Six Pixels of Separation - The Blog
April 3, 201211:52 AM

The E-commerce Tipping Point

The business of selling is about to get a whole lot more interesting.

When you think about e-commerce, how does it make you feel? Do you feel that it's still a fairly nascent part of the retail experience or do you think that it has matured to the point where it's not only a proven merchandising channel, but a critical function of how people buy? Recently, a very senior marketing professional who works at one of the world's largest corporations was recounting a story of how they saw a postal truck outside of their corporate head offices in Silicon Valley, and every single parcel that was being offloaded from this truck was from Amazon. He thought to himself: "this is the what retail looks like in 2012."

It's big but it will become a whole lot bigger.

Last week, MediaPost ran a news item titled, PwC: Even With Social, Stores Aren't Keeping Up, in which the company expects to see U.S. e-commerce sales hit the $279 billion mark by 2015. So, we're talking real money and big money. Like anything else in business, with that steep growth and adoption comes a myriad of challenges, roadblocks and adoption issues. The biggest challenge? Figuring out how, when and where consumers want to connect, order and buy. Retail is, without question, morphing from a physical location (a shopping mall or a busy intersection of a popular city) to a state of digitization. What Amazon started is now being continued by new and fascinating online retailers like Fab. Driven by analytics, Fab.com is a daily deal site that offers up products with a modern contemporary design flare. From posters and art to furniture and jewelry, its about more than a great price (although sales can be up to 70% off retail) as Fab has managed to create it's own brand, look and feel that nurtured a passionate community of customers (and fans). Other brands like One Kings Lane (which offers up home decor, gifts, kitchenware, and vintage finds) are also doing brisk and growing business in this ever-evolving segment. These new start-ups are not only churning out millions of dollars in profit, but they're helping to redefine the world of retailing.

A million stores in the palm of your hand.

A testament the challenges that traditional retailers face is the exponential growth of mobile (in that cluster, let's include smartphones and tablets). With this new and hyper-connected customer - who is also highly untethered - we're able to get a crystal clear view of where the struggles begin. Choose a favorite retailer of yours. Now, enter their website URL into your smartphone and tell me what you see? Is their experience adaptive? Does it work as elegantly as their website experience? More often than not, it's the exact website and nothing else - making it a nightmare on a smartphone.

The E-commerce Tipping Point.

It's here and it's now. Retailers are doing themselves a massive disservice by sitting on the sidelines and waiting for consumers to adopt e-commerce. The opportunity is for them to lead. To enable all of their platforms to accept the transactions and help their consumers navigate through the multi-channels. Check out this little nugget of reality from the MediaPost news item mentioned above: "In fact, the PwC survey finds, people aren't waiting for stores, but inventing the multichannel experience for themselves as they go along. 'Because most retailers haven't yet created efficient multichannel models, consumers are working it out for themselves, using different channels in ways that best suit them.'" Just imagine - for a second - if the retailers took the lead, instead of waiting for consumers to adopt. Without whipping out a crystal ball, here's my prediction: e-commerce conducted by smartphones and tablets is going to be pervasive within the next two years. Once it is as ubiquitous as e-commerce is today, it's going to make our current world of e-commerce, mobile and social media look like a joke in terms of sales, size and people using it.

The future belongs to selling everywhere, anytime. Why some retailers are sitting back and waiting is beyond me.

The above posting is my twice-monthly column for The Huffington Post called, Media Hacker. I cross-post it here with all the links and tags for your reading pleasure, but you can check out the original version online here:

By Mitch Joel


Comments Comments Feed
  • Posted by David Phillips
    Mitch Joel

    In the UK we have the same issue. Germany is even more into online retail. It is no longer a suprise to see retailers reporting 10-18% increase in online sales.
    The big number is when a sector has 20% of its sales online. That is the tipping point. At that point we see retail shops closing in the high street. They can't compete.

    The success of Asos brought another element. It is possible to provide goods and services that hither to requires a physical presence (to try on clothes).

    Quite suddenly we are seeing digital services entering into areas that hitherto did not respond to digitisation or web/social media disintermediation.

    A friend showed me his latest toy. It was a surveying instrument which drew very accurate GPS verified 3 dimentional site maps with a subterainian attachment to identify underground cable and water mains. The information is stored online automatically. The work of a surveyor and manual worker done, not in days, but in minutes.

    The work of a doctor is, let us remind ourselved available using sensors that can be attached to a smart phone.

    Once it was the publisher who worried about the internet, now the retailer and soon the surveyor and doctor.

    Tip toe everywhere becuase we are all on the verge of the tipping point.

    Reply
  • Posted by Don O'Connor
    Mitch Joel

    Prior to reading this post, UPS dropped off my Amazon order. Timely! E-Commerce is yet to explode. When it does...duck!

    Reply
  • Posted by Kevin Behringer
    Mitch Joel

    Great insights, but I think one thing that all the retailers and brands that are going to lead in this space is their e-commerce experience. For too many, it seems very common to put up a store with no thought to the design, feel or experience of the end user. That's going to do a lot of disservice in moving the adoption further.

    Kevin

    Reply
  • Posted by Stuart Lambert
    Mitch Joel

    The barrier to online shopping becoming *the* way to shop is still the relative inconvenience of getting your stuff delivered compared to walking out of the store with it in hand.

    A key part of the supply chain with online retail is the courier who takes stuff from the e-tailer's central location(s) and gets it out to individual addresses.

    As courier companies get more sophisticated and start treating the recipient as their ultimate customer - as opposed to the sender - and start offering increasingly narrower confirmed delivery slots the convenience of online looks set to leapfrog the high street.

    I can't help thinking that the legacy delivery companies (Royal Mail, USPS, La Poste) should be making more out of their wide and far reaching networks to get a larger slice of this part of the e-commerce pie.

    Reply
  • Posted by Barry Harvey
    Mitch Joel

    We tried to get a fridge a while back - from Curry's. The one we wanted was not in stock, could not be delivered to store (why?), could be delivered for free in one month or for £20.00 if we wanted it the following week.

    Amazon sent me a gift-wrapped book I had ordered for my sisters' birthday today: DPD emailed me first thing to say it would arrive between 12.21 and 13.21 - it duly arrived at 12.29.

    Different products admittedly, but retail vs e-commerce? No contest.

    Will the Curry's store still be there in three years? I would suggest not, unless they adapt pretty quick.

    Reply
  • Posted by Joseph Ruiz
    Mitch Joel

    Excellent post Mitch, and very timely. The topic of our #SMchat today is the intersection of mobile and technology I am using your article as a pre-read. Thanks for sharing. Your tipping point content speaks directly to one of the questions.
    Thanks again.
    Joe

    Reply
  • Posted by David Hamburg
    Mitch Joel

    I'm not sure. I think the online retail success stories are few and far between, over-hyped and a distortion of reality. For every Amazon and Zappos, there must be tens of thousands not cutting it. Agree that online shopping is the future, but who knows how long...

    Reply
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