Relying on new online shoppers to drive sales brings
only limited opportunity, according to Forrester. Instead,
retailers are investing newfound profits in emerging technologies,
such as sophisticated analytics and personalisation tools that
enhance the online experience for existing consumers.
The result: businesses no longer view the web as a low-cost
sales channel but as a way of improving customer service and
retention.
Forrester Research Vice President Carrie Johnson believes that
businesses are debating their online strategies. "Many believe that
they became too focused on sales. Now they're looking at their web
sites as a way to drive in-store traffic and increase their
engagement with customers," she said. "This is a huge shift in
philosophy as e-commerce enters a more sophisticated phase. But
it's also creating tension as CEOs demand ROI for expensive web
sites with hard-to-define metrics such as loyalty and brand."
Companies that illustrate this new philosophy include Target,
which is using its web site to promote and brand its retail stores;
Gap, which is launching redesigned web sites that ease the
check-out process; and Nike and Timberland, two manufacturers that
are exposing online shoppers to the idea of product customisation.
All are being forced to become more innovative online because pure
plays such as Amazon.com, drugstore.com, Blue Nile, and Newegg.com
have raised the customer experience bar, according to
Forrester.
Other highlights in the Forrester report:
- e-commerce will represent 13% of total US retail sales in
2010;
- travel remains the largest online retail category, growing from
$63 billion in 2005 to $119 billion in 2010;
- general merchandise (all retail categories excluding auto, food
and beverage, and travel) will top $100 billion for the first time
in 2005;
- an increase in the number of women shoppers will contribute to
14% of jewellery sales moving online by 2010 while online sales of
health and beauty products will grow at an annual rate of 22%;
- 29% of small appliance sales will migrate online by the end of
the decade as a generation that grew up with internet access begins
to get married and attend weddings;
- categories showing significant growth (growth above the overall
14% compound annual rate) include: apparel, consumer electronics,
health and beauty, home products, food and beverage, and sporting
goods.
