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Об этом и других главных ИТ-трендах, технологиях и системах, которые помогают делать современный бизнес максимально эффективным и прибыльным, говорили участники крупнейшей бизнес-конференции SAP Trade & Consumer Industries Forum 2015, где компания NOVARDIS выступила генеральным партнером.

The Future of Online Luxury Retail

New tactics to drive online sales of high-end goods.

Reports by Samantha Woodworth

The Opportunity

  • Online luxury sales are expected to triple as a proportion of the total global luxury market sales by 2025, reaching $91 billion USD. Nearly one-fifth of all personal luxury sales will take place online.
  • Consumers’ online experience influences at least 40 per cent of all luxury purchases.

The Problem

  • Luxury brands and high-end retailers need to identify new ways to engage with affluent consumers online. It is particularly important to avoid cannibalising performances of their offline retail stores.
  • Online sales have so far not been able to drive the same level of upsell opportunities than their offline counterparts. Research shows that luxury consumers spent overall less per purchase when buying online.

The Solution

  • Luxury brands first need to assess the contribution that digital currently has on their total sales performances and consumers’ purchase behaviours.
  • High-end businesses then need to define a long term strategy to utilise digital as an impactful branding and sales component.
  • Two broad online luxury retail approaches should be explored to drive digital sales: self-owned platforms and outsourcing to third-party resellers.

The Future of Online Luxury Retail

This article is part of a series on the future of online luxury retail. Discover how digital is transforming high-end retail and shaping new consumer shopping experiences.

Traditional luxury brands have historically considered online retail to be a distribution platform fitted for selling low to mid-range luxury goods. Selling through multi-brand retail sites, in particular, was not seen as an appropriate channel for upscale brands. Multi-brand websites were often perceived as a threat to a luxury brand’s image amongst its affluent consumers.

High-end products were thus reserved for the premium experience of offline retail stores. This was based on the assumption that affluent consumers wouldn’t be willing to spend the premium price required for high-end luxury goods online. Indeed, wouldn’t luxury shoppers always favour a personalised customer service and a tactile shopping experience? The kind of experience that only a premium offline retail space could offer.

That assumption is now being challenged.

of personal luxury sales will take place online by 2025

eCommerce sites such as Net-A-Porter and Farfetch have successfully demonstrated that digital retail works. Indeed, luxury consumers are willing to shop for high-end goods online at an undiscounted price that is on par with the offline retail premiums.

Online sales of luxury items across high-end categories such as beauty, perfume, footwear, jewellery, watches, and leather goods accounted for 8 per cent of the $313 billion USD global luxury market at the end of 2020.

According to Antonio Achille, Sophie Marchessou, and Nathalie Remy from McKinsey, the contribution of online luxury sales to the global high-end market will more than triple by 2025, reaching $91 billion USD. Nearly one-fifth of personal luxury sales will take place online. [1] The digital transformation in retail is effectively underway. Online luxury shopping is only just starting.

Furthermore, digital is increasingly influencing the purchasing decision of high-net-worth individuals. Research by McKinsey found that a consumer online experience in some way influences at least 40 per cent of all luxury purchases. [2]

That digital luxury consumer experience most often takes place through online research for a product that is subsequently bought offline, social media conversations, or by browsing a luxury brand’s website.

Millennials and Generation Z consumers drive 85% of luxury growth

The growing importance of digital in luxury is driven mostly by a generational shift that is taking place in luxury sales. While older shoppers have traditionally been the growth engine of luxury sales, affluent buyers born after 1980, called the Millennials (born between 1981 and 1994) and Generation Z (born between 1995 and 2010) consumers, are now making up over 30 percent of all luxury spending.

More importantly, Millennials and Generation Z consumers alone generated 85 percent of the global luxury growth in 2020. [3]

This power shift between generations, away from the baby boomers towards younger shoppers, means the latter are now the growth engine of the market in every region globally,” said Claudia D’Arpizio, a partner at Bain & Company who specialises in luxury and fashion. “In order to recover following the downturn, brands had to strategically reposition themselves towards this new demographic and their state of mind and distinct product and shopping tastes. But what has proven particularly interesting is how those habits and preferences are now shaping those of other generations, too.

Established luxury brands have taken notice and most high-end companies are now readjusting their strategy to invest in digital. The exact role that digital will play in their broader brand positioning still needs to be defined, however. Luxury leaders are thus experimenting with various approaches. Some with more success than others.

In this special series on the future of online luxury retail, the Luxe Digital team reviews the different strategies available for luxury brands to establish their online retail leadership. This article is the first of a series of seven that offers a comprehensive and exhaustive view of the role of online sales and the future technologies that will enable digital luxury retail growth.

It is important to note that this series on the future of online luxury retail will focus on digital sales channels. An equally important aspect of retail for luxury brands is the digital transformation of the offline retail space, where opportunities abound.

We’ve recently discussed the importance of storytelling and the transformation of offline retail as a showroom to engage with Generation Z affluent consumers. Read our interview with Pontus Persson on the critical role of a digitally-inclusive CRM system and our report on the importance of big data for luxury retail to dive deeper into that subject.

The 3 levels of digital integration in luxury retail

Many luxury brands are still hesitant to fully embrace e-retail as part of their distribution strategy,” explains Florine Eppe Beauloye in her book, Shine – Digital Craftsmanship for Modern Luxury Brands. “Fearful of losing a feeling of exclusivity, but knowing they should offer some sort of digital experience, other luxury brands are somewhere in-between, only providing a limited online boutique.

As a result, three levels of digital inclusion have been identified for luxury brands by the Altagamma-McKinsey Digital Luxury Experience Observatory. High-end businesses can be categorised in one of these three archetypes:

  1. The Hesitant holdout: digital is only partially used as a showroom to drive offline sales. This approach is becoming increasingly rare. It’s characterised by tight control of all retail operations through mono-brand sites only.
  2. The Selective e-tailer: digital is used to sell entry-level products online, mostly through mono-brand sites. Brands in this category are demonstrating an opportunistic use of digital channels, with online considered primarily as an entry point for aspirational consumers. Digital is seen as a marketing channel more than a sales platform.
  3. The Plugged-in pro: digital is fully embraced to sell most luxury products online. Brands performing at this level demonstrate a capacity to execute a diversified online luxury retail strategy by using a combination of mono and multi-brand spaces. Digital is integrated for both marketing and sales operations. Most of the brands in this category are digital-born luxury brands. Traditional high-end brands are now playing catch up by investing substantial resources to achieve this level of integration.

Once a luxury brand has decided to leverage digital retail to sell online, two, non-exclusive, approaches are possible: selling through a fully-owned in-house platform or selling through third-party resellers.

The next articles in our series on the Future of Online Luxury Retail will each focus on a particular digital retail model that falls under one of these two approaches:

With this series, you will understand the opportunities and challenges that each approach offers for luxury retail online, and in which scenario it makes the most sense to invest in one of them. You will also learn from the best online luxury retailers, with a particular focus on the new tactics and technologies employed by digital-first high-end stores such as Yoox Net-a-Porter and Farfetch.

To conclude our series on the Future of Online Luxury Retail, we will explore the new retail technologies that avant-garde high-end brands are experimenting with to engage with their affluent consumers. From augmented reality, voice command and AI-powered commerce, to Single Value Chain strategies, you will see everything that the future holds for digital luxury retail.

  1. Luxury in the age of digital Darwinism, by Antonio Achille, Sophie Marchessou, and Nathalie Remy, McKinsey&Company, February 2020.
  2. Luxury shopping in the digital age, by Linda Dauriz, Nathalie Remy, and Nicola Sandri, McKinsey&Company, May 2014.
  3. Luxury Goods Worldwide Market Study. Millennial state of mind: the tailwind behind consumer behaviours and winning strategies, Claudia d’Arpizio and Federica Levato, Bain & Company, October 2020.

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Buildings constructed in earthquake zones can now be built to be elastic and adaptive; the materials used in their making can flex in the face of strong seismic activity – this bending isn’t a weakness but a strength. Retailers and manufacturers need to reorganise to exhibit a similar flexibility and adaptiveness in the face of the challenges created by the collision of new consumer behaviours and technological innovation.

As explored in the Forum’s project on Operating Models for the Future of Consumption, the new operating models will need to focus on the integration of people, partnerships and purpose. People are the priority because successful businesses never lose sight of their customer’s needs and prioritise them above all else. At the same time, your customers can also play the part of your workforce; and a business built around their aspirations, needs and desires will be able to develop the processes and innovations that deliver a competitive edge.

Customers are now more knowledgeable about how products are made, how materials are sourced and how companies make their profit. As such, they expect a relationship with companies beyond the merely transactional. This however does not mean they are curtailing their shopping; research by A.T.Kearney reveals that more time in the UK is spent online to make purchases than on accessing entertainment, while in Japan, more time is spent on shopping than even social networking.

However, customers are spending more time researching before purchase and there is a shift in what they are searching for. In the last two years alone, searches for ‘best’ product have grown 80%. This hunt for the ‘best’ shows people are prioritising quality over price, longevity over the disposable and ultimately are looking for some greater form of engagement.

I found this relationship dynamic to have changed significantly from when the company I set up, Glasses Direct, created the glasses category online in 2004. Back then, people cared about price, range and convenience. Now, experience of the brand or product, together with a degree of control, whether that means innovations in user involvement or personalisation, are just as important.

What can you offer beyond the product?

This drive for a deeper, ongoing connection means businesses must consider where they can extend their offering far beyond the original core service. Retailers and manufacturers need to identify where they can offer lifetime value which will ensure loyalty from their customers.

Smart companies are picking up on this desire and using technology-driven platforms to help customers to be more empowered and involved. Beer company Brewdog turned to its audience to help finance its business, creating a community of customer stakeholders via its ‘Equity for Punks’ scheme; DIY creative craft company Darby Smart lets its customers design products; and Naked Wines allows its customers to support independent winemakers with a £20 investment into their account — for which they receive discounts and exclusive wines.

Some businesses are making acquisitions to help take them satisfy customer expectations of a richer experience. For example, Walmart bought Bonobos, a premium male online shopping brand, that believes stores are places for stylist consultations and calls its outlets ‘guideshops’. Bonobos is focused on integrating online and offline to provide a frictionless retail experience for its customers, offering advice and the ability to order how and when they wish.

Then there are the partnerships that are becoming increasingly prevalent with the aim of delivering a seamless, convenient experience to the consumer that benefits everybody. For example, Sainsbury’s has just teamed up with Italian restaurant chain Zizzi to offer hot pizzas in-store — but that’s only one of the more obvious ways companies are working together. Organizations are creating intra-industry partnerships with competitors they would never have dreamt of working with previously and thinking more widely about extra-industry partnerships.

In the UK, delivery firm Ocado is using the machine learning ability of the Google Cloud Platform to triage customer’s enquiries by reading all the emails it receives, working out the sentiment and then labelling for priority. Ultimately, the focus is on helping those customers with immediate problems and bolstering loyalty, but the partnership delivers sizeable operational efficiency savings as well.

Other companies are building, rather than buying or partnering, to try to sharpen their agility, fast feedback loops and speed to market. Those that understand how to unlock and guide the skills and expertise of their workforce without a heavy, controlling hand will have an advantage. Some companies are seeing the benefits of self-organizing teams (a group of people who combine different skills to work without the usual managerial supervision toward a common purpose or goal) with a mandate to prioritize progress over perfection and move at an accelerated pace.

RS Components, a predominantly B2B retailer of electrical components in the UK, sets up ‘agile teams’, consisting of 10-15 team members working on solutions, often as a direct result of customer feedback. At the beginning of 2020, the company stated that it was making 200 changes a month to its service, via six agile teams. In our own company we encouraged speed with the ‘design sprint’ — a five-day process for multi-disciplinary teams to answer critical business questions through design, prototyping, and testing ideas with final users and — most importantly — customers.

I’ve mentioned brand purpose – which is a way of defining the true role of a company beyond sales. Companies that know what they are fundamentally in business to do are more likely to be able to attract and harness talent. The rapidly-changing competitive landscape does mean the organising brand purpose of a business can shift rapidly.

The lines between marketplaces, manufacturing and retail are certainly blurring. Amazon is becoming a vertically integrated retailer in more and more categories, with thousands of SKUs in fashion alone, while many manufacturers are leveraging their deep knowledge of their products and the e-commerce capability offered by platforms to position as retailers. Just look at Dyson, which is showcasing its knowledge and letting potential buyers get ‘hands on’ with its products by opening retail outlets with no visible tills. Customers are asking for more expertise, guidance and inspiration around products and who is better placed to answer than the manufacturer? They can build their own brand equity, own their own customer relationships with real influence on the customer decision journey and ensure the right balance of distribution.

Indiv >

Automation is bringing change to the workplace, but businesses also need to embrace ‘the human’ if they want a successful operating model. New roles will emerge that will require the creative, problem-solving skills that only humans can provide. In 2020, OECD analysis showed that 65% of children will work in jobs that do not yet exist and these will require strong interpersonal or creative skills.

Forward-thinking companies will look to change their processes to bring out the best in people by, for example, providing continual learning of new skills and increasing the role of entrepreneurship. As companies automate their more manual or repetitive tasks, a continuous cycle of learning or upskilling will ensure the human workforce remains agile and nimble – the very traits that need to be baked into a company’s culture if it is to stay responsive and relevant.

Companies are going to have to hire or train people so that teams have the resource to both analyse problems and develop creative ideas. Employees will bring their desire for more flexibility and empowerment into the workplace and look for opportunities explore their own ideas. Google has programs such as 20% projects, whereby employees are encouraged to work on projects they think will benefit the company and the experimental Area 120 program, which is a process for forming small teams that can rapidly explore the potential to iterate new products from existing ideas in an entrepreneurial environment.

The idea of upskilling and educating people has both a societal and business benefit. The business benefit is that there is a suitable pool of talent from which to recruit — a matter of concern in the UK. The Federation of Small Businesses is the latest organisation to raise the issue of a digital skills gap as a factor to stalling growth in smaller firms.

Business, government, and sometimes both together must work to bridge this development gap. The UK Government is introducing a new set of technical qualifications called T-Levels to better prepare 16-year-olds for the labour market of the future. Our global CEO, Sundar Pichai, committed to offering everyone in the UK five hours of free digital training and our Digital Garage programme has trained three million people in digital skills via a mix of online teaching and in pop-up spaces. Our own business depends on companies and sole traders understanding and using digital tools, so there’s a clear mutual benefit to helping educate people – be they our customers or our customer’s customers.

The retailers and manufacturers of the future will likely sell a combination of the tangible and intangible – the product and an extended/involving experience. Manufacturers and retailers that reorganize and restructure their operations with a focus on the individual and act in a more human fashion will be able to start building foundations for future growth.

Jamie Murray Wells OBE is Industry Head of Retail at Google UK and is a member of the World Economic Forum’s Steering Group for Operating Models of the Future, which will publish its report for the 2020 Annual Meeting at Davos. He was also a member of the Steering Group for last year’s publication Shaping the Future of Retail for Consumer Industries.

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VR in Retail: The Future of Shopping Is Virtual and Augmented

Published Jul 31, 2020 By: Lisa Terry

There are many things consumers have long disliked about shopping, from poorly lit dressing rooms to lack of information to pushy salespeople. Digital and mobile technologies have started to chip away at those irritants, but it turns out those are just the beginning. With digital signage now the norm and the mobile revolution well underway, augmented reality (AR) and virtual reality (VR) are set to completely transform the shopping experience, replacing the pain points with captivating, interactive experiences that both inform and entertain.

Goldman Sachs forecasts the market for AR and VR in retail will reach $1.6 billion by 2025. VR is proving a great fit for use cases where the retailer wants to put the consumer into a completely new environment, like behind the wheel of a car, while AR layers images over the consumer’s immediate surroundings, such as projecting a new outfit on an image of the shopper standing in the store.

Alongside these retail technology trends, retailers are also investing in artificial intelligence (AI) and the Internet of Things (IoT). In fact, many of the use cases making the most impact on the customer experience combine some or all of these technologies to create a more engaging encounter with the brand. These retailers are betting on a data-fueled, differentiated experience to boost conversions and revenue by making shopping fun again.

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How AR and VR in Retail Improve Shopper Experience

Here are some examples of how retailers are already leveraging these technologies to do away with the things shoppers can’t stand, and replace them with better experiences.

Creating Virtual Encounters: AR or VR can help overcome the hassle factor of shopping. Here’s one example: according to a McKinsey study, the average car buyer today visits 1.6 auto dealerships, down from five dealerships 10 years ago. Many call the experience boring, confrontational and bureaucratic, according to The Economist. But given how complicated cars are becoming, customers also want a knowledgeable person to talk them through all the features like entertainment systems, navigation services and automated parking. VR can bridge consumers’ seeming conflict between the desire for personal service and unwillingness to visit a store by enabling experiences virtually. For a car purchase, this might mean exploring the cockpit or taking a virtual test drive.

Testing or Trying on Merchandise: AR and VR can both be useful in helping consumers see products in context, such as a furniture buyer previewing how a couch would look in their living room. To overcome the stumbling block of consumers avoiding the possibility of overheated, poorly lit fitting rooms, Timberland unveiled a virtual fitting room using Kinect and digital signage technology that enables passersby to virtually try on every piece of clothing available in the store using hand gestures. Web and Facebook apps use a PC’s built-in cameras and AR to create a similar experience for home users.

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Virtual Browsing: Online stores are well-organized, but less compelling and immersive than the experience of moving through a physical store. A VR-generated store lets customers virtually browse the store no matter where they are, and buy items they find — as Karen Miller did with a fashion showroom. Instead of the cost of erecting a brick and mortar location, the retailer simply designs 360-degree panoramas that are accessible on most platforms — including digital signage and smartphones.

Designing Custom Goods: Creating a custom order used to take a lot of time and rely on the customer’s imagination. AR and VR in retail help overcome those hurdles by producing virtual versions of the desired product. Nike’s Makers’ Experience combines AR, object tracking and projection technology (using AI and IoT) as well as digital signage or videowalls to enable a customized design to appear on sneakers. An hour later the customer can pick up the finished product.

Offering Product Info in Context: Lists of specs and features can be dry and mind-numbing. When such information is delivered in context, it makes a bigger impression: the shopper picks up and looks at a product, then sees specific information on the benefits of the part they’re viewing, so it’s much more likely to resonate. For instance, Starbucks is leveraging AR to blend the experiences of shopping in-store and online at its Starbucks Reserve Roastery in Shanghai. Visitors can point their smartphones at a piece of equipment to see how coffee is processed in that machine to produce the product they’re considering.

The Future of AR and VR in Retail

According to Forbes, the future of AR and VR in retail seems to break down into two major use categories. On one hand, AR lends itself well to consumer applications that answer questions such as, “What will it look like in my home? What will it look like on me? Tell me more about how to use this product.” VR, on the other hand, is finding a home in business uses such as store design, shelf assortment and layout, as well as in contextual store walks and real-time store performance, which allow executives to see store data in the context of how the store looks, rather than simply as a chart or list of numbers.

Consumers are excited about shopping’s tech-enabled future. Research by GfK found 38 percent of U.S. consumers hope to see improved experiences in stores, while 35 percent want improved customer service based on individual needs, and another 35 percent seek improved ways to find and compare different products. With their ability to replace the parts shoppers dislike about shopping with a more immersive, interactive and information-fueled experience, AR and VR in retail holds promise to create the differentiated brand experiences that drive conversions, repeat visits and higher revenue.

Get a deeper look at the technologies changing the face of retail and redefining how consumers and businesses interact.

Lisa Terry

Lisa Terry is a seasoned B2B writer of articles, blogs, research reports, case studies, white papers and e-books, with a long list of media and corporate clients in hospitality as well as retail, IT and supply chain. She has written for Hospitality Technology, HTNG publications, Nation’s Restaurant News, RIS News, Advertising Age, Consumer Goods Technology, Inbound Logistics, Washington Technology and many others.

The future of online retail is collaboration

This article was taken from The WIRED World in 2020 — our fourth annual trends report, a standalone magazine in which our network of expert writers and influencers predicts what’s coming next. Be the first to read WIRED’s articles in print before they’re posted online, and get your hands on loads of additional content by subscribing online.

For decades, business was all about competition — enterprises operated under the principle that they needed to find and exploit a competitive edge to survive and there could be only one winner. Businesses big and small would use any advantage they had. In 2020, however, there will be a shift: the most successful businesses will be characterised by collaboration between businesses in the same sector, different sectors or with their customers.


Innovation in technology has fundamentally changed the way businesses function and work with each other. It’s no surprise, then, that the nature of competition has changed, driven by companies expanding their offerings along with diversifying and innovating in new sectors. Technology giants such as Google and Amazon are constantly moving into new areas. Who could have predicted that a search engine would be pioneering driverless car technology 17 years later? Or that an e-commerce bookshop would now be selling everything from furniture to fashion and testing drones for deliveries?

This blurring of boundaries means that businesses, especially online ones, no longer occupy one sector within a single set of competitors. Competition comes not only from the other players in your space, but from those in other sectors who see an opportunity. This can be viewed as a threat, or people can collaborate and create a bigger pie for everyone to have a share of.

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This doesn’t mean that competition is dead — far from it. Businesses should be their own greatest competition and be willing to disrupt themselves before someone else does. That was the thinking behind Net-a-Porter’s launch of The Net Set social network in May 2015 — to move the store to where people are heading. When Net-a-Porter launched in 2000, its mission was to bring fashion to women at their desks or home through online shopping. Today, in the age of social media, it’s about joining the conversation and the communities that share online.


Social shopping is rap >Instagram to Pinterest influence how consumers discover items and spend their money by making e-commerce about more than dropping items in a virtual shopping cart. Consumers can shop with friends, and have a personal dialogue with the brands they love. This evolution is making it possible to collaborate in a much more meaningful way.

Businesses working together is only one aspect of this increasingly collaborative economy — the consumer is best served if we collaborate with another supplier and directly with her or him. Fashion has moved from a one-way conversation where designers and magazines told the consumer what to buy to one that invites the consumer to shape the conversation and empowers them to make their own buying decisions.

For example, if a reader sees a Chanel top in a magazine and it’s not yet available to buy online, the magazine should communicate directly with Chanel and find it at no extra cost. That might sound like sending profit elsewhere, but in fact it’s a win for everyone involved. The customer is happy because she has her top and will no doubt return to the magazine. And Chanel is happy because the magazine has connected the retailer with a customer. In today’s world, we need to collaborate to be able to compete.

In 2020, this will grow ever more nuanced and natural: it’s important that e-commerce firms do whatever they possibly can to reduce the friction between customers and their desired product or service.


We are finally at the point where retailers can analyse and act upon the huge amount of data that customer interactions create. In its simplest form, this is what everyone has been calling personalisation, but it could be so much more. Amazon, for example, made huge waves with its Anticipatory Shipping patent that predicts which products consumers will buy and ships them to a nearby hub, anticipating the purchase. Innovations like these tap directly into what people want: immediate, exceptional and personalised customer service that goes beyond marketing.

The early days of e-commerce were blighted by confusing, cluttered and unfriendly user experiences. Crucially, digital businesses lacked the intuition and basis common sense that a well-staffed bricks-and-mortar shop offered. That human touch, so often missing when we shop online, will become more present in 2020 as new technology dissolves outmoded business models. This new age of immediacy demands a rethink of this approach, especially as technology now caters for whatever we want at the tap of a screen. Competition creates win-lose scenarios, but collaboration benefits us all.

The future of retailing

The challenges and changes shaping the etailing environment

E-commerce sales growth continues to soar with forecasts projecting even bigger numbers for the future. All seems rosy in the world of online commerce. So why are analysts concluding that ‘retailers have their work cut out for them’ in the coming years?

According to eMarketer’s latest forecasts, worldwide business-to-consumer (B2C) e-commerce sales will increase by 20.1% this year to reach a whopping $1.5 trillion.

Forrester estimates that US online retail sales alone will total $294 billion by the end of the year, and will grow to $414 billion by 2020. These are some mind-boggling numbers, but then there are powerful forces driving them, and these forces will define the future of retailing .

For instance, rapidly expanding online and mobile user bases in emerging markets are super-charging sales. This year, for the first time, consumers in Asia-Pacific will spend more on e-commerce purchases than those in North America, topping $500 billion and making it the largest regional e-commerce market in the world.

In turn, this is encouraging a growing number of major brands to push into new international markets. In a Forrester report, 75% of US-based online retailers ranked international expansion as either ‘very important’ or ‘somewhat important’ to their overall business strategies. Although international e-commerce revenues are limited for the majority of brands today, companies like Asos.com and eBay Marketplaces that take in roughly 60% of their revenues from outside their home markets, are pointing the way.

‘Internationalisation is a big trend,’ notes Chloe Thomas, Founder of indiumonline.co.uk and author of the e-Commerce MasterPlan. ‘There is an increasing interest in UK e-commerce businesses to expand overseas and start shipping to other countries like Ireland and around Europe. This is a new one for ebusinesses in the UK, which have always kind of ignored other countries.’

Also driving e-commerce growth is the increased spend from younger consumers, with digital natives now older and earning salaries that provide purchasing power, and whom are more likely to spend a larger share of their wallet online.

Mobile commerce boom

And of course a huge influence on online sales has been the boom in mobile commerce. Forrester estimates that there will be nearly 200 million unique smartphone subscribers and over 100 million tablet owners in the US by the end of 2014. It is therefore unsurprising that retailers are reporting an ever greater share of their sales coming from mobile devices, with Shop.org’s recent State Of Retailing Online study reporting that 20% of retailer’s online sales are now coming from smartphones and tablets.

Forrester predicts by 2020, 55% of online buyers will use their smartphones to make purchases. In the UK, retail mobile commerce sales are expected to top £6.61billion this year, according to eMarketer.

‘Mobile is taking off way beyond the expectations that the industry had three or four years ago,’ says Chris Fletcher, Research Director at Gartner. ‘On the one hand you find that people are using the smaller devices such as mobile phones for browsing. But then more frequently customers are doing the actual shopping or buying process through a tablet or traditional laptop environment when they get back to their desk or back home. But we are seeing, especially with the larger companies, that there’s a very high level of mobile shopping out there or mobile purchasing. Tablets in particular have gotten very popular. But that’s no surprise, I guess.’

Harder to retailers to turn a profit?

So why is it that in Forrester’s recent report, US E-commerce Forecast: 2013 to 2020, the analyst firm concludes that ‘retailers have their work cut out for them in the coming years’?

‘Retailers have to pay more money for mobile development, it will be more expensive to ship packages in the future, and there is going to be more price competition from companies like Amazon,’ explains Sucharita Mulpuru, Vice President and Principal analyst at Forrester. ‘All of these factors will make it harder to have a very profitable e-commerce model.’

Elaborating on her first point, she continues: ‘You have to be thinking about how you develop your site from a technical standpoint, so that it renders well on different devices. There is no question that is something which is an extra cost that every retailer needs to budget into their website execution now. A lot of it is design and functionality if the website, because that affects everything – it affects the conversion rate and the ability of customers to find content on different mobile devices and typically mobile is smartphone as well as tablet so that just makes the decision on what to do even more complicated.’

Bill Loller, Vice President of IBM Smarter Commerce, adds: ‘Mobile is really changing the game for design and technology investment. Adaptive and responsive websites are now a basic requirement for servicing the mobile market and the UK market has embraced that model.

If you look at sales of PCs vs laptops vs tablets and smartphones, it’s pretty clear that the desktop-centric world is dead. Why investment in desktop experiences anymore? The rate of adoption of mobile devices is only going to continue. And what happens when wearables actually hit mainstream? Someone is going to be running your app or website on a watch. And that world will come very quickly. Companies need to be thinking about a mobile only world and even the fact that the definition of mobile is changing.’

Fletcher agrees that it is a moving target. ‘It is not so much a challenge with the larger and more established e-commerce platforms — if you look at what IBM, Oracle Commerce, SAP Hybris, they’ve all done a good job at supporting these dynamic resizings of e-commerce sites. But some of the internally developed applications, which smaller retailers have, mean they’ve got a real challenge here.

One of the problems for the smaller retailers or for companies that have e-commerce developed in-house, is that you’ve got to continually keep that site refreshed with new technology, new experience, different mobile devices. And it’s a real challenge for retailers working on very thin margins.’

Thomas, however, is optimistic that this mobile obstacle isn’t insurmountable. ‘E-commerce businesses shouldn’t get too hung up on whether customers are using a tablet or desktop. They should make sure their website works well across all of them, and make sure you’re making it easy for the consumer to buy from them.

So if you’re seeing a lot of mobile traffic then it’s time to put PayPal in pace, or some merchant account which means that the consumer doesn’t have to key in the 16-digit credit card number on their phone, which is painful for anyone who’s ever tried to do it. If you’ve got PayPal on your phone, two clicks and you’re done. So it’s a bit of a mindset change to embrace these things and I think it’s quite reassuring now that the industry talks mobile in terms of responsive design, not in terms of building apps.

Because responsive design is something that even the smallest e-commerce business can manage to implement and it not increase their daily workload, whereas an app does increase your daily workload.’

Omnichannel challenges

Other challenges that etailers can expect to face include the growing demand for a cross-channel or ‘omnichannel’ shopping experience. What this means is that retailers must blend the experience they provide with their e-commerce sites with the in-store experience and all the other channels that they have. And this is not easy.

‘The biggest challenge by far is how to get all your sales channels to talk to each other,’ suggests Max Childs, Marketing Director at Amplience. ‘If you’re going to sell via your website, mobile app and high street stores then you need a way to synchronise and deliver new campaign materials to them all at the same time in an integrated campaign.’

Fletcher adds: ‘On the one hand you’ve got the worst case example where you put an order in online and then you want to change something on it so you call and of course the retailer has no visibility. That doesn’t happen very much anymore, but what we find does happen is that somebody will order online and want to pick up from the store; they’ll order online and want it delivered to their house then they’ll want to return it to the store, and these kinds of complexities are really creating some headaches for retailers.

A lot of it is dependent on the back-end systems which are not very glamorous and don’t get as much coverage as they should. But things like order management and distributive order management, inventory and warehouse management systems, the financial management systems – all this plays a really important part of that cross-channel experience.’

Also related to this is the growing importance of having not only visibility of the customers visiting your site, but also an understanding of them.

‘The most significant tech-related challenge for etailers is when it comes to using technology to understand their customers,’ warns Loller. ‘As customers’ expectations of commerce mature, businesses are beginning to understand that the customer experience is no longer just about the number of sales, website clicks or social media mentions. Instead, businesses with e-commerce platforms need to know what prompts customers to behave the way they do – what different types of customer behaviour exist, how issues impact their behaviour and how this can help ebusinesses improve the overall online customer experience.

‘According to our research, over three-quarters (78%) admit that they are more likely to have limited or no understanding of the behaviours of different visitor types, while 73% admit they’re unaware of the reasons customers leave the site without converting. While businesses consider this information very valuable, they fail to gather the actionable insights to help them improve the overall customer experience.’

How to respond to grow online sales

Forrester recommends three areas to focus on to ensure that retailers will continue growing their online sales:

    1. Have a laser focus on site execution. With retailer conversion rates remain still very low, companies must ensure that their sites continue to render quickly across the various devices that shoppers use to access their content and make sure they enable shoppers to easily pay for products with as little friction as possible.

Responsive design frameworks and well-designed experiences are vital.

A recent burst of innovation in the e-commerce world demonstrates how brands are indeed responding to the present (and future) challenges.

Click-and-collect services

Click-and-collect services, for instance, have proliferated due to their popularity with shoppers. UK retailer Argos has reported that its ‘check-and-reserve’ service accounted for 31% of total online sales in Q4 2012, while 86% of all of Halfords sales are now for in-store collection after it introduced click-and-collect three years ago. Furthermore, research by Econsultancy into shopping habits during the Christmas period revealed that 45% of online consumers used reserve and collect over the festive period.

‘Click-and-collect is part of a wider trend for e-commerce sites to integrate with the external world,’ suggests David Winterbottom, Technical Director at Tangent Labs.

‘For instance, Korean grocery stores have started to embed a 2-dimensional version of themselves on subway platform walls. Customers can scan QR codes to get items delivered for dinner that night. QR codes may have been laughed at to start with, but that’s perhaps because we’re only just starting to see the real use-cases.’

Amazon’s innovations — ‘Prime’

Elsewhere, e-commerce giant Amazon has been trialling a range of innovations, from anticipatory shipping to Amazon Dash to delivery by unmanned drones. Its Prime service has also been a huge success.

Shopping cart abandonment levels hitting a record high of 72% in 2011 thanks to the ‘sticker shock’ that occurs once shipping prices are applied, so Amazon launched Prime to offer shoppers the opportunity to resolve the issue of slow and unreliable delivery. For $79 annually, Prime users get free two-day shipping with no minimum purchase, among other benefits such as free digital content. McKinsey reports that Prime members spend over four times more with Amazon than non-members, due to their increased transaction frequency that would not have otherwise happened without their benefits. Now, other etailers are looking to follow suit.

‘There are US companies at the moment that are trying to enter the UK market who have a cross-business prime account where you can pay, like Amazon Prime, but it counts for multiple websites,’ says Thomas.

‘P&P charges remain the number one barrier to conversions, so if you can find a way of dealing with that and also incentivise someone to continue buying from you rather than someone else then these yearly delivery charges, then it becomes a real customer acquisition tool and customer retention tool. And the supermarkets are now also bringing these in as well.’

Thomas continues: ‘Customer service and delivery are huge battlegrounds at the moment. You’ve got the likes of Next and Ironmongery Direct that offer ‘order by 8pm tonight and get free delivery tomorrow’. It’s incredible from a consumer perspective when you think about what they have to do to enable that to happen. And there are a lot of interesting tactics coming in – Amazon has pretty much done the deal to buy all the Transport for London tube station ticket offices to have them as parcel collection points. It totally changes the game in terms of customer service and ease of getting your goods.

Watching those big businesses, you can see where the industry’s going and the easier we make it for the consumer to get the goods, the more likely they’re going to be to buy.’

Little wonder that projections for online commerce are so robust. But with such innovative thinking serving to further create an ultra-competitive environment, etailers must ensure that they have the technology, the experience and of course the offers to go toe-to-toe with the other players. With that in mind, in the coming weeks we’ll be examining how to be an e-commerce leader, from creating a strategy, to putting the technical infrastructure in place to building an e-commerce team.

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Global Online Retail Spending – Statistics and Trends

Editor Note: If you are looking to increase your ecommerce store revenue, we highly recommend reading the article: 31 E-commerce Conversion Rate Optimization Ideas You Must Try.

Global online retail sales are growing and is estimated to reach 8.8% of total retail spending in 2020 as compared to 7.4% in 2020. In terms of country, UK has the highest retail E-commerce sales as %age of total retail sales (15.6%) , followed by China (13.8%), Norway (11.5%), Finland (10.8%) and South Korea (10.5%). Check out our infographic “Globe Online Retail Spending” for latest statistics and trends.

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Estimated online retail sales worldwide

Year Retail Sales (In trillion USD) %age of total retail sales
2014 $1,316 5.9%
2015 $1,592 6.7%
2020 $1,888 7.4%
2020 $2,197 8.2%
2020 $2,489 8.8%

Digital Buyers penetration Worldwide

Year %age of total internet population
2014 42.7%
2015 44.3%
2020 45.4%
2020 46.4%
2020 47.3%

Top 10 countries with retail E-commerce sales as %age of total retail sales

Country E-commerce retail sales as %age of total retail sales
2015 2020 2020 2020
UK 14.4% 15.6% 16.9% 18.0%
China 12.0% 13.8% 15.5% 16.6%
Norway 10.7% 11.5% 12.1% 12.7%
Finland 10.4% 10.8% 11.2% 11.5%
South Korea 9.8% 10.5% 11.3% 12.0%
Denmark 9.3% 9.9% 10.4% 10.8%
Germany 8.4% 9.4% 10.4% 11.2%
US 7.1% 7.7% 8.3% 8.9%
Canada 5.9% 6.6% 7.4% 8.2%
Japan 5.4% 5.8% 6.2% 6.7%

%age of E-commerce Traffic and Sales by Device

Device %age of E-commerce traffic %age of Retail Sales
PC 53.9% 76.9%
Smartphone 33.7% 10.7%
Tablet 12.4% 12.4%

Nearly One in Four online shopper shop online at least once a week.

Gender Frequent (Shop at least once per week) Occasional (Shop at least once per month) Infrequent (Shop at least once per year)
Male 30% 32% 38%
Female 18% 40% 42%

Online Shopping Frequency ( By age)

By Age Frequent (Shop at least once per week) Occasional (Shop at least once per month) Infrequent (Shop at least once per year)
18-29 35% 41% 24%
30-39 37% 35% 28%
40-49 23% 35% 42%
50-64 17% 38% 45%
65+ 11% 31% 58%

Top Countries by average e-commerce revenue by online shopper

What Is the Future of Ecommerce? 10 Insights on the Evolution of an Industry

“No industry,” wrote Harvard Business Review at the close of 2020, “is failing faster than retail.” At risk of contradicting the Crimson: bullshit. Sweeping proclamations make for great sound bites and (scholarly) clickbait. But the truth? Not so much.

At the opposite extreme lay headlines trumpeting “voice-search buying,” “Instagram-worthy pop-ups,” and “VR-enabled O2O experiences.”

What the data shows — and what the leaders we spoke to from brands at the forefront said — isn’t that retail is failing nor that success is tied to innovation for innovation’s sake. Instead, it points to the now unignorable center of commerce: customer choice. What is the future of ecommerce for 2020 and beyond? 10 insights offer the answer:

1. Ecommerce v Retail: The Dichotomy Ends

For all its enduring hype — physical versus digital, offline versus on — the old war is over. In fact, it’s always been a lie. Choice, not location, is commerce’s greatest opportunity and its most-looming threat.

In defense of retail’s “apocalypse,” brick-and-mortar losses are mounting; the four-year bankruptcy count now sits at 57 once-landmark chains. Manufacturing market share and in-store sales for consumer packaged goods are flat or declining. Born-online “microbrands” have devoured the lion’s share of growth. And ecommerce’s gains continue to trounce retail as a whole.

Here’s the uncomfortable twist: brick-and-mortar still dominates online sales by over $20 trillion. And the gap will widen. After a quarter century, ecommerce’s spread is slowing, 80% of 2020’s gains belonged to Amazon, and (in the U.S.) the top five online retailers own 64.7% of sales:

“The brands that are winning,” says Fab Dolan, Head of Marketing at Google Canada, “are the ones that understand and own the fundamental interplay between experiential and transactional. If we were to believe that retail is dead, then we should be spending all of our money doing online ads and guiding people to our website. And yet, what we’re seeing time and time again is that building anticipation and an appreciation for the magic of our products happens in the real world even though most people buy online or through call centers.

“Will retail look fundamentally different and maybe unrecognizable in ten years? Yeah. But it’ll always depend on how you navigate the interplay between offline and online worlds, how you — the brand — interlock customers and products.”

The future belongs neither to legacy giants nor pure-play ecommerce. Instead, it belongs to direct-to-consumer (DTC) models, often referred to as digitally native vertical brands (DNVB). Just don’t let the name fool you.

2. DTC Emerges as Commerce’s Future

Vogue’s late 2020 feature, “These Are the 50 Digitally Native Brands You’ll See Everywhere in 2020,” blew the mainstream doors off what many in the industry already knew: the worlds of technology and commerce are undergoing a revolution. At the forefront are brands like Outdoor Voices, Warby Parker, Allbirds, Glossier, Hims, and home-goods companies like Casper, Brooklinen, Purple, and Leesa.

What unites these verticals is a focus on “brand equity” and “brand purpose.” Both terms describe the value of a brand. Owning their customer relationships, DNVBs run on value — elevating people and products over price and place. The centrality of selling something worth buying isn’t replaced but augmented. As a microcosm in 2020, numerous DTC leaders offered either no holiday discounts, minimal discounts, or charity-based incentives:

Does this mean price and optimization are things of the past? Hardly. DNVBs who did host holiday discounts delivered them in ways that drove conversion rates and average order value (AOV) without sacrificing brand value:

  • In-cart upsells for “Mystery” items or bundles
  • Sold-out merchandise fueled by influencer marketing
  • Tiered discounts via spending thresholds, without coupons
  • Installment plans for high-ticket purchases rather than “Pay now”
  • Countdown timers, customizable free gifts, and subscription incentives

All built seamlessly into the onsite and check-out experience. The question is: are those techniques enough?

3. More than “Digitally Native” Tactics

People have always bought with their hearts and justified with their heads. The difference now is that choice means brands can scale by profitably serving smaller niches than legacy competitors and expand from a mission-centric foundation.

There was perhaps no better signpost of the future than lingerie-incumbent Victoria’s Secret against Savage x Fenty and ThirdLove. Juxtaposed fashion shows set the stage. In Sept., Savage x Fenty — where women, in the words of founder Rihanna, were “celebrated in all forms and all body types and all races and all cultures.” In Nov., Victoria’s Secret — whose CMO, Ed Razek, answered the question of whether plus-size or transgender models would be included with, “No. No, I don’t think we should. Well, why not? Because the show is a fantasy.”

Though Razek apologized for his remarks, the drama culminated in Victoria’s Secret CEO resigning and an open letter by ThirdLove’s CEO Heidi Zak published in The New York Times:

“It was a big decision to do the open letter,” Zak says. “In the past few years, we had remained really focused on building the ThirdLove product, brand, and customer base. But given the remarks Ed Razek made, and the specific call-out of ThirdLove, we believed it was the right move to get our opinion and mission out to the world.”

ThirdLove is far from alone. Sixty-two percent of global consumers want brands “to take a stand on current and broadly relevant issues.” More than marketing, this demands putting money where a company’s mouth is: e.g., Bombas giving away over 10 million socks, Sudara’s fight to end human trafficking, Nike’s campaign with Colin Kaepernick, or Gillette’s “The Best Men Can Be.” People crave brands who connect with them beyond merchandise and advertising. And that means …

4. Content Becomes the Holy Grail of Growth

Often misunderstood, the power of content — what previous generations of marketers have called “mass desire,” the public spread of a private want — resides not in its direct ability to sell; although it can. Content’s true power comes from galvanizing an audience, entering its heart and mind through a consistent story well told — full of drama, with people at its core.

“In paid social, it doesn’t matter how good your strategies are,” says David Herrmann, Dir. Advertising at Social Outlier. “Your audience needs to connect with your content first. It’s the kindling. It’s what drives inspiration. I can’t make people money unless they keep feeding me content. If sales are down, if traffic is more expensive, blame content.”

Of course, not all content is created equal. Recent data shows that never before have so many companies produced so much content with so little attention to results.

What makes the difference in connecting content and commerce? “Successful brands heavily use written, audio, visual, and experiential content to drive full-funnel marketing campaigns: awareness, interest, desire, and conversion,” says Nik Sharma, Head of DTC at VaynerMedia and 2020 Forbes 30 Under 30.

“There are three reasons this approach works. First, driving a paid click to a piece of branded content is only a few cents, compared to driving a click to a brand or landing page, which could be up to $5-6 per click. Second, with retargeting you’re able to immediately build qualified audiences. Third, great content doesn’t sell a product, it sells an opportunity to better an aspect of your life.”

Nike’s DTC social, Thinx’s periodical blog, Glossier’s Into the Gloss, and Rothy’s use of earned media all connect content and commerce

Interestingly, brands like Koala are breathing new life into “old” forms of content. Last year the mattress company turned billboards located near IKEA in Sydney, Australia — one of which read, “NÖFNIDEÅ? No tools, no worries.” — into press, sales, and social virality. The billboards weren’t a stunt; they were extensions of Koala’s ethos. Whether through humor or gravity: content creates audiences and, in a world flooded with choice, audiences are currency.

5. Physical and Digital Solidify Their Relationship

For online businesses flirting with offline retail, the time to commit has come; pop-up shop “experiences” staged for social media have worn out their welcome.

“I’ve been hearing more and more complaints about this trend,” says Paul Munford, CEO of Lean Luxe, “and I’m worried that some brands — those same brands who preach an obsession over knowing their customer, understanding how today’s shopper wants to shop, and of course owning that relationship — are losing their way a bit as they focus considerable time, energy, and money to launch ‘Instagram-worthy’ spaces.”

As an alternative, Munford points towards spaces that serve multiple functions, like Rapha’s Clubhouses where customers can get bikes fixed, buy gear, and do work. “They also double as Rapha-specific event spaces after hours,” he adds. “Think about what that does for your brand and your customer’s reliance on you versus anything an IG-worthy space would do.

“There are life and meaning to the former; shallowness and transience to the latter.”

Commitment isn’t about quantity, but quality. Allbirds, who rounded out 2020 with a reported $1.4 billion valuation, now operates three locations. “Though we launched exclusively online,” says Travis Boyce, Head of Global Retail Operations, “we always had ambitions to open physical stores. As a brand with a comfort-oriented product, retail has been and remains a key part of our growth strategy. We started experimenting with retail very early on, and quickly realized how important it was to get our products into the hands of curious shoppers so they can experience the comfort and design for themselves.”

“We elicit feedback as frequently as possible,” Boyce says, “and our on-the-ground retail teams are able to gain incredibly valuable insights from talking to consumers day in and day out.”

6. Social Commerce Evolves or Limps to the Grave

For years, digital pundits have preached the gospel of “going native”: selling directly within social networks without sending visitors onsite. By every big-picture metric, social media and ecommerce should be a match made in heaven. Worldwide penetration, active accounts, time spent, and ad spend are up across the board.

But, there’s a disconnect. In terms of sources that influence purchase decisions, social media lands last and was rated less than half as effective as reviews. More pointedly — despite the rollout of numerous “native” purchasing features — every major report reveals the same thing: social users aren’t buying.

Rumors continue to swirl around Instagram and Facebook developing its own ecommerce platform. However, after Amazon’s Q3 financials showed 122% year-over-year revenue growth in its advertising platform: even on marketplaces, the margins are in the ads, not the products.

Direct social commerce is at best a hypothesis. With low incentive to make it work, don’t expect salvation to come from the networks (not immediately nor outside a seismic acquisition). Wisdom resides in testing new features, but beware the hype-circle that inevitably accompanies them.

Acquiring new customers is most effective through low-cost engagement campaigns that lead with (1) entertainment or emotion, (2) user-generated content, or (3) influencers and micro-influencers. Front load paid social with content meant to be consumed on social or “branded” content that tells a story. Not only does it cost less to build an audience like this, but it’s also the reason people go on social in the first place.

For promotions, target qualified audiences who interacted with engagement campaigns or existing customers. Also, anchor campaigns in increasing AOV through bundles, discount tiers, and subscriptions. Axe Bat did this over Black Friday with its Facebook ads and achieved an 18% lift in AOV despite the sale and a

400% increase in return on ad spend relative to their through-the-year average:

Retargeting should be sequential, personalized, and cross-platform: dynamic campaigns that widen (that is, serve different ads) from abandoned carts to products viewed to collections to the brand, depending on each visitor’s last interaction. Finally, bring social onsite: brands like MVMT, Kate Spade, Gymshark, lululemon, and Fashion Nova personify this through Instagram “shops” and by seeding social content — especially user-generated content — into product pages and checkouts.

7. Channels Must Deliver on Their Promises

The rise of channels presents two dangers: one, obvious; the other, hidden. The first is fragmentation. Today’s path to purchase might start on Pinterest and end at a physical storefront or through an Instagram buy button embedded in an onsite feed. Along the way, shoppers may be spurred to purchase through organic search results, retargeting sequences, or by an article through paid-content distribution.

In response, businesses scramble to adopt either a multi-channel (left) or an omni-channel (right) solution. The goal: be everywhere for everyone. The result: ending up nowhere for anybody. Let go of the expectation that customers want everything in one seamless and buzzword-driven experience.

“The way we think about the business,” says Nate Checketts, co-founder of Rhone, “is return on ad spend. At the end of the day is your overall marketing budget giving you a return on what you’ve spent? We focus on that more than we focus on a lot of the detailed terminology. Either our mix is wrong, meaning the channels that we’ve selected for marketing aren’t generating results or we’re doing something wrong in another way and we need to dig deeper and get a detailed analysis to understand how we improve it.”

Second, and far more destructive, is any approach to channels that puts marketing before backend. Attempting to unite channels without properly setting up and maintaining inventory and order management is futile. “Every retailer seems to have at least some form of an omnichannel strategy,” says Phil Granof, CMO of NewStore — which UNTUCKit uses to operate its retail locations. “But only a minority are approaching it from the ground up technologically, and even fewer demonstrate a holistic, experience-first mindset.

“Competitive advantage will not be had in the bits and pieces, but in delivering experiences of value across the customer journey.”

Leads might get turned off by an overly aggressive chatbot plus email plus retargeting sequence. Customers who don’t get what they ordered when they were told they would are unforgiving. Never forget: the most important moment in ecommerce doesn’t happen online. It happens when brands deliver.

8. Mobile Buying Is (Almost) the New Normal

Ever since mobile traffic surpassed desktop, the question haunting ecommerce has been, “How do we close the browser-to-buyer divide?” This challenge is acute in North America where just over half of shoppers who begin on smartphones complete their purchases there. Worldwide, mobile sales trail desktop by over one trillion dollars and mobile conversion rates are less than half those of desktop.

To close this gap, mobile design and especially mobile-first buying have to be at the forefront. Fast and easy are everything; this includes:

    Providing mobile-first payment options like purchase buttons via Amazon Pay, PayPal, etc. within product pages to bypass traditional checkouts

Enabling checkout entry through those same payment gateways first and then social profiles followed by email addresses in order of visual prominence (as a general rule, email works best on desktop and mobile for returning customers)

Designing mobile pages with tailored content; namely, separate visuals and videos based on device, single column layouts (opposed to grids), prominently placed “Buy Now” and “Add to Cart” buttons, as well as full-screen onsite search with product thumbnails and prices

Personalizing mobile experiences with page curl notifications for recommended products (instead of pop-ups) and slidable “drawers” (on the left or right of screens)

Placing status bars at the top of screens that automatically adjust to cart value based on spending threshold for shipping or tiered discounts: e.g., spend $50, save $10; spend $100, save $30

  • Optimizing for mobile and desktop separately — testing creative, offers, and onsite funnels by device (barring this separation, data will inevitably lead you astray)
  • To accomplish these goals, Rothy’s — who is creating a women’s shoe empire with recycled, single-use plastics — recently relaunched its mobile site as a progressive web app (PWA). PWAs are mobile websites that function like standalone apps: instant loading, push notifications, saved user data (for easier payments and better personalization), and offline modes when connectivity is poor.

    “Our decision to go the PWA route,” says Gigi Teutli-Vadheim, Rothy’s Site Experience Manager, “has been driven largely by the importance of mobile conversions. Like many other brands, we see the majority of our traffic from mobile devices — a trend that spiked during the holiday season as consumers were away from their desktops.

    “Our audience is incredibly mobile savvy, which made the decision to move to a progressive web app a no-brainer. In terms of the customer experience, we’re shifting our focus to be mobile-first in 2020, prioritizing speed to ensure users are satisfied.”

    9. Micro-Moments Win or Lose Conversions

    One-size-fits-all advertising messages are already obsolete, and companies’ competitive advantages increasingly reside in micro-moments. Such moments fall into two categories — pattern interrupts and effortless experiences. As a counter-intuitive example of the first:

    Why was it successful? “I suspect the reason this code worked,” Kurt Elster says, “is because it’s personalized. As our marketing tactics become more sophisticated, so do our customers. Presenting someone with what appears to be a dynamically-generated unique coupon code signals to them that the experience is personalized and that the urgency is real. The formatting of a coupon code may seem like a tiny mundane detail, but it’s a big signal to a sophisticated shopper.”

    Elster’s illustration works not as a plug-and-play tactic, but instead as a principle. To do this, look for highly visible assets — e.g., most-sent emails, most-visited landing pages, most-engaging social content, subheadings and captions on product pages, etc. — to test the unexpected.

    At the opposite end lay experiences where effortlessness shines: in-the-moment purchase decisions (impulse buying), discounted upsells that usefully bundle products, and lifecycle notifications.

    This last micro-moment is particularly powerful for increasing lifetime value. Most products have a shelf life. Spare customers the onslaught of generic post-purchase offers and instead delight them with timely Messenger, SMS, or email notifications.

    10. International Ecommerce Expands to the East

    According to McKinsey, 1.4 billion people will join the global middle class by 2020 and 85% will be in the Asia Pacific region (APAC). Ecommerce as a whole has already shifted away from the West and will continue to do so:

    Once known for sourcing and manufacturing, tapping into China and the larger APAC market is now a frontline strategy. Rothy’s, for instance, built a team in Shanghai to begin selling. Its entry point was WeChat. Everlane and Allbirds have also identified China as the “horizon for future expansion.”

    This isn’t to say internationalization is without challenges, but solutions exist. Where some beauty brands have forgone China due to mandatory animal testing, 100% Pure sells cruelty-free products directly to Chinese customers through Tmall Global and delivers them via a third-party logistics partner. Before Single’s Day in 2020 — which surpassed Black Friday Cyber Monday revenue by $16.7 billion — 100% Pure forecasted its sales would quadruple year-over-year.

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    Part of its strategy lay in Juhuasuan, a group-buying feature within Tmall for flash sales that also leverages live streams with Chinese influencers. “You don’t want to market in China the way you market in the U.S., so I needed local people to help,” says co-founder, Ric Kostick. “You have to do it the local way.”

    Don’t back off from global opportunities. Instead, find creative workarounds and trusted partners. Double down on global ecommerce markets and make sure infrastructure — like global fulfillment partners and international warehouses — are up to the challenges.

    The Future of Ecommerce Is Already Here

    “Business as usual” is business no more: in retail and in ecommerce. It’s not location that matters. Nor futuristic jargon. Leaders are facing a world of opportunity to evolve or perish, with success coming from big and small steps alike.

    The future will manifest itself in relationships. Choice isn’t tomorrow. It’s today. Direct and meaningful connections to customers that include but extend far beyond mere products. Are you ready?

    Editorial note: this article was last updated Jan. 29, 2020

    A Warning to Ecommerce Startups: The Future of Online is Offline

    When ecommerce first took the world by storm in the late ’90s and early 2000s, cutting edge marketers knew that the “information superhighway” was the future of commerce.

    As we entered the information age, we were going to free ourselves from the shackles of brick and mortar, and virtual reality imagined by science fiction writers would become reality.

    But the winds have been changing.

    Something a bit unexpected happened: the mobile revolution. While some may have seen bits and pieces of it coming, nobody could have foreseen the way it would influence our daily lives. Rather than migrating into the digital world, we’re bringing the digital world into ours.

    The future of online is offline.

    Shopify, a top ecommerce platform with 70,000 retailers, recently released a point-of-sale system that will connect physical and online retail. Meanwhile, Amazon is quietly building a same-day delivery system that could change the way people shop forever. The secret will be to place warehouses in every city, complete with delivery men and women, a very offline way of thinking about online retail.

    At the same time, Warby Parker’s co-founder Dave Gilboa found that, even though only 10 percent of their sales occur offline, those sales lead to customer retention and online success that wouldn’t otherwise be possible.

    More generally, rather than becoming a new place to shop, the web has become part of the everyday shopping routine. Roughly 70 percent of shoppers research online before they shop in the store, and already 1 in 4 consumers pull out their mobile phone while in the store to research the products that they find there.

    How should ecommerce startups react to this future? How do we adapt?

    The Right Foundations

    Before we move on, I want to be clear that ecommerce isn’t going anywhere. Where offline retail is more convenient, in the sense that you get instant gratification, online retail offers consumers a level of variety and novelty that they can’t find offline.

    That said, ecommerce is getting harder.

    In 2012, 30 percent of shoppers turned to Amazon to research their most recent online purchase. Only 13 percent turned to Google. In such a competitive environment, it’s easy to see how offline exposure might actually be an easier way to build a customer base. In any case, it’s impossible to compete on price.

    Justin Winter built an ecommerce business with a $12 million run rate in just 18 months. The business, Diamond Candles, sells home fragrance candles with a ring inside (valued between $10 and $5,000). He shared 7 shortcuts for ecommerce sites with Clarity.

    I feel almost any successful ecommerce site is built on at least some these fundamentals:

    1. Fight a downhill battle – You want your product to be innovative, but you want to choose a billion-dollar industry that isn’t famous for its innovation.
    2. Don’t become the product expert – Your job is to bring innovation, novelty, and an interesting angle to your sector of the market. It’s not to become an expert on the product. Contract manufacturers are getting far better at limited runs for a decent price. Know who to pay to get the quality you need. Don’t waste time trying to become the expert, unless you already are.
    3. Design intrinsically shareable products – While we recently argued that full-blown viral marketing is a myth, there’s no denying the benefits that come with being worth talking about. We’re talking about Seth Godin’s purple cow here. While it’s clearly important for your product to be good, it’s even more important for it to be worth discussing.
    4. Copy the experts from other industries – Justin Winter suggests copying the poster-boy innovators that have been successful in industries that are known for being innovative. In other words, you aren’t copying people in your own industry, but you’re learning from the example of innovators elsewhere.
    5. Start with one channel – The advice here is simply to stick with one channel until you know how to make it profitable. He also advises picking a channel that is both “free” and “paid.” In his case, he chose Facebook. The point is to pick a channel that makes sense for your product and to stick with it until it works before you do anything else.
    6. Get a mentor – This is crucial. You need somebody who’s been there before so that you can learn from their mistakes.
    7. Optimize your conversions – Optimize your unique selling proposition, product story, social proof, security seals, and money back guarantees with split testing to get to profit as quickly as possible.

    Without these foundations, it’s unlikely you’ll be able to have any success when you expand your business offline.

    Going Offline: Start by Being Profitable

    This title will probably get some laughs. Duh, we all want to be profitable. But I’m being serious here. Going offline is a big step. It typically means paying somebody to stand behind a cash register, paying rent and utilities, paying for maintenance, and more.

    I’m going to suggest that you forego all of that at first.

    Warby Parker’s initial “showroom” was their dining room.

    Whether it’s doing things the Warby Parker way, setting up a kiosk, or selling out of your van, I suggest starting with a “minimum viable store.” This will give you an idea of your revenue potential, and what it’s going to take to be profitable when you expand.

    In other words, I’m challenging you to find a way to be profitable in the physical world before you talk to a single investor or bank.

    It’s this kind of real-world experience that’s going to give you the numbers and lessons you need in order to launch a full-blown retail location.

    Conversion Rate Optimization For Online-Offline Retail

    When I say that the future of online is offline, I mean just that. You’re still an online business, and that means that you’re going to use conversion rate optimization to sell goods in a physical location.

    That means optimizing both your site and your store to maximize sales and retention through both platforms.

    On Your Website

    By now I assume you know how to optimize a site for sales, to grow an email list, and to boost social sharing. It’s not too much of a leap to use these same skills to drive offline sales, but it may not be immediately obvious how to make it work.

    Thankfully, most websites for brick-and-mortar businesses are terrible at CRO, so you have that going for you.

    The first thing you’ll need to consider is how much you should separate the ecommerce and brick-and-mortar elements of your online presence. There are several reasons you may want to do this:

    • Most people who find your site won’t live in a location where they can reach your offline store. Calls to action centered around your physical store will create clutter, and may confuse your visitors into believing that they won’t be able to buy your products online.
    • Your offline store may not have all of the same products in stock. If you accidentally create the impression that visitors will be able to buy all of these products in your store, you could create frustration and disappointment, doing more harm than good.
    • Google incorporates local factors into its algorithm, and a site designed for a specific location will be much more likely to show up if it’s obvious that it’s meant specifically for that location. This means visitors will be much more targeted and satisfied with the result.

    Once you’ve worked that out, you’ll want to consider some of the following elements of CRO:

    • Your call to action is no longer a shiny button. It’s a phone number or driving directions. You want these front and center, complete with directional cues, proper use of negative space, and everything else you’ve become accustomed to.
    • You have a new objection to overcome: is it worth driving to see your product in person? Don’t make the mistake of thinking that having a physical location means you can write shorter copy and overcome fewer objections. It’s more likely that the opposite is true. Don’t hide anything. Consumers want to see prices and product details. Give them more information than they could ask for. If you’re worried that the price will scare them off, take note that most consumers won’t even consider an option without knowing the price first.
    • There’s basically no such thing as full-blown A/B testing for offline sales, however, you can do this to an extent with coupons. Since you can trace coupon codes to their respective landing pages, you can measure which landing pages are driving more visits, at least among the segment of the population that brings in coupons. While this isn’t a truly representative sample, it’s “good enough” for comparing landing pages and site designs. It will take more time to reach statistical significance with tests like these, so you’ll want to focus exclusively on big changes.
    • Another way to A/B test as well as encourage visits is to provide a “reserve for pickup” button, or something to that effect.
    • In the same way that you can use coupons or promo codes to track referrals from your website, you can use promo codes to track referrals from your store. Keep in mind that this is best used for building up an email list, since the best place to encourage immediate sales while somebody is in the store is…in the store.
    • The store is also a great place to incentivize people to join an email list with a loyalty program (or ideally, something more creative). You’ll want to be clear that this email list is different. You’re not going to use it to spam them with coupons and deals. You’re going to use it to share useful and entertaining content.

    Moving from online to offline is no reason to sacrifice the mind of an optimizer. The physical analogue to CRO is retail design. Trying to teach you everything you need to know about this discipline goes beyond the scope of this post, but it’s definitely worth discussing some important takeaways.

    Entrepreneur magazine discussed five myths that can hurt retail design:

    • “Neutral walls are best” – Not always. Generally speaking, it’s actually smarter to develop a “brand pallet” that matches with your logo and the story you’re trying to tell. If it has the same design feel as your website, you can expect better results.
    • “Use fixtures designed for stores like yours” – As with your product, your store needs to be worth talking about, and using mass-produced fixtures isn’t always the way to do that. Found objects and unusual fixtures can give you an edge.
    • “Your fixtures should be flexible” – While it’s important to test and experiment, much as you would with a website, using exclusively flexible fixtures is a bad idea. If everything feels temporary, the store takes on an air of impermanence, and hence, unimportance. Bold fixtures that incorporate lighting tend to make a stronger impression.
    • “You can’t afford an interior designer” – This is probably the biggest one. While you probably can’t afford a full-time interior designer, you can consult with an experienced designer for under $100 an hour, and often a two-hour consultation is all it takes to set yourself apart from your competitors, especially if you come prepared with some images from your site and a strong idea of your brand identity.
    • “Copy the big retailers” – To survive as a small retailer, you need to stick to the foundations that make you successful online. Again, this means you need to be intrinsically worth talking about, and the worst way to do that is to be a cheap imitation of big stores. If you must copy, copy the innovators in retail sectors that are nothing like yours, and be sure to bring at least one major twist into the mix.

    A principle component of this is visual merchandizing, which is about developing floor plans and three-dimensional displays in order to maximize sales. Key attributes to play with include:

    • Color
    • Lighting
    • Product information
    • Sensory inputs
    • Interactive installations

    That last one is particularly vital for an online business. Interactive displays that are creatively linked with your online store will be particularly effective. The principle goals of visual merchandizing are:

    • Allow consumers to find what they’re looking for easily
    • Simplify the decision making process, and call attention to high-margin and low-selling products. (Many retailers make the mistake of hiding their worst sellers, instead of calling attention to them.)
    • Educate consumers about the products in creative ways that appeal to their instinctual, emotional, and logical brains
    • Increase serendipity by highlighting things that people will like, even though few people will be searching for them

    In much the same way that web marketers are encouraged to retain their customers by being helpful and entertaining with their content, a savvy ecommerce startup will make an effort to make the physical retail experience fun and helpful. That means:

    • A knowledgeable, helpful, friendly staff
    • A unique shopping experience that is worthwhile in itself: worth talking about, and worth coming back to, even if you don’t spend a dime. In other words, the modern retailer encourages, rather than discourages, loitering.
    • Build a community around your physical location, and blur the lines between this community and your online communities. Host events, take stances, and encourage participation. Interactive spectacles are the key to making a name for yourself, because experiences are more memorable than things.


    While ecommerce certainly isn’t going anywhere, the most successful ecommerce businesses of the future are going to diversify into the real world, and leverage it for improved sales both online and offline.

    Startups in this sector don’t necessarily need to make this move right away, but they should be thinking about how their business model is going to adapt to this change from the very start.

    I hope this guide has helped you learn a few things about the intersection between online and offline commerce. If you did, we’d love it if you passed this along. Thanks for reading… and be sure to leave a comment below.

    The Future of the Online Retail Industry

    As online retail grows and more shoppers move to the web, retailers will face a series of challenges. How can they best prepare for the successful future of the online retail industry?

    The online retail industry has witnessed significant growth over the last several decades. According to data from the U.S. Department of Commerce , online retail accounted for $136.6 billion in sales in 2007. By 2015 the number of sales online more than doubled and surpassed $340 billion. The future of the online retail industry promises to be even more prominent, with Forrester predicting online sales will reach 523 billion in the U.S. alone, by 2020.

    The growth of online retail sales is promising and presents an opportunity to connect with customers on a larger scale. However, as more customers turn to the web, retailers will face a number of challenges, specifically related to connecting disparate sources of data and integrating systems, applications, and devices. The best way for retailers to overcome these challenges will be to create a personalized retail experience by analyzing, integrating, and unlocking valuable data to better connect with customers.

    The future of online retail requires personalization

    Developing relationships with customers online is dependent on creating a personalized experience for every customer. In a study of 1,000 consumers, 88% of respondents stated that they are more likely to shop at a retailer that offers individualized and connected online and mobile shopping experiences. Retailers are therefore now trying to incorporate human, tailored experiences into their online platforms. For example, a chatbot on a retailer’s homepage can now welcome visitors and simulate a greeting that customers would receive when they walk into a store.

    A website or platform of a retailer is therefore quickly becoming a unique gateway into their products and brand. If a customer is visiting a retailer’s website and has a question, they should have instant and personalized communication options––whether that is through an AI-powered personal assistant, live chat, email, or over the phone.

    Similarly, repeat customers expect to get tailored retail experiences that leverage their digital footprint to predict their tastes, suggest products, and send relevant coupons and offers to their email inbox. According to the same study , approximately 87% of customers surveyed cited that such individualized retail experiences increased their loyalty to a retail brand. This shows that the future of online retail is highly dependent on providing more than a product transaction but rather building a relationship with the customer.

    In order for online retailers to build effective personalized retail experiences, they need to address the ‘siloed’ data problem. This is difficult because retailers use a wide variety of systems and applications, including on-premise and cloud applications. In addition, customers now jump between devices – mobile, desktop, tablets – and purchasing channels throughout their customer journey . And as the world becomes more connected, customers will use more devices and purchasing channels to shop online. Retailers need to ensure that they can rapidly and effectively tap into this data.

    This growing IT landscape presents a challenge for online retailers; they want to connect data from disparate sources to create a single view of their customer . Working with our retail customers, we are told that they want an effective integration strategy that connects their POS, marketing, ERP, and other critical systems. Additionally, they want to integrate these systems to social media management platforms, mobile applications, and third-party systems. A retail integration strategy therefore ensures that, regardless of which channel a customer chooses to engage with the brand – in the store, on the web, or on the phone – that retailers are able to unify the customer’s data in one place to create a seamless online retail experience.

    The path to integration in the retail industry

    Integration is key in the retail industry and a majority of retailers understand the importance of connectivity between their systems. Based on our conversations with retailers, we find that most use point-to-point integration in order to connect data, devices, systems, and applications. However, point-to-point integration is complex because the number of endpoints exponentially increases as connections are added. This means that retailers that adopt point-to-point integration not only end up with a complicated IT architecture, but are also unable to ensure that this architecture is future-proof––thereby hindering IT agility and the ability to respond to market changes.

    We believe that IT agility is crucial for the future of the online retail. As technology continues to disrupt the industry, retailers must be able to continually connect modern systems, applications, and devices, and remove outdated connections if necessary. This ensures that when the next major channel emerges, for example, retailers are able to easily tap into customer data on the platform in order to create personalized retail experiences for their customers and better prepare their sales and marketing teams. One way to ensure IT agility is by adopting a composable, future-proof approach to integration: API-led connectivity .

    API-led connectivity provides an approach for connecting and exposing assets. With this approach to integration, rather than connecting things point-to-point, every asset becomes a managed, modern API that is discoverable through self-service and controlled through governance. This methodical approach to integration allows retailers to build composable applications and systems––guaranteeing their retail enterprise is future-proof and preparing them to better adapt to customer demands.

    Through these modern APIs, retailers are able to unlock valuable data. Take, for example, the experience of one of our customers––a luxury retailer. The retailer saw that their customers were expected to interact with the brand across digital channels. As a result, the customer – traditionally a brick-and-mortar store – wanted to heavily invest in building personalized digital experiences through mobile applications and in-store iPad applications.

    The customer, like most retailers, had built up their IT architecture on point-to-point integration and was finding it difficult to connect systems quickly and launch new digital initiatives. The luxury retailer needed a new approach to integration to better connect with their customers, so they adopted API-led connectivity. MuleSoft was able to support this customer’s eCommerce platform migration and connect all relevant endpoints. The customer used modern APIs to power their mobile and in-store iPad applications, and safely expose data to third parties and partners––thereby building their online retail strategy. The retail customer is now set up to deliver a personalized experience leveraging a flexible and agile IT architecture.

    As we look to the future of retail, online sales will continue to grow and there will be increased focus on the major eCommerce players such as Amazon. In 2020, Amazon accounted for 43% of all online retail sales in the U.S. As Amazon and other marketplace giants continue to gain market share, retailers will continue to differentiate their offerings through online channels. To better prepare for the future of the online retail industry, it is important for retailers to embrace an approach to integration that is agile and future-proof, such as API-led connectivity.

    Want to learn more about how you can leverage MuleSoft to prepare for the future of online retail? Explore how organizations can develop omnichannel strategies with APIs and check out our integration solutions for the retail industry .

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