Throughout the world, eCommerce spending is increasing at a steady clip and is expected to exceed $7 trillion in 2008. As consumers increasingly opt for virtual stores over traditional brick-and-mortar ones, the manner in which buyers and sellers interact is also undergoing a paradigm shift. James Kuczmarski has an inserting take on this changing phenomenon, which he expressed in the business magazine Fast Company (April 2008). A quick look at his views on the matter:
A survey was conducted by Pui-lai To (writing in Technovation) with an intention to discover why consumers were increasingly shifting online to address heir buying needs. Pui-lai distributed questionnaires relating to shopping incentives to over 200 students and workers from Taiwan. Cost, convenience and the variety of selection were the expected answers; but what was new was the satisfaction of the users while using this new technology and the sense of adventure associated with trying out this new mode of shopping. Pui-lai calls these "hedonistic motivations"; and it was also noticed that consumers prone to these kinds of motivations had an inclination toward impulse buying when online. Knowing this, online sellers are designing their websites in such a manner that appeals to the sense of adventure and technological competence of these buyers.
Looks matter! While many consumers are still concerned about online security and poor vendor reliability, it has been noticed that these concerns are generally reduced when the customers comes across well-designed websites. They are more comfortable while buying form sites that project an aura of professionalism. Also, trust increases when the website is easy to navigate and is user-friendly in other ways (e.g, uses rich web applications intelligently). Comfort leads to an increase in the trust factor, which ultimately leads to more purchases.
Negative reviews can easily be overruled by positive experiences. In the online world, perceptions are volatile and prone to change fast. So even if a vendor has got a not-so-good review, the effects can be negated if the Internet shoppers have a positive, personal experience.
eCommerce, in spite of its recent gains, is still in its infancy. As more people come online, the more will the dynamics between the buyer and the seller change. But one thing seems certain – online shopping is growing fast, and there’s no turning back!
Friday, March 27, 2009
Global Ecommerce growth patterns
Ecommerce has become one of the mainstays for online players and the double digit growth figures tell a good story. Year-on-Year growth in global ecommerce has been growing at more than 40% per annum.
Though the data is a bit dated, the growth has slowed down only by a few points and that does not really matter as the absolute figure now runs into '00s of billion dollars. Some of the encouraging signs for this growth stem from the fact that:
1) Many brick and mortar services such as financial services have moved on to the internet in a big way in the last few years. Banking, trading and a whole gamut of online financial services have helped increase the growth of online commerce.
2) Steady investments have gone into making the internet a secure place to transact in. Secured servers, encryption technology have made online transaction safer than they were 5 years ago. Other than that, increase in broadband availability, city-level Wi-Fi networks (specially in the US) have made it possible for users to access the internet very easily.
3) Small businesses are yet to go online and make ecommerce an important aspect of their bottom-line. This spells a huge potential in future ecommerce market as going online is not longer cost-prohibitive and ecommerce solutions are now available out-of-the-box for as little as $75 per month (www.easystorecreator.com is a good example). In September 2007, Small Business Research Board eCommerce Study further confirmed the fact that 30% of small businesses were expecting online sales to increase significantly in the next 12 to 24 months.
The US of A continue to lead in the ecommerce race with more and more Americans booking travel, completing their financial transactions and buying day-to-day needs online. However, Europe and most of Asia are fast catching up to the ecommerce phenomenon and is likely to speed in the next couple of years.
Though the data is a bit dated, the growth has slowed down only by a few points and that does not really matter as the absolute figure now runs into '00s of billion dollars. Some of the encouraging signs for this growth stem from the fact that:
1) Many brick and mortar services such as financial services have moved on to the internet in a big way in the last few years. Banking, trading and a whole gamut of online financial services have helped increase the growth of online commerce.
2) Steady investments have gone into making the internet a secure place to transact in. Secured servers, encryption technology have made online transaction safer than they were 5 years ago. Other than that, increase in broadband availability, city-level Wi-Fi networks (specially in the US) have made it possible for users to access the internet very easily.
3) Small businesses are yet to go online and make ecommerce an important aspect of their bottom-line. This spells a huge potential in future ecommerce market as going online is not longer cost-prohibitive and ecommerce solutions are now available out-of-the-box for as little as $75 per month (www.easystorecreator.com is a good example). In September 2007, Small Business Research Board eCommerce Study further confirmed the fact that 30% of small businesses were expecting online sales to increase significantly in the next 12 to 24 months.
The US of A continue to lead in the ecommerce race with more and more Americans booking travel, completing their financial transactions and buying day-to-day needs online. However, Europe and most of Asia are fast catching up to the ecommerce phenomenon and is likely to speed in the next couple of years.
Reasons behind abandoned shopping carts
'Boston Consulting Group (BCG) estimates that some 65 percent of online consumers bail out of a transaction and abandon the shopping carts before the final purchase transaction took place.' Daunting numbers for any online retailer and something that is still not explained in very clear terms during analysis phase. Some of the known reasons for abandoned shopping carts are:
1) Price not equal to value received. This is really a perception thing, consumers might feel that the shipping and the online prices might be higher than what they would spend at a brick and mortar store and they abandon the shopping cart.
2) Too long a process. A frequent internet user might not be daunted by the long process of shopping online which is commonplace in online stores but a not-so-frequent user might loose patience. This might also happen when the site is slow making online shopping a frustrating experience.
3) No mood to really buy. Abandoned carts also result from the 'Window Shopping phenomenon' where the user is not really in the mood to buy anything and leaves the cart once he is satisfied with the browsing experience. there is really not much that can be done to control this just as brick and mortar stores are unable to contain users who leave without buying.
4) Security concerns also play a role in abandonment of shopping cart especially with first time users who are worried about using their credit card online. E-retailers can quell this issue by offering a detailed guideline for first time users and offering assurance regarding credit card theft. In fact, some creative e-retailers have converted to other forms of payments such as payment on delivery etc to ensure that these buyers stick with them.
Abandoned shopping cart is a serious bane of the online industry and recent research by www.DoubleClick.com noted that for every $1 sold online, $5 was in the abandoned cart. In spite of this, ecommerce is growing at a nearly 30% per annum (Source: Doubleclick.com) and that is a real silver lining!
1) Price not equal to value received. This is really a perception thing, consumers might feel that the shipping and the online prices might be higher than what they would spend at a brick and mortar store and they abandon the shopping cart.
2) Too long a process. A frequent internet user might not be daunted by the long process of shopping online which is commonplace in online stores but a not-so-frequent user might loose patience. This might also happen when the site is slow making online shopping a frustrating experience.
3) No mood to really buy. Abandoned carts also result from the 'Window Shopping phenomenon' where the user is not really in the mood to buy anything and leaves the cart once he is satisfied with the browsing experience. there is really not much that can be done to control this just as brick and mortar stores are unable to contain users who leave without buying.
4) Security concerns also play a role in abandonment of shopping cart especially with first time users who are worried about using their credit card online. E-retailers can quell this issue by offering a detailed guideline for first time users and offering assurance regarding credit card theft. In fact, some creative e-retailers have converted to other forms of payments such as payment on delivery etc to ensure that these buyers stick with them.
Abandoned shopping cart is a serious bane of the online industry and recent research by www.DoubleClick.com noted that for every $1 sold online, $5 was in the abandoned cart. In spite of this, ecommerce is growing at a nearly 30% per annum (Source: Doubleclick.com) and that is a real silver lining!
Understanding viral and social network marketing
A friend tells you about the new range of food processors from a well known manufacturing company so the next time you are at the mall, you are going to be tempted to check it out. Word-of-mouth publicity is the oldest form of social network marketing and the internet is only helping it grow at a global scale. According to eMarketer.com, 37% of all American Adult internet users along with 70% of online teens are involved in each month.
If these figures are anything to by, it is also predicted that by 2011, social network marketing will span at least half of all online adults and the online teens contribution is likely to go up to 84%! No big surprise here that the marketing arm of all major companies are keenly following this trend and investing in seriously. In fact, according to eMarketer.com, $920 million has already been spent in 2007 on this form of marketing and the social network marketing industry is likely to see an influx of $1.6 billion in 2008!
Viral or social network marketing is a strong force and has some core characteristics which make it formidable:
1) direct communication between users
2) ability to spread a good word fast
3) offers instant information by way of hyperlinks which results in quick re-action
4) ability to go to the right demography right away
5) cost per person approached is lower than direct marketing
6) informal and easy-to-handle
7) suitable for new product launches
8) many networks like Orkut, Facebook, Squidoo, etc available for social network marketing
However, this form of online marketing is not suitable for all products and services. Custom services tend to feel shortchanged when utilizing viral marketing as users want a defined product of service to capture their imagination. The statistics stand in favor of social network marketing and it is likely that this is going to gain maturity and morph into a mainstream marketing activity in the near future.
If these figures are anything to by, it is also predicted that by 2011, social network marketing will span at least half of all online adults and the online teens contribution is likely to go up to 84%! No big surprise here that the marketing arm of all major companies are keenly following this trend and investing in seriously. In fact, according to eMarketer.com, $920 million has already been spent in 2007 on this form of marketing and the social network marketing industry is likely to see an influx of $1.6 billion in 2008!
Viral or social network marketing is a strong force and has some core characteristics which make it formidable:
1) direct communication between users
2) ability to spread a good word fast
3) offers instant information by way of hyperlinks which results in quick re-action
4) ability to go to the right demography right away
5) cost per person approached is lower than direct marketing
6) informal and easy-to-handle
7) suitable for new product launches
8) many networks like Orkut, Facebook, Squidoo, etc available for social network marketing
However, this form of online marketing is not suitable for all products and services. Custom services tend to feel shortchanged when utilizing viral marketing as users want a defined product of service to capture their imagination. The statistics stand in favor of social network marketing and it is likely that this is going to gain maturity and morph into a mainstream marketing activity in the near future.
Online Consumer Experiences
Usability. That is a key mantra with online users and greatly influences the success rate of an online web site. An online consumer experience is governed by the way the site is designed and how it leads the users on to the next transaction. Some guidelines for good online consumer experiences are:
1) Keeping It Simple, Stupid! No offence meant but this is the KISS theory which means that the web pages have to be really simple to understand and follow. Complicated processes tend to turn off users and send them away. www.Google.com is the perfect example of how to keep web interfaces simple.
2) No Clutter. Most site owners would like to stuff the home page with as much data as possible resulting in information overload and one which is definitely going to confuse users. The objective of the site should be clear and that is going to offer a good experience to consumers. www.Facebook.com is a good example of clutter-free environment and new web technologies like AJAX have been put to good use here.
3) Speed and technology stack. Though these two factors are influenced by the backend of the web site, they greatly influence consumer experience. nothing is more bothersome than a slow site which is server-dependant issue and outdated technology also makes user experience painful. Online email accounts like www.hotmail.com have follow prey to these problems but have been quick to correct them in order to better the user experience.
4) Relevant content, product information, images and online help are some on-site items which improve consumer experiences. It comes as no surprise that www.amazon.com has such a tremendous customer following….it offers all this and more in a very easy to follow interface. In fact, the now-popular feature of reviews has been around at Amazon.com for more than a couple of years.
It is safe to say that good consumer experiences can make or break a web property as users are maturing and are able to understand which sites given them value for time!
1) Keeping It Simple, Stupid! No offence meant but this is the KISS theory which means that the web pages have to be really simple to understand and follow. Complicated processes tend to turn off users and send them away. www.Google.com is the perfect example of how to keep web interfaces simple.
2) No Clutter. Most site owners would like to stuff the home page with as much data as possible resulting in information overload and one which is definitely going to confuse users. The objective of the site should be clear and that is going to offer a good experience to consumers. www.Facebook.com is a good example of clutter-free environment and new web technologies like AJAX have been put to good use here.
3) Speed and technology stack. Though these two factors are influenced by the backend of the web site, they greatly influence consumer experience. nothing is more bothersome than a slow site which is server-dependant issue and outdated technology also makes user experience painful. Online email accounts like www.hotmail.com have follow prey to these problems but have been quick to correct them in order to better the user experience.
4) Relevant content, product information, images and online help are some on-site items which improve consumer experiences. It comes as no surprise that www.amazon.com has such a tremendous customer following….it offers all this and more in a very easy to follow interface. In fact, the now-popular feature of reviews has been around at Amazon.com for more than a couple of years.
It is safe to say that good consumer experiences can make or break a web property as users are maturing and are able to understand which sites given them value for time!
Online shopping and popularity in Asia
According to a Feb 2008 A.C. Nielsen survey, 84% of respondents in the Asia Pacific region had transacted online. This is an impressive number no doubt and confirms the fact that online shopping is now a mainstream activity and no longer a fad which created talking points for some online retailers. Content and information has been a common driving point for ecommerce in Asia and the same report has thrown up some interesting information.
Books happen to the most popular category of products bought online and account for 41% of all online purchases and are very popular in developing Asian countries like China, Brazil, Vietnam and Egypt. The next most popular category of Clothes/Accessories/Shoes accounts for 37% of online shopping by Asians. Travel is yet another category which is popular and a combined total of more than 50% Asians having booked some form of travel online.
Incidentally, one country which stood out in the survey when it came to the frequency of online shopping (79%) and the highest number of respondents to the 'have you shopped online?' question (a whopping 99%) has been none other than Asian tiger, Korea which boasts of one of the best internet connectivity in the world. These numbers are not perchance….Asia has got many emerging economies and countries like India, Korea and China are growing as knowledge-driven economies which include a highly-tech savvy population with good disposable incomes. Rapid advancement in security as well as the initiative of banks to issue credit cards to people in good jobs is some more reasons for the growth in online shopping in Asia. Asians are also make one of the most faithful online customers as more than 66% customers return to the same site to shop online! That should be enough to make online retailers to include Asia as one of their most important marketplaces!
Books happen to the most popular category of products bought online and account for 41% of all online purchases and are very popular in developing Asian countries like China, Brazil, Vietnam and Egypt. The next most popular category of Clothes/Accessories/Shoes accounts for 37% of online shopping by Asians. Travel is yet another category which is popular and a combined total of more than 50% Asians having booked some form of travel online.
Incidentally, one country which stood out in the survey when it came to the frequency of online shopping (79%) and the highest number of respondents to the 'have you shopped online?' question (a whopping 99%) has been none other than Asian tiger, Korea which boasts of one of the best internet connectivity in the world. These numbers are not perchance….Asia has got many emerging economies and countries like India, Korea and China are growing as knowledge-driven economies which include a highly-tech savvy population with good disposable incomes. Rapid advancement in security as well as the initiative of banks to issue credit cards to people in good jobs is some more reasons for the growth in online shopping in Asia. Asians are also make one of the most faithful online customers as more than 66% customers return to the same site to shop online! That should be enough to make online retailers to include Asia as one of their most important marketplaces!
Online payments
If you are an avid internet user, it is unlikely that you would think twice before making an online payment. Online payments, worldwide, have become an accepted way of doing business and the increase in security measures and robust ecommerce systems have made it a safe option for many people to transact online without going through a tizzy.
However, nothing is 100% safe and most reputed online payment sites will provide a list of Does and Don'ts which should be referred to if you are new to making online payments. One of the most popular online payment systems is Paypal (www.paypal.com) as it lets you pay via credit card to anyone with an email address. You can set up a user account and go through its 'real-world' verification system of credit card pin numbers to get started. Setting up a merchant account is also very simple with Paypal and you can get started in 48 hours.
SafeScrypt is encryption software which makes online payments safer and allows the data to travel on the internet without interception. It is safe to shop on sites which have a SafeScrypt emblem on the site. If you planning to start an online business, offering online payment solutions is a must-have feature for business growth. You can choose from the international favorite, Paypal.com or the following credit card gateways:
www.worldpay.com
www.ccavenue.com
www.authorize.net
All of the above mentioned payment gateways are easy to integrate with and can be done in a DIY fashion or with the help of a web designer. There are many processes which banks have introduced for limiting any kind of loss to customers such as Online Transaction Insurance, Special Internet Cards with certain limits and higher security level and the 3 digit customer verification numbers printed at the back of the card.
However, like we said, online payments is not 100% safe so if you do find occasions of credit card misuse, it is recommended that you alert the card company immediately. If you make online payments frequently, then you can also keep a check on your credit card statement by using online access from the bank or card issuing company.
However, nothing is 100% safe and most reputed online payment sites will provide a list of Does and Don'ts which should be referred to if you are new to making online payments. One of the most popular online payment systems is Paypal (www.paypal.com) as it lets you pay via credit card to anyone with an email address. You can set up a user account and go through its 'real-world' verification system of credit card pin numbers to get started. Setting up a merchant account is also very simple with Paypal and you can get started in 48 hours.
SafeScrypt is encryption software which makes online payments safer and allows the data to travel on the internet without interception. It is safe to shop on sites which have a SafeScrypt emblem on the site. If you planning to start an online business, offering online payment solutions is a must-have feature for business growth. You can choose from the international favorite, Paypal.com or the following credit card gateways:
www.worldpay.com
www.ccavenue.com
www.authorize.net
All of the above mentioned payment gateways are easy to integrate with and can be done in a DIY fashion or with the help of a web designer. There are many processes which banks have introduced for limiting any kind of loss to customers such as Online Transaction Insurance, Special Internet Cards with certain limits and higher security level and the 3 digit customer verification numbers printed at the back of the card.
However, like we said, online payments is not 100% safe so if you do find occasions of credit card misuse, it is recommended that you alert the card company immediately. If you make online payments frequently, then you can also keep a check on your credit card statement by using online access from the bank or card issuing company.
Subscribe to:
Posts (Atom)
