Ecommerce has become omnipresent
We are invited to ‘like’ brands on Facebook in return for discounts and push messages or vouchers which find their way onto our always-on phones through email, SMS and near field communication. To boot, brands are starting to lead on their online price comparison credentials to hook savvier audiences.
The traditional retail space has become increasingly connected. Commerce today is less about selling ‘in’ a channel but selling ‘through’ a channel, reaching out to consumers wherever they are and selling in that context.
Whilst it would be ideal for everyone to purchase in store as they research products, retailers have wised up to the idea of enabling ‘shop anywhere’. You may not want to buy now, in store, so visit our site (either now on your phone or when you get back home) and we will try hard to compete with Amazon on price.
Just look at the prolific use of APIs introduced by US retailer Best Buy, or the range of niche apps you can access Shop Savvy through. This is about finding and engaging audiences, not waiting for them to arrive.
Smartphone use is growing seven times faster than traditional desktop Internet access across the EU (Comscore, May 2012). Studies by International Data Corporation (IDC), indicate that 45% to 60% of European smartphone users conducted ‘due diligence’ on store prices and inventory in 2010. IDC also predicts that more than $50 billion will be spent on merchandise globally using a smartphone by 2014.
The European smartphone offers unrivalled access for on the move consumers to the social space too. Enter, contextual commerce. We are reminded where to buy and what is cool by friends on social networks and the rise of Facebook login has provided us (perhaps unwittingly) with a constant feed of qualified clothing, accessory and gadget recommendations that all carry a rating or commendation from someone we know.
The ability for people to share interests with their social graph combined with well planned CRM programmes and strong on-site customisation tools such as faceted search are all eating away at our resistance.
Following the trend of sharing potential product choices, Zara has introduced a ‘Phone a Friend’ app that allows you to hold a video call with friends to get their view on apparel before purchasing. Perhaps resistance is already futile?
Brands and retailers now enjoy quicker, more targeted and more cost effective access to consumers
How? Here are just some of the drivers:
- The rise of established enterprise ecommerce systems.
- The increasingly forensic practice of competitor website benchmarking.
- The widespread use of testing, usability and optimising programmes.
- The increasing maturity of social media in Europe as a driver for contextual targeting.
In addition, wholesale changes in tracking and targeting capability online are transforming the ability to find buyers. Some pundits are already making the argument that brands no longer buy advertising, they instead buy audiences.
Whilst search has traditionally been the weapon of choice for ecommerce retailers, the availability of data and evolution combined with the explosion in the number of websites that carry ad inventory across Europe has super-charged the display space.
Re-targeting and real-time-bidding technologies have helped turn display into a more targeted channel and in turn, monetise remnant inventory that advertisers and media owners were previously unable to link to valuable audiences seeking to buy.
But getting an ecommerce business to succeed across borders has been a challenge. There is currently no pan-European Amazon or eBay, in fact, less than 10% of Europeans buy from retailers in other countries.
Whilst there are clear variances in how consumers have adopted social media across Europe and indeed how people research and buy products, these are not the reasons why pan-European ecommerce initiatives rarely grab the headlines.
The truth is, it isn’t that easy to make cross border transactions in the EU. Back in 2009, Techcrunch ran a response to a European Commission report on cross-border ecommerce dramatically titled: ‘When it comes to ecommerce, there is no Europe’.
The report found that European shoppers looking to purchase products from other EU countries online are likely to fail three times out of five.
Three years on, many of the obstacles to a ‘Digital Single Market’ in Europe remain largely the same:
- Fragmentation of consumer protection rules.
- No or limited cross-border delivery.
- Taxation overheads for the retailers.
- High shipping costs between countries.
- Different payment preferences.
- Language barriers.
Let’s explore shipping costs. According to Pan advert a product that within the US (West coast to East coast) costs $9 USD, in Europe has an average cost of 16 Euros ($22 USD). This problem is further exacerbated for parties, vendor and customer, when the customer needs to return faulty or damaged goods.
Whilst saturating home markets first should be the starting point for online retailers, it is clear that the continued expansion of ecommerce will require European sellers to start to overcome these barriers in order to find new head room across borders.
The increasingly diversified US model is a strong basis for Europe to follow, with brands offering discounted and flexible access to products to audiences across wider geographical areas. Europe should also look to China, where the prevalence of free and discounted shipping and aggregator websites are driving a dramatic proliferation of online retailing.
The technology and demand are in place however Europe needs a commonly understood, location-neutral framework, to work towards if we are to compete on a global scale and attract customers closer to home.