Retailers need to embrace mobile commerce

A new report from Pew Research Center's Internet & American Life Project suggests 46 percent of American adults owned smartphones as of February 2012, lending further credence to recent research from Nielsen that made a similar observation.

Given the sheer number of people who own these devices, retailers need to incorporate smartphones into their store operations when possible. Tom Nawara, vice president of digital strategy and design at online marketing firm Acquity Group, told Internet Retailer that mobile adoption should no longer be a question of "if." Rather, it is one of "when."

"For several years we’ve been saying it's 'the year of mobile.' It is time to put that phrase away and understand that mobile is here to stay and simply one part of an overall omni-channel strategy retailers need to embrace," Nawara explained. "… The question for retailers can no longer be, 'Should we include mobile in our mix?' It has to be, 'How do we most effectively build mobile experiences into our omni-channel plans?'"

Walgreens recently began leveraging phones as coupon distributors. When users check in to a store, a coupon or discount will be delivered straight to their phone.

Survey: Nearly half of consumers use physical stores as a show room

Further fueling retailer concerns, a new report from ClickIQ suggests approximately half of consumers who have shopped online in the past six months first went to brick-and-mortar stores to check out the product for themselves.

The study found that 67 percent of consumers have shopped online recently. Nearly half – 46 percent – of this group said they had gone to physical stores and used them as a "show room" to check out a product before making the purchase on the web later.

Walmart was the biggest victim, with 41 percent of these window shoppers heading to the retail chain's physical stores before buying online. Conversely, Amazon was the biggest gainer – 48 percent ended up making their final purchase on the etailer's website. A scant 15 percent ended up buying the product from Walmart.

"When asked the drivers behind their decision to make the purchase online, the dominate reason was price at 87 percent," Retailing Today notes, citing the ClickIQ report.

Retail merchants may be able to combat this behavior by adopting aggressive price-matching policies that encourage consumers to make purchases in-store instead of online.

Ecommerce spending to top $327 billion by 2016

Americans will spend almost 50 percent more shopping online by 2016, a new report from Forrester Research suggests.

In 2011, Americans dropped $202 billion shopping online and this year, that number is projected to reach $226 billion. By 2016, online expenditures will grow 45 percent to $327 billion – a compound annual growth rate of approximately 10.1 percent over the five-year period. Eventually, online retail will account for 9 percent of total retail sales, a marked improvement over the 7 percent spent in 2012.

Forrester came to this conclusion by analyzing the monthly figures provided by the U.S. Census Department. Unlike the government organization, however, the researcher does not include sales of cars and trucks, gasoline, groceries and restaurant meals.

The big driver of sales won't be retail brands opening up new websites – many big retail merchants already have one – but the improvement of homepages and the services offered through them. A number of consumers have expressed dissatisfaction with the current online shopping experience and want more features from retailers, especially when it comes to high-end sellers.

"This is particularly true of categories such as apparel and jewelry, which have integrated rich selling tools such as zoom, color swatching and configurators, as well as office supply stores, which have broader payment options (e.g., small business purchase orders online) and subscription plans for their buyers," Forrester analyst Sucharita Mulpuru writes.

The number of shoppers is also growing steadily, thanks to improved accessibility from specific channels, such as smartphones and tablets. Nearly 200 million Americans will shop online in 2016, up 15 percent from the 167 million who do so today. Perhaps more importantly, though, is that the shoppers will spend considerably more online – the average ecommerce budget is slated to grow from the current $1,207 to $1,738 by 2016.

There is a perceived value to shopping on the web, which is another key driver of new sales. "Online shoppers believe that promotions available online are even better than what they could find elsewhere," the research added. This is why many Americans will prefer shopping online to brick-and-mortar retail stores.

Over the 2011 holiday shopping period, more than $50 billion was spent on ecommerce, according to separate data from comScore.

Shifting retail business online isn’t as easy as some may think

Once a successful retail merchant has a few brick-and-mortar locations operating, it only makes sense to expand to the world of ecommerce. However, as several small-time New York retailers have found, the transition isn't as easy as it may seem.

For example, Herb Philipson is the owner of a seven-store casual apparel retail chain. Philipson has enjoyed success with his seven shops, but shifting to online has proved more complex than he originally thought. He just launched an online website, but has found it challenging to fill orders with the much-larger audience of the web.

"The worst thing is to go online and try to buy whatever and get an order for 12 and you have three in stock," Philipson told the Utica Observer Dispatch. "You want vendors who have a lot of stock that we can replenish."

However, Philipson has reason to keep trying – Amanda Nicholson, Syracuse University director of retail practice, expects apparel sales online to hit $40 billion.

Ecommerce has been growing significantly, even during the economic recession. During the two-month holiday period alone, online sales hit $35 billion, according to data from comScore.

‘F-commerce’ fails to attract consumers, deserted by retailers

While ecommerce has proved an effective and successful channel for companies' retail merchandising operations, not all online mediums have paid out.

Social networking giant Facebook offers retailers and companies access to its nearly 1 billion members. However, even these numbers couldn't help the network's attempt at social retail, "F-commerce," catch on.

According to a recent article from Bloomberg, major retailers such as Gap, JCPenney and Nordstrom have opened and closed shopping operations on the website within the past year, despite speculation that the site would soon rival Amazon and PayPal for business.

"There was a lot of anticipation that Facebook would turn into a new destination, a store, a place where people would shop," Sucharita Mulpuru, an analyst at Forrester Research, told the source. "But it was like trying to sell stuff to people while they're hanging out with their friends at the bar."

However, in an article for ZDNet, Emil Protalinski suggests that it may not be Facebook's fault. Retailers, he writes, need to learn to use the site correctly by building a service or feature that users will want to share with their friends.

Service is king when it comes to online shopping

A snazzy ambiance and massive selection may woo shoppers at a brick-and-mortar retail store, but when it comes to ecommerce, service and deals are king, InternetRetailer reports.

AccessoryGeeks, an online retailer that sells consumer electronics such as cell phone and iPad add-ons, began sending promotional offers to consumers who had left items in the online shopping cart. After noticing the response to this campaign, the brand quickly extended this to real-time platforms. Now, AccessoryGeeks offers round-the-clock customer service through email and text – a move that has improved overall results significantly.

"Customers online, they demand more and more and more as time goes along," says David Byun, the e-retailer's president, told the news source.

The key is making customers feel empowered. Nowadays, there are dozens of ecommerce websites out there and if shoppers can't find the product or service they are looking for on one retail site, they'll move to another.

Retail merchants should use customer service and lucrative promotions to keep customers in their sales loop, rather than giving them the opportunity to go to a competitor.

Commerce Department: Online retail sales up 16 percent in 2011

According to the recently released 2011 retail report from the Commerce Department, approximately 5 percent of all retail expenditures – or 5 cents for every U.S. dollar – was spent shopping online. That marks a notable 16 percent increase from 2010, with online spending crossing the $61 billion milestone for the year as a whole.

Since 1999, Americans have been shopping online more frequently. Over the past 12 years, ecommerce's market share has grown eightfold. Despite the economic recession, ecommerce has remained consistent, only experiencing stagnation instead of suffering the retreat other sectors did.

"Cyber sales are soaring since more people feel comfortable buying online, and the real game changer this past holiday season has been the increased use of smartphones … to shop online," economist Chris Christopher of IHS Global Insight told Rent-to-Own News. "Online retailers are starting to make a dent in the brick-and-mortar business model. Many chain stores are looking to cyber space to supplement weak in-store sales."

Moreover, some retail sectors tend to see even more online activity. For example, sporting goods, hobby shops, books and music retailers have gained ground, while electronic and appliance retailers have improved their market share even more. Even more startling, the news source notes, is that the online sales of traditional brick-and-mortar merchants are counted as in-store in the Commerce Department's report, so in reality, ecommerce could be even bigger than the data suggests.

"But there are still some brick-and-mortar retailers who have little to fear from the internet," Rent-to-Own News adds. "In the fourth quarter of 2011, gas stations represented 11 percent of all retail sales, up from 10 percent during the recession and 7 percent in 1999. Part of that is due to rising prices at the pump, but gas also is something you still have to go out to purchase."

The Commerce Department's report is even more optimistic than recent research released by comScore, which suggested ecommerce spending was up only 14 percent to $50 billion in 2011. The research firm noted that digital content and subscriptions, jewelry and watches, consumer electronics, toys and hobbies and computer software were the big 2011 drivers.

Retailers need to focus shopping experience around busy consumers

The average American is a busy person, trying to juggle multiple tasks at once in their everyday lives. Retail merchants need to recognize this and assist customers by making the shopping experience revolve around their busy schedule. This is best done by enabling "easy in" and "easy out" shopping, a new report released by The E-Tailing Group suggests.

Every feature or service a retailer launches needs to be focused on expediting the shopping experience. The average customer no longer has the time to figure out how to find whatever it is they are looking for – this process needs to be as seamless and intuitive as possible to secure their purchases. Consumers don't want to invest any more energy than that.

"When deploying new functionality and evolving existing tools, ensure all features are sensitive to the time demands of harried shoppers," Internet Retailer notes, citing the report.

For the most part, merchants are doing an effective job of meeting the demands of today's shopper. For example, the number of retailers offering advanced search features that help consumers more efficiently find goods increased from 21 percent in 2010 to 39 percent in 2011 – up almost twofold. Meanwhile, the merchants offering navigational drop-downs or fly-outs grew from 70 percent to 81 percent in the same time period.

As a model example, the report points to Walmart's website. The retailer's ecommerce platform enables shoppers to narrow their searches by in-store and online availability, brand, price, customer rating, color, special offers and affiliated retailers. Moreover, all these features are integrated seamlessly into the company's website, which makes them easy for time-harried shoppers to use and find.

Organization by brand is one feature that a number of various retailers have implemented into their online product search.

"With more manufacturers selling directly to consumers, merchants have to work harder to distinguish themselves from online competitors," Internet Retailer explains.

"The percentage of sites that enable shoppers to refine results by brand jumped to 79 percent from 64 percent. And the percentage that allow consumers to shop by brand increased to 84 percent from 75 percent," the news source adds.

Retailers should also consider this as they design their anchor stores. Aisles and products should be organized in a way that makes it easy for consumers to find what they want.

More than $50 billion spent online during the fourth quarter

Retailers already had a good idea that the amount of money spent shopping online in the fourth quarter of 2011 was up significantly compared to the previous year – comScore reported shortly after the beginning of the new year that Americans spent more than $34 million buying goods through the web in November and December.

The digital measurement firm recently released a new study which gives a clearer picture of total online expenditures. ComScore found that $49.6 billion was spent shopping online during the fourth quarter of 2011, marking yet another double-digit quarter-over-quarter spending increase. For 2011 as a whole, more than $161.5 billion was spent online.

"The fourth quarter of 2011 capped off what was yet another strong year for online retail, one in which every quarter achieved double-digit increases versus the prior year," said comScore chairman Gian Fulgoni. "In the face of continuing uncertainty regarding the U.S. economy, consumers increasingly went online for their shopping needs."

ComScore's report further highlights the need to have at least a basic ecommerce platform in place, whether it's a full-blown online store or a simple merchant portal on Facebook.

Online fraud rate hits record low

Retailers concerned by the safety of online shopping platforms have little to worry about. According to a new survey by CyberSource, the online fraud rate hit a 13-year low in 2011, declining from 0.9 percent in 2010 to 0.6 percent.

While fraudsters didn't manage to steal as much, they were more prone to target big-ticket items. In fact, total dollar values were up – criminals stole approximately $3.4 billion from U.S. and Canadian e-tailers last year, an increase from the $2.7 billion pilfered in 2010. Luxury good sellers should take note and ramp up security on their ecommerce platforms.

"The continued growth in ecommerce is a welcome development for merchants and the economy overall," says Andrew Naumann, CyberSource's senior business leader for fraud management solutions. "The bad news is that fraudsters took in a higher dollar volume, the first such increase we've seen since 2008."

Given the rampant growth of ecommerce – more than $35 billion was spent over November and December 2011 alone – it's vital that retail brands have some sort of online shopping platform in place. They just need to look out for suspicious activity to avoid being scammed.