How Will Forrester’s Predicted $1.4 Trillion In Web-Influenced Sales Affect Competitive Retail In 2014?

$300 Billion in online direct sales expected in 2014 is nothing to scoff at... but it’s immediately overshadowed by the projection that an additional $1.4 trillion in web-influenced retail sales is expected in 2014. Retailers need to be keenly aware of three key factors affecting 2014’s “choppy waters” as they relate to the web, according to Sucharita Mulpuru speaking at NRF's “Retail’s Big Show” last week in New York, and reported by Forrester client Shop.Org.  The choppy waters refer to the importance, influence, and problems/solutions related to shipping, shopping, and pricing in the web-influenced retail world. More specifically, the importance, influence and problems/solutions related to free and same-day shipping, mobile shopping, and dynamic, competitive pricing. Here are the potential problems addressed by Mupuru.  (I added the parenthetical adjectives):

 1. (FREE) SHIPPING

Shipping “is the Achilles heel of online shopping,” said Mulpuru. “Consumers expect to have free shipping and expect retailers to subsidize free shipping,” Mulpuru said.

Around the pre-Thanksgiving, Thanksgiving weekend and Cyber Monday time frames this past holiday season, Forrester found consumer use of free shipping offers was up – sometimes significantly – over 2012 and 2011.

Shipping logistics are key to e-commerce but face deep difficulties, Mulpuru noted. Not only did holiday volumes prove too much for firms such as United Parcel Service over the 2013 holiday season, the U.S. Postal Service is revamping everything from staffing to retail locations in order to reduce burgeoning costs and stem losses.

Shipping to a commercial location is cheaper than shipping to a residential address; so what saves multichannel retailers is shipping to their own stores which leverages the retailer’s network of stores and “can insulate retailers from unwelcome surprises,” she said.

2. (MOBILE) SHOPPING 

Retailers surveyed for the “State of Retailing 2014” study ranked mobile as their top priority, spanning projects from responsive design to mobile site optimization and tablet redesign.

“The irony is that the majority of retailers are investing less than $1 million in their mobile initiatives,” which is fine as long as you are a leader and the technology doesn’t change, said Mulpuru.

The lesson: by creating “mobile unique” experiences that meet real customer needs, retailers will enhance their chances of their mobile success and create distinct competitive advantage.

3. (DYNAMIC) PRICING & CONSUMER WANTS THE PRODUCT NOW

“Everyday low prices” dies “because the web always has a lower price,” said Mulpuru, citing a comparison study of comparable items that found Amazon had an average of 15 percent variance in price (for some items, it was over 30 percent).

A third of consumers Forrester surveyed early last year said they use their smartphones to research and compare prices in-store, and many expect to use their phone for price research even more in the future, but what’s most important to the consumer is getting the product!

Forrester reports that half of consumers would be willing to pay a premium of 1 to 5 percent in order to get the product on the spot in the store versus having to wait for an online order. Also notes that top brands in any sub-category will be able to maintain prices across channels, but this is limited to the top brands.

Bottom Line For Retail's Bottom Line:

Several top Upstream Commerce pricing intelligence team members were present at Retail's Big Show last week in New York where Forrester Research Analyst Sucharita Mulpuru gave some indications of the web’s increasing influence on total retail sales this year and beyond. With average web growth of 29 percent, 2013 was a great year for e-commerce, and “2014 promises to be even better,” said Mulpuru, but the big figures (i.e. $1.4 Trillion) are coming with web-related sales

Shipping is still a conundrum for retailers as they wrestle to find the best, quickest shipping that will satisfy the customer.

Retailers have to figure out the give-and-take of shoppers wanting the convenience and cost of the web, but wishing to have the product in their hands immediately.

Dynamic pricing as a retail pricing strategy is here to stay, with some of the biggest impact in areas such as merchandising strategies.

*The full Forrester Report: “State of Retailing Online 2014: Key Metrics and Initiatives” on which Mulpuru's presentation was based, is due out later this month.  

 

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Mauricio Barberi

About Author

As CMO of Upstream Commerce, Mauricio leads all branding, marketing communications, public & analyst relations, web presence, social media, demand & lead generation and sales enablement programs. He has over 20 years of experience in B2B technology marketing and product development. Previously, Mauricio was SVP of Global Marketing at TradeCard (acquired by GT Nexus), a leading innovator in Cloud-based supply chain management solutions for large retailers and manufacturers; SVP of Worldwide Marketing at CGS, a $200 million software and services provider, where he revitalized the BlueCherry suite of software solutions for the retail & apparel sector; SVP of Marketing at Mobius, a NASDAQ-listed digital archiving and records management company; and VP of Marketing & New Products at C3i, a CRM services firm and Siebel partner. Mauricio earned an MBA from Harvard Business School and a S.B. in Mechanical Engineering from Massachusetts Institute of Technology.
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