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Posts Tagged ‘Technology Advances’

Online Retail Thriving: 8% Growth Expected This Holiday Season

Yesterday we reviewed the past decade in online retailing. Today we look at some forward-looking statistics about e-commerce. In particular we analyze the upcoming holiday season and how online retailers can expect to fare.

Amazon.com was founded in 1995, but it famously didn’t make its first annual profit until 2003. Those days of struggle for e-commerce vendors are long gone. In its State Of Retailing Online 2009 report, Forrester Research reported that the vast majority of Web retailers were not only profitable in 2008
- in a recession – but also that their overall level of profitability grew.

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The e-commerce market is expanding, due to a combination of factors. One is that consumers are no longer afraid to buy things online, as they once were. Also brick-and-mortar businesses are migrating more of their operations online. We also have technology advances to thank: better recommendations technology, social media, the emergence of mobile commerce.

E-commerce Continues to Grow, Despite Economy

E-commerce has ridden the ups and downs of the general economy over the past decade, but it has continued to grow throughout. In the State Of Retailing Online 2009 report, Forrester Research reported that retailers saw their Web divisions grow by 18% in 2008. Given that Forrester described 2008 as "one of the worst years ever" in retail, that’s significant growth in online retail activity.

Holiday Season Predicted to Grow 8%

Online shopping always been a seasonal market and there are promising signs for the upcoming holiday season. The latest comScore statistics show that toy web sites grew 9% in October, which comScore claimed was due to some parents getting in early for holiday gifts. The retail apparel segment also grew by 9% in October.

Overall, Forrester Research predicts that online holiday retail sales (over November and December) will grow 8% this year to $44.7 billion.

Brick-and-Mortar Stores a Success on the Web

A noticeable trend over the past decade has been the slow but steady flight of ‘brick-and-mortar’ retail stores to the Web. In the early days of online retailing, Web operations were typically isolated from the main sales channels. But nowadays, Forrester notes that Web operations are a strategic part of the entire organization.

Two recent stories from industry website Internet Retailer show how traditional retailers are not only adapting online, but thriving. Best Buy’s traffic has grown 18% over the past 12 months according to Nielsen Online. Meanwhile for the quarter ended October 31, 2009, Gap’s Web sales increased 4.9% to $298 million. The web accounted for 8.3% of sales at Gap in Q3 09, compared to 8.0% in Q3 2008.

Forrester outlined a number of reasons why online channels are appealing during a "challenging" economy – including enabling consumers to find products online that they can’t find elsewhere, offering comparisons on product features and pricing, avoding holiday crowds, and more.

All of this data is very encouraging to online retailers. Even during a down economy, the Web has come through for most of them. Web entrepreneurs, if you’re looking for opportunities then look no further than online retailing!

Photo credit: Sⓘndy

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Top Internet Trends of 2000-2009: E-commerce

Over the past decade, Amazon.com and eBay have continued to dominate the online retail market in the United States. However, there have been signs that more social and distributed forms of online shopping are gaining traction. eBay, in particular, is beginning to lose ground.

In this post, we review the past decade of e-commerce and the key trends. Advances in recommendations technology, together with the emergence of social media and mobile commerce, have combined to change the way e-commerce is transacted.

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This is the third in a ReadWriteWeb series looking back at some of the key trends of the past 10 years. We previously covered the online music industry and the democratization of news media.

Recommendations Technology Advances

Over the past decade the online retail industry has seen great strides in the use of recommendations technology. Amazon has consistently led the field in this, with its sophisticated blend of personalized, social and item recommendations.

Many of the retail recommendations in use today rely on implicit user data. These systems typically track user data, which is then analyzed with a set of usually proprietary algorithms. The end result: recommendations for users. Earlier this year we looked into Baynote’s recommendation system:

"Baynote observes real-time user behavior on a site and looks for implicit, emergent patterns. It uses collective intelligence and an affinity engine to analyze the data. Common behaviors which it tracks include page refers, queries, mouse movement, time spent on a page, peer behavior."

Other similar recommendation technologies we’ve profiled include MyBuys, ATG and richrelevance.

Social Media Takes Retail to Blogs, Social Networks

As with nearly every other industry, shopping sites have increasingly used social media to promote their wares.

According to Shop.org’s recent eHoliday Study, 47.1% of retailers surveyed will be increasing their use of social media this holiday season. Specifically, more than half of retailers have "added or improved their Facebook page (60.3%) and Twitter pages (58.7%)" this year. Nearly two-thirds (65.6%) have "added or enhanced blogs and RSS feeds" over the same time period.

One result of this has been a big increase in implicit social recommendations data across social networks and blogs.

Another trend with ecommerce sites is distributed sales. Anyone can embed an Amazon store into their blog or social network these days. As Kurt Collins of social commerce vendor Cartfly told us in December, this won’t replace "end destination e-commerce" – but it will "augment sales tremendously" at the edge of the network.

Mobile Commerce Arrives, Albeit Slowly…

The growth of mobile phones has been a big trend this decade. However, as Sarah Perez wrote in September, mobile commerce in the U.S. market has struggled for momentum.

According to data from eMarketer, more than 70 million U.S. mobile phone users will access the internet from their devices this year. Despite this, the m-commerce market remains immature. In an April 2009 survey by RIS News, privacy and security concerns are still at the forefront of both shoppers’ and retailers’ minds.

There is some promise that mobile commerce will finally gain traction in the coming decade. Mobile payments firm Billing Revolution found that on-the-go consumers are happy to purchase small ticket items like pizza and movie tickets, for example.

One market that has shown strong signs of mobile commerce growth is Japan, according to Morgan Stanley.

See also our analysis of mobile payments.

Conclusion

New recommendations technologies make it easier every year for consumers to find what they want, social media has driven a lot of retail activity to small websites and social networks, and mobile commerce has slowly but surely gained a foothold in e-commerce.

These are just some of the trends in e-commerce over the past 10 years. While Amazon.com and eBay continue to be the giants of online retail, the Social Web and advances in web technology have both had a big impact this decade.

See also:

• Top Internet Trends of 2000-2009: Online Music
• Top Internet Trends of 2000-2009: Democratization of News Media

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