Ecommerce, social business, digital economy report
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Transcript of Ecommerce, social business, digital economy report
Social Business ECOMMERCE &
THE DIGITAL DYNASTY
An Ahain Group Report
by Christina Giliberti, Greg Fry, Anton McCarthy
& Stephanie King
Social Business – E-commerce and the Digital Dynasty www.digitalmarketinginstitute.ie www.ahaingroup.com
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Table of Contents
Executive Summary ……………………………………………………………………………………………………………………..…….. 3
Benefits of E-Commerce ………………..……………………………………………………………………..……….…………………... 4
What is E-Commerce Worth……………………………………………………….………………………………………………………..7
Behavioural Insights ……………………………………………………………………………………………………………………….….16
What Makes a Successful E-Commerce Store …………..………………….……….………………………………..………….23
Technology: Platforms, Engines and Gateways …………………………………………………………………………………..36
Learn From the Masters ……………………………….…………………………..…………………………..…………………….…… 46
Opportunities for Retailers ……………..………………………………………………………………………………………..……… 65
Conclusion ……………………………………….…………………………………………….……………………………….……………..… 80
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EXECUTIVE SUMMARY
Businesses across the world are reviewing their business strategies and allocating a higher proportion of
budget and resources to their online operations - 20% in 20121. Moving on-line to ‘e-commerce’ is very
attractive to the retail sector especially, allowing vendors to sell to the global market.
However, setting up an e-commerce store-front requires much more than pretty web pages to greet
prospective buyers. Turning ‘lookers into bookers’ requires:
An in-depth understanding of target customer needs
Competitive analysis to enable formulation of a competitive advantage strategy
Optimisation of the online store for searches
Development of all traffic streams to entice people to the trading platform
Research and continued optimisation of all transaction flows
A listening post to monitor public perception, awareness and sentiment
This report seeks to analyse some key insights into e-commerce practice, to provide case studies of some
of the leading e-commerce websites (such as Amazon, Burberry, Littlewoods Ireland and John Lewis) and
to uncover ways that Social Business empowers e-commerce strategies by addressing areas where
retailers can evolve within the digital dynasty.
1 http://www.iia.ie/resources/resource/1/state-of-the-net/ Issue 25
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BENEFITS OF E-COMMERCE
E-commerce allows consumers and businesses to conduct instant monetary transactions via online
platforms, using the Internet - the transactions can take place, irrespective of physical location.
Benefits for retailers
Benefits for retailers include:
web platforms are available 24/7 and are not restricted by normal shop hours
customers can transact from any global location (although shipping restrictions can be applied by
the store owner/manager)
transactions happen in real-time and often in less time than in personal transactions
there are no restrictions on numbers of customers ‘in store’
there’s an ability to sell an infinite range of items (as opposed to only those you can keep
physically within the store)
flexibility allows editing and publishing simultaneously
online transactions and activity can be both monitored and measured
An airline e-commerce website is a classic example of all of the above.
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ryanair.ie
Customers can book a flight day or night, saving the airline from answering calls 24/7. News items can be
published instantly and updated in real time.
Benefits for customers
no need to spend time travelling to stores, parking, getting caught in crowds or queuing
have access to a generally more extensive range of items
shop anytime, anywhere – at home, office or while travelling
simple to search for items and transact
there are better bargains online
can compare items side-by-side
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nextdirectory.ie
The Next Directory Ireland store actually stocks a fraction of the complete range of women’s shoes that
are available to purchase online. The online store features mouse-over previews of the next page to save
on irrelevant clicking for customers.
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WHAT IS E-COMMERCE WORTH?
The value of e-commerce activity is generally measured in terms of transactional volumes. Whilst this is
important and useful data, a number of other factors are important in determining its value. Whilst total
sales may be rising therefore increasing profitability, operational costs are generally much leaner too. Add
the Internet’s ‘borderless’ reach and it’s easy to understand the tangible and intangible worth of e-
commerce.
As one might expect, the US and the UK are the influential forces in the e-commerce sector. However, as
the economy adapts yet again and Internet coverage expands, newer markets – such as China and India -
are beginning to flourish.
The forecast chart above predicts that Asia will supersede all other regions by more than $50,000m in
profit in 2013.
E-commerce figures vary greatly by geographical location; the following section sets out some figures for
Ireland, UK, US and global.
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Ireland
Total ecommerce spend within Ireland was 2.96 billion in 2010 and rose to 4.1 billion in 20112.
Ireland’s population stands at 4.6 million in 2013 and currently there are limited resources to fully
explore e-commerce adoption. According to the Digital Hub Development Agency (DHDA) Irish
consumers will spend more than €20bn online each year by 2017.
Image Credit: mapsoftheworld.com
VISA3 has reported that €2.96 billion was spent on online purchases by the Irish adult consumers in
2010
Amas4 has published a report suggesting that 43% of Irish consumers have purchased online in 2012
Of the €4.10bn spent in 2011, 75% went to companies outside of Ireland. It is forecast that this figure
will grow to over €15bn by 2017 (CSO)
2.6 million Irish people regularly shop online5
The biggest challenge for the Irish retailer is selling within the domestic market. According to the statistics
above, of €4.10bn, only 25% was spent within Ireland. This exposes a considerable gap in the market for
Irish retailers to fill, if they can attract customers with products, fair pricing and incentives.
Littlewoods Ireland is an example of a successful retailer within the Irish market - who were predomin-
antly a catalogue retail business, but now conduct 84% of sales online
2 http://www.cso.ie
3 http://www.visa.ie/visa_ireland/press_releases/articles/2011/irish_spend_%E2%82%AC296_billion_onli.aspx
4 (http://www.iia.ie/resources/resource/1/state-of-the-net/ Issue 25)
5 http://www.upc.ie/pdf/upcdigitalindex.pdf
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littlewoodsireland.ie
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UK
The UK population is 63.2m.6 Of this figure, 33m. adults accessed the internet daily in 2012 and 51%
accessed via a mobile device.7
Image Credit: cia.gov
According to the ONS8, around two thirds (67%) of 25-34 year-old adults bought goods or services
online in 2012 – an increase of 14% from 2008
32% in the 65+ age range bought online – an increase of 16% from 2008
It is estimated that UK online retailers are at risk of losing 30% of potential business by not having a
website that works on mobile9
More than 95% of UK shoppers have made an online purchase, yet of 70% of UK businesses with a
website, just 40% accept online payment10
6 http://www.ons.gov.uk/ons/taxonomy/index.html?nscl=Population
7 http://www.ons.gov.uk/ons/rel/rdit2/internet-access---households-and-individuals/2012-part-2/stb-ia-
2012part2.html 8 http://www.ons.gov.uk/ons/rel/rdit2/internet-access---households-and-individuals/2012-part-2/stb-ia-
2012part2.html#tab-Internet-shopping 9 IAB Rich Media Brand Effectiveness Study July 2011
10 http://www.electronic-payments.co.uk/ecommerce-in-the-uk
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Image Credit: ONS
All age groups purchased more goods online for 2012, with the exception of the 25-34 age range,
although the difference in comparison to 2011 is slight. The key point is that mobile is the biggest
disruptor and retailers need to maximise mobile capability in order to compete and profit.
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USA
The USA is the front-runner when it comes to e-commerce purchases. A mature online market and a
strong digital adoption rate have contributed to online profitability.
Image Credit: Commons.wikipedia
Retailers’ e-commerce sales for 2010 increased by 16.3 percent; e-commerce was 4.4 percent
($169bn) of total retail sales, up from 4.0 percent ($145bn) in 200911
In the first quarter of 2013, e-commerce profit was recorded at $61.2 billion, an increase of 2.7
percent (±1.4%) from the fourth quarter of 201212
In 2012, North America sales increased 13.9% to about $365 billion and Asia-Pacific sales increased by
33% to about $332 billion - the gap between the USA and Asia Pacific is rapidly closing13
http://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf
From the table above, profit figures attributed to e-commerce sales are rising every quarter.
11
http://www.census.gov/econ/estats/2010/2010reportfinal.pdf 12
http://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf 13
http://www.emarketer.com/Article/Ecommerce-Sales-Topped-1-Trillion-First-Time-2012/1009649
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One USA retailer which has seen high online sales is Apple. Apple’s rapid growth coincides with the
launches of the iPhone, iPad, iTunes and App store. The latter two have reached $25bn sold and $50 bn
downloads, respectively.
[See overleaf]
apple.com
• iTunes Store Sets New Record with 25bn Songs Sold
• Apple’s App Store Marks Historic 50 Billionth Download
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Global
Global e-commerce sales reached $1.08875 trillion in 2012, up 21.9% from $893.33 billion in 201114
Image Credit: bu.edu
The potential to sell beyond the domestic market into the international market is a long-term objective of
many online businesses. In terms of statistics:
Internet users now account for one-third of the world population and one billion persons are
expected to make a purchase online in 201315
It is forecasted that in 2013, total e-commerce sales worldwide will grow 19.3% year over year to
reach $1.29844 trillion16
China alone now represents more than 22% of the entire world's Internet users, with more than
40% of the population using the Internet on a regular basis17
European countries with high online retail market shares included Germany (9%), Switzerland
(8.7%) and Norway (8.1%), while the lowest were in Italy (1.3%) and Poland (3.1%)
14
http://www.internetretailer.com/2013/02/05/global-e-commerce-tops-1-trillion-2012 15
http://www.aljazeera.com/news/americas/2012/09/2012923232111323871.html 16
http://www.internetretailer.com/2013/02/05/global-e-commerce-tops-1-trillion-2012 17
http://www.iglobalexports.com/global-ecommerce.html
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The challenges of selling abroad mainly centre around:
Costs (fees, taxes, transportation, postage)
Legalities and compliance (especially in the medical, pharmaceutical and beauty trades)
Operational (distribution)
Language and cultural barriers (translations - packaging and cultural understanding, product
adoption - straight or modified products)
Strength of the local competition in the purchaser’s country
The food retail industry has been faced with the challenge of international trading with the emergence of
receptive markets such as the Far East, India and Brazil. Increased affluence in these markets, whilst
representing opportunity has meant that vendors have to compete with local food retail leaders for
market share.
A big issue for food retailers is the ability to understand their consumers (culture, social norms, values,
shopping patterns, choices) and whether they should standardise a current offering or adapt it to suit
online sales.
Tesco is a good example of how understanding international customers’ culture better, and by working
with technology, can work to its advantage. As exemplified by its experience of reaching one of the top
positions in Korea. It researched South Korea before entering the market and, in particular, looked at the
largest competitor - E-Mart Co18
The results of the research showed that a high number of people there work long hours and commute via
the subway. Tesco utilised augmented-reality technology and entered the market by setting up virtual
stores within subway stations, allowing commuters to simply scan their goods by smartphone19
18
http://www.euromonitor.com/grocery-retailers-in-south-korea/report 19
http://www.adverblog.com/2011/06/23/tescos-subway-virtual-store
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BEHAVIOURAL INSIGHTS
‘43% of Irish consumers [are] saying that they had made an online purchase within the previous 12
months. This represents an increase from 36% in 2010. The use of e-commerce for purchases has grown
from 44% in 2010 to 49% in 2011’20
These represent a distinct leap into e-commerce, but what is e-commerce worth, why do people shop
online and what are they actually purchasing?
20
(http://www.iia.ie/resources/resource/1/state-of-the-net/ Issue 25)
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Image Credit: ogilvyaction.com
The rise in the rate of e-commerce adoption reveals the steady increase of consumer use in the sector is
shown in the following table:
December 9, 2002 1.7 million items ordered 20.0 items/sec. worldwide
December 10, 2007 5.4 million items ordered 62.5 “ “
November 29, 2010 13.7 million items ordered 158.0 “ “
In the five years between 2002 and 2007, transactions increased by over 300% and profit by 2.5 times; in
the three years from 2007 to 2010, transactions increased by over 150% and profit again by 2.5 times.
Why and What Do People Shop Online?
The upward trend of online retail statistics (shown above) is reassuring, yet all successful e-commerce
store owners pay close attention to the more insightful ‘why’ statistics
Understanding the ‘why’ and ‘what’ precedes/supports product decision-making, such as:
What to sell or specifically, what IS selling in the marketplace
Number of ranges / depth of range
Price (including postage and packaging)
How often to update
What to discount or promote
Importance is also placed on the ‘way’ products are published and promoted:
What products are featured on the homepage
What categories each product falls under (primary, sub and sub-sub categories)
One-click purchases and streamlined/optimised checkout
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Production of ‘sticky’ content and techniques, e.g. a feed with ‘similar products’, ‘also by [brand
name] or ‘customers who viewed this product also viewed....’
Whether or not to add reviews
These are reviewed in some further detail for the four markets considered, in the following section.
Ireland
Irish consumers are going online to save money, with a majority believing that online shopping can
result in savings of 18% compared with prices on the high street21
Principal reasons Irish consumers give for choosing to shop online include:
Shopping when I want (54%)
Saving time (54%)
Getting other consumers’ opinions (50%)
Praise is given for trust, price and presentation and simplifying the sales process plus an easy returns
policy are factors that online shoppers rate as high priority.
What Are People Purchasing Online?
Does everything sell online or are certain products and services favoured more highly? And does this
change by geographical location?
21
VISA Europe, http://amas.ie/irish-businesses-planning-ecommerce-fight-back/
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Image Credit: amas.ie22
In Ireland:
34% of consumers are turning to the Internet to book holidays or business travel
Clothing and sporting goods showed significant growth, with 17% of the Irish population making an
online purchase compared with 13% the previous year
The largest gaps between Irish and UK e-Commerce figures are in groceries and food – 20% of UK
consumers now buy them online – and 33% buy household goods online, compared with just 4%
and 8% respectively, in Ireland
The travel sector was an early adopter of e-commerce. As an example of results achieved, within three
months of the Ryanair’s website launch in 2000, they received over 50,000 bookings per week.23
In common with most vendors, Ryanair is constantly under fire for not embracing multi-channel digital. If
it did, it is estimated that bookings could increase significantly and, in the process, it could create a Social
strategy to not only increase sales through content and incentives but also to ameliorate the burgeoning
negative comment on add-on fees and penalties online.
22
http://amas.ie/online-research/state-of-the-net/state-of-the-net-issue-25-summer-2012/ecommerce/ 23
http://www.marketbusting.com/casestudies/Ryanair%20Report.pdf
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UK
UK online sales recorded a 17% jump from July 2011 to August 2011. For the year, that’s £6.5 billion
spent online with each person spending an average of £128. Total growth in 2012 is approximately
13%.24
The main reasons UK consumers give for choosing to shop online are25:
Convenience
Better pricing
Variety
Fewer expenses
Comparison of prices
The findings resemble the Irish online shopper reasons and reinforce the core benefits for retailers.
What Are People Purchasing Online?
74% of UK consumers use the Internet for household grocery shopping activity 26
The most popular categories for online purchases are travel, books and groceries
UK consumers are embracing the new generation of Internet-enabled TVs with 15% owning such a
set, compared to 10% in the USA27
24
IMRG Capgemini eRetail Survey 25
http://upstreamcommerce.com/blog/2012/02/14/8-reasons-consumer-likes-shop-online 26
http://www.nielsen.com/uk/en/insights/press-room/2012/three-quarters-of-uk-consumers-use-the-internet-for-grocery-shop.html 27
http://www.bbc.co.uk/news/technology-20700046
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Again, travel is at the top of the list and books continue to yield strong results, possibly supported by the
introduction of electronic books (e-books) that can be read via a Kindle, iPad or similar reader.
Kindle
“After five years, e-books [are] a multibillion-dollar category for us and growing fast—up approximately 70
percent last year. In contrast, our physical book sales experienced the lowest December growth rate in our
17 years as a book seller, up just five percent.” Amazon Chief Executive Jeff Bezos.
Amazon’s recorded media sales were $19.9bn in 2012, although this encompasses the entire media
offering. Pacific Crest estimated that the Kindle Fire models sold 6m units during Q4 2012.28
28 http://www.businessinsider.com/amazon-kindle-fire-sales-estimates-2012-12
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USA
According to the U.S. Census Bureau, the manufacturing sector is the largest contributor to e-commerce
sales (46.4% of total shipments), followed by merchant wholesalers (24.6% of total sales). These two
segments make up the business-to-business category.29
U.S. e-commerce has seen steady growth for several years and shoppers are expected to spend $43.4bn
online this holiday season, an increase of 17% on last year and the biggest e-commerce growth projection
since the recession hit. This healthy growth figure is in large part influenced by the emergence of digital
services that have made online shopping more enjoyable, more unique or generally easier to
participate.30
A comparison of ordering via PC or smart device reveal that airline tickets or holiday packages continue to
be purchased mainly on a PC. Purchase of musical downloads, e-books, CDs and DVDs have all increased
on smart devices. Laptops are the most popular electronic device, used by over 80% of consumers and
tablet PC’s are now owned by just under 30% of consumers.
In the USA, downloads are the quick and easy sale. The music industry in particular has strengthened in
the digital arena.
The proportion of U.S. consumers’ disposable income spend on digital music is more than five times
higher than in Europe.
Online, U.S. broadband users spent an average of US$12.5 on music compared to US$7.8 in the UK
and just US$0.6 in Spain (2007)31
29
U.S. Census Bureau 30
ComScore 31
http://www.grabstats.com/statcategorymain.aspx?StatCatID=9
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WHAT MAKES A SUCCESSFUL E-COMMERCE STORE
This section explores factors that contribute to the creation of a successful online e-commerce presence.
Image credit: www.merchantstand.com
According to Theo Paphitis32 ‘There’s only one thing that’s shaping retail at the moment and that’s
technology.’
32
http://www.theopaphitis.com/index.html
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He goes on to highlight ‘changing trends’ towards e-commerce activity and his own ventures; all
profitable online.33
His e-commerce website - Boux Avenue - is a lingerie business that lends itself well to online. As this quote
suggests, his success started with passion ‘If I could give just two pieces of advice for people who want to
succeed in retailing and go into retail management, it would be one - passion’.
A significant number of integrated variables are prerequisites to the set up and execution of a successful
online e-commerce store:
People/Team working within an agreed process
Efficient communication internally and externally
A platform that is easy to manage, fluid and flexible (including CMS)
Operations - storage facility and transport network
Marketing, Sales and Customer Service process
Selection of products and competitive pricing
Knowledge of the online market and key trends
A monitoring-evaluation-implementation feedback loop
Hurdles
While the benefits of running an e-commerce store are sure to motivate retailers to invest, there are
certain hurdles to be aware of in the pursuit of success:
33
http://media-podcast.open.ac.uk/feeds/b122-retail/transcript/b122retail12_01448_14409.pdf
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Technology is progressive. That means it moves at a pace and e-tailers will need to be aware of
emerging technologies and trends to avoid the dinosaur effect (being out-dated and becoming
extinct).
Competition is rife. You may have ten local stores for competition where you are, but online, every
store that sells to your customer base is a competitor. This leads to a lower loyalty rate, an emphasis
on presentation and a need to stand out from the pack.
Loyalty is gained through satisfaction. This is based on e-commerce criteria such as - design of site
and branding, architecture of site, availability of products, desirability of range, price, cost of delivery,
lead-time, payment options, reviews, etc. It may be easy for people to buy from your store, but is it
even easier for them to buy from somewhere else?
International trading - legislation, trading laws and e-commerce compliance, such as the cookie
directive.34
When building and managing a website, there are certain legalities to be considered, e.g. :
Cookies Policy
An important regulation for Irish website owners is the Irish Cookie Regulation,35 which states that a user
must be presented with a prominently-displayed pop-up that allows them to 'opt in' so that websites can
append cookies to the user's machine.
Cookies are files that are stored by a website on a user’s computer hard drive, which can then collect
information about the user’s preferences and other information which a user will need when visiting the
website, for example log in details, credit card details, locations, preferences and any personal details a
user submits to the website for whatever reason.
The information stored in a cookie relates to how the user browses the website and allows the website to
remember that user and their preferences when they return to it at a later date. Importantly cookies are
also used for marketing and advertising purposes as we seen later.
RTE, for instance, has a nicely branded pop-up to alert users to its cookie policy.
34http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&ved=0CDEQFjAA&url=http%3A%2F%2Fwww.ico.org.uk%2Fcookies&ei=xHGbUbWJHcnH7Ab-s4HQBw&usg=AFQjCNHPzw2DT4L_hzerTn4iPZML00ffPg&sig2=j0Er-61c6BKe2AV_KdOBWw&bvm=bv.46751780,d.ZGU 35
http://www.gaumina.ie/irish-cookie-law-policies/
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In spite of the advantages that can accrue from having an effective e-commerce web presence, some
retailers shy away from the same. An example is Primark/Pennys which has nonetheless achieved profits
increasing 56% to £238m in 2012.36 Proponents for e-commerce, however, would probably suggest that
e-commerce would provide them with limitless expansion and a wider consumer audience.
Primark/Pennys issues regarding ‘transportation’ are a chief concern for all retailers, although
Debenhams, Next, River Island, Littlewoods, Zara, Ann Summers, Boux Avenue, Amazon and countless
retailers (whether pureplay or bricks and clicks) have proven the e-commerce model in the fashion
industry. The question is whether the challenges of selling own brand clothing would affect overall
e-commerce sales
Primark/Pennys
36
http://econsultancy.com/ie/blog/62640-is-primark-mad-to-ignore-commerce?utm_medium=email&utm_source=daily_pulse
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An exploration of how to create a successful e-commerce store
The customer is always right, but the customer doesn’t know what they want or where to find it
A bold phrase, yet a practical one that prompts online store owners to go back to basics and plan a store
from the perspective of the user - in basic terms, customers want:
pleasing design
ability to find items quickly
fair price
sufficient information to support decision-making
trust (transparent legal/payment security)
Common amongst successful e-commerce stores are:
An in-depth understanding of target customers’ needs and how to utilise this knowledge to
create an attractive user experience
Continued competitive analysis to set/retain a competitive advantage (product range, price
and promotion)
Clever use of available technology and the ability to upgrade in-line with trends and changes
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Marketing processes to develop all traffic streams to entice people to the platform e.g. search
and referral
Research and continued optimisation of all transaction flows
A listening post to monitor public perception, awareness and sentiment
Who are your customers?
Before developing products and services, the holy grail of any business is knowing who the customers are.
Customer profiling is the process by which an organisation will outline criteria to create a representation
of the ‘ideal’ customer - a common sales and marketing practice. Online, this process will shape the entire
online experience from design to architecture, goal flows and tone of voice.
As an example, if the customer base is 18-25 years old, then the design will be slick and modern with
more technical features and an informal tongue.
Example of ‘teen’ branding - teen.com
If the target audience is more discerning and mature, a more formal branding would be more appealing.
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Competitive Analysis
One of the biggest challenges in the e-commerce industry is direct and indirect competition.
With an endless list of comparison websites online,37 rate parity is becoming more difficult. In fact, price is
the number one incentive for purchases and one challenge for the smaller retailer is how to compete
against the larger retailers who can use economies of scale to drive down online prices.
Some retailers use price to leverage online sales. Amazon, for example, has used price (with mobile
technology) as the competitive edge with the Amazon ‘PriceCheck’ App. The App allows users to scan
products or search for them on Amazon to compare prices – allowing them to find and try on/see/feel the
product they want, then purchase online.
A popular online incentive that utilises price as a key sales factor is a ‘Price match guarantee’. This seeks
to reassure customers that purchasing from the retailer will yield the lowest price, regardless of
competitor prices. Retailers are warned here to create terms to safeguard this guarantee.
Promotions are another way to compete in the e-commerce marketplace and via online and offline
forums. A multi-channel approach tends to yield a much higher conversion rate than a singular,
independent approach.
37
comparethemarket.com
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Customer Needs and the User experience
Attracting customers to your store is only half the battle. Impressing them, engaging them and helping
them to find exactly what they need is all part and parcel of the role that the user experience plays.
The store experience from a user perspective can be split into: -
1. Ambience
2. Navigation and usability
1) Ambience
Physical stores use location, building design, store branding, layout, scent branding and customer service
(dialogue).
The dotFNB store (First National Bank)38 is a cash-less store that focuses on the digital experience and
merges banking and retail. The clean styling is similar to two key digital/IT brands - Apple and Google.
38
http://memeburn.com/2013/03/how-fnbs-dotfnb-stores-are-merging-the-digital-banking-and-retail-experience/
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A website is a representation of a business, and the ‘mood’ created for customers invites them to explore,
but the website store must also appease search engines.
Both Moo and Vistaprint use Google Adwords to support their search engine marketing.
Google.ie search for ‘business cards’
Websites also must not distract from the products and services they sell. In fact, Amazon, River Island and
Debenhams opt for a simplified brand experience, allowing the photography to express the brand style.
The architecture is neat, colours limited and the shop-front is split between main product focus (Kindle),
navigational menu, Amazon merchant ads and popular products.
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amazon.com
A good example of branding is displayed by Yesterdays39 designed by Jamjo Design.40
The products are central to the homepage and all menu items are designed to target customer interests.
The wow factor of the banner captivates the visitors and allows the store to treat visitors to a special
glimpse of a theme or product range.
The ‘wallpaper’ is subtle, yet leaves visitors in little doubt that Yesterdays has an atmosphere of ‘past
times’ with an art-deco/Victorian flair.
39 www.yesterdays.ie 40 www.jamjo.ie
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yesterdays.ie
Yesterdays is an Irish-based store, yet online the brand can be experienced worldwide. And, mirroring
Amazon, products are given much homepage frontage.
Navigation and Usability
Navigation within physical department stores and supermarkets requires negotiation of an entrance, exit
and rows of aisles or segmented brand/category clusters such as footwear and cosmetics, with overhead
signage. Close to aisles or clusters are checkout points, with incentive impulse buys (generally low-cost
desirable items like chocolate bars, gum and wrapping paper). All have a kind of order to ease the
shopping function. Smaller stores limit signage and use small clusters such as casual, formal, footwear and
accessories. These stores are small enough for the shopper to casually walk around.
An e-commerce store must do a similar job using architecture and menus in a more streamlined fashion.
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Overall layout (Home-page, menu placement, filter placement, how products are formatted, landing
pages, etc.)
Structuring and categorising thousands of pages in a systematic order
Menu items and which are primary, secondary navigational
Cisco, for instance, uses mixed text and graphical menus. The items are selected based on popularity and
‘all products, solutions and services’ are hidden and accessed via three links to keep neat. The three core
customer segments are split into ‘Enterprise’, ‘Small Business’ and ‘Home’ and each has a menu link with a
bold blue background. While the menu may look simple, the decision-making process to select items and
style to capture the most clicks per category, is never simple.
cisco.com
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The clean menu structure is adopted by many retail giants such as Next, Debenhams and Amazon.
nextdirectory.ie
Next uses a two-tiered menu for navigation: –
a primary level (top-level categories) to select ‘Women’ (highest usage
and clicks, so must be first), ‘Men’, ’Newborn’, ‘Girls’, ‘Boys’, ‘Shoes’,
‘Accessories’, ‘Brands & Sports’, ‘Lipsy’ and ‘Homeware’.
A secondary level (sub-categories) to list items types. This menu is split
and the before section covers ‘Next Collections’. There is a ‘New In’
category for some menus.
The menus are stripped back and ordered to align with priority searches with
the objective of limiting search activity, to increase the chance of a sale.
Once the initial selection has taken place, all items pertaining to that search are
presented. To allow for specific (and swift) choices, filters are used to find more
relevant matches.
Menu structure and filters are designed for ‘quick’ location of goods, yet they
also serve a secondary purpose for the retailer. They create pages around a
particular search query such as ‘Dresses > Evening > Silver’ that Next can track
using analytic engines.
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Amazon includes an additional filter of a ‘star rating’; the majority of e-commerce websites tend to
feature customer reviews alongside products.
TECHNOLOGY: PLATFORMS, ENGINES AND GATEWAYS
In the world of e-commerce, the choice of platforms largely depends on who is making the development
decisions. The most popular platforms include:
Wordpress with e-commerce addition such as WP Commerce
Shopify
Drupal
OpenCart
Joomla
Payment engines include:
Magento
OS Commerce
Payment Gateways include:
Realex
Worldpay
Sagepay
Paypal
When selecting platform, payment systems and gateways, ultimate decisions are centred on:
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Price/budget
Flexibility and ability to integrate
CMS and level of control required (developer or general user)
Maintenance costs for on-going development
Level of design and feature types
Marketing
Fundamentally, online marketing is based on the AIDA Model (Attention, Interest, Desire, Action). The
online store may look the part (branding, searchable products) but, unless it markets those goods, its
potential is limited.
The alternative AIDA model in the Social Business age is Awareness, Interaction, Dialogue, Action. This
alternative works perfectly for Social Media marketing where the marketing is a two-way communication.
Four situations are considered:
On-site
Off-site
Off-line
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Social Recommendations
On-Site
Effective e-commerce sites use the following tactics on-site:
Homepage frontage (banner section with or without clickable graphics, advertising-style boxes)
Calls to action (Click here, Read more, Buy, Sign up, Register)
Competitions, Offers and Discounts
Checkout Vouchers (codes) to promote repeat purchases
Product Reviews
Social Media integration (Facebook/Twitter feeds)
UPC is one of Ireland’s best performers online and offline. The website has an uncluttered feel with
banner slides, a main menu, a ‘quick links’ menu, sections for core objectives e.g. ‘Television’,
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‘Broadband’, new customer offers, section ‘calls to action’ and an email sign up. They even have a peel
back page to entice curious customers.
This neatly portrays best practice design, usability and marketing to instigate e-commerce sales.
Off-site
Inbound Marketing Cycle, Hubspot
Inbound Marketing (Content/Social networking/blogging/Video/Forums/Infographics)
Digital Advertising (pay per click/Banner advertising)
Social Media
Email Marketing
Video
Recommendations
Off-line
TV
Radio
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Media (PR)
All of the above methods can be used to create a multi-media strategy to promote products. Each stream
can be accessed via analytics and attributed a goal conversion target to determine performance.
Social Recommendations
Source: http://www.zendesk.com/resources/customer-service-and-lifetime-customer-value
Recommendations on social platforms are making an impact on consumer buyer decisions with 93%
influence in 2013 according to Carot.ie41 Sites such as TripAdvisor, Yelp and similar help 90% of
customers make a buying decision42, proving that recommendations are a powerful source for consumers.
41
http://www.carat.ie/uploads/136310064033482/original.pdf 42
http://blogs.constantcontact.com/fresh-insights/do-customers-trust-online-reviews/
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A survey conducted in the USA43, compared the effect of both good and bad reviews, stating:
45% share bad customer service experiences and 30% share good customer service experiences
via Social Media
More have read positive reviews (69%) of customer service online than negative reviews (63%)
Allowing customers to negatively or positively ‘rate’ products and services is seen as a genuine activity by
retailers and customers appreciate feedback from others, so that they can gain further insight into the
product before they purchase. The goal for retailers is to ensure detailed information is available to
customers and that quality is paramount - otherwise, negative reviews and recommendations can have a
severely damaging effect.
43
www.dimensionalresearch.com via http://www.zendesk.com/resources/customer-service-and-lifetime-customer-value
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Monitoring and Transaction Flows
The best time to put performance analytics in place is when setting up an online store. Failure to track
website performance is to fail to create insightful data derived from all website activities.
The most popular tool is Google Analytics.
Google Analytics offers multiple options for e-commerce websites, such as:
Enabling e-commerce settings
Activating and configuring site search (monitor internal searches)
Transaction filters (to group categories for insights)
Time zone settings (useful for real-time analytics)
However, e-commerce site owners should also concentrate on establishment of goals and funnel flows.
These are addressed on the following pages.
Goals and Funnel flows
Goals can be generic or targeted. They can be set for particular time-frames, to assess ad hoc projects or
used to assess trends over time.
There are four goal types, giving retailers the choice of:
URL destination
Visit Duration
Page/Visit
Event
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Goals are a mechanism for monitoring online objectives such as:
Number of people who contacted via a contact form
Number of sales made on the website / number of sales per product category
Number of applications or sign-ups
Number of people who entered a competition
Number of people who spent over x minutes viewing web pages
Number of people who looked at more than y pages on the website
Number of people who watched an ‘event’, like a video
Number of people who downloaded a .pdf, a white paper, a report or similar
Using goals, retailers can monitor such as:
Total transactions, transactions by category
Downloads
Competition entries
E-mail sign-ups
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Funnel flows
Funnels flows and Goals go hand-in-hand. Goals provide metrics for completed actions and Funnels track
all steps (pages) preceding those actions. The benefit of Funnel Flows is that you can see a visual of where
conversions start, when they drop off and which flows (steps) are performing best.
Google Analytics
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Campaigns
Google Analytics offers a feature that is useful if marketing activity consists of various digital campaigns
like emails, banners and advertising.
Custom campaign parameters (extra code) can be added to track campaigns in order to monitor the effect
of external campaigns within the website traffic reports. This provides a more holistic view, greater
monitoring power and a way of attributing goals/sales/objectives.
Custom campaign parameters can highlight an actual email creative or particular banner, as opposed to
just a ‘referral’ or even an ‘email referral’. If three of five emails sent are under-performing, the two that
performed well can be assessed and the information obtained then used to produce more effective email
campaigns.
Parameters are set by entering them in the custom URL builder.
Example:
http://www.ahaingroup.com/?utm_source=boards&utm_medium=banner&utm_content=social&utm_campaign=socialBus
iness
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LEARN FROM THE MASTERS
Big name brands like Burberry, Amazon, John Lewis and Tesco use their status to optimum advantage in
the online environment. With substantial financial budgets, these brands could dominate. The ease of
entry, low maintenance costs and the ability to reach a wide (global) audience without huge
investment, afforded by the Internet, level the playing field somewhat, however.
Amazon
Amazon is a digital colossus, a household name - and experienced one of the fastest growth trajectories in
the internet’s history. Within its first five years, Amazon reached $2.8 billion in revenues, compared to
Google’s achievement of $1.5 billion, and eBay’s $0.4 billion. As of May 2013, Amazon’s market cap is
$117 billion, with over 152 million customers. It currently represents a staggering one-third of US e-
commerce sales.44
Amazon grew to become a commercial juggernaut achieving total dominance online, due to three main
factors:
1) The limitless inventory afforded by a digital operation
2) High-margin, low-cost products
3) Outstanding customer care (two-thirds of Amazon sales are to returning customers)
In 15 years, Amazon went from serving one retail category (books) to 16 main categories. They began with
books as, at the time in the mid-nineties, the market was quite fragmented, with no one dominant player.
This allowed Amazon to enter the market as a nimble upstart without fear of being quickly edged out by a
larger company.
44
http://www.slideshare.net/faberNovel/amazoncom-the-hidden-empire
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The rate of growth is amazing: Amazon started with a garage of 400 square feet in 1995, 2 fulfilment
centres of 300,000 square feet in 1997 and 50 fulfilment centres of 26 million square feet in 2010.
Acquisitions and partnerships have been key to Amazon’s growth strategy. It has acquired many
companies in areas where there is an incumbent who would prove hard to beat and, equally, it partners
with various existing online operations when there is an obvious opportunity for synergies and to benefit
from the partner’s existing market share. [Example of incumbent acquired is Zappos].
This also allows it to achieve massive inventory for its customers - great when customers place a high
premium on choice and selection, so this helps fuel even further growth, revenue, and profits.
Examples of co-branded or formed partnerships include Waterstones and Toys R Us.
Innovation
Amazon is synonymous with innovation, both in terms of marketing, customer service, and of online
properties. The company constantly looks for new opportunities to drive more traffic and revenue to the
online site through a multi-pronged approach focusing on those three areas.
When it comes to web properties, Amazon has a strong focus on conversion optimisation and testing.
Here is just a snapshot of the different on-site innovations Amazon has pioneered over the course of its
history:
1995: Customer reviews
1997: 1-Click ordering
2001: ‘Look inside the book’ feature
2003: ‘Search inside the book’ feature
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Example of Amazon ‘look inside the book’ innovation
Optimisation, Mobile and Payments
In terms of conversion optimisation - 1-click ordering was brand new to the industry, and Amazon paved
the way for others to follow in terms of its relentless focus on conversion optimisation and making it
really easy for the customer to buy from them. Amazon in fact pioneered A/B testing in 1997.
Its approach to and recognition of the critical importance of mobile, also plays a key role in enabling a
seamless shopping experience no matter where one may be, e.g. comparison pricing with barcode
scanners when out and about or in a physical store, anywhere.
In terms of accepting payments in this $1.0trillion p.a. industry, Amazon was also quick to identify the
need for its own payment system, free of the charges imposed by incumbents such as Paypal. It launched
Amazon Payments in 2007, to compete with Paypal and offer its own payment method, reducing its
reliance on external payment networks.
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Marketing Innovations
Amazon is also innovative in its strong focus on personalised marketing, i.e. one-to-one marketing.
Crafting customer experiences at an individual level and enabling discovery of other products, is
something it does exceedingly well and it is evident to any returning customer viewing their
recommended content and related products of interest. It also inspires trust and this is consolidated by
the huge focus on customer service and by exceeding customer expectations.
The Kindle
Perhaps nowhere is Amazon’s shrewdness more apparent than in the introduction of the Kindle to an
already highly-competitive market. The fact that the company introduced the product as a loss-leader is
only one side of the story, given that what they lose in sales of hardware is made up for in terms of
follow-on sales via the same device. The Kindle not only gives people a superb reading experience, it also
offers the perfect channel linking the reader to the Internet and therefore to Amazon’s vast range of
consumer offerings.
Amazon Kindle products (homepage splash) amazon.com
More chances to browse content again leads to more potential for purchases and so, with the Kindle,
Amazon is showing once more why it has achieved its current standing as a giant of e-commerce.
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Burberry
‘E-commerce is the latest fashion accessory’ if Burberry is anything to go by. Founded in 1856 by 21-year
old dressmaker Thomas Burberry, Burberry is now a £4.95bn business, is one of the UK’s biggest
e-commerce success stories and was winner of the Digital Innovation award at the
British Fashion Awards in 2010.
Burberry has shown that a digital-oriented marketing strategy yields outstanding all-round results when
using a multi-channel approach. In 2012, total revenue of £1,857 million and sales of £1,270 million, and a
24 per cent rise in each over the past year. Sales of menswear alone grew by 40 per cent in 2012.45
Success
2011/12 Burberry was named the fourth-fastest growing brand globally by Interbrand and
WPP/BrandZ, behind Apple, Google and Amazon
Burberry has opened 18 stores in emerging markets of China, India, the Middle East and Latin
America
It has received ‘International Retailer of the Year’ and ‘Retailer of the Year’ awards
It obtained 'Genius' classification in a "Digital IQ" report46 (New York University think-tank
LuxuryLab) for seamless digital and e-commerce integration
45
http://www.burberryplc.com/about_burberry 46
http://www.luxurydaily.com/burberry-continues-digital-domination-tops-fashion-iq-study-l2-think-tank
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Technology and Digital
'Technology is an intrinsic part of most people's lives, all we've done is make sure to weave technology into
the fabric of the company.' Burberry chief creative officer
Burberry has led the way for retailers globally, in pursuit of digital acclaim with a jaw-dropping 60% of
their total marketing budget allocated to digital.
Social
‘You have to be totally connected with everyone who touches your brand. The iconic fashion brand
embraces the Web and Social Media to extend the brand and engage with customers and fans in entirely
new ways. The new way to measure customer reaction is engagement.’ Angela Ahrendts, Burberry CEO.
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Burberry was one of the first brands to realise the potential for retail and sales through Social Media and
has been rewarded with a combined Social audience of over 17 million -
15 million Facebook fans
More than 1.7 million on Twitter
761,000+ Instagram followers
Burberry has introduced live-streaming of catwalk shows from London and live-tweeting ‘Tweetwalk’ of
each ‘look’ on the runway with garment details.47 All pieces are then made available for sale online, direct
from the show. This is a dramatic overhaul of the usual six-month wait.
Burberry World is ‘the ultimate expression of the Burberry brand’ for store visitors to ‘engage, entertain,
and interact…’ 48
Innovation
Burberry is never afraid to innovate, and the flagship London store is a testament to that innovation.
Designed to resemble the website, Burberry are giving customers a ‘home-on-the-sofa’ shopping
experience with no queues or waiting. That allows:
The consumer to sit while staff members bring the ‘pay point’ to the consumer
RFID microchips within each garment activate mirrors that display videos of the making of the
garment and the modeling of it, on the catwalk
A trench coat designing area (trench coats are Burberry’s most iconic item)49
The store on Regent Street has been designed as a physical manifestation of the Burberry website,
branded ‘Burberry World Live’. This is a clear statement to the world that Burberry places digital as
number one.50
47
http://fashion.telegraph.co.uk/news-features/TMG9694181/Burberry-entrenched-in-the-digisphere.html 48
http://www.salesforce.com/customers/stories/burberry.jsp 49
http://retailindustry.about.com/od/retailtrendsetters/p/Burberry-London-High-Tech-Flagship-Store-Biggest-Best-UK-Design-Website-Features.htm 50
http://blog.micros-ecommerce.com/2012/09/28/how-burberry-is-using-technology-in-their-flagship-store-on-regent-street/
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Burberry’s retail theatre showcases live catwalk footage from within the store. The central point is a state-
of-the- art 22-foot screen with enhanced acoustics utilising 500 speakers - seamlessly integrating digital
with the shopping experience.
Campaigns
To launch the ‘Body’ fragrance, the public was invited to 'Like' the Facebook page, to register for a freebie.
The campaign resulted in 8.5million followers.51
51
http://fashion.telegraph.co.uk/news-features/TMG8822760/Burberry-named-most-digitally-competent-luxury-brand.html
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On YouTube, Burberrys shared their spring/summer campaign of ten-year-old Romeo Beckham, dancing
alongside Edie Campbell and Charlie France. For the clip he donned the season's metallic lamé shirts.
Views were in excess of 1.6 million views in 48 hours.52
Earlier in the report, profiling of customers was discussed to illustrate how marketing allows a campaign
to segment and target. With the “Art of the Trench Campaign”, Burberry utilised a fashion ‘street’ blog to
engage a younger generation of customers; a new profile of customers, this generation was targeted to
interact with the brand on Social Media by ‘liking’, ‘sharing’ and ‘commenting’ on photos.53
52
http://www.independent.co.uk/life-style/fashion/features/digging-trenchcoats-what-makes-burberry-our-boldest-brand-8504034.html 53
http://www.medianeedle.com/blog/2010/11/burberrys-successful-social-media-campaign/
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Littlewoods Ireland
Littlewoods Ireland (Shop Direct Ltd) is very much an Irish brand and has been trading in Ireland for 35
years. It is one of the most admired brands in terms of digital capability, one of the Top 1000 Irish
businesses and had a recorded turnover of €54.6 million in 2012.
Grey Fry of the Ahain Group interviewed Commercial Director, Geoff Scully, to get a snapshot of where
Littlewoods Ireland is in relation to e-commerce and what it is doing in the digital space.
Geoff Scully, Littlewoods Ireland
Littlewoods Ireland operates independently of the UK in terms of marketing. It oversees all marketing
operations and takes ownership of development and design of all digital campaigns. The online operation
has seen exponential growth, changing the Littlewoods model from a primarily catalogue-based business
in 2007 (15% of their business online) to a dominant online business, with 83% of business via the web. It
has moved from display ads in recent months and now allocates 2% of the budget to Social ads and
above-the line-marketing.
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Challenges
Source: edudemic.com
Geoff, as Chairman of EEI (Digital Division eTail Excellence Ireland), is very aware of the challenges that
retailers face when developing their business online. A recent survey of 400 retailers carried out by the
EEI revealed that only 56% of retailers had a transactional website.
Geoff explains that digital marketing is - at the end of the day - marketing, like any other, and retailers
should ensure they keep the tone of message consistent across all marketing channels. Digital marketing
has to be integrated into the core of all marketing efforts.
Geoff is supportive of the role that digital experts play and urges companies to spend money working with
specialists when moving online. He is adamant that no unsupervised interns should support the online
function.
As the conversation turns to ‘returns’ - a subject that most retailers consider as the ultimate negative of
being online, Geoff is clear on the facts:
If an outlet offers free returns, the average rate of returns will be 31-33%
If the customer has to incur the postage cost return rates, this drops to 21-24%
Clothing can have a return rate as high as 70%, the average rate is 45-50%
Electronics is one of the lowest categories with a returns rate of 7-9% on average
Costs are a big consideration for retailers moving online - postage, staff to handle the returns, customer
service, etc. Littlewoods has a warehouse dedicated to returns alone, at which the condition of returns is
checked and items are re-packaged. A proportion of goods are damaged or open and in such instances,
the retailer must take a decision on follow-up, based on the cost and time of challenging the customer.
Fraud is still a big and legitimate concern for online retailers in Ireland. Geoff believes Ireland will have a
proper Address or Post Code system within the next 18 months and believes that this will help the fight
against fraud online by cross-referencing credit card transactions with a physical address - if the delivery
address differs from the credit card address, for example, further verification may be needed.
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Mobile Device Revolution
Responsive design websites are great, but e-commerce sites that host a high degree of video content may
take too long to upload. Time is of the essence for online customers and Littlewoods aims to achieve
response times of two seconds; any longer is too long and could result in lost custom..
Traffic via smartphones and tablets for Littlewoods has risen over a short time period with:
30% rise on mobile
172% rise on tablets
Geoff adds that while conversion rates are still low on mobile, tablet conversions are heading towards
parity with laptops.
Standing out from the crowd
The online space allows the retailer to reach a wider audience, but, within a really competitive arena.
Within this arena, pricing tends to be highly competitive, so the key differentiator is quality of service.
A site has just eight seconds within which to capture and keep a new customer, so the online store must
appeal instantly and secure the customer’s attention.
Personalisation is one of the key objectives when running an e-commerce site. If, for example, a customer
is shopping for a red dress and the retailer sees from previous transactions that the customer is a size 10,
then the customer should see all red dresses in stock that have a size 10. The concept is to show items
that the customer might purchase - not items that the customer cannot purchase, such as different sizes.
Referred to as ‘Re-marketing’, the concept can only be applied to advantage in countries in which users /
customers have opted in to use of personal data. It appears that, as long as a website explains the use of
cookies and offers an opt-in option, re-marketing is free of risk to the retailer.
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Geoff, Chairman of EEI54and Sheila Buckley (formally of Carphone Warehouse) Head of eTail Excellence
Ireland, are both committed to helping retailers to excel online.
Some of their principal objectives are: –
To create a central hub for e-commerce in Ireland and to work with other similar organisations
To ensure that up-to-date data on the online retail marketplace in Ireland is readily available
(including stats on pre-smartphone and tablet data)
To identify and recommend the best digital marketing agencies, web developers, analytics
experts, etc. who can help a retailer maximise its efforts online
Innovation
Every retailer will have a brand that they monitor closely in terms of innovation and for Geoff, that brand
is John Lewis. The No.2 online retailer in their category, in the UK, is ahead of the curve and uses ‘click to
collect’ functions.
54
http://www.retailexcellence.ie
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The John Lewis Partnership
The John Lewis Partnership is one of the biggest retailers in Britain. It has more than 28 department
stores and over 200 Waitrose food shops, as well as other interests including a home furnishing
production unit and a farm – all producing a combined annual £8.2bn gross sales. 55
John Lewis Direct is the Internet arm of John Lewis department stores providing customers with multi-
channel options to shop. The website features over 70,000 lines with a number of user-friendly options
and it reached more than £800m in annual sales through Johnlewis.com in 2012.
Adwords
Using Google Adwords, John Lewis gained prominent search placements. This search for the ‘iPad 2’, saw
John Lewis adverts above above both Argos and Tesco.
55
http://www.jlpjobs.com/jobs/head-office-jobs.htm
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To show how dedicated John Lewis are in claiming iPad 2 sales, A search for ‘John Lewis’, shows the title
containing the term ‘iPad’ and one of the main sections highlighted is ‘iPad & Tablet PCs’ – an indication
of its dedication to achieving iPad 2 sales.
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Plenty of attention given to products
Deep Product description pages with information, a neat layout and clean graphics:
Consistent website navigation
The difference between an average user experience and a great one, is navigation. John Lewis has a
consistent navigation across the website that encompasses the primary menu and breadcrumb trail that
allows shoppers to go back through the categories.
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Optimised ‘enclosed’ checkout flow
Abandonment rates at the online checkout can be as high as three in every five shoppers56, so optimising
the checkout flow can decrease this figure
John Lewis has removed the main navigation and obtrusive information to streamline the checkout and
offers a wide selection of payment options.
Unlike many competitors, John Lewis allows customers to select whether they wish to register at the
beginning or at the end of the checkout process.
56
http://econsultancy.com/ie/blog/11297-effective-ecommerce-tackling-the-checkout-challenge
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Free delivery on purchases over £50
Customers can easily be put off by a high postage rate. As a way of eliminating additional costs for the
shopper and to incentivise a higher sale per shopper, free delivery on orders above a certain amount
(such as £50 as John Lewis has used), is an excellent way of gaining a sale and keeping customers happy.
Click-and-collect (order online, collect at specified locations)
A giant leap for online retailers is use of the physical stores – Click-and-collect means that a customer can
order online and collect at a store of their choice.
As the John Lewis Partnership includes Waitrose, customers also have the option of ordering via John
Lewis Direct and collecting from Waitrose.
Click-and-collect
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Strong mobile adoption with WiFi in-store
In support of mobile usage, John Lewis has introduced WiFi from a BT Openzone to all stores.57 This aids
shoppers in researching products, comparing details and checking reviews.
johnlewis.com
Multi-channel strategy
John Lewis has embraced a multi-channel strategy by marketing via smart device apps, introducing
personalised deals and sending coupons to reward purchases via Click-and-collect.
57 http://www.johnlewis.com/inspiration-and-advice/access-wi-fi-in-our-shops
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OPPORTUNITIES FOR RETAILERS
2012 saw Pinterest flourish and introduce a new discovery shopping model. It also saw mobile
integration advance in the form of search, apps, payment and more.
2013 will no doubt build on this momentum.
Key trends which will fuel e-commerce growth in 2013/2014 include:
1. Mobile and M-commerce
2. Mobile Marketing and increased mobile integration
3. Localised Content
4. Visually stimulating technology like Augmented Reality
5. Curated Commerce
6. Rise of the specialist retailer
7. Increased video use
8. Blended commerce - merging on-line and off-line
9. Advances in payment technology
10. Use of apps and tactics like Showrooming
11. Real-time bidding
The opportunity for retailers is a moving bar – it keeps rising. The effect of disruptive technology, of
customer insights and of new forms of interaction like Social and Mobile, are influencing the success of
e-commerce.
We explore some of the key trends above, on the following pages.
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MOBILE
The benefits for users are many – lightweight, portable, ability to connect to the Internet and
functionability that mirrors the standard PC. For retailers, mobile commerce (M-Commerce) and mobile
marketing campaigns are dominating the digital sphere.
image credit: Apple
Mobile provides all-in-one connectivity, flexibility and mobility offering a connection anytime, anywhere.
Mobile commerce opens up the market further to capitalise and profit from this connection.
There are at least 750,000 smartphone owners in Ireland58
38% of consumers now shop online via Smartphone or Tablet59
16% of adults have used a tablet to purchase online while 22% have used a smartphone
The market penetration of mobile usage in Ireland is actually over 100% with 5.52m active mobile
phones; there are 5.9bn mobile devices in use worldwide60
58
http://amas.ie/tag/social-media/ 59
http://www.carat.ie/uploads/136310064033482/original.pdf
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Retailers’ apps take up the most of consumers’ time at 27%, followed by online marketplace at
20%, purchase assistant at 17%, price comparison at 14% and daily deals at 13%61
27% of companies worldwide plan to implement location-based marketing in 201362
By the end of 2013, there will be more mobile devices on Earth than people 63
Is Mobile Worthwhile For Retailers?
Mobile commerce (m-Commerce) is a growth area for businesses that sell online: ‘Amárach64’ predicted
that the acceleration in smartphone use would stimulate demand for mobile commerce in Ireland and
forecasted that €800 million worth of transactions would be conducted through mobile devices in 2012.
‘In the first half of 2012, mobile advertising revenues reached an all-time high – peaking at
£181.5m with mobile ad spend up 132%. Mobile advertising revenues will undoubtedly continue
to increase in 2013.’65
Of 42% of people who clicked on a mobile ad, 35% visit the advertiser’s page66
‘67% that view a mobile-friendly site will buy/use the service’67
82% have researched a product via their mobile and 67% that view a mobile-friendly site will
most likely buy/use the service68
In support of mobile commerce, the above statistics are powerful motivators, although as mobile
is still (unbelievably) in its infancy, retailers adopting mobile strategies must investigate: -
o Projected increase in sales
o Competitive insight - demand, usage, potential audience, average mobile sale, etc.
60
DMI Mobile Marketing Conference, Dublin 2013 61
AdMedia Partners via Marketing Charts, 2013 62
Comscore via Econsultancy, 2013 63
Cisco via Mashable, 2013 64
http://amas.ie/online-research/state-of-the-net/state-of-the-net-issue-21-summer-2011/7-mobile/ 65
James Connelly, co-founder/Managing director of mobile agency Fetch 66
Google via Mobithinking, 2013 67
Paul Dunne, DMI Mobile Marketing Conference, Dublin 2013 68
Eric Daly, DMI Mobile Marketing Conference, Dublin 2013
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A promising Irish example is RTÉ, who have seen traffic to their web services from mobile devices increase
from 15% to 40% in 201169
RTE’s mobile adoption is now at 60% with 63% of their 128 million page impressions coming from mobile
devices. Their ‘News Now App’ has 900,000 downloads and 20% access from international sources.70
Mobile Design
When designing a mobile website, there are three types of design that can be chosen: -
Responsive design
A responsive design adjusts to any width. This is a good solution, as it will ‘flex’ for all devices and is a
‘future-proof’ option that will work on future mobile and tablets.
Recent travel-companion website Travelbuddy71 has secured Enterprise Ireland funding to provide a
technology-driven activity tool for travellers. The website has a series of responsive-designs for iPad and
iPhone devices, and a plan for geo-targeted marketing to promote unique attraction/activity discounts.
69
http://www.slideshare.net/AMASinternet/state-of-the-net-issue-23-pdf 70
http://www.rte.ie/blogs/digital/2013/05/15/the-future-of-mobile-and-rte-digital-and-mobile-monday-event/ 71
http://www.travelbuddy.mobi
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Adaptive design
A website using an adaptive design, adapts to device widths and viewpoints. While this approach is quick
and easier to implement, it doesn’t account for future device screen changes and so could be obsolete in
a short time-frame.
Pure mobile
Pure mobile websites differ from responsive/adaptive websites, as pure mobile are honed for mobile use.
Websites like Daft.ie, The Open University and The Journal account for mobile devices by designing mobile
websites with the following in mind:
Compress the site navigational menu system and prioritise options; use collapsible navigation, as
opposed to full
Add ‘click to call’ options
Use Screen swipes
Insert big buttons that stand out against backgrounds and are perfect for big fingers
For retailers – include maps/GPS and the ability to check stock at stores
Use Auto-detection feature that sends all mobile users to the mobile site
daft.ie
Websites like Mobdis and Wix mobile help website owners build their own mobile websites. Mobile
applications (apps) are synonymous with mobile devices. If a user has a ‘linked’ set of devices, ie. Apple
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iPhone and Apple iPad, the apps can appear on both devices; some apps however, are only suitable for a
smartphone or tablet.
Apps and Tactics
The values of apps for businesses are based on:
Trend (apps are ‘in’)
Public Accessibility (their website, Apple store, Google)
Ease of use for users and the fact that apps are added to the main screen to access them quicker
Dynamic applications – integration functions for a seamless user experience
Make instant updates in-line with technology, feedback, etc. and make changes available to users
(they must update app)
There are countless apps on the market and more businesses are investing in them as they drive
customers to the business.
democraticapps.com
Democratic apps72 is a business that is based on an app product. This app is designed so that Politicians
and Councillors can enter their details and the general public can use the app to contact them directly,
follow them on Social platforms and log local issues.
Sage 50 app73 allows the user to access his/her finances, produce instant quotes and even generate
invoices.
72
http://www.democraticapps.com
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Both of the examples above utilise mobile by giving smartphone and tablet users access to their products
on the go.
Accessibility is key to a successful mobile strategy.
Showrooming
Showrooming is the term used when a mobile user accesses an online store while in a physical store, to
compare prices. They may use Amazon’s ’Pricecheck‘74 app to check the price on Amazon, and all they
need is a search term, an image or a scan of the barcode.
73
http://www.sage.co.uk/sage-50-accounts-mobile.html 74
https://play.google.com/store/apps/details?id=com.amazon.pricecheck&hl=en
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ADVANCES IN PAYMENT TECHNOLOGY
One of the greatest advances for mobile commerce is the ability to generate an instant payment. Through
the use of technology and the ‘buy in’ of global payment systems like Visa, there are now a number of
payment technologies with products in the mobile commerce market.
Mobile payment technologies:
Realex payments75 remains one of the top providers of online payments, allowing payments from credit
cards, debit cards and even the Irish Laser card (although this is being phased out 2012/2013). The service
is operated in conjunction with most card merchants such as VISA, MasterCard and American Express.
VISA76 (in conjunction with Samsung) has enabled Near Field Communication (NFC) payments (as opposed
to chip and pin) on Samsung devices. These utilise a secure element chip, embedded within the devices
that stores the user’s payment account information.
MasterCard has launched MasterPass77 - which is a secure digital merchant checkout service.
Payment Security and Fraud
Online fraud is one of biggest challenges that an online retailer will face and it is only increasing. Accord-
ing to Experian (UK) :
Annual fraud losses across the UK are now estimated to now top £70bn (Experian Fraud Report
2012)
75
http://www.realexpayments.com/ie 76
http://techcrunch.com/2013/02/25/visa-samsung-ink-nfc-deal-galaxy-s-iv-first-in-line-for-deep-integration-roam-is-visas-first-ready-mobile-payment-partner/ 77
http://www.mastercard.com/masterpass/
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In the United States, the FBI’s Internet Crime Complaint Center recorded 300,000 fraud
complaints in 2011 with an adjusted dollar loss of nearly half a billion dollars. For victims
reporting financial losses, the average was $4,187 (Microsoft Online Fraud Booklet)
Fraud prevention company, Trustev78 recommend an additional layer of security to limit the financial
loss merchants face when dealing with fraudulent activities.
The company offers real time, online identity verification using unique social fingerprinting technology. It
verifies a customer's identity to ensure they're a real live human being and not a fraudster or an
automated fraud attack.
The verification technology is so advanced that it rates and verifies in a matter of seconds, analysing past
purchase patterns and a series of standard and custom criteria.
Mobile Marketing
As the adoption of smartphones increases, as too does the marketing for retailers.
Similar to the bygone days of email only marketing, mobile only marketing gives mobile users the edge.
78
http://www.trustev.com
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staples
Staples, for instance, has engineered a mobile-only campaign that advertises on mobile devices with
Black Friday deals prior to the date.79
Fashion retailer Diesel, launched a QR campaign that rewarded fans for ‘liking’ products on Facebook by
offering a discount. The idea being that by ‘liking’, you share the product with all your friends.
Diesel
Location-based retail / Geo-targeting
Location-based marketing for retail stores like Subway, Littlewoods Direct and Walmart is an excellent
way to entice shoppers to the store.
Subway UK‘s ‘You Are Here’ campaign, via O2, targets customers based on their location. Opted-in users
near a Subway store are sent an MMS (multimedia messaging service) with vouchers that are scanned in-
store.80
79
http://www.internetretailer.com/2012/11/09/staples-will-reward-mobile-night-owls-black-friday 80
http://mobilemarketingmagazine.com/content/o2-more-launches-subway-mobile-voucher-campaign
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Subway
Walmart’s ‘Store Mode’ mobile app uses geo-location and geo-fencing technology to detect when
customers are in a store. When they enter, the screen below pops up on their mobile.81
Walmart
81
http://www.internetretailer.com/2012/05/31/wal-mart-wants-consumers-use-its-apps-stores
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Virtual stores
Wal Mart has dominated in the US grocery market for innovative selling, and its virtual toy store (in
conjunction with Mattel) as part of a pre-Christmas campaign,82 was nothing short of genius. Customers
could pre-order toys by scanning the QR codes.
Walmart Toy Store
Tesco is also a leader of online selling and pure innovation in the grocery sector across the UK and within
the Asian market.
Tesco’s virtual stores have been rolled out in Korea and the first virtual store in the UK has been set up at
Gatwick Airport, London. The stores are a virtual representation of a physical store, so the food items are
seen in graphical form. Customers use their smartphones to scan the QR codes associated with the items
they wish to buy and the items are then paid for via an app.
Merging Online and Offline and Blended stores
An exciting trends is the one that fuses the benefits (and coolness) of a digital store with physical stores.
Burberry’s flagship London store is an excellent example.
82
http://www.aquarius.biz/en/2012/11/09/case-study-walmart-focuses-on-shopping-in-virtual-supermarkets/
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Modeled on the website, so that the customer experience mirrors the online one – for example, use of
clothes embedded with chips which activate when the wearer looks in the mirror; now it is possible to
view the item on the catwalk and see how it was made. There are checkout staff that come to conclude a
purchase with in-store iPads.
This kind of digital-Social upgrade has transformed Burberry into a digital-savvy retailer that understands
the power of Social Media in the real world. It represents a benchmark for all other retailers to follow and
it will be interesting to see who accepts the challenge to join them.
Another strong example of Social-retail integration and of blended stores, car manufacturer Renault has
launched Facebook check-in in store that enables users to ‘like’ their favorite models.83
Whisper codes are codes that are given on social platforms, yet used in store, allowing retailers to provide
social media only promotions.84
83
http://mashable.com/2011/06/21/innovative-mobile-marketing-campaigns/ 84
http://www.jonloomer.com/2013/04/30/facebook-capture-leads/
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Augmented reality (AR)
Augumented is a live, direct or indirect view of a physical, real-world environment whose elements are
augmented by computer-generated sensory input such as sound, video, graphics or GPS data. Augmented
Reality brings a campaign to life by allowing customers to interact with the brand.
Examples include:
Walmart ’Scan & Go’ service85 that lets consumers save time by scanning store items with their iPhone
device and bagging straight away. Consumers can head to a self-checkout lane, transfer their basket
wirelessly and complete their payment.
National Geographic brought Dinosaurs86 to life in an AR campaign designed to allow customers an
opportunity to interact.
Integrating Social with a Website
The dominance of Social Media has had an unprecedented effect of e-commerce and the trendiest of
websites in general. Many existing are modernising and mirroring the sleek, carefree Social look that sites
such as Facebook and Twitter employ.
From the more simplified nature of adding Social Media icons as a way of boosting a following and fan-
base, website owners are now integrating Social feeds and Facebook connect/OAuth (Facebook login) like
Small Business Can.
85
wm5.walmart.com/scanandgo/ 86
http://www.businessinsider.com/augmented-reality-campaigns-2013-2
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CONCLUSION
The key insights this Report has uncovered are:
the complex decision-making process for e-commerce design and setup
the strength of social media in relation to buying habits
the supporting nature of inbound marketing for retail
the rise of technologies such as mobile transactions, apps and augmented reality
the new trend of blended physical - digital stores
E-commerce has adopted a daring approach combining use of technology and Social Media. The leading
brands are allocating more of their marketing budget funds into technology and digital and reaping the
benefits.
Burberry’s flagship London store has created a new trend in digital; the blending of digital and physical.
This powerful combination seeks to celebrate the relationship of digital AND physical. Renault has used
the idea of blending with a Social influence, by featuring stations where customers can connect with
Facebook to interact with products.
Mobile continues to pick up the pace and disrupt the typical e-commerce model. A top priority consid-
eration for online retailers is not only does the website look good, but does it look good on smartphones,
portable devices and TV screens. PCs may still be a predominant device but the borderless technology
that has powered the Internet, has found an ally in wireless. The ‘now’ of retail is all about flexibility,
integration and wireless.
Mobile marketing has also simplified the buying process, leading retailers to advertise specifically (Google
Adwords has multi-options and one is Mobile only) and use location-based marketing to target customers
in real-time. Subway’s ‘You Are Here’ campaign and WalMart’s ‘Store Mode’ mobile app incentivize
shoppers to convert either close to or within their shores. Scan and Pay is revolutionising mobile as a
complete transaction tool, capitalising on the momentous rise in mobile searches in the retail sector.
In keeping with the ‘borderless and flexibility’ theme, technology knows no bounds and can be
experienced anywhere as Tesco has shown with its virtual stores and the National Geographic with its
augmented reality (AR).
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Lastly, the speed of technology within e-commerce is a signal to retailers to ‘keep the ball in the air’ and
be as progressive with stores as technology will allow. It moves swiftly, and retailers failing to invest, can
quickly fall behind.
Key takeaways: explore, interact, socialise, blend, mobile and integrate.
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