eCommerce

Retailers are responding to the growing consumer appetite for online videos by adding them to their Websites both to differentiate themselves from competitors and to keep up with what consumers expect from their online shopping experience.

Although consumers rank other purchase decision-making tools, such as customer reviews, ahead of videos in importance, according to eMarketer. But that has not discouraged retailers from quickly adding videos to their sites. They find that videos boost sales conversion rates and reduce abandoned shopping cart and product return rates.

The proportion of the top 50 US online retailers offering videos jumped 378% in 2009 over the year before, according to a Forrester Research study, "Online Retailers' Adoption of Online Video Content Is Ahead of Consumers' Preferences," published in November 2009. In 2009, over two-thirds of the biggest online retailers hosted videos.

The adoption rate is poised to climb further, as revealed by a February 2010 Multichannel Merchant survey. Among the two-thirds of respondents who indicated they were planning a site redesign in the next 12 months, some 42.3% said they would add video to their site. That makes it the second-highest priority, well behind social media tools but ahead of other popular Website enhancements including customer reviews and personalized recommendations. (eMarketer, May 2010)

Users of print and online directories are prepared to make a purchase after researching local businesses, according to research conducted by Burke and commissioned by the Yellow Pages Association (YPA).

About 8 in 10 users of either type of directory bought or planned to buy a product after their search.

US consumers who intend to make or made a purchase after searching print vs. internet Yellow Pages, 2009 (% of respondents):
- Internet yellow pages: 44% intend to make a purchase / 36% made a purchase
- Print yellow pages: 39% / 39%  

A Q1 2010 study from BIA/Kelsey and ConStat found that 48% of internet users looked for info in online yellow pages when researching local products and services, compared with 90% who used search engines.

But the YPA "2009 Local Media Tracking Study" found greater trust in both print and internet yellow pages than in online search. Two-thirds of respondents said directories were more trustworthy and accurate for local information.

Aside from the YPA's interest in print and online directories, respondents were asked about search in general rather than local search specifically. Research on local search behavior from TMP Directional Marketing and comScore indicated that for most business categories, internet users did use general search engines rather than specific local search sites. But users of local search were 12% points more likely to visit a store in person than users of online yellow pages or general search. Most internet directory users did contact a store by phone after their research. (eMarketer, April 2010)

2009 US retail e-commerce sales will come in at $131.4 billion, representing a slight annual decrease of 0.6%, according to estimates by eMarketer. By 2013 sales are expected to rise to $189.3 billion.

This forecast is very similar to the one eMarketer issued in March 2009. In August, however, the 2009 prediction was revised downward to a drop of 3.1% after our benchmark, the US Census Bureau, released first-half figures that were worse than expected.

E-commerce was always expected to outperform overall retail, but positive growth in the second half seemed increasingly unlikely as consumer confidence, consumer spending and unemployment continued to worsen. Despite the greater savings and convenience usually found online, e-commerce was not immune from the effects of the recession. But the trend of negative growth rates was reversed when Q3 2009 Census Bureau figures released in November showed e-commerce sales up 2.1% versus the same period a year ago. Overall retail sales, meanwhile, posted a "less bad" 7.8% drop. After initial cutbacks made by consumers, e-commerce resumed positive growth as shoppers shifted their spending online. eMarketer expects the trend to continue and anticipates 5% year-over-year growth in Q4.

Although the situation is improving, these single digit e-commerce growth rates are a far cry from the 20%-plus annual growth rates seen prior to 2008. Within the next two years, increases will again hit double-digit levels, but will not reach the same heights as the channel continues to mature. (eMarketer, December 2009)

ABI Research has revised upward its forecast of mobile sales of physical goods in North America. In January 2009, it projected m-commerce sales would reach $544 million in 2009, up 57% over 2008. But in late October 2009, ABI upped its forecast, saying sales would top $750 million in 2009, a massive 117% annual growth rate. M-commerce's time has arrived, and it is likely that sales in 2010 will pass the $1 billion mark.

Whereas consumers once limited their mobile phone purchases to downloadable ringtones and games, today they are using their devices to buy books, apparel and other items associated with online shopping on a PC.

Mobile ad spending will rise from $416 million in 2009 to $593 million in 2010 as more brands and agencies integrate mobile into their marketing mix. And if not an outright arms race, Google's $750 million purchase of AdMob is certain to prompt greater interest in the mobile space from agencies, brands and media companies alike. (eMarketer, December 2009)

Two seconds is the new threshold in terms of an average online shopper's expectation for a web page to load, according to a study by Forrester Consulting.  The study found that 40% of shoppers will wait no more than three seconds before abandoning a retail or travel site.

Forrester Consulting indicates that this is worse than it used to be as a similar survey in 2006 found users were prepared to wait four seconds for a page to load.  

The research also concludes a poorly performing site has an effect beyond any online transaction. Almost half (46%) of the survey respondents said they would develop a negative perception of a company following a dissatisfying online-shopping experience. (Travelmole, September 2009)

34% of US internet users who bought a product or service based on a recommendation got that tip from a friend or relative, while one-quarter bought based on advice from a spouse or domestic partner, according to Mintel.

Source of product recommendations among US internet users, 2009 (% of respondents):
- Friend/relative: 34%
- Husband/wife/partner: 25%
- Blogger: 5%
- Chat room: 5%

While bloggers may bring buzz to a product, converting the buzz to sales is another matter-unless, of course, the blogger is a friend. It is interesting to find that as much time as we spend online, we still prefer a personal recommendation from someone we know and trust, according to Mintel.

The most common reason that internet users recommended a product or service was price (64%), followed by quality (55%) and convenience (33%). (eMarketer, June 2009)

US retail e-commerce sales (excluding travel) will contract by 0.4% in 2009, falling to $133 billion, according to eMarketer. But as the economy improves, online sales will return to the double-digit growth rates seen prior to 2008. Growth will come from online buyers who shift a greater share of their discretionary spending from stores to the Web. Pent-up consumer demand, especially among affluent online shoppers, will provide an additional sales boost.

By 2012, e-commerce sales growth will begin to decline, resuming another trend seen prior to 2008. This will be due to the inevitable maturation of the e-commerce sales channel, as growth in new online buyers approaches saturation. All told, from 2008 to 2013 retail e-commerce sales will increase at a 9% compound annual growth rate (CAGR).

US retail eCommerce sales, 2008-2013:
- 2008: $133.6 billion
- 2009: $133.1 billion (-0.4% on previous year)
- 2010: $146.1 billion (+9.8%)
- 2011: $165.6 billion (+13.3%)
- 2012: $184.5 billion (+11.4%)
- 2013: $203.5 billion (+10.3%)

eMarketer benchmarks against the US Department of Commerce (DOC) when forecasting e-commerce sales. The DOC estimated online sales rose 4.6% in 2008, reaching $133.6 billion. But most of this increase came in the first half of the year. After year-over-year growth rates of 13.3% in Q1 and 8.7% in Q2, sales grew only 4.6% in Q3 before plummeting nearly 5% in the important Q4 holiday season. (eMarketer, March 2009)

Unlike in preceding years, business-to-consumer (B2C) e-commerce growth got sluggish in 2008.

Looking specifically at retail e-commerce, comScore found that sales grew by only 6% in 2008, the lowest rate since the dot-com crash in 2003. Of the total $221 billion in B2C online sales in 2008, $130 billion were retail e-commerce sales. The rest were travel sales.

Other sources reported numbers similar to comScore's, with Citi Investment Research, Collins Stewart and eMarketer all within $10 million of their retail projection.

The online retail categories that were hardest hit by the slowdown were computer software, digital entertainment and office supplies, while fitness equipment, books and furniture continued strong. (eMarketer, March 2009)

"Talking to others you know" was the most often cited information or advertising source when it comes to making informed shopping choices, according to a Prophis eResearch January 2009 survey of 1,478 US online adults across 16 product and service categories.

Most important information or advertising sources in shopping or purchasing (16 shopping categories combined):
- Talking with people you know: 46%
- Physical store location: 44%
- TV: 32%
- Magazines: 32%
- Search engines: 29%
- Product catalogue: 26%
- Online ads: 25%

Producing and consuming content via various word-of-mouth (WOM) media in the past 7 days:
- Email: 95% consumed content / 78% produced content
- Text/SMS: 47% / 38%
- Chat/Instant messaging: 41% / 28%
- Social networks (FB,MS): 41% / 32%
- Blog: 23% / 11%
- Consumer ratings/ reviews: 21% / 8%
- Twitter: 4% / 3%
- Social Bookmarking: 3% / 2%
- Virtual world: 3% / 2%
- None of the above: 2% / 14%

While talking face-to-face is undoubted still the most important way to have a give and take on any given subject with one's circle of friends and acquaintances, internet-based communications technologies continue to revolutionize the way in which people can exchange information. Many of these technologies also contain the ability to communicate with people one knows less well or not at all. This grape-vine can quickly become more tangled than those people relied on even a decade ago.

Email, for example, has become almost as common-place as talking on the telephone or even in person for the majority of US adults with access to the internet. As of March 2009, fully 19 of 20 online US adults read their email in the average week. Among internet technologies, it ranks ahead of all others and ahead of cell phone texting in terms of producing content as well, with 78% of online adults writing emails every week.

Some technologies (e.g. email, chat, text/SMS, etc.) are typically used to enable one-to-one interactions between people who already know each other. However, these technologies along with several other internet-based technologies (i.e. social networks, blogs, consumer ratings and reviews sites, Twitter, social bookmarking, virtual worlds) may also be used as one-to-many communications tools.

In some instances, message recipients may also be less well-known or not at all known to the sender. Use of many of these tools is widespread. For example, as of March 2009, while 41% of online US adults have consumed content on social networks like Facebook in the past seven days, about three-quarters of them, or 32%, have created content there during the same time period. (imarketinsights, March 2009)

Only slightly more than a quarter (27.6%) of US online retailers offered any type of personalized product recommendations on eCommerce sites in August 2008, according to Vovici. Until recently only large retailers had the money, expertise and time to develop the complex algorithms that drive personalized product recommendation systems. But the market has advanced and a number of vendors have proven they can deliver real customer value. Now the technology is affordable to even small retailers.

But that proportion could be changing, according to eMarkter as a growing number of success stories is spurring online retailers to jump on board.

Despite low adoption rates, 40% of online merchants surveyed by Internet Retailer said they planned to add personalized product recommendations to their websites by the end of 2008, second in priority to video functionality. (eMarketer, March 2009)

US online retail sales are expected to rise 11% to $156 billion in 2009, excluding revenue from travel, according to Forrester Research. However, that will mark a slowdown in the overall growth rate, which was 13% in 2008.

Forrester Research said the majority of the 2009 growth in online spending will come at the expense of physical stores. They expect more consumer dollars to be spent online because it's easier for people to comparison shop and to find what they're looking for.

Online sales are expected to make up 7% of overall retail revenue in 2009, compared with 6% in 2008.

Forrester Research thinks that Web-based retailer Amazon.com Inc. is primed to benefit. However, some big retailers with a Web presence, such as Best Buy Co. and Macy's Inc., could continue to capture a disproportionate share, since consumers are familiar with those brand names. (HOTELMARKETING.COM, February 2009)