Trends in 2007 Online Retailing

Fundamental to succeeding in retail is building a strong brand that customers trust and desire. A good brand builds loyalty, provides clear messaging, and avoids cutthroat price competition. A key element of building this brand is the shopping experience. Think about walking into your favorite retail store--how does it make you feel? You love being there for the ambiance and the atmosphere that has been painstakingly crafted to support the brand. It is not called retail therapy for nothing. Now think about visiting that same retailer's online store. Do you get the same feeling? Probably not. Aside from some logo, font, and color changes, most e-commerce sites look and feel pretty much the same and there is little to differentiate shopping at one site versus another. Why is it that so much attention is paid to the shopping experience in the store or catalog channels and so little is paid to the online shopping experience? When retailers first began selling online in the mid-'90s, it was just cool to be able to buy something using a computer, so consumers were forgiving of the limits of this new technology. The shopping experience wasn't important because simply shopping at all was the appeal. The core value proposition was availability and convenience, and people loved it. Over the past 10 years, this core value proposition has propelled e-commerce from an interesting experiment to a vital part of every retailer's brand and strategy. E-commerce sales topped $100 billion in 2006 and continue to climb rapidly. Even more importantly, studies show that nearly 90 percent of consumers research products online before buying offline. Clearly, Web shopping isn't just about the Web anymore. But with this growth and success comes new challenges. Consumers now expect more from e-commerce--a lot more. Availability and convenience still matter, of course, but now they are minimum requirements just to be in the game. Absent a compelling reason to shop a specific site, therefore, consumers are deciding on price. That is not good news for e-commerce, and given the interaction between the Web and traditional channels, even worse for retail in general. But there is a solution, and it's called rich shopping. Rich shopping describes the movement to make online shopping easier, more compelling, and fun. It leverages rich media--video, graphics, high-quality photographs, zoom--and combines it with more interactive capabilities--drag and drop, user-generated content, social opportunities--to create a unique and fun shopping experience. Rather than clicking through a site and waiting for each page to reload to get to the next step, rich shopping enables consumers to seamlessly browse a site with the information they want coming to them when they want it to, and without leaving their shopping context. Suddenly browsing an e-commerce site becomes as engaging and fun as shopping in a store, not just convenient but entertaining and enjoyable as well. Suddenly, the shopping experience matters as much for online shopping as it does for offline shopping. And suddenly the whole brand feeling matters again. Rich shopping isn't something for the future. It is here, now. A key enabler is broadband penetration. By the end of 2006, almost 80 percent of active Internet users had high-speed connections at home and more than 90 percent at work. Many retailers will tell you that more than 90 percent of their online sales come from broadband customers. This opens up a whole new set of opportunities to make the shopping experience exciting. After all, Amazon and other early leaders designed e-commerce shopping to work in a 28.8 bps world. It worked really well, and understandably everyone followed that model. But take away bandwidth constraints, and the possibilities for shopping differentiation explode. Flash, AJAX, and other technologies change from being interesting marketing techniques that consumers routinely skip to being tools that help make the core shopping path better. When this happens, better shopping becomes a compelling value proposition that gives consumers a reason--other than price--to shop an online store. Many retailers are already offering elements of rich shopping. American Eagle, Gap, Nike, and others are offering engaging experiences with great success. But leadership (akin to Amazon's leadership in the first wave of e-commerce) is still being established, and the speed with which consumer expectations are rising means that retailers need to act quickly if they are going to capitalize on this opportunity. A recent study comparing the 2005 and 2006 holiday seasons showed a 50 percent increase in the number of consumers who said they would stop going to a retailer's physical store because of a bad experience with its online store. Just as their patience is running thin, their eagerness to be delighted is high. In fact, nearly 80 percent of consumers said they would buy more from a site if it offered a more interactive experience--in other words, rich shopping. Rich shopping is the next wave of e-commerce and it is here now, enabling retailers to rise above the competition to build and sustain their multichannel brand, regardless of which channel a customer chooses to use. It brings retailing back to its essence--branding. And as in the retail industry in general, those who master it will succeed and those who don't will struggle. About the Author Graeme Grant is vice president of sales and operations at Allurent. Please visit www.allurent.com
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