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Ecommerce – dot calm

Posted by Michael Bloch in ecommerce (Tuesday June 19, 2007 )

The sky is falling; sell your sites! Low double digit online retail sales growth figures forecast in the next couple of years, tapering off to single digit figures by 2010! I predict wailing, ripping of shirts and gnashing of teeth from those who bank on limitless massive growth! Oh, woe are we!

An exaggeration? Definitely, but the basic message behind it isn’t. Online retail appears to be heading into a period of what this New York Times article calls “dot calm”. It’s further evidence that the USA market is simply maturing.

I’ve often wondered how long the incredible growth rates could keep up for and it looks as though in many sectors, the honeymoon period is over. Now it’s really time to roll our sleeves up and get in up to our elbows.

For example, online sales of books will “only” rise 11% this year, compared with nearly 40% last year. Some of the other categories experiencing substantial slowing of growth include apparel, health and beauty products, computer peripherals, pet supplies, appliances, sporting goods, auto parts, and even music and videos.

For the small online business owner, these forecasts don’t spell gloom and doom but do give an early warning that we’re all going to need to get more creative in the years ahead. Up until recent years, many big brands didn’t “get” the web; they were quite slow on the uptake of the online world being an important conduit for sales. They sure realize it now and have thrown a lot of money in establishing infrastructure, further increasing competition for the little guy. As growth slows further, expect the big brands to become even more aggressive in their marketing.

If the New York Times article is correct, it seems we also have ourselves partially to blame. The article mentions that shopping online is more of a chore than a pleasurable experience and that retailers in the offline world have set new standards in real world shopping, drawing customers back into stores. Consumers are suffering from “Internet fatigue” it seems; perhaps the novelty of online shopping has worn off for many and while the web still forms an important component of research; some are returning to real world stores to make the actual purchase.

If you are a clicks and bricks merchant, i.e. you have a web site and a physical store; there’s an interesting tip in the article about the growing trend of big brand names allowing customers to reserve goods online and then picking them up at the physical store location. It seems to be a highly successful strategy with an added bonus of customers often purchasing more when they get to the store to pick up their reserved item.

Online shopping is no longer cool or trendy; it’s just there now as if it had always been – we need to make it quicker, safer, easier and hassle free. Also bear in mind that there’s a world outside the USA, so perhaps start looking at emerging foreign markets. Equally as important is to remember that often it’s easier to keep existing clients than to find new ones; i.e. retention is part of a good growth strategy.


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