This week in eCommerce, we see interesting perspectives on how brick and mortar stores are being affected by online shopping. On one end, physical stores are being abandoned by shoppers due to the convenience and ease of online shopping, while the luxury industry takes advantage of the growth of online shopping by integrating digital features into their physical stores. Online shopping creates another obstacle for companies as customers frequently jump from site to site. However, it looks like they’ve found a solution to this problem. Target, who’s been struggling recently, is trying to recoup themselves with stronger digital efforts. Their most recent development provides free shipping to customers! And finally, McDonald’s releases a new mobile app allowing customers to order straight from their phone. Check out our Weekly Wrap Up below to see what’s been happening in eCommerce!
Like CJ Chu, a 24-year-old that does 99% of his shopping online, millions of Americans are abandoning bricks and mortar stores for convenient and quick online shopping. Especially with the increasing popularity of mobile devices, eCommerce is accelerating at a rate faster than ever. Experts seem to be recognizing the importance of omni-channel retailing to stay competitive, however many retailers are struggling to do it right. This article from Bloomberg highlights examples of why and how big retailers, such as Wal-Mart and J.C. Penney, are being affected by online shopping.
Market Leaders Understand and Recognize the Power of Omni-Channel
Yes, eCommerce is growing and yes, it has become critical for businesses to have some form of online presence. Especially in the men’s fashion market. According to a luxury analyst at Exane BNP Paribas, “Men are often creatures of habit when it comes to their purchases. As they often re-order the same product from the same brands, online is perfect. Men don’t like shopping as much as women and don’t want to invest the same time as women.” However, that doesn’t mean brick and mortar stores are necessarily going anywhere. Numerous luxury fashion brands such as Gucci, Lanvin, and Hermes, have actually invested millions of dollars in bricks and mortar stores to explicitly target men. This is because for today’s fashion consumers, the path to purchase increasingly involves both physical and digital touchpoints. With luxury items especially, customers like to feel and see the quality first-hand before splurging. Market leaders are understanding the concept of omni-channel and integrating it into their online and offline business to create new, enhanced stores.
You would think displaying ads on your eCommerce store would be counterintuitive to what the business is trying to accomplish, as it would simply send the shopper away from their site. However, many sophisticated eCommerce sites, such as Wal-Mart, Target, and Toys R Us, are doing just this. About 80% of American retailers are now use display advertising, which links to featured and sponsored products associated with the company. This way, sites are making money even if customers do not purchase anything from it. The technique is popular since the nature of online shopping involves shoppers jumping from site to site, and online conversion rates are a dismal 3% at best. Looks like retailers figured out how to make money from shoppers, even without real purchases.
Target Presents: Free Shipping on (nearly) ALL Orders Above $50
Who doesn’t love free shipping?! Definitely not the average online shopper. For many shoppers, free shipping can be a deciding factor on whether or not they will actually purchase anything from a site. Target realizes this and sees that it can be a big advantage to have over competitors, so earlier this week, they have announced that they will now offer free shipping on nearly all orders over $50. Previously, only some items were eligible for free shipping, but with the new policy change, the shipping terms will be much clearer and simple for customers. Jason Golderberger, senior vice president of Target.com and mobile, believes that the new policy will will to increased sales and customer loyalty. This development is only one of the numerous ways that Target is trying to catch up on its digital efforts.
Going digital isn’t just for product retailers, it’s for service businesses as well, such as McDonald’s. The fast-food giant released a new mobile app that allows customers to order their meals from their phones! Only 22 locations, across Georgia and Alabama, are currently participating in testing the new app. Other chains such as Starbucks and Five Guys have seen success with mobile apps, so this might be a great move for McDonald’s.