The State Of eCommerce In 2014

The eCommerce landscape is more competitive than ever moving into the second half of 2014 due to explosive growth over the past 15 years.   eCommerce B2C sales topped 1.2 trillion dollars worldwide with a growth rate just over 18%.  B2C ecommerce sales are expected to surpass 1.5 trillion with growth at over 20% in 2014 according to eMarketer.
North America led the way with 431 billion dollars in B2C eCommerce sales in 2013.  However it is developing nations that are growing the fastest in the eCommerce marketplace with countries like China and Indonesia growing at over 70% per year.
B2B eCommerce has also grown tremendously and is actually larger than B2C eCommerce in the United States. B2B eCommerce sales reached approximately 560 billion dollars in the US alone according to Forrester Research. Due to the changing eCommerce climate, many B2B companies are embracing B2C eCommerce methodology as a way to drive revenue and grow market share.

eCommerce Platforms:

The eCommerce platform that you choose will be critical to your current and future success. Some platforms may come with attractive up front costs but offer little room for growth as your eCommerce needs become more complex.  Unless you are a massive eCommerce company like Amazon, you will most likely be using a platform to save the cost of building your own eCommerce platform.
As you look at the top 10k sites in the world, Oracle’s ATG, Demandware, IBM’s Websphere, SAP’s Hybris, and Magento community/enterprise lead the pack. Overall the combination of Magento Enterprise / Community lead the pack at just under 14.5%, follower by Demandware. However, The big three of Oracle’s ATG, IBM’s Websphere, and SAP’s Hybris manage the most top B2B eCommerce websites followed by Intershop, NetSuite, Insite Software, Magento, and Commerceserver.net.

Top eCommerce sites have complex ERP integration and functionality needs, therefore the platform they use will have to be robust and capable of integrating with third party software. Larger eCommerce providers like Demandware, IBM’s Websphere, Ebay’s Magento, SAP’s Hybris, and Oracle’s ATG Commerce can meet this level of complexity which is why they are the leading platforms for the top 10 thousand eCommerce sites.

As you move into the lower level eCommerce sites in the top 100k and 1 million you will see that Magento leads the way with about 17% of the top 100k and 14% of the top million.  This is because it has a free open source community edition so the only costs are hosting and third party developers or in house development work, but also offers the scalability and feature richness of the major providers like IBM, Oracle, and Hybris.  This makes Magento a great choice for SMB’s looking to grow their eCommerce presence with the ability to convert to the Enterprise edition as their needs grow.

As you look at the top 1 million, less complex and robust platforms like Woocommerce have a larger impact. Options like Woocommerce, the eCommerce extension for WordPress, Yahoo store, Volusion, Zen Cart, UberCart, Miva Merchant, Shopify, osCommerce, and more can also be good options for smaller companies that want something easy to get started with at a low cost. These options might come at lower development costs than Magento or other major eCommerce platforms, and could be a good fit for a smaller mom and pop that has a lower budget to hire a third party development team or freelancer.

Technical Infrastructure: 

The platform that you use to run your eCommerce site will only get you so far. Simply installing Magento or one of these other eCommerce software platforms and adding some products will most likely not lead to many sales. You need to invest in either in house or third party web development to customize your shopping cart to your companies’ needs and strengths in your industry.
In house development versus third party implementation is definitely a decision many companies will face as they develop their eCommerce technical infrastructure.  There are many advantages to both types of development and a company should weigh all factors involved.
SMB’s will most likely benefit from a third party development team because it will be more cost effective than hiring a team or individual that has skills in front end design, eCommerce development, and specific knowledge of the platform you choose to build with. However there are always exceptions to the rule.
Often times a hybrid mix of in house and third party help is the best solution with the third party focusing on the technical and eCommerce side of things while the in house team focuses on the marketing and content assets for the eCommerce project.
For larger companies this choice may become more difficult.  It may come down to the platform you choose, how easy or expensive it is to hire in house developers for that platform, and how reliable or effective third party options are for that platform.
According to Bruce Cardwell of Gartner, only about 20 percent of the worlds 500 largest companies are outsourcing most of their IT infrastructure, proving that most larger companies prefer to keep their technical infrastructure in-house compared to SMB’s. 

UI/UX:

User interface and user experience is critical to the success of most eCommerce websites.  A conversion rate of 2% versus 5% can be the difference between hundreds of thousands or millions of dollars for many online retailers and B2B eCommerce sites. In respect to eCommerce, a conversion occurs when a visitor completes a transaction through the website so conversion rate is the percentage of all visits that result in a completed online sale.
The average site according to Forrester and other research sites report a conversion rate of low 2 to high 2 percent depending on the source for eCommerce. Factors like average price of products and other variables will greatly effect what is average for businesses given their industry prices and online situation.
High quality web design matters and can drastically affect conversion rates of your eCommerce store. In a study, 15 participants were directed to search the internet for health information that was relevant to them, and then they were asked to discuss their first impressions of the websites they visited. Of all the factors that were mentioned for rejecting or mistrusting a website, 94% were design related; only 6% were content related.
There are many factors that are cited as affecting UI/UX the most, and thus the conversion rates of ecommerce websites. Some of these are quality of product photography and content, ease of navigation in the menu, searchability of products on the site, ease of use during checkout, calls-to-action, up-sells, cross-sells, reviews and more.
You must ensure that your eCommerce store represents your brand, quality of products or services, is easy to navigate by menu or find products by search, and offers effective calls to action causing a user to click on a promotion, category, or product.  Once a user goes to a product the product page must be useful with high quality photography and content, and offer a fluid check out process, coupled with upsells and cross sells that will benefit the user.
A poor design will turn away visitors and cause you to lose out on sales. eCommerce sales depend on the trust of the visitor to believe in the quality of the service and product behind the company. A bad design will lead to a lack of trust by the user.

Mobile-Responsive: 

Approximately 28% of traffic is mobile, and that number is expected to increase dramatically over the next five years. 62% of companies that designed a website specifically for mobile had increased sales.
Designing for mobile is critical for improving the effectives of your eCommerce store as the percentage of online traffic from mobile outgrows desktop and conventional traffic. Mobile commerce is growing much faster than traditional eCommerce with some estimates reporting 68% growth for mCommerce in 2013 and expected growth of over 35% in 2014.
When designing for mobile you will have to decide whether you want to go with a responsive or separate mobile website. Responsive design is a trend that seems to be dominating the mobile space because of the ability to have one website that is optimized for all devices versus developing an entirely separate site for mobile.
Responsive design will most likely be the more cost effective and efficient solution, but for larger companies an entirely separate mobile website could be worth the investment.

On-Page SEO & Content Work:

Organic traffic continues to be the number one driver of new customers and traffic to most eCommerce websites. Therefore having quality content and On Page SEO is crucial for developing a successful eCommerce website that generates a successful ROI.
SEO traffic had by far the highest customer lifetime value according to research by Custora that did a study of 72 million customers shopping on 86 different retailer sites.

Social & Off Page Work:

Social media is a growing part of almost every business’ online marketing and customer acquisition strategy. That is especially true of eCommerce websites because of the increased referral traffic social media sites are bringing to most online stores.
Social media is estimated to bring in approximately 7.5% of traffic to eCommerce websites but that number seems to be growing across the board for most retailers and online stores.
Facebook and Youtube bring in the most eCommerce traffic and also offer the highest conversion rates per visit, although Pinterest is making some serious ground. As a retailer you should absolutely be focused on Facebook, Youtube, Twitter, and Pinterest as part of your social media strategy because the combined four bring in over 7% of traffic to ecommerce websites according to data on the hitwise 500 by Experian.
https://www.experian.com/marketing-services/post-holiday-learnings-for-2013.html

Email Marketing:

Email marketing is crucial to driving returning visitors and reaching out to potential or current customers. In fact, a report by smartinsights reports that email generated the highest conversion rates of the major traffic drivers.

• Email has an ROI of around 4,300% (according to the Direct Marketing Association)
• 80% of people say they receive marketing messages alongside their personal emails on a daily basis.
• 70% of people make use of coupons or discounts they learn about from email.
• 60% of people say that receiving special offers is the top reason they subscribe to an email list from a business.

Email marketing drives the highest conversion rate by traffic source by a significant portion of approximately 3% versus 2% for search and .8% for social respectively. Email marketing is also one of the largest sources of traffic for many online stores depending on the size of your email list, quality, and frequency of e-blasts, accounting for an average of 10-30% of traffic for most eCommerce websites.

Third Party Integrations:

Integrating with an ERP to keep track of inventory without manually changing quantity in stock per product on your eCommerce site and other third party integrations can be vital to the operations and efficiency of your online business.
The majority of eCommerce platforms will fall short in some areas such as email marketing, SEO, social media, inventory management, accounting, analytics, or other elements of a successful eCommerce enterprise.  Therefore it is essential to figure out what third party software or integrations you will need to make your store more effective.
This is something that you should do when evaluating your technical infrastructure, eCommerce team and the platform that your website is constructed upon.  If your platform is not open source, you may find it more difficult to integrate with third party applications. So if this is the case, make sure you do your research to find out what kind of implementations and integrations with your non open source ecommerce platform are possible.

Analytics & Tracking: 

Chances are your standard eCommerce platform is not going to have the level of analytics and tracking required to make the adjustments necessary for a successful and competitive eCommerce website. Luckily, there are free third party software available such as Google Analytics.
Google Analytics and other tracking software like Alexa, New Relic, Quantcast and many more offer unbelievable insight into the traffic, visitor flows, sales, and other data about your website. It is incredibly important to have the right tracking software in place in order to have the knowledge of what is having the most positive or negative influences on your eCommerce store.
Platforms like Optimizely also offer unbelievable conversion optimization capabilities and split testing so that you can see what variables could be improved such as button colors, banners ads and more. Utilizing analytics and tracking software on your eCommerce store will be imperative to a successful 2014 YOY increase in online sales.
Among some 80 factors deemed most useful by retailers and manufacturers for bringing in more web sales were: site measurement and analytics tools (76% of respondents found them effective), sales and clearance pages (73%), customer ratings and reviews (68%), enabling site visitors to search by price, brand, new arrivals, colors and other such attributes (64%) and offering multiple product views and other alternative images (58%).

International Growth:

International growth has been skyrocketing in the eCommerce industry with countries like China and Indonesia leading the way. Developing markets are the key areas of growth for eCommerce that are seeing incredible growth rates of over 25% YOY and higher.
Investing in an eCommerce platform or eCommerce infrastructure that offers international capabilities may be a major growth opportunity for companies that are willing to take the plunge overseas. Smaller companies may not be ready for this type of investment, but mid to large companies that are looking for new growth opportunities should strongly consider this option.
The leading eCommerce website in the world, Amazon, generated almost 30 billion dollars in net sales over seas, accounting for about 40% of their total revenue.  International growth is a major opportunity for many eCommerce websites that have not yet tapped into it and should be heavily on the radar for any company generating over a million per year online.
The report also indicates that U.S. online retailers can improve their global e-commerce capabilities, especially as the relatively weak U.S. dollar makes their products more affordable for many foreign consumers. Few retailers, for instance, have invested in making their e-commerce sites more accessible to foreign consumers by language, as 72% of respondents say they offer only English-language content, and 68% offer customer service only in English. Almost half of respondents (49%) said a single team based in the home country manages all international e-commerce sites, while only 6% report having a regional manager to handle local marketing.

Customer Service and Delivery:

eCommerce is turning customer service upside down. The new customer service is a flawless eCommerce experience with fast, low cost delivery, and no interaction with a human being. In fact interaction with a human being through an eCommerce site is most likely a negative sign because if the site was designed properly they should not have to contact a person to get their desired goods or services.
Improving customer service for eCommerce has become more about having useful and easy to access customer reviews, offering fraud and security protection features or modules during the checkout process, conveniently places upsells, cross sells, and other things that automate or make the user experience more convenient for the user.
Mobile experiences need to improve for most retailers as many customers say they will leave a site if it is not mobile friendly.
That does not mean that customer service beyond the web is not important. Retailers that offer a phone number or a way to get in contact with a person are still viewed as more favorable than companies that do not in most cases.

Promotions & Incentives:

Only 36% of daily deal customers will spend more than the discounted price of a deal. New customers are more price conscious: The probability of getting a sale from a brand new customer is 5–20%. 
Loyal customers like to hear from you: 65% want stores they frequent to email them coupons and promotions.
Promotions and incentives are critical to building a loyal customer base. They can also be a huge asset to your email marketing campaign. Developing an effective promotional and incentive eCommerce campaign will be another essential factor for e-retailers and even b2b eCommerce stores in 2014.

Conclusion:

Growing your eCommerce business in 2014 will require a multifaceted approach combining, social media, SEO, PPC, the best fitting eCommerce platform and technical infrastructure enhancements, analytics & tracking monitoring, email marketing, third party integrations and much more.  Of the two most important traffic drivers, Email marketing and SEO dominant the other traffic channels, and should be priority number one for getting more sales.  On the radar, however, is social media, a growing third place driver of eCommerce traffic to keep in mind.