Ecommerce has hugely morphed over the last few years. The juggernaut that is Amazon continues to be the benchmark. What has changed are the barriers to entry:
- Platforms such as Alibaba ease the process of finding a wholesaler or manufacturer
- The likes of Wix provide an easy way to build a website
- Shopify and others simplify the process of establishing an online storefront
- Drop shipping eliminates inventory risk, and
- Logistics can be wholly outsourced (which eliminates the need to invest in warehouse space)
The combination of the above means there are virtually no barriers to entry in ecommerce. The potential to reach a global audience at the click of a mouse, combined with low barriers to entry, inevitably attracts competition. However, there remains a hugely lucrative opportunity for existing businesses who either do not yet have an online presence, those who do but who haven’t started transacting online, or ecommerce entrepreneurs looking to break into or develop a niche for themselves.
In a retail context, ecommerce success boils down to the ability to differentiate oneself from the increasing plethora of options available to consumers. Customer experience, as with traditional retail, is the linchpin of ecommerce success. Whilst this may at first seem an obvious statement, customer experience in an online retail environment is subtly different to that in a bricks and mortar retail environment. In the online retail context, the following points are becoming more important than ever in the quest for differentiation and effectively capturing the ever diminishing attention span of prospective customers:
- Effective (innovative and intelligent) cross-platform (for example, Facebook, Instagram, Twitter etc.) content to drive prospective customer engagement and helping them traverse through the acquisition funnel.
- Website optimisation to ensure content and layout is as effectively placed as possible to ease the prospective customer’s navigation of the site. Ultimately site layout should make it as easy as possible for the customer to make a purchase (Amazon is the gold standard in this, with its one-click shopping feature). Split-testing is one method of optimising websites: the method essentially conducts an experiment by profiling different versions of a page to different consumers and recording which versions help achieve the business’ goals (for example, conversion rate); this data is used as the basis to make changes to the site.
- Ensuring a consistent, contextual and relevant user experience across devices. With an ever increasing number of purchases taking place on mobile phones and tablets, ecommerce platforms must ensure the experience is optimised for the consumer regardless of the device they are using to make the purchase. 30% of ecommerce traffic in the UK occurs through a mobile device, of which 30% is through tablets and 70% through smartphones. With the number of devices proliferating, the share of ecommerce being transacted through mobile devices will only increase.
Whilst ecommerce is increasingly becoming engrained in our day to day shopping experience, in the USA it still only accounts for 7% of all retail sales; the European mean in 2015 was 8.4%, with the UK leading the way at 15.2%. Across Europe, this represents an annual growth rate of 18.6%. We are increasingly becoming comfortable with transacting online, with 77% of internet users in the UK having made a purchase online in 2015; it is no longer unusual to come across stories of houses or cars being bought online. With Twitter now offering a ‘Buy Now’ button, there is no doubt as to the ubiquitous potential of ecommerce and the increasingly important role it will continue to play across the global economy.