With 1.92 Billion customers buying items online amounting to 13.7 per cent of retail sales worldwide, we can argue E-commerce is here to stay. KPMG revealed “People shop online because they can shop at all hours of the day” and “65 per cent of shoppers compare prices while in a physical store”.
These e-commerce statistics for 2019 are self-explanatory and they are hinting towards an impending e-commerce boom.
While the e-commerce industry is on the rise and it is posing a real threat to the retail sector, some facts suggest people are yet not comfortable with buying online. A Hub Spot study reveals 80 per cent of people will dump companies after just one bad experience, while another study states only 2.86 per cent of e-commerce visits converts.
Online shopping is shaping the landscape of tomorrow, where people can shop privately and explore more options without actually hopping from one store to the other. Like every good thing, e-commerce also comes with its share of pros and cons.
Let’s discuss trends followed by industry leaders that are not going to last long
Cashbacks to lure customers: E-commerce platforms are dolling out cashback like never before to acquire and retain customers. Amazon spends 12 per cent of its annual revenue in cashback.
On the other hand, most customers have agreed to pay extra for quality customer experience. In the times, where experience matters the most, spending heavily on cashback and less on customer experience improvement might cost e-commerce players a fortune.
Also, half of the enterprises are now diverting their investments towards customer experience innovations, which means any business that is not focusing on CX will turn obsolete.
Not compensating sellers well: Instead of focusing on improving seller performance, businesses are focusing on beating their competitors at the number game. All these heavy discounts, free delivery, and free returns are costing sellers a bomb and no, players like Amazon, Flipkart or eBay are not compensating them well.
E-commerce players have made slogans out of “Faster Return and Instant Refund”, “No Question Asked Refund Policy”, which is pushing a lot of small sellers out of business.
With sellers losing money fulfilling “no question asked return policy” and “instant refunds”, they are going to stop selling online. Marketplaces like Amazon manufacture no products, they earn commissions on every product sold on their platform. With increasing losses, sellers are bound to quit and bring the whole eco-system down.
Competing only on price-points: A good number of e-commerce players are trying to compete only on price point. These players are not bothered about post sell customer service or overall customer experience. By listing products at cheaper prices, these platforms can drive traffic and sales but they are failing big time to retain customers.
As KPMG study revealed, 86 per cent of customers are willing to pay extra for quality customer experience, it is very clear that price is no more a major decision influencer hence not focusing on other metrics and compete only on price-point is not a lasting strategy.
A poor search experience: Product Discovery is the metric that guarantees sales, top-notch customer experience, and re-purchases. By assisting customers to discover products they are actively looking for, e-commerce businesses can cross-sell as well. Improving search results has varied benefits but a good number of players are not worried about it.
Businesses today are relying on social media marketing to drive traffic and then converting those traffic into sell. These E-commerce platforms remain unintroduced to the power of Product Discovery.
Product Discovery is not only about cross-selling but also about leveraging an incomparable customer experience. When a customer finds a product he or she is looking for faster, they will come back every time they need a product.
Not offering personalised experience: PwC and Gartner have made it clear that CX is now a key brand differentiator. By not investing in personalized customer experience, e-commerce players will lose customers to their contemporaries.
All the successful e-commerce players have focused on personalized experience not only to retain customers but to drive referrals and re-purchases as well. Experts say “delivering personalized experience can increase customer referrals by three times”. As found by Hub Spot in a study, “81 per cent of consumers trust their friends over businesses for advice” hence offering personalized experience is more effective than running paid ads.
E-commerce is certainly the future of shopping but there’s no guarantee that all contemporary industry leaders will continue to rule. With an array of new enterprises entering the arena, the competition is getting stiff.
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Image Credit: Brooke Lark