The phenomenon of e-commerce had kept the world mesmerised in recent years. Part 1 of this article in last month’s issue [RETAIL ASIA October 2014] looked at the amazing sales figures chalked up by B2C e-commerce globally during the holiday shopping season last year. Growth rates were manifestly record high and many-fold greater than those of conventional retail formats.
B2C e-commerce had continued to grow in exponential terms throughout 2014. Analysts expected sales of the sector to surge 20% this year and soar to a whopping US$1.5 trillion worldwide for 2014.
Asia-Pacific had been the powerhouse of this growth, accounting for more than 45% of the business globally. Clearly, online retail sales was all set to rock across Asian markets again this holiday shopping season.
Part 2 now revisits some of the major trends and examines current prognoses of the B2C e-commerce buzz. Would online channel totally steal the limelight this holiday season and displace brick-and-mortar retailing channels? The answer is both yes and no.
Yes, in terms of the growth rate. No, when one considers absolute sales turnover and market coverage. So, what is in store for Asian retailers this season? Market watchers say that it would be an omnichannel strategy that rings up the cash register most this season…
Online consumers: Who, what, and how?
The consumer is central to retailing and to the success of the business. The adage obviously holds true for the online consumer.
Thankfully, there has been lots of rigorous research in this area providing comprehensive insights into the online consumer profile – their demographic make-up, purchasing psyche, shopping behaviour, etc.
The impressive Nielsen e-Commerce Global Survey published in August is one such research. The survey polled 30,000 online consumers in 60 countries to determine online consumer demographics and online spending trends.
Nielsen found that age mattered considerably with digital shoppers. Nielsen said, “Millennials (age 21-34) are a coveted demographic for marketers.”
However, and interestingly, it was not just the younger generation that mattered. Nielsen added, “But while Millennials comprise more than half of respondents (53%) who plan to make an online purchase… older generations represent a sizeable 40% share, too.”
The survey found that globally, Generation X (age 35-49) respondents made up a sizeable 28% of those willing to buy online while Baby Boomers (age 50-64) constituted about 10%.
So the online market is significantly broader and larger than what first strikes the eye – a point that must gladden the heart of retailers.
Another impressive survey conducted by Cisco Consulting Services published in January this year underscored the point succinctly.
The survey, Digital Shopping Behaviour in an Internet of Everything World, found an interesting mix of the online consumer base – 80% being what it called Digital Mass (median age 40-44) and 18% being Über Digitals (median age 30-34).
What about shopping behaviour, preferences and buying decisions among online consumers?
The Nielsen survey said the most popular e-commerce categories, not surprisingly, are non-consumable durables and entertainment-related products.
It added, “When it comes to shopping for clothes, event tickets, books and toys, or making reservations for tours and hotels, consumers typically have something specific in mind. Consumable products, on the other hand, have lower online browse/buy intention rates than non-consumable products…”
Nonetheless, the trend in buying influencers is increasingly digital. According to the Cisco survey, the three most important information sources for buying decisions are: online reviews at retailer website (58%), friends and family (46%), and online reviews expert sources (43%).
Interestingly, store staff accounted for 15% despite not being a digital medium – suggesting a bright spot for the relevance of physical stores.
It won’t be just the digital channel…
Given the dramatic e-commerce phenomenon, the often-asked question is: Does e-commerce spell the end of the traditional stores? This may not be necessarily so, or at least not anytime soon according to many industry experts.
A case in point is a recent McKinsey interview with Devin Wenig, the president of eBay Marketplaces, one of the world’s largest online markets.
Explaining the impact of digitisation on traditional retailing, Wenig reportedly said: “I should say the death of the store has been greatly exaggerated. There will be a transformation of retail real estate, but not an end to it. You could step back and connect dots and say: ‘The world’s going to have e-commerce only’ and that ‘Stores are dead’, but we don’t see that future at all.”
Definitely comforting words for traditional retailers coming from a global leader in B2C e-commerce.
Weniq rationalised: “I think people like to shop and they like the serendipity of stores. Shopping is as much about entertainment and engagement as it is about utility.”
He added, “Building engaging experiences across channels is incredibly important. Many retailers have spent their entire lives thinking about how to build an engaging experience in one channel, which is the store. But now, understanding how to connect with your core customers across every way they want to connect [is the focus] …”
The Cisco survey had separately underscored the sentiments. One of the key survey findings pointed out that shoppers, online ones included, wanted personalised experiences.
It said, “Digital shoppers will still come to stores…” and cited some compelling reasons for it.
The ballgame this holiday season is definitely not single-channel retailing.
B2C e-commerce had continued to grow exponentially throughout 2014. Analysts expected sales of the sector to surge 20% this year and soar to a whopping US$1.5 trillion worldwide this year. Clearly, online retail sales was all set to rock again this holiday shopping season.
Would the online channel totally steal the limelight and displace the brick-and-mortar channel this year? Market watchers say that it would be an omnichannel strategy that rings up the cash register most this season.