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Happy Friday, everyone! With New York Fashion Week consuming much of the apparel industry’s attention and the rest of us consumed with President’s Day sales, Mardi Gras offerings and Chinese New Year celebrations, it’s likely you’ve missed some of this week’s top ecommerce news.
We’ve gathered the must-read stories of the week below, including L’Oreal’s focus on growing their Chinese ecommerce presence, the U.S. West Coast labor disputes impacting retail sales, the health of U.S. ecommerce in comparison to the rapid growth of mobile commerce in Canada, and a recent study showing consumers prefer to show with brands that have both a physical and digital presence.
L’Oréal Looks Toward China for Ecommerce Growth in 2015
After generating more than $900 million in online sales in 2014, L’Oréal is looking to China for the brand’s next big ecommerce boost in 2015.
“Ecommerce for our division in China already represents more than 10% of our sales,” Marc Menesguen, president of L’Oreal’s consumer products division, told analysts on the brand’s Q4 2014 earnings call. “We’re No. 1 in B2C in both skincare with L’Oréal Paris and makeup with Maybelline.”
Overall, L’Oréal’s ecommerce offering makes up 3.6% of the brand’s total sales across all divisions, with Chinese ecommerce leading the pack. In fact, Brigitte Liberman, president of L’Oréal’s active cosmetics division, told analysts that ecommerce represented 70% of her division’s sales in China in 2014.
L’Oréal’s ecommerce offering makes up for 3.6% of the brand’s total sales across all divisions.
Mobile also remains a large focus for the brand after it released an app called Makeup Genius, allowing users to virtually try on makeup. The app landed the brand on Fast Company’s 50 most innovative companies of the year list and has been downloaded more than 6.3 million times.
L’Oréal is also taking advantage of influencers in the cosmetics industry including YouTube star Michelle Phan and cult favorite brand NYX Cosmetics, which hit peak purchases when a wide swath of video bloggers routinely wore it and advocated for it. In all, the brand is giving its “Because You’re Worth It” tagline a social and international upgrade.
U.S. West Coast Port Dispute to Cost Retail Industry Upward of $7 Billion
There are 29 U.S. West Coast ports currently crippled by a labor dispute. Talks between workers and management have been ongoing for nine months with few resolutions in sight. For retailers in the U.S., both large and small, the dispute is creating a lack of inventory, requiring many brands to look to methods beyond shipping in order to receive product.
Ralph Lauren, for instance, flew in more products from overseas and funneled shipments through East Coast ports, requiring their East Coast distribution center to handle a larger volume of goods.
Currently, 34 ships are currently unable to dock, meaning goods are stalling out in the Pacific Ocean rather than becoming available on shelves throughout the country. This slowdown is expected to cost the retail industry $7 billion this year. Lululemon, for one, said it expects $10 million less in fourth-quarter revenue because of the issue.
Some 34 ships are currently unable to dock, meaning goods are stalling out in the Pacific Ocean rather than becoming available on shelves throughout the country.
“It’s gotten worse over the last couple of weeks and the delays are now more volatile and unpredictable, which makes it harder for us to manage and plan our business,” said Charles Bergh, chief executive of Levi Strauss & Co., on a recent conference call with investors.
For different industries within retail, the delays in the delivery of goods, which can be up to 35 days, has different consequences. For apparel stores, goods can go out of season before they arrive. For the meat market, which exports goods overseas, brands are running short on cold storage facilities. The North American Meat Institute estimates the industry is losing $85 million a week in sales of meat, poultry, hides and skins.
Many experts including Frank Layo, a retail supply chain strategist at Kurt Salmon, predict the port slowdown will encourage many brands to rethink their long-term strategies for accruing inventory and shipping products to customers.
The North American Meat Institute estimates the industry is losing $85 million a week in sales of meat, poultry, hides and skins.
“The cost of overcoming this is way worse than the cost of building it in and developing a diversified strategy,” Layo said.
Meanwhile, The National Retail Federation has been working hard to encourage the White House to take action. Last weekend, the Obama administration announced plans to send Labor Secretary Tom Perez to California to meet with negotiators and break the gridlock. No official deal has been reached.
U.S. Ecommerce Sales Surpass $300 Billion, Canadian Mobile Commerce Growing Exponentially
On Tuesday, the U.S. Commerce Department released final ecommerce sales tallies for 2014, noting that web sales in the U.S. passed the $300 billion threshold for the first time, closing out at $301.91 billion. That number is up 15.4% from 2013.
The fourth quarter of 2014 was particularly strong, with 31.4%, of total sales, or $95.98 billion, occurring during those traditionally holiday-driven months. Q4 sales are up 14.7% from 2013’s Q4 numbers. This marks the fifth year in a row that ecommerce sales grew by close to or more than 15%.
The National Retail Federation’s economic forecast for 2015 projects ecommerce sales to grow 7-10% in 2015.
This marks the fifth year in a row that ecommerce sales grew by close to or more than 15%.
Meanwhile in Canada, the growth of mobile commerce sales are doubling the rate of overall ecommerce sales. Mobile commerce growths projected at 34% whereas overall ecommerce growth is projected at 14%.
The new research, led by PayPal Canada, noted mobile commerce spend reached $3.45 billion in 2013 in Canada, with predictions projecting that number to grow by 142% by 2016.
“We are at the dawn of a mobile-first era,” said Alexander Peh, head of mobile and market development at PayPal Canada.
Canadians report shopping on their smartphones routinely, with 17% saying they make a mobile purchase more than once a week and 10% saying they make a mobile purchase once a week. Millennialls are the most active mobile shoppers, with 30% saying they make a purchase mobile at least once a week.
Customer Satisfaction Declining at Brick-and-Mortars, Increasing for Ecommerce
Growing ecommerce sales may also be influenced by customer service within brick-and-mortar stores themselves. According to a new report from American Customer Satisfaction Index, customer satisfaction with retail is down for the first time in four years.
Customer satisfaction with internet retailers increased 5.1%.
All brick-and-mortar industries took a hit, with ecommerce being the lone retail industry to see an increase in customer satisfaction from a year ago. In fact, customer satisfaction with internet retailers increased 5.1%. The study also found that brick-and-mortars with an increase in customer satisfaction this year all have relevant ecommerce offerings likely contributing to the increase. Indeed, many pure play ecommerce companies saw a slight decline in customer satisfaction.
This new study reaffirms findings from PricewaterhouseCoopers last week, stating that consumers prefer to shop with brands which have both a brick-and-mortar and ecommerce presence.
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