Why Online Retailers Should Diversify Their Platforms

Amazon, with 100 million Prime members, is an obvious place to sell products, but Amazon has its downsides, most notably the substantial financial bite it takes out of every transaction but also its ability to kick sellers off its site for non-performance. It is important, strategically, for online retailers to diversify their selling outlets beyond Amazon (otherwise known as multichannel selling), including through their own websites. Read More>

The Case for Customized Ecommerce

Ecommerce platforms like Shopify have grown rapidly because of low cost of entry and ease of use. Overlooked in the stampede, though, are advantages that often accrue to customized solutions, such as the ability to integrate multiple vendors and drop-shipping. This infographic does a good job of comparing Software-as-a-Service platforms like Shopify with custom-built solutions.   Read More>

Zero Waste Consuming

Loop, a zero-waste platform supported by a coalition of major brands, will launch a pilot program in New York and Paris this year allowing consumers to purchase items in reusable stainless-steel containers. When finished, the containers will be picked up and sent to a sterilization facility and then returned to the manufacturer for re-use.    Read More>

News for February 11

How to Improve Your Landing Page Conversions

They say don’t judge a book by its cover, but landing pages serve the same purpose as book covers — moving customers into the sales funnel. The conversion rate of an average landing page is 2.5%, but some reach as high as 11%. How? The Conversion Benchmark Report offers comprehensive data on landing-page conversion-rates per industry, along with data-backed recommendations on how to improve, such as using attention-grabbing headlines, strong calls to action, and appealing visuals.  Read More>

News for February 4

Is In-House Fulfillment Holding You Back?

Many start-ups try to run their own fulfillment at the beginning, which makes sense when order volumes are small. As volume increases, however, in-house fulfillment can become an impediment to growth for three main reasons: 1) the desire for control creates bottlenecks, 2) short-term cost-cutting inhibits scalability, and 3) customer service tends to suffer.   Read More>

News for January 28

The Challenges of Ecommerce Packaging

The rise in ecommerce has led to a corresponding rise in packaging. According to design engineer Emmy Corman, ecommerce packagers faces three challenges that need to be overcome: 1) reducing waste, 2) improving shelf presence, and 3) optimizing returns-costs in a small-package shipping environment.    Read More>

 

Ecommerce Predictions for 2019

The Chief Product Officer of BigCommerce has looked into the future and seen four 2019 trends— 1) direct-to-consumer brands will continue to thrive, 2) headless commerce (the ability to pair any content management system with any backend payment platform) will grow, 3) Amazon will keep raising the bar, and 4) virtual-reality shopping will remain more a trendy promise than a reality.  Read More>

January 21st Entries

Five Ways to Update Your E-Commerce Site

How about this for a New Year’s resolution? Update your e-commerce site. Here are five suggestions, beginning with 1) refreshing your product and landing pages, 2) streamlining your checkout process, and ending with 5) employing chat bots for customer service.  Read More>

 

Social Media’s Evolving Role in E-Commerce

The average person spends an hour and 40 minutes browsing social media every day. Meanwhile, there are 217 million internet shoppers in the U.S. alone. The intersection of these two activities represents a treasure trove of sales opportunity. Facebook advertising leads the way with its extreme targeting capability. Meanwhile, messaging apps like WhatsApp and Snapchat are enjoying tremendous user growth, and you can buy products directly on Instagram, Pinterest and Twitter.    Read More>

 

Retail Predictions for 2019

The site Retail Customer Experience recently reached out to leading retail experts to find out their 2019 predictions, and here’s what the experts said: Physical retail will continue to improve in the areas of transparency and sustainability, checkout-option technology (such as scan-bag-and-go) will become more prevalent, and retailers will use their space more creatively, such as converting some of it into fulfilment centers.  Read More>

 

Shipping Companies Set a Record for E-Commerce Deliveries

The numbers are in for the holiday season, and USPS, FedEx and UPS delivered a combined total of 2.5 billion packages with an on-time delivery percentage of almost 99% (anything above 95% is considered good). The big delivery companies continue to step up their game under pressure from rising e-commerce volumes.   Read More>

Consumers Moving Toward Direct-to-Consumer Brands

According to a recent survey, one-third of consumers plan to do almost half of their shopping with direct-to-consumer (D2C) brands, and 81% say they will make at least one purchase this year from a D2C. However, only 9% believe the customer service with these companies is superior to traditional brands.

Price, quality and convenience are the driving features in today’s retail environment, and this is where D2C companies prevail. A countervailing trend is that the most successful D2Cs, such as Warby Parker, Casper and Untuckit, are moving into brick-and-mortar, opening specialty stores in affluent areas.

Changes are taking place with traditional retailers, particularly with in-person customer service. That is, after all, their main advantage, which is face-to-face selling and giving customers the opportunity to touch the merchandise.

The Facts About Subscription Boxes

Subscription e-commerce companies such as Stitch Fix, Dollar Shave Club, and Blue Apron comprise a fast-growing sector of online selling. According to a McKinsey survey, 15% of online shoppers have signed up for one or more subscription services. Cancellation rates are high, however, with consumers quick to bail if the services don’t deliver a superior product or experience.

Subscription box website visits have jumped from 700,000 in 2013 to 21.4 million today, a 3,000% increase. This strong growth has attracted a lot of mainstream players like Procter & Gamble (Gillette on Demand) and Walmart (Beauty Box), as well as triggering many acquisitions. Unilever, for example, in 2016 purchased Dollar Shave Club for $1 billion.

Subscriptions aren’t new, of course. Magazines and newspapers have long used a subscription model, though the growth rates of modern startups are eye-catching. Birchbox, for example, launched in 2010 and grew to 800,000 members in less than three years. It took the Columbia Record Club 40 years to reach that level.

So why do consumers like subscriptions so much?

First, let’s look at the three types of subscriptions — replenishment, curation, and access.

Replenishment subscriptions allow consumers to automatically receive consumable items that they have to purchase anyway, a great convenience.

Curated subscriptions surprise customers by choosing the items based on algorithms derived from data supplied by customers.  Stitch Fix is the best example of this model, which asks new customers 51 questions to determine the individual style and then selects clothing accordingly.

Access subscribers receive a discounted price by virtue of membership.

The typical subscription-box visitor is in their early forties, lives in an urban environment, and makes slightly less than $80,000 per year. Sixty percent of them are women.

All is not perfect in subscription-world, however. Customers are quick to cancel their subscriptions, with up to 40% having done so at least once in the past.

Subscription boxes are a great e-commerce sales model if consumers’ high standards are met.

 

 

Ten E-Commerce Facts & Stats

1. 80% of Americans with internet access have made an online purchase in the last month.

2. Millennials and Gen Xers spend 6 hours per week shopping online; Baby Boomers spend 4,              and Seniors 2.5 hours.

3. Parents spend more of their shopping budget online compared to non-parents (40% vs.                    34%) and spend more time shopping online per week (7 hours vs. 4 hours).

4. Last year, men spent 28% more money online than women.

5. Americans in metropolitan areas spend more money online than suburbanites or rural                        customers.

6. Shoppers on third-party marketplaces spend more time searching and also spend more                      money per-purchase than those who visit branded stores.

7. The top three factors in determining where Americans shop are price (87%), shipping cost                and speed (80%) and discount offers (71%).

8. 30% of online shoppers say they are likely to make a purchase via a social media network                  like Facebook or Pinterest.

9. 55% of e-commerce sales are done through branded stores vs. 45% through third-party                    marketplaces.

10. 43% of online shoppers have made a purchase while lying in bed.

The Truth Behind Free Shipping

In 2017 Amazon spent $21.7 billion on shipping costs, nearly double the amount from two years ago. That is $21.7 billion in losses, since Amazon doesn’t charge for most shipping. One hundred million items qualify for free two-day shipping now compared to only 20 million in 2014.  The company’s bet, of course, is that by offering free shipping to customers they will become addicted to the convenience and spend more. But do the increased sales make up for the shipping losses?

Probably not, which is why Amazon recently announced the cost of a Prime membership would rise by 20% effective May 11. In addition to raising the cost of a Prime membership, Amazon is also raising seller fees in certain high-volume categories such as apparel and books.

There’s no such thing as a free lunch. Costs have to be absorbed somewhere, either through lower margins or by investor subsidies, which has been Amazon’s strategy for most of its existence.

In business, there are fixed costs, defined as costs that remain basically the same no matter how much a company sells, and then there are variable costs, which rise and fall with sales. Shipping is a variable cost and therefore a price factor in every purchase. Some analysts expect shipping costs to increase by 7% per year going forward, a variable cost that will have to be absorbed either by e-commerce sellers or their customers.

The secret sauce to e-commerce may ultimately turn out to be convenience over price as the competitive landscape finds its natural level. Brick-and-mortar rents are falling, for example, while e-commerce shipping rates are rising, which may start returning some leverage back to the brick-and-mortar business model.

Some analysts say that the supply-chain cost to retailers for direct-to-home sales is three times that of an in-store purchase, yet customers don’t pay three times as much to have items delivered to them. In fact, they often they pay less, with the difference in cost being absorbed by the retailer. How long will that continue?

Amazon Prime membership fees only recover about 55% of the money that Amazon spends on shipping, which is why Amazon recently raised the minimum purchase for free shipping to $49 from $35.

How can smaller e-tailers compete with Amazon as the promise of free shipping bites deeper into margins? One way is to ship through fulfillment 3PLs that receive shipping discounts from the major carriers, reducing shipping costs. Another way is to improve packaging. Shipping costs are determined by weight and dimensions. The weight of the product usually can’t be controlled, but often substantial savings can be found in packaging variables.

Another strategy is to create a sales niche or buyer-community that is loyal to your product. Then the e-tailer can charge more and cover the costs of increased shipping.

Whichever route one chooses, shipping costs will play an increasingly important role in retail decisions going forward.

Walmart -- The Sleeping E-Commerce Giant

Walmart is a sleeping giant in the world of e-commerce. Despite double-digit growth in recent years, its e-commerce business is still less than one-quarter of Amazon’s. The giant is waking up, however, now offering two-day free shipping without a membership fee (there will be no Walmart Prime) and introducing a cleaner and more modern e-commerce website.

In addition to better photography, newer fonts, and more color, the revised site will include specialty shopping experiences, such as fashion, beauty, and groceries and feature a more personalized and local angle, like alerting customers to fast-selling items in their area.

Consumer spending habits are changing in ways that might help Walmart. Rather than buying in bulk once-per-month (the Costco model), people are starting to purchase more frequently and in smaller quantities, using physical stores to browse before going home and buying online. This is bad news for Costco but good for Walmart, which doesn’t care if you purchase from one of its stores or its website.

Amazon understands this spending-habit change and is building its own brick-and-mortar footprint (Whole Foods, Amazon Go, Amazon Books), but that will be a laborious and expensive process if it wants to match Walmart, which already has 11,000-plus physical stores.

In a sense, Amazon and Walmart each have what the other one needs, and so, barring a highly unlikely merger, it will be a race to see which one can put together the most effective omnichannel strategy consisting of in-store sales, online sales, pickup and delivery.

Informed Delivery

Is Snail Mail about to turn into Cool Mail? The USPS’s new service, Informed Delivery, will email you images of every piece of mail you’re scheduled to receive that day. Wondering whether or not to wander down to your apartment building’s mail box? Check Informed Delivery first and see if anything interesting is scheduled to arrive. Expecting a check or maybe hoping to avoid a summons? Informed Delivery will let you know.

This could be a boon to marketers when the USPS takes the next step and includes clickable links with the images. Imagine launching a direct mail campaign with the ability to track the clicks, just like with digital. Imagine being a customer, seeing an image in the morning with a clickable link leading straight to purchase, and then receiving the physical mail later that day. Then there’s the added benefit for marketers of knowing that the consumer actually received the physical mail and probably looked at it, unlike email marketing where many — if not most — messages languish in spam folders.

It’s an opt-in service and entirely free. Currently Informed Delivery only shows images of envelopes but not packages or magazines. However, the service does give a status update of packages and allows for special delivery instructions. The USPS plans to include packages and magazines in the next phase of Informed Delivery.

Click here for more information about Informed Delivery.

Selling on Walmart.com -- A Guide

Walmart, the Amazon of its day, is putting everything it has into competing with the e-commerce giant, including letting third-party sellers appear on its website. Walmart.com doesn't accept everybody, however. There are standards to be met before a third-party seller can post products on the site,  including:

- strong customer service

- unique product assortment

- competitive pricing

- fast and reliable fulfillment.

To apply, sellers log onto https://marketplace.walmart.com/apply and fill out detailed company information along with product details and warehouse/fulfillment capabilities.  If accepted, Walmart sends an email allowing sellers to begin the setup process.

Here are some advantages to selling on Walmart.com versus Amazon:

- No setup or monthly fees

-  Less competition

- A voice-based partnership with Google.

 

Here are some disadvantages:

- The approval process can take weeks.

- Walmart tends to favor known brands over small sellers.

- Buyers of premium products often view Walmart as down-market and might not think to go on its e-commerce site to buy a higher-end product. 

The Curse of the Corrugated

These are salad days for corrugated-box manufacturers, especially with e-commerce requiring outer shipping boxes for almost every shipment. Meanwhile, acres of discarded boxes are recycled or thrown away each day.

Because of this, the packaging industry is ripe for disruption. Currently, products are packaged to enhance their shelf-appeal in stores rather than for shipping, yet brick-and-mortar continues to lose market share to e-commerce.

So where is the disruption opportunity? In the packaging production lines, which need to be retooled so that products can be packaged in ready-to-go shipping boxes, thus avoiding the need to repackage them in larger  boxes at time of shipment.

The Rise of M-Commerce

M-commerce (M stands for mobile) is trending. Its biggest hurdle to date has been an uneven integration with online shopping carts, primarily because of three factors:

1. Small mobile-phone screen size

2. Speed

3. Payment security

Smartphone manufacturers have addressed the first issue by creating larger screens. Meanwhile, cellular connections continue to improve, with upcoming 5G wireless technology promising to speed things up even more. Social media sites have helped out by offering Buy buttons, which transport customers seamlessly from browsing-to-purchase and reduce the fear of sharing credit-card information via phone.

The results are startling. Money spent per mobile visit to online retailers has increased by 27% since 2015, almost as big of a jump as tablet and desktop sales combined, while the length of time spent during the purchasing process has declined by 10%, meaning that the mobile shopping experience is becoming more streamlined.

Meanwhile, overall mobile  visits have skyrocketed. Since 2015 there has been a 90% increase in smartphone visits to websites, while traffic from tablets and desktops has actually declined.

The growth in sales is phenomenal — m-commerce revenues are expected to increase from $30 billion in 2014 to $284 billion by 2020.

Physical distances are shrinking also. You can log into e-commerce websites from almost anywhere, purchase from a seller  who is located almost anywhere, and expect to have your purchase delivered in a matter of days.

Now that's service.