Retail E-Commerce:Future Trends

While both the number of new Internet users in the US and the number of online buyers are only growing at single-digit rates, eMarketer estimates that online sales in 2005 increased a hefty 25%. Baby boomers and digitally literate young adults, coupled with the spread of broadband access, are changing the way people shop online—and how Web merchants market to them.

Attention: Marketers, Advertising Agencies, Retailers, Online Content Sites, Portals and Financial Analysts.

The Retail E-Commerce report tracks the trends that are invigorating B2C marketing and sales, including unprecedented consumer involvement in product comparison sites, peer opinions, social networks, discussion boards and blogs. At the same time, higher broadband penetration is empowering Web merchants to experiment with product visualization tools that give customers a greater sense of products that have traditionally only been evaluated up close in stores.


US Internet Users 14+, Online Buyers 14+ and Retail E-Commerce Sales (excluding travel), 2004-2008 (as a % of increase vs. prior year).

2004
US Internet Users 14+ 3.5%
Online Buyers 14+ 8.3%
Retail E-Commerce Sales 24.2%

2005
US Internet Users 14+ 3%
Online Buyers 14+ 7%
Retail E-Commerce Sales 20.1%

2006
US Internet Users 14+ 2.3%
Online Buyers 14+ 5.7%
Retail E-Commerce Sales 21.4%

2007
US Internet Users 14+ 1.8%
Online Buyers 14+ 5%
Retail E-Commerce Sales 20.2%

2008
US Internet Users 14+ 1.8%
Online Buyers 14+ 4.3%
Retail E-Commerce Sales 19%


Key questions the "Retail E-Commerce" report answers:
Which consumer segments are driving US retail e-commerce growth?
How are young shoppers changing e-commerce?
How are consumers and Web retailers using virtual communities to aid the buying decision process?
Which online shoppers make the greatest use of visualization tools—which product categories?
And many more...

eMarketer Reports—On-Target and Up-to-Date
The Retail E-Commerce report aggregates the latest data from leading marketing and communications researchers with eMarketer numbers, projections and analysis to give you the comprehensive range of information you need to make well-informed e-business decisions.

Starting Your Own E-Business, Choosing a Platform

Selecting which software you'll use to build your online store is a critical decision. It's like laying the foundation: all the other tools, from your credit card account to your marketing plan, will be influenced by this one decision. So choose carefully. Very carefully.
'But wait,' you say, 'I already have Web design software — can't I just use that, and then simply add a secure method for accepting credit cards?'
You can, but it's a limited solution. Because an online store has so many special requirements, like inventory management and product display, merely building a Web site and calling it an "online store" won't get you very far. You're best served by buying or licensing software specifically intended to handle the heavy lifting of e-commerce.

As you shop for an e-commerce platform, you'll encounter a blizzard of choices, each of which has a blizzard of sub-options. Before you choose one, browse through them until the jargon starts to make sense. The market for e-commerce platforms is far more confusing and lingo-heavy than, say, the market for cars. It's worth educating yourself before you buy.
Even the most established vendors have only been around a few years, so the market is still evolving quarter by quarter. This means that prices and product offers can vary wildly by vendor. You can spend $10,000 a month and get a Rolls Royce, or you can spend a few hundred bucks a month (or less) and get an almost new Toyota. Either one might be right for you, based on your needs.
Test Drive and Get ReferencesTo help you sort through the many options, you can "test drive" the software before you buy it. Most vendors will allow you to demo their software (if not, that's a red flag). They either have a model store set up that you can access, or some other way for you to poke around the controls.
Don't plunk down your money until you've really opened up the hood and gotten a feel for the software. You'll be spending a lot of time with it.
While you're investigating, get references. The only way to find out the truth about a platform is to ask people who use it - and not the people the company recommends. Find a user who isn't on the official list, and ask them how they feel about the platform.

The All-In-One / ASP TrendOne key concept to be aware of: some e-commerce platforms are "all-in-one" solutions that provide everything: hosting, accounting tools, Web analytics, even marketing tools like e-mail management. In contrast, some platforms are just the core e-commerce platform itself, and you buy the other tools from separate vendors. Adding confusion, some platforms are in-between; they include, say, hosting and the basic e-commerce software, but you shop elsewhere for the rest.
The all-in-one solution has become ever more popular with online merchants in recent years. The advantage is that A) someone else has done the homework of gathering all the needed tools into one handy package, and B) all the tools are integrated, so they work well together.
As a related concept, some vendors of e-commerce platforms license their software on an "ASP" basis. ASP stands for "application service provider." This means the software seller hosts the software on their own servers, and the online store owner accesses it remotely. This way the store owner doesn't have to worry about servers going down (hopefully). Also, ASP vendors tend to offer a lot of hand holding in terms of maintaining the store owner's software.
The e-commerce industry is moving toward platforms that are all-in-one solutions offered on an ASP basis. This frees the store owner from technical concerns as much as possible. It allows e-tailers to concentrate on selling and leave the technical snafus to someone else. An online merchant who licenses an all-in-one solution on an ASP basis doesn't need to hire tech people — a huge savings. The salary of a tech person can buy a lot of pay-per-click advertising.
But don't let the trend toward all-in-one be your deciding factor. You might buy an inexpensive stand-alone platform, find a cheap place to host it, and you'll be off and running. If you're truly a small fry who's tech savvy, you might not need a tech person very much.

One more thing: you might be successful. If that happens, your software platform must be able to grow with you. In industry lingo, it must "scale," as in "scale larger." Don't be seduced by a platform whose initial price is low, but that won't scale. When your business grows you'll be stuck with a platform that's too basic. And it's really a hassle to change your software platform once its in place.
The general rule: buy as much platform as you can reasonably afford upfront. Get a platform that can grow with you.

Questions to Ask Before Buying E-Commerce Software Before you buy your platform, look back at your business plan (you did make one, didn't you?) and find out what specific tools you'll need. Based on your needs, ask the vendor's salesperson the following:

Some Really Key Questions:
Do you provide tech support, by telephone, 24/7?
What other important tools are included? Web analytics? Hosting? Accounting package?
Does the platform help with cross-selling and up-selling?
Does the platform have built-in site search? If so, what kind of tools will I have to enable me to influence search results?
From the page the shopper chooses an item on, what is the total amount of pages they must click through to complete the purchase?(A higher number of page results in a higher percentage of abandoned shopping carts.)

Site Building Questions:
How many products will your software allow me display? Dozens? Thousands? Is there a wide array of templates that come with the software, so I can avoid a cookie-cutter look?
If I hire a HTML expert to jazz up the site, will custom-written HTML pages interface with your software?
Does your solution generate both static and dynamic Web pages? (Static pages are written in HTML and are more likely to get recognized by search engines; dynamic pages are created as a shopper requests them, and allow you to more easily present a large catalog of items.)
How much do upgrades cost?
What sort of flexibility does the product shipping section allow me to offer? Will it be easy for me to offer a shipping discount based on total customer purchase?

Marketing and CRM (customer relationship management) Questions:
Does the platform help with gathering shoppers' e-mails, and administering an e-mail marketing campaign?
Does your system include a method for tracking coupons or special offers?
Can shoppers keep their own lists of favorite items, or previously bought items, on the site? (Shoppers really like this, and it boosts sales.)

Merchant Administration Tool Questions:
What notification system will tell me I've got an order? (Some systems send the merchant an e-mail; others require you to check a Web interface.)
Will the software send the shopper an automatic confirmation e-mail? To what extent can I customize this e-mail?

Database/Inventory Questions:
What databases will run with your platform?
Does the software allow my site to be connected to a real time database that reflects constant changes in inventory and prices?
What features does the software have to allow me to update inventory level based on my bricks and mortar in-store inventory?
What file formats does it work with to import and export inventory reports?

E-Commerce Platforms
The list of e-commerce software providers gets longer all the time, but here's a good start:

Goemerchant –“ SmallBizManager reviews and recommends "best of breed" service providers for small businesses, and this is the best offering we've found for merchant accounts and online stores.".

Yahoo - If there's a default platform for small business e-commerce, it's Yahoo's Small Business platform. Mom and pops flock to Yahoo's e-commerce software because it includes most everything for one low price — it's the no-brainer solution. Some merchants complain, however, that Yahoo doesn't allow them to scale as they grow and the learning curve for its management console can be difficult.

Affinity Internet is a popular provider of web hosting solutions for small to medium-sized businesses. Its ValueWeb e-commerce package allows you to create a comprehensive Web site and on-line store capable of marketing and selling up to 100,000 products. ValueWeb incorporates tools like Miva Merchant and Macromedia's Contribute site building software.

NetSuite - Well respected in the e-commerce industry as an affordable, scalable package. The company gets a lot of buzz.

iCode - Considered easy to use, the company specializes in the small-to-medium e-business all-in-one solution, although there has been rumbling in our forums about poor customer service from them.

MarketLive - A robust solution that has garnered an impressive client list, including Encyclopedia Britannica and Keds shoes.

Venda For a monthly fee of $10,000, Venda handles everything, from deployment to hosting to maintenance.

Actinic - Used by a lot of small-to-medium sized merchants, the Artinic software interfaces with the UPS shipping system and the popular QuickBooks accounting software.

MainStreet Commerce - MainStreet's base cost is $15,000, with an additional ten percent license fee. MainStreet provides a complete e-commerce infrastructure, and its software is known to be highly configurable.

ProStores - an eBay Company (formerly Kurant StoreSense) - Geared for the smaller merchant, eBay's ProStores has solutions ranging from $30 to $250 a month.

LaGarde StoreFront - Along the lines of ProStores, LaGarde caters to the small merchant, with an array of low cost pricing options.

Miva Merchant - A popular solution aimed at the small business market, the basic Miva Merchant store building program retails for $1,000.

Websphere - Made by venerable IBM, Websphere is too pricey for a shoestring start-up, but if you have the finances it's a full-service platform will scale as large as you can imagine.

Microsoft Small Business - A similar all-in-one platform to Yahoo's, although a bit more expensive. One advantage: it's good to choose a vendor that's going to be around for a while, and it's safe to assume that Microsoft will be (won't it?).

Again, don't limit your shopping to this list alone. As you shop, you might also look at 1ShoppingCart, Shopsite, Mal's E-commerce, osCommerce, AbleCommerce, MonsterCommerce and many more...

James Maguire is a contributor to ECommerce-Guide.com. His weekly feature appears every Monday.

E-commerce "rules of the road" — key concepts that will help online merchants of all sizes navigate the challenges of Internet commerce:

1) The best technology doesn't make the sale"If someone has live chat but they have crummy products or bad prices, it's not going to make shoppers purchase," Freedman notes. Closing the sale is still all about product — rich content, virtual modeling or bulletin boards won't move SKUs that people don't want or that are priced too high.

2) The customer is in more control than ever before"The consumer is incredibly demanding now," Freedman said. "They expect that anything's possible — they hit the submit button and expect that the FedEx guy is at the door." This is a big change from the frontier days of e-commerce, when merely receiving the product filled shoppers with wonder. Now, notes Freedman, the Internet enables shoppers to be far more informed than the typical $7 an hour sales clerk — the uninformed sales associate is at the mercy of the educated e-shopper. "Customers hold all the cards," she notes, which makes it harder for merchants to profitably compete in today's shopping environment.

3) Cross channel selling is a killer app — if done rightclearly, merchants who combine a brick and mortar outlet with an e-commerce operation are positioned to move ahead of their competitors. Yet these two venues need to be fully integrated to truly romance customers. "The customer demands a consistent experience from that merchant," Freedman said. "They don't understand why they can't use their gift card online and in the store — and why can't they pick something up in the store they bought online?" So while a cross-channel approach increases an e-tailer's possibilities, it also increases customer demands.

4) Smart merchandising leverages the old ruleswhile the Internet introduces a blizzard of new techniques into merchandising, many of the timeless rules still apply, Freedman notes. For example, presenting "Top Sellers" or "Featured Products" is still an effective sales technique, regardless of new-fangled merchandising approaches like automated push based on traffic patterns.
"The old rules still work because 'what's hot' and 'what's new' is still what shopping is all about," she said.

5) The Web is the ultimate efficiency model for consumersit’s a well-known fact, yet it bears repeating because it so fundamentally determines the online experience: It is remarkably easy for shoppers to get their shopping done online. Customers can find the best price at a store aggregator like PriceGrabber in 30 seconds. Amazon and other e-commerce outlets are increasing the prevalence of one-click shopping. E-tailers need to make sure their own site doesn't contrast with this: Is your e-business set to compete for shoppers who are used to a highly efficient experience?

6) Be aware of e-commerce's limitations (and don't forget the catalog)"There's still a huge role for touch and feel," Freedman notes. "The [brick and mortar] store is not going to go away; contrary to what a lot of early venture capitalists tried to pretend would be the case."
For those sites that don't have a brick and mortar outlet, Freedman notes that catalogs are a version of touch and feel. The old fashioned print catalog, once thought to be on the verge of extinction, has proven to be an unbeatable sales driver in the online era. "It's the portability element of it, and it's much more visual."
Part of the challenge for online merchants is showing all their merchandise quickly, especially when an e-tailer offers 5,000 skus. Here's where a catalog comes in handy. "You could browse a catalog in five minutes — but you could be online for 30 minutes and have found nothing," she notes.

7) Convenience and time saving often beat price — but the customer will only pay so much more"People initially thought that price would be the only driver, but that's not true," Freedman said. Many online merchants make a tidy profit by tacking on a few bucks to a product that's delivered fast and hassle-free. Something that's not available locally or items that aren't fun to shop for can be safely marked up within reason.
On the other hand, the customer is willing to pay only a certain amount more to buy online, she notes.
Freedman tells a story from her own life: To avoid a trip out to a busy department store, she bought pajamas for her daughter online. "This item weighed about a half ounce, but they charged me $10 for shipping — I sent it back to them for $.99 postage." She decided never to buy from that merchant again.
Moral of the story: a reasonable margin works, but a gouge will send customers fleeing — and they won't forget.

8) E-mail is still the greatest thing since sliced breaddespite the deluge of spam on the Web, "the ability of a merchant to send an e-mail to get a shopper to take action is very powerful because of the low cost," Freedman said.
Yet e-mail is still not fully utilized, and is often not properly targeted, Freedman said. There are countless instances where a shopper has bought an item and a merchant fails to send them a sales offer for a related item — with a discount — that might generate a second purchase. "We're not there yet on that kind of sophistication, but watch for innovations in 2005."

9) Personalization is in its infancy - but keep your eye on itEarly e-commerce futurists predicted that the Web would offer a one-to-one experience, yet we're still waiting for this. "When we surveyed merchants recently, they said, 'We are rudimentary when it comes to personalization,'" Freedman said.
Some merchants are pushing the envelope — note Amazon's quasi-functional capability to offer items based on past visits — but they're the exception rather than the rule. So far, personalization "has been lower on the radar screen. Businesses have first focused on getting everything to work — the product shipping, the e-mails going out right — and only then do they think about getting more sophisticated in their marketing," she adds.
Expect personalization to be more of a sales driver in the years ahead.

10) On-site search is the crux of most online activityimproving on-site search is clearly one of the hot topics in e-commerce today. Refining on-site search to the point that it quickly delivers the results shoppers want is seen as the Holy Grail of e-commerce.
"Over the last year and a half there has been a drastic improvement in the quality of on-site search," Freedman notes. As part of the 100 purchases her firm makes annually, they use misspelled words and descriptive searches (like "light backpack" instead of "Sierra Mega Pack"), and these now return better results.
Yet the technology has its limitations. "Because not all shopping is directed, if you don't know what you want it's a much more frustrating experience," she said. "The problem is that there's still a lot of impulse shopping, and we have to be able to create interest in impulse buying to garner the next wave of business."

Written by: James Maguire
James Maguire is a regular contributor to ECommerce-Guide.

Search Engine Marketing, From Keyword to ConversionBuying your way to the top of search results may seem easy, but managing an effective search engine advertising campaign requires a thoughtful approach with more than a little elbow grease.
Search engine advertising has exploded in popularity over the past few years, offering e-commerce site marketers top positioning and providing searchers with appealing alternatives to annoying banners and popups. To newcomers, the process of bidding on keywords, then sitting back and watching site visitors and online sales start rolling in, seems easy and painless.
That is, until the hapless merchant gets into a bidding war with a non-rational competitor. Or when the boss asks for specific ROI numbers to justify the expense of a search advertising campaign. These are just two of many issues that can bedevil a marketer setting out on a search advertising effort.
Enter Search Engine Advertising, a new book by Catherine Seda, who is a guest writer for sister site SearchDay.com. This book offers a wealth of information about the entire process of creating and running an effective search advertising campaign. It's an excellent book, written by a pro that not only understands the mechanics of search engine advertising, but also has the ability to describe sometimes difficult concepts with ease and skill.
Importantly, the book starts off with a critical but often overlooked activity: planning a successful strategy. The apparent simplicity of search engine advertising can be a trap for those who don't lay a solid foundation for their efforts.
Long before you place your first bid, it's crucial to go through the often-challenging process of keyword research. It's also important to spend time writing your ads, creating compelling copy that entices people to click through to your Web site. Another key activity is creating effective landing pages, your one chance to convince your visitor to spend more time on your Web site and ultimately "convert" -- buy a product, register for an account, subscribe to a newsletter. Seda covers these topics in depth, offering numerous tips and strategies from her own extensive experience.
The book also has excellent coverage of paid placement and paid inclusion programs, their strengths and weaknesses, and when and how to most effectively use them. It also covers specialized search engines -- shopping search engines, and targeted search engines that focus on a particular niche, or cater to residents of different regions of the world.
Once you've created and implemented a search engine advertising campaign, you must monitor it constantly, measuring success (or failure) and continually tweaking your approach. Part four of the book provides detailed information about performance measurement, including a look at some popular bid management, analytics, and ROI tracking tools and solutions.
Search Engine Advertisingby Catherine SedaNew Riders, $29.99ISBN 0-7357-1399-5http://www.searchenginesales.com/
The book wraps up with a section on protecting your profits. Although it's not widely discussed, click fraud can and does occur with paid placement programs. Other problems include improper use of your trademarks by competitors, or affiliates using tactics that may do you more harm than good. Seda shows you how to identify these types of problems, and also offers useful strategies and tips for dealing with them before they become major issues.
Full disclosure: I was a reviewer for this book prior to publication. I'm going to repeat what I wrote then:
The wealth of accurate, savvy information contained in this book makes it a must-read for anyone promoting products or services online. Using even a few of the tips and techniques offered in Search Engine Advertising will boost your results significantly, paying for the book many times over.
Chris Sherman is associate editor at SearchDay.com, a site in JupiterWeb's ClickZ Network.

Ecommerce, or Electronic Commerce, is one of the most important aspects of the internet. It allows people to exchange goods and services immediately and with no barriers of time or distance. However, the road to creating a successful online store can be a difficult and confusing one if you are unaware of the concepts and principles behind eCommerce. The trick to entering this market smoothly is to find out what you need to do before you have to do it. This is how eCommerce works. The consumer moves through the internet to the merchant's web site. From there, he decides that he wants to purchase something, so he is moved to the online transaction server. Once he has placed his order, the information moves through a private gateway to a Processing Network, where the issuing and acquiring banks complete or deny the transaction. There are many different payment systems available to accommodate the varied processing needs of merchants, from those who have a few orders a day to those who process thousands of transactions daily. With the addition of Secure Socket Layer technology, eCommerce is also a very safe way to complete transactions.