Newsletter Article

September 2005

Current Ecommerce Trends

D. Graham Tweedy, DGT Internet Marketing

Should you consider ecommerce?

Just to remind you, ecommerce usually refers to the actual buying and selling of goods and services on the Net.  We have been reluctant to promote ecommerce solutions to many of our clients.  Would the setup costs be justified?  Would online sales bring a fair return?  Do our clients have products that are of interest to the online buyer? 

We are changing our mind.

A note to our readers who do not consider themselves “retail”.  Maybe you sell services.  At the very least we all need to examine our online presentation with an eye of doing a better job of “selling” from our website.  Maybe a coupon, or “bring in this announcement and receive 10% off ….”

Things are happening online; consider a few recent statistics and trends.

To start, let’s look at the 2004 end of year holiday period.  Online sales were up 25 percent over the prior year.

Jewelry made the biggest gain – 113 percent.

For the year 2004 online sales grew 24 percent while traditional retail grew only 7 percent.

Second quarter 2005 online sales at $19.8 billion exceeded expectations as reported by the US Department of Commerce.  This represents a 26 percent increase over the same period last year.  This is only 2.2% of all retail sales but it is growing and it is a demographic that should not be ignored – they spend. 

Consider this comparison – for the week ending July 31 online sales were up 28 percent over the corresponding week in 2004. Total retail sales were only up 4.2 percent over last year.

Use of e-mail from house lists is increasing and showing a 4.3 percent conversion rate.

If you are in the direct marketing business consider these trends.  According to Direct Magazine 57 percent pf direct marketers plan to increase their online spend in 2006.  Online sales now account for 25 percent of total revenue, up from 20 percent last year.  Online orders are reported to be more profitable than offline.

What is fueling the phenomenal increase in ecommerce?

• Recent studies as reported by eMarketer remind us that today’s younger generations are the first that are entirely wired and they are changing marketing, technology and communications.  There are roughly 18.8 million teens in the US - they are wired, they are online.  They makeup close to 20% of all U.S. internet users.

• Retailers are integrating their offline with online systems ---some stores provide the capability to purchase online from with in the store.  Some provide online coupons, etc.

• Some stores are offering instore pickup for items bought online

• Consumer confidence in online secure transactions has increased.

• Consumer demand has increased as the convenience of shopping online improves.

• From a survey – 36 percent of online shoppers do it to avoid the crowds

• Increase in broadband access to the Net.

How will we respond?

Retailers with a local thrust are reluctant to provide ecommerce thinking that they cannot compete with the big boys.  However, you may have an edge on the national company.

Since you are local you can use local marketing techniques to enhance the chance of you being found by persons looking for local services but still wishing to purchase online.  This gives you a great advantage over the nationals.

Our younger generations have been wired almost from birth and the rest of us are catching up fast.  This means that even now and certainly around the corner the buying habits of the public will be increasingly focused online.

We will have to adjust.