are investing in social strategies are more focused on listening to customers than they are on measuring what their customers are doing. "This makes social tactics such as blogs and social network pages more akin to new market research tools to help retailers hear and respond to customer feedback and engage through customer service initiatives," says the report.

In the coming year, spending for on-site social activities will increase, as user-generated content such as ratings and reviews - which are already implemented by two-thirds of retailers surveyed - as well as social recommendations, ask and answer, videos, and co-shopping/co-browsing functionality.

The report reveals that most retailers surveyed still are either entirely without a mobile strategy or in the very early stages of developing a mobile strategy. Those retailers that do have a strategy tend to offer campaigns that include product and price information, store information, and customer ratings and reviews to support the in-store experience rather than less popular features like store maps and in-store product availability.

Respondents invested an average of $170,000 in mobile sites this year, but the report states that the average is skewed because some respondents have planned investments approaching $500,000. The results seen by mobile investments have been modest, generating just 2.8 percent of overall site traffic and 2 percent of Web revenue.

The report was executed in conjunction with Shop.org and was composed of responses from 109 retailers.

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