The ecommerce industry is expected to gross $334 billion in 2015, accounting for approximately 10% of all sales in the U.S., according to an April 2015 report issued by Forrester Research Inc.. By 2019, that revenue is predicted to reach $480 billion, a 44% increase in a mere four years. And online stores selling physical goods will be the businesses experiencing the vast majority of that upward trajectory.
In the U.S., 69% of consumers regularly buy products online, totaling 16% of all consumer purchases. The two fastest growing categories for online ordering are apparel and accessories — which generated $48 billion in 2014 — and consumer electronics — which generated $30 billion in 2014. In years prior, media purchases including books and music drove ecommerce growth. However, as the media industry moves to digital goods, rather than physical, which come at a lower price point, retail sectors shipping physical goods are beginning to lead the industry.
In fact, late-comer categories like furniture and autoparts are growing faster online than ecommerce overall. Forrester Research Inc. predicts these two categories to have a compound annual growth rate of 15% and 11%, respectively, between 2014 and 2019.
For Scaling SMBs, an Omni-channel Strategy Isn’t Optional
For all successful businesses, omni-channel is no longer a strategic choice. It is a necessary part of business as usual –– and those online retailers refusing to innovate on their omni-channel strategies or of which are slow to do so will lose market share.
The most competitive SMBs optimize for mobile — which now drives 10% of ecommerce revenue — and are aggressive with their shipping offers. Shipping is no longer a profit center for retailers, and those that treat it as such will perish. Instead, shipping offers must be competitive — with 49% of consumers citing it as the top consideration for why they buy from a retail website.
“That said, it isn’t essential to offer free shipping without a threshold at all times,” reads the Forrester Research Inc. report. “Rather, retailers should benchmark their competitive set and act accordingly. Case in point: Target recently reduced its shipping threshold across the board to $25 to more effectively compete with Amazon and Wal-Mart, which both have higher thresholds for comparable orders.”
A smart omni-channel strategy can offset shipping costs by pulling in and converting a higher number of customers. Online shoppers are more likely to close the deal with brands which offer various options in browsing, checkout and shipping. Ship-from-store options help to reduce the cost of long distance shipping, while in-store pickup options alleviate the need for shipping at all — and allow brands to further interact with the consumer in-store, increasing brand loyalty when done correctly.
In all, rapid mobile adoption is further spurring ecommerce growth as consumers become more and more accustomed to mobile checkout and browsing. Scaling retailers must offer convenient delivery options and on-site experiences (whether desktop or mobile) in order to meet customer expectations and gain loyalty. And, with the growth of ecommerce, data security needs to also stay top of mind for online brands. More than half of consumers say they are concerned about personal privacy, security and safety when making online purchases.
“Ensure this topic is topic is top of mind for your senior-most IT executives as well and work with them to make security a core element of your shared technology agenda,” Forrester Research Inc. suggests.
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