With the recent announcement of the launch of our new CommerceLive offering, we thought it would be beneficial to explain some of the underlying market conditions which led to the creation of CommerceLive.
With many retailers being forced to tighten their belts or even to close stores in response to the recent economic downturn, the web channel remains a bright spot for retailers and CPGs and provides an opportunity to offset losses by other channels.
Despite Forrester’s recent prediction (Q1 2009) that e-commerce growth would be flat in 2009, they are still predicting that it will pick up by 2010 and rebound into double digit growth again through 2012. Forrester predicts that by then approximately one of every three retail dollars in the US will either be transacted online or influenced by the Web. Reuters is reporting last month that the recession “probably end in the third quarter, but uncertainty exists over the speed and duration of the economic recovery1”.
Most retailers follow the research and the trends, so they know that cross-channel shoppers typically spend nearly 30% more than their single channel counterparts. They also know that it’s far more cost effective to retain loyal customers compared to acquiring new customers.
This means that businesses will continue to plug away trying to increase the loyalty of their current customers, get new customers, and cut costs where possible, until retail indicators start to improve. However their instincts to hunker down and weather the storm are offset by the fact that they know there are improvements that they can effect now that have the potential to make a big difference to the bottom line. Many retailers are positioning themselves for the approaching upturn, and are working on initiatives that can help them achieve the true seamless cross channel experience which can help them reach their cross-channel goals, improve that customer loyalty, and take advantage of the opportunities that still exist for the web channel.
Retailers and CPG’s have been struggling to reach these goals because of various challenges:
- Disparate e-commerce applications and web sites that make the experience choppy and hard to manage
- Difficulty extending the infrastructure to new channels and devices
- Web site look and feel is locked down too tightly
A more sophisticated customer base and smarter shopping tools, coupled with the current economic climate, means that more than ever consumers are researching prices and looking for the best deals. At the same time businesses are looking to reduce operational costs and react quickly to competitive threats. It’s a challenge for retail and CPGs to keep up mainly due to some of the following:
- Difficult for business users to modify e-commerce sites
- New site creation requires an extensive rework of the infrastructure
- Reliance on IT to do day to day business tasks
Businesses need to overcome these challenges if they are going to succeed with their long-term goals. One of the best ways that they can do that is through customer engagement as a way of fostering brand loyalty and meeting some of the raised expectations that come with more savvy consumers. Consumer centric strategies that are designed to win loyalty can be very effective. These include such things as:
- Rich Interactive web based applications
- More advanced tools and methods for consumers to find products and content
- Social / User Generated Content
- Cross-channel innovation and seamless interaction across channels
Businesses that are working on, or have already succeeded at reaching some of these milestones are much better positioned compared to their competition, for when the economy starts to turn around. But for many businesses going beyond the basic stand-up and maintain of their website is a daunting task, and they do not even know where to start. What many retailers and CPG’s are asking themselves is “How do we effect this change?”.
Stay Tuned for the next post in the CommerceLive Series, which will explore the market gap in deployment models that led to the creation of CommerceLive, and how it offers the best of both worlds to retailers and CPGs.
1.U.S. recession seen ending in third quarter