Ecommerce - The Scepticism Dissolves 

Analysing The Industry's Experience in On Line Selling

Ecommerce has been with us for quite a while now and it has ridden many waves; economic, social and technological.  Salient data has been taken from new reports that make for some interesting reading especially if you are budgeting for your business and looking at the best way of achieving new growth.

When we look closely at the figures that are presented here it is no longer a question of 'if' but 'when' to take your retail business on line.


Ecommerce Growth by Revenue

Many companies face being left behind if they only stick with traditional sales channels when they could be thriving through on line sales. Early adopters of on line sites appear to have ‘come out of nowhere’ to steal market share and even overtake their rivals who may have been around for a lot longer. In some cases, this longer standing structure is often holding them back and restricting their thinking and possibly their pricing thinking with traditional overheads coming into play where modern on sellers are more lean and agile.

From recent studies, top performing eCommerce businesses have edged away from their natural competition, attaining revenues over 330% higher than everyone else. Top performing ecommerce companies have an Average Order Value to the level of 35% higher than other market players. Top performing companies are seen to create a “renewable resource” of loyal customers. By the end of year three in such a business initiative, the majority of their revenue is coming from repeat purchases. After three years, companies in the top quartile have almost quadrupled monthly orders, resulting in 280% higher number of all-time orders.


While ecommerce is progressing in market share in the retail industry, the level of acceptance differs significantly in other segments. It would seem then, that retail category would play a role in a company’s ability to grow, but this doesn’t seem to be the case. Across the categories that were explored in recent research, there is no significant difference in their growth rates.


 Factors Driving Faster Growth in Ecommerce

 This insight is a significant help to companies in two ways:-

1.      It’s a strong guideline as you set growth targets for your company.
2.      It’s a useful indicator to when you will need to move past the low-hanging fruit and begin to explore new sources of growth. 
In the early days of your company, you can grow simply by building awareness. You can build a highly functional website, create some ads, and grow a subscriber list. This alone can be enough to stimulate rapid growth. But once you cross certain revenue lines, you’re going to need to work harder to achieve the same performance results. The factors below show what is changing in the market and in possession of this information a more effective campaign and marketing plan can be created.
1.     The increase in technology-aware consumers: Consumer shopping behaviour has changed dramatically with the adoption of rising technology such as mobile and social media. Generation Z, those aged 18 to 24, are now spending 10% of their disposable income online.
2.     Mobile purchasing In Q2:2014, purchases made via tablet or Smartphone increased 48% Year on Year three times [see graph below] the growth in desktop purchasing. Gartner found that mobile commerce currently generates 22% of digital commerce revenue, and predicts mobile revenue in the U.S. will account for 50% by 2017.
3.      Logistics: FedEx and UPS have committed to addressing previous seasonal constraints by hiring seasonal employees whilst  ecommerce companies across the scale are increasing their ability to handle their own deliveries and fulfilment.
4.      Emerging international markets: As other countries become more aware of product availability and as their use of modern devices grows then higher sales can follow.
5.      Product and brand differentiation: Ecommerce stores can succeed against the bigger players by creating a highly differentiated range  of product and brand experiences.
6.     Store-based retailers catching web-only: Traditional retailers saw 22% growth in ecommerce sales over the 2nd quarter, a pace faster than overall ecommerce. However, the influence of the online channel as it extends to offline is continuing to evolve, and many physical retailers are learning to balance new growth with the proper pace of closing physical locations.
7.     Product and brand differentiation: Ecommerce stores can succeed against the bigger players by creating a highly differentiated range of product and brand experiences.




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