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For every dollar spent online, six dollars are earned in sales in the traditional channel which are influenced by the Internet, according to Richard Last of JCPenney. ‘In other words, consumers are active participants in multichanneling. And we have to take advantage of this.’ Last gave the introductory speech to open the second day of theGlobal E-commerce Summit. A report.
Last, who is also the president of the American industry associationShop.org, turned the microphone over to Wijnand Jongen, director of the organisation’s Dutch counterpart,Thuiswinkel.org. In a follow-up to the presentation given by Scott Silverman, who, during the first day of the Summit discussed six trends in the American market, Jongen also mentioned six image-determining developments on the online retail market. However, this time the trends applied to Europe.
Jongen started by saying that there is still plenty of growth potential (1) for webshopping, and that this potential may be found primarily in the southern and eastern parts of our continent. There is also still flexibility for online sales’ share in the total distance-selling sector.
Changes in customer behaviour as a result of the financial crisis (2) have already become visible, according to Jongen, who referred to the increasing use of (price) comparison websites. ‘There is also a positive side to the crisis. Specifically, that a 'battle of the channels' will develop, a war for which there can be only one winner.’ In Jongen’s view, it is definitely conceivable that online shopping will leave the battlefield as the winner.
Jongen next stated that ‘long tail’ in Europe is 'alive and kicking'(3). He added that the question still is whether or not niche sites will make the larger sites redundant, or that the larger sites will swallow up the niche sites.
In the near future, an increasing number of manufacturers will have to start working on direct sales online (4), Jongen continued. Europese consumer protection has since also become a current political theme (5) and the harmonisation of webshops' rights and duties in different European countries (6) is one condition for the growth of sales across country borders.
The fact that European consumers are only making scant purchases online in webshops outside of their own country's borders was confirmed by Victoria Bracewell Lewis of Forrester. In the research firm’s very latest preview on online shopping in Europe, the online channel’s for 2013 was forecast at €186.1 billion. One of the more striking figures in this forecast is that projecting that webshopping will take a huge leap forward in 2010. After that, growth will level off.
The figures:
2008: € 124.1 billion
2009: € 136.0 billion
2010: € 151.2 billion
2011: € 163.6 billion
2012: € 174.7 billion
2013: €186.1 billion
Bracewell Lewis also listed the most important drivers behind this growth. On the consumer side, these are the growing penetration of broadband, the growth of the use of Internet (both in terms of numbers of users as well as user intensity), and the increasing degree of trust in the Internet. On the retail side, these are the improvement of delivery options, the gradual improvement in the design of websites, the increasing competition and the rise of free shipping. ‘The old obstacles are slowly disappearing,’ Bracewell Lewis summarised.
In her opinion, the same may be said of factors that make the difference in a webshop’s appeal; convenience, selection and price have become basic conditions. As a webshop, you can no longer set yourself apart on the basis of these basic elements. Where can you make a difference then? According to Bracewell Lewis, these areas are service, control (it’s consumers’ turn now, and they essentially do the marketing for you these days), and audience engagement.
Just like Richard Last, Tony Stockil, CEO of the Javelin Group and Russell Harte of Boots.com also discussed the influence the Internet has on physical stores. The former shared his conclusion with the audience in the Krasnapolsky that in terms of movement between the channels, the opposite of what was expected several years ago has now been proven to occur; people mainly thought that shoppers would first nose around in the stores and then make their purchases online. These days, the opposite appears to be occurring. ‘So in fact, your website has turned out to be your shop window, the central entrance for the customer,’ according to Stockil, who provided several recommendations on participating in multichanneling successfully.
These tips may be found below:
• Also offer your entire range online;
• Show the stock available at that moment in the shops nearest to the consumer;
• Facilitate a system of order online, pick up in store;
• Accept return shipments from online orders in your stores;
• Create access to the full product range (online) in smaller physical points of sale.
The Javelin Group helped the large British retailer Boots.com in choosing a new e-commerce platform. ‘The most important conceivable decision,’ according to Stockil. In general, he recommends that in making their decision, retailers should first create a clear vision, and then on the basis of common sense, eliminate several providers, and then define a ‘solution footprint’, which specifies exactly what a platform should be able to accomplish. In order to add a system of prioritisation between all the different essential functionalities, Javelin Group works with what it calls a ‘scorecard’, a type of puzzle with larger and smaller pieces. The final choice may then be made on the basis of this scorecard.
In Boots.com’s case, the decision was made to go with IBM's e-commerce platform; this formed the foundation for the health and beauty retailer’s new site. The main reason for choosing IBM was due to ‘a good feeling’, according to Harte. ‘The platform also offers the option of adding business-to-business applications if necessary, as well as the capacity to operate on a worldwide scale.’
The content of the presentation given by Angela Kapp of Estee Lauder focused on the gathering of customer information and the application of this in the marketing strategies for the various channels. She spoke at length about the ‘cultivation' of customers, whereby ‘one-night stands’ disappear and permanent brand lovers are created.
In Kapp’s view, successful multichanneling begins with consolidating of all of the available customer data in one location, which is not as common as it may seem she adds. Another lesson that Estee Lauder has learned is that consumers always have a preference for one specific channel, and that this is often the channel in which they first came into contact with the brand. Another lesson: be smart and use different tones in your communication to the various channels, since one channel is simply not the other. It is important however to be consistent in applying segmentation models in the different channels.
At Estee Lauder, insights derived from customer research have led to the so-called ‘multi-touch decision tree’. This means that the way a customer is approached for marketing purposes (for example, by e-mail, telephone, SMS or DM) depends on the number of purchases the consumer has already made and the channel in which he or she has previously shopped or browsed. These activities result in a tree with countless branches; the loyal online shopper of one of the Estee Lauder brands is notified of a clearance sale promotion via a different channel than the customer who ordered a product via a catalogue once upon a time.
After the lunch break, Kelly Mooney of Resource Interactive discussed in detail the topic of her highly-praised book, The Open Brand . Just as Stockil did earlier in the day, she emphasised that the Internet is slowly becoming the portal to everything. It is the central hub for customer perceptions and transactions, thereby making it a great deal more than merely a platform for e-commerce. Mooney provided powerful support for her argument by giving examples of consumers who expressed one of the following emotions via the Internet: I Can, I Connect, I Am or I Matter. By making use of, connecting to, identifying with or becoming concerned about brands, respectively, customers are influencing the marketing of these brands. This makes Internet the connecting link, literally and figuratively. The time of mass communication has passed, according to Mooney, who defined the characteristics necessary to an ‘open brand’ using the acronym O.P.E.N.: On demand, Personal, Engaging, Network.
Several differences between closed and open brands in a nutshell:
- Targeting - feeding the community
- Monologue - dialogue
- Awareness - engagement
- Push - pull
- Controlled communication - transparent communication
- Creation by marketer - co-creation
- Brand management - brand stewardship
Kelly Mooney was followed at the podium by Patti Freeman Evans of JuppiterResearch and by representatives from three online retailers who have just completed a process of international expansion: Peter Cobb of EBags, Jake Bailey of Overstock.com and Carine Moitier of Bivolino. The interesting part is that the process leading to sales outside of their own country’s borders proceeded very different for all three. EBags opened an office in the United Kingdom in order to focus on the British market, Overstock.com has a facility where it is able to determine on the basis of visitors’ IP addresses where they are located and then presents them with a regional site, and Bivolino was looking mainly for partnerships with existing parties such as Marks & Spencer and Otto. The experiences the three companies have had vary considerably, but one thing is certain: international expansion has its price. Cobb: ‘Make an estimate of the costs, and double this before you start.’ Bailey, jokingly: ‘An incredible amount of money will go towards legal issues. Sometimes you can plan ahead, but it is better not to present these plans to that particular department.’
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