by Adam Stewart
It is by now a familiar story: while traders are experiencing some of the toughest ever conditions on the high street, online sales are growing exponentially. As the penetration of high-speed broadband continues at a pace across the world, the online shopping experience is growing in sophistication and being boosted by the massive popularity in smartphone and tablet devices. It is little surprise, therefore, that analysts are predicting a boom for online retail. Forrester, one of the leading analyst houses, has forecast that there will be 190 million Europeans shopping online by 2014, up on the 141 million we see today. It seems clearer than ever that the future of retail will be founded on the online world.
However, what is also becoming clear is that there will not be a simple dichotomy between online and offline retail. The fact of the matter is that consumers are increasingly opting for a multichannel approach to retail. The devices they use to shop online will vary. One day they might sit at their laptop and buy from an online marketplace; then next they may surf a reviews site on their mobile before making a purchase; on another day they may visit a bricks-and-mortar retail outlet to redeem a gift voucher they received online. Today’s shopping environment is one that increasingly crosses the boundaries between the off and online worlds, and also one that consumers want to access 24/7. This new approach to shopping has presented retailers with a range of new channels for communicating with customers, ones that have a global reach and if used effectively will help them win business and build brand loyalty.
A return to the marketplace
Before the high street came to prominence in the 19th century, shopping took place in the local marketplaces that dotted the towns and villages of the world. Today we are seeing a return to the marketplace, but unlike its predecessors today’s marketplaces are global and digital. In 2011, Rakuten conducted a survey which threw into sharp relief just how popular online global marketplaces have become. Shoppers in Brazil were the fondest of the international marketplace model, with 81 per cent of consumers keen to shop on different online markets. Indonesia (77%), Thailand (74%), China (69%) and Spain (66%) were close behind, and demonstrated that the online marketplace is appealing to consumers regardless of the cultural and political environments they come from.
These results were also significant as they have provided retailers with a route into new and emerging markets, demonstrating that online marketplaces and affiliate marketing models represent a simple means of targeting a truly global audience. At a stroke, retailers can globalise without needing to invest in the capital expenditures usually associated with internationalisation, such as establishing local delivery models or buying local storage facilities. Instead, retailers will be able to establish a presence through local marketplaces, and easily scale their presence according to demand.
The penetration of smartphones has sparked a revolution in ecommerce, providing retailers with a web-enabled platform that reaches to the consumer with greater immediacy than any other channel. Over the course of 2010 and 2011, marketers started looking at the full potential that mobile devices could offer, and new services such as location-based marketing and QR codes began to come into play. This is just the beginning however. While browsing on smartphones has increased month by month, the sales conversion rate has lagged behind. As we move into the second half of 2012, we expect to see more of a push from retailers to change this state of affairs. Key to this will be innovation in the mobile payments space. The easier and more secure it is to buy goods over the mobile, the greater sales conversion will become. All the evidence from this year’s Mobile World Congress suggests that we are on the verge of solving the problem of mobile payments, and when this happens we expect to see the mobile become one of the most important sales channels.
Any mobile strategy today cannot be limited to smartphones, however. Tablets provide an engaging visual browsing and buying experience for consumers, and great importance should be placed on developing a strong t-commerce strategy. The rich functionality of the tablet shifts the traditionally transactional and bargain hunting online experience into a virtual store experience. Given the convenience and quality browsing experience delivered by tablets, we expect to see e-commerce growth driven by tablet devices. To make the most of the tactile nature of the tablet, marketers and retailers must look to optimise their web pages for use on these devices, and ensure that all content is as engaging as possible. After all, the more time a consumer spends on your site, the more likely they are to buy something.
Taking your friends shopping
Many people treat offline shopping as a highly social experience, taking their friends and family with them to advise on good buys and provide recommendations. We are now seeing this being replicated in the online world. Instead of bringing a few friends shopping, however, consumers are increasingly able to call on their entire social network for retail advice. Social media can offer much more than this, however, delivering retailers with tools for product development and customer service. For a marketplace to be truly social, they need to enable members to be able to invite friends to view products and live chat while looking at the website. This will deliver the social element of shopping that is such an important part of the traditional offline markets.
The great changes that are taking place in how consumers shop cannot be overstated. We are moving towards a multichannel environment where consumers will interact with brands and ultimately make a purchase from a variety of platforms. The marketplace will play an increasingly important role in this change, offering retailers with an easy way to create feature-rich multi-platform strategies across whichever markets they wish to operate in. Before long, we will have an online market where shopping is a communal and social experience, and brands are marketed to individuals in a highly personalised and relevant manner.
Adam Stewart is marketing director at Rakuten’s Play.com