I had the pleasure of attending Shop.org’s Digital Summit in Philadelphia last week. The key trends that struck me were the dilemma of mobile, the next wave of personalization, the globalization of e-commerce and the rapid pace of innovation.
The dilemma of mobile
The dilemma of mobile is that it is a significant source of traffic to retailers’ digital channels but conversion rates remain low. While conversion rates are not ideal, Sucharita Mulpuru, Vice President and Principal Analyst of Forrester Research, noted that mobile has a significant influence on sales across all channels, including US$977 billion in offline sales. The two biggest questions that conference participants tried to answer were:
- How do retailers improve conversion rates on mobile?
- How do you leverage mobile’s strong influence on overall sales?
QVC’s President and CEO Mike George shared the company’s experience in mobile, which accounted for 41% of e-commerce sales in 2014, to help retailers approach the first question. Mobile is considered the company’s flagship experience so QVC implemented a smallest screen first mentality with continuous optimization for the ever evolving use cases for mobile devices.
Another approach was suggested by Michael Yamartino, Head of Commerce at Pinterest. Most of the time people spend on mobile is not with retailers, so he recommended going where the people are, especially social media apps. This is why Pinterest introduced buyable pins. He stated that there are 60 million buyable pins which have more than double the average mobile conversion rate at no additional cost.
Facebook’s Director of Advertising Research, Daniel Slotwiner, also agreed that time on mobile is concentrated on very few apps, which is important when addressing the second question. Facebook and Nielsen conducted research that showed that Facebook ads done alongside either e-mail or TV makes the ad more memorable. Because the path to discovery has changed, his recommendation is that retailers should market holistically across all media channels, leveraging the strengths of each with the appropriate creative.
The importance of mobile was underscored by Salim Ismail, Executive Director of Singularity University, who pointed out that the entire world will have broadband internet through inexpensive tablets or phones in the next few years.
The next wave of personalization
Julie Bornstein, COO of Stitchfix, highlighted that 35% of Amazon’s sales come from recommendations while 100% of Stitchfix’s sales are based on them. Stitchfix is the leading retailer when it comes to personalization at scale. The company has 14 data scientists with four years of data to help make a lot of the decisions at the company. The algorithms, along with stylists, make product recommendations for shoppers.
Mr. George of QVC pointed out that personalization is service. The company is learning its customers’ habits to make the shopping experience sticky and personal. He admitted that the company still has work to do on personalization and is looking forward to learning from Zulily, which sends out thousands of personalized e-mails daily.
On the advertising aspect of personalization, Veronika Sonsev, CEO and Founder of inSparq, explained the ways in which advertising can be personalized, such as location targeting, dynamic content targeting and feed based creative.
- Location targeting: Ads are designed to drive in-store foot traffic based on location, demographics and interests.
- Dynamic content targeting: Ads are based on the shopper’s behavior and context. The creative changes based on the shopper’s location and profile in addition to external factors such as time and weather.
- Feed based product creative: The creative adapts to the products a shopper selected in real time or on trends and personalization strategies.
The globalization of e-commerce
E-commerce is growing faster outside the US, especially in Asia Pacific, which retailers are looking to capitalize on. Peter Sheldon, VP and Principal Analyst of Forrester Research, highlighted the three main ways for global expansion e-commerce expansion along with the advantages and disadvantages. Many retailers use a combination of all three when going abroad.
Three Strategies for E-Commerce Globalization
|Cross border shipping||Inexpensive, relatively easy to implement||Customers dislike expensive shipping costs and long delivery times|
|List on a Marketplace||Access to a lot of buyers, easier than launching a direct website||Limited data, less creativity, consumers expect discounts|
|Open a localized store||Own customer relationship||Heavy investment, needs about five years to see ROI|
Source: Forrester Research
When implementing these strategies, there are challenges. Jim Okamura, Managing Partner of Okamura Consulting, recommended that the first obstacles to tackle are localizing payment, translating the website and producing a local welcome mat. Multiple vendors have cropped to handle the more complicated side of global e-commerce such as customs, currency conversions and customer service.
The rapid pace of innovation
Kasey Lobaugh, Principal and Chief Retail Innovation Officer at Deloitte Consulting, drove home the point that technology is advancing in an exponential way, not linear. Retailers must adapt to the faster rate of change.
Other experts weighed in on the specific technologies that will be coming faster than we think.
Jon Nordmark, Principal and Chief Retail Innovation Officer of Iterate Studio, suggested following the R&D investments of Google, Amazon, Facebook and Apple as those are the companies that retailers compete with. These companies are focused on Magic Materials, Robots, Deep Learning, Internet of Things (IoT) and Globalization.
Singularity University tracks the following technological trends that are improving exponentially: self-driving vehicles, solar energy, virtual reality, 3D printing, Artificial Intelligence, biotech and nanotech. Mr. Ismail’s recommendation to companies is that big transformations fail so task small teams to disrupt the company. Another key takeaway is that anything can be digitized.
Maria Thomas, Former Chief Consumer Officer of SmartThings, focused on the Internet of Things (IoT). Her view is that the last two decades were about people controlling the internet while the next two will be about devices connecting with each other through the internet. IoT is still in its infancy since multiple standards prevent devices from communication with each other. The future, though, is that IoT will be the physical graph—a network of networks.
Read Consumers in the Digital World: Hyperconnectivity and Technology Trends to learn more.