Losing Steam or Part of a Bigger Story?

6 Comments | This entry was posted in Marketing

A few thoughts on Sunday’s New York Times article, “Online Sales Lose Steam.”

  • The placement of the story, front page, above the fold, in the Sunday paper, seems misaligned with the topic’s importance.  Online sales in 2006 were nearly a quarter trillion dollars.  It shouldn’t be a surprise that the growth rates are slowing down.
  • It’s great to see stories that reference retailers “livening up their stores to be more appealing.”  Perhaps this is the result of competitive pressure from online only retailers.  Or, maybe the Internet has helped improve the store-buying experience by allowing customers to find deep product information before they go to the store, thus being a better educated customer when they walk through a store’s doors.  Or, maybe the convenience of shopping from the comfort of your home at any hour also contributes to consumers feeling better about shopping. 
  • Are online retailers really giving customers a “blasé” experience as the article suggests?  If blasé means that customers are more satisfied, then so be it.  In 2006, Amazon.com and Overstock.com were included in the top five companies honored with the “Customers’ Choice” award, given to companies that have achieved a reputation for excellence in customer service by the NRF Foundation/American Express Customer Service Survey.  
  • It’s time to stop thinking about “online retail,” as its own industry and start thinking about it as part of the overall retail industry.  Whether its online, catalog or stores – they’re serving the same customers.  And, if there was any doubt that they are inextricably linked, look at some of the data about how online influences offline sales. According to JupiterResearch, in 2007, the Internet will influence nearly 600% more sales offline than it will generate online.

Please feel free to share any other thoughts about this topic.

 

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6 Comments

  1. Posted June 19, 2007 at 12:00 am | Permalink

    “It’s time to stop thinking about “online retail,” as its own industry and start thinking about it as part of the overall retail industry.”

    Amen!

  2. Posted June 19, 2007 at 12:13 pm | Permalink

    Great commentary! I wholeheartedly agree savvy retailers will regard the e-commerce (AND the emerging mobile commerce) segments as critical components of the most strategic and sound sales and marketing model. Technology has, and will continue, to re-shape the retail industry and those who succeed will embrace it.

  3. Posted June 19, 2007 at 12:15 pm | Permalink

    I saw this article and I too expected that there would be a lot of… “online retail is over” banter. There are a few of things to take away from the article and the discussion around it.

    First, OVERALL experience with your brand, wins. Offline/online/inline… whatever, you have to perform as a synergistic team, or it won’t work. The fact of the matter is consumers EXPECT your retail brand to be the same, online and off.
    As marketers or operations/merchandisers… we look at our business by channel. But, looking at our business from the consumer’s perspective, they’re all one: your brand.

    Next, conversion rates online still speak volumes about the overall online experience. If your conversion rate online, is less than in store, you have work to do on your website. Vice Versa is ALSO true(think overall experience, not just one channel or another…).

    Finally… as you pointed out Scott we’re past the days of “online retail” being a business. This is retail. Just like NBC, or Google, or Microsoft… they’re in the MEDIA business… not the “online media business” or “offline media business.” Those just represent the method of consumption(inward) or distribution channel (outward).

    Figured you’d have an intelligent response to the article Scott.
    Cheers!
    Bill Bledsoe

  4. Posted June 19, 2007 at 12:47 pm | Permalink

    Here’s the big picture context: the growth rate of Internet sales may slow, but the influence of the Web on retail sales will continue to explode. That’s because the use of the Internet for pre-shopping, comparison shopping, browsing and choosing a store (or web site) destination is growing more important, not less, even (or especially) if the purchase is not completed online.

    This is the biggest trend, today and for years to come, in the retailing industry, and why I started my newsletter/consulting/speaking business, Integrated Retailing [http://www.integratedretailing.com].

    Retailers need to integrate their in-store and online environments to drive traffic, provide consistent service and customer experience, get a unfied view of markets and merchandise, and to increase sales, profits, market share and stock price. This is what will separate winners from losers, the profitable from the unprofitable. (In fact, the retailers I have identified as being industry leaders in multi-channel integration have seen their share prices rise an average of 30% over the last year.)

    E-tailing does not replace bricks-and-mortar retailing, it complements it. It’s an extension of consumers’ in-store experience (or should be). It’s a resource of information, comparison shopping, and consumer reviews and rankings. 87% of consumers shop online before buying offline, and credit the Internet with improving their in-store shopping experience.
    At present, online research influences about $400 billion in in-store sales annually, but is on pace to surpass $1.1 trillion by 2012. Multi- or cross-channel shoppers shop more, spend more, have more to spend (being somewhat richer, more educated, etc.), and are the most desirable consumers.

  5. Posted June 20, 2007 at 3:47 pm | Permalink

    I think your last point is definitely on target, Scott. The question should not be whether companies should invest online or offline, but how are companies leveraging the strengths of each to optimize these channels and create truly seamless brand experiences.

  6. Posted June 21, 2007 at 6:08 pm | Permalink

    I also wrote on this topic because it’s a subject near and dear to my heart. Click on my name to check out what I said.

    Thanks for all the great posting, Scott. It’s never unappreciated!

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