eCommerce Sets the Tone for the Retail Future of 2015

It is no secret that consumers can save time and money (along with exposure to the elements this holiday season) by shopping online. The annual expansion of Internet retail growth signals a strong paradigm shift away from the brick and mortar stores long associated with retail merchandise. Online sales numbers continue to rise every year.

Internet shoppers typically prefer to make purchases via their desktop or laptop. It is natural for the average consumer to feel more secure giving out their financial information from the comfort and safety of their home or office. As eCommerce sales expand annually, desktop sales are expected to correlate with such growth. Home and work desktop computers still dominate the purchasing landscape, even as mobile devices continue to gobble up a larger percentage of online sales every year.

Factors Behind e-Commerce Growth

The Rise of mCommerce- A large percentage of online sales are coming from mobile phones and tablets, helping play a significant role in the overall eCommerce market. Tablet sales continue to rise. Smart phones have processor speeds faster than some desktops from just a few years ago. Larger mobile phone screen sizes allow for easy and comfortable online browsing, and new web development frameworks and platforms make it easier to design mobile friendly responsive websites than ever before. Recent trends have found that mobile devices also contribute to negative sales in brick and mortar stores without even facilitating the sale from the device. Consumers wanting to visit a store in person to check out a particular product can use their mobile device to instantly check around and find the best possible price. This essentially makes the in store trip nothing more than a show room visit with the final sale often going to a online competitor. Some of the most popular shopping days of the year demonstrate the importance mobile devices play in the online market.

Retailers Marketing More to Online Shoppers- Retailers have always targeted their marketing and promotions towards the biggest shopping days of the years. The term Black Friday was coined because it was considered the time of year when retailers would finally begin to turn a profit and hit the “black.” Transitioning that marketing to online consumers is a natural evolution. Cyber Monday has been around since 2005, with Shop.org credited with originating the term. More recently, retailers have also begun to target eCommerce shoppers during the second Monday of December known as “Green Monday.” Research has long shown Mondays in December to be some of the biggest shopping days of the year. According to the National Retail Federation, 7 out of 10 retailers they surveyed in 2014 planned to market themselves to consumers for Green Monday through various methods and by offering site wide discounts and free shipping. This year’s Green Monday, December 8 2014, hit $1.6 billion in desktop online sales, according to comScore.com, making it the third biggest online shopping day of the year behind Cyber Monday and the Tuesday after, December 2.
Free Shipping- With Internet retailers doing everything they can to entice customers to shift their business online, free shipping during the holiday season is fast becoming the industry standard. 60-65% of online purchases come with free shipping and most retailers assume that cost as part of doing business, according to comScore co-founder, Gian Fulgoni.

Expansion of e-Commerce Globally

The rise of eCommerce is not exclusive to capitalist hubs like the United States and Western Europe. Middle class economies in places like China, Northern Africa and the Middle East, all with expanding rates of Internet usage, offer new lucrative markets for retailers to tap into. China’s eCommerce market is predicated to grow at a rate of 25% annually over the next few years. Sales are expected to rise from $390 billion in 2014 to $781 billion by 2017, according to a study released by the consulting firm AT Kearney. 35% of eCommerce sales in China are made from mobile devices, further illustrating the growing power of mCommerce in the online marketplace.

Alibaba- The most prominent example is the massive success of the online Chinese retailer, Alibaba. Credited with the largest IPO in history, Alibaba started trading publicly on the NYSE in September, setting an historical record with a share flotation of $25 billion. More recently, Alibaba made news again with a massive one-day sales record of $9.3 billion. Using the successful marketing strategy of focusing discounts on a particular date, similar to Cyber Monday in the United States, Alibaba shipped 278 million orders on the day of November 11, 2014. The 11^th of November is marketed as “Singles Day” which has become the largest online retail sales day in the world. Alibaba trademarked the term “Double-11” back in 2012, which was already a little known holiday dedicated to single people. The site has been marketing sales towards “Singles Day” since 2009.

Souq.com- Dubai based eCommerce retailer Souq.com is another mega merchant aiming to take advantage of the booming Internet sales market. Internet usage for the region is growing at a rate of around 40% annually, leading to impressive eCommerce sales predictions for the Middle East and Northern Africa.   $12 billion in online sales is expected for 2014 with an increase to $15 billion estimated for 2015. Following the same successful model of marketing towards a particular date, Souq.com has their own Cyber Monday for the Middle Eastern market, termed “White Weekend” which takes place prior to Dubai’s largest annual retail occasion, the Dubai Shopping Festival. Souq.com is focusing their business model on growth over short-term profit, with the goal of eventually going public. “For the next two to three years, we’re aiming for a high double-digit top-line growth and not looking for profit, which will come at the right timing, along with (an) IPO,” says Souq.com group chief executive Asif Keshodia in a November interview with Reuters earlier this year. This type of longer-term strategy demonstrates the expectations Souq.com has for heavy eCommerce growth in the region and beyond.