Article:
The future of online shopping

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Debbie Oates, Principal Consultant - Analytics, Experian Marketing Services

Marie Myles

‘England is a nation of shopkeepers’ was used by Napoleon, but is most widely attributed to Adam Smith when he used the phrase in ‘The Wealth of Nations’. Now there is strong evidence to suggest that the UK has become ‘a nation of online shopkeepers’; on eBay alone in the UK, 7.4 million people have sold 1 billion items in the last 10 years. While not everyone will agree with the notion of ‘a nation of online shopkeepers’ few can disagree with the fact that more and more people are selling items online. This article will look at what this means for retailers and how the growth of social may herald the way for an explosion of ‘online shopkeepers’.

The launch of the online auction site, eBay, in 1995 provided the first platform for individuals, sole traders, and small businesses to sell online. Until then this group did not have the techniques and tools - nor the budgets - to build ecommerce sites. Within ten years eBay generated annual revenues of over $9 million dollars. Over the next decade a cottage industry grew up in books on how to buy and sell on eBay.

EBay in effect changed the traditional online relationship with the customer. The relationship between buyer and seller became more intimate. The buyer could ask questions of the seller and leave feedback on the seller’s profile. Sellers quickly cottoned on that a poor feedback rating would impact on their sales. Buyers enjoyed the power of public redress for a faulty product or bad service and the ability to leave a recommendation for a future buyer. Sellers realised that writing a detailed product description or using keywords within the description could improve conversion as would good photography. Sellers started using basic analytics like number of bids, number of views, etc.

Has this impacted a retailer with an online presence? Few can argue that it has helped drive customer service improvements. The perception and often reality of remote online retailers with only frequently asked questions or help pages and no phone number has been replaced with web chats and multi-channel contact points. Retailers have been quick to add customer reviews after seeing the positive impacts on conversion but most have been slow to pick up on some of the basics learnt from an eBay seller. The use of product page descriptions to sell is still poor with many retailers managing less than a few words despite the known positive impact on SEO. Photography is still not up to the standard of some eBay sellers and often only one picture provided by the manufacturer is used. If you are a buyer or seller on eBay your expectation will be higher and as more and more online shopkeepers are created through marketplaces these expectations will grow even higher.

Both eBay and Amazon have been quick to innovate not just in the functionality they provide their sellers, but with their sites in general. Amazon in particular has driven innovation particularly around personalisation. Amazon understands the power of its data and analytics and is already an early adopter of social data. But again, in general, retailers have been slow to implement such changes and developments despite the now wide spread use of web analytics tools. Even a mature channel like email still often lacks the personalisation a customer now expects.

The challenges and threats from the online marketplace have now gone full circle with retailers building their own niche marketplaces. While these provide revenue opportunities within their own right they also keep the customer close and provide yet more customer data that can be leveraged to improve personalisation and targeting. In what is likely to be a challenging economic outlook it may also be a growth area as customers sell old products before buying new. As already discussed, it is likely that these marketplaces will create yet more ‘shopkeepers’ and this will in turn raise the expectations of the retailer’s main site.

The latest digital developments are in social media and retailers are one of the many sectors that are looking at ways to make it work for them. Fan pages are now becoming channels in their own right with apps providing the means for commercial transactions. This is challenging for retailers many of whom are still struggling to render their sites for mobile but there is little doubt that where Amazon and ASOS have led, others will follow. The rewards are high if done right. Not only are retailers letting customers choose their own channel to shop with them but the data provided back through social can be used for even more personalisation and targeting.

The question is will social, aka Facebook, become the next mass marketplace and create even more online shopkeepers? With retailers leading the way with their commerce apps they are driving the technology which will enable individuals and small businesses to sell and complete payment transactions through their own Facebook pages. Unlike the eBay or Amazon marketplaces the Facebook platform lets developers build their own bespoke apps which will in turn further drive volume and value to the Facebook marketplace. Sellers will be able to use their own network of friends and groups to drive demand. They will also be able to buy advertising inventory and drive their own traffic / footfall and use basic web analytics to drive conversion. Retailers may also look to use customers as affiliates selling through their Facebook profile pages.

So the outlook is for more developments in customer engagement and interaction all of which will again raise the bar for the more traditional retailers. This will force them to innovate further and integrate new channels with their existing ones as their customers, many of them online shopkeepers, continue to expect more.

About the author:

Debbie Oates
Principal Consultant - Analytics
Experian Marketing Services

Debbie has over 20 years experience in leveraging data and insight to drive effective marketing strategies across both client and agency based roles. Debbie specialises in managing and implementing customer insight, targeting, and planning led projects to deliver increased effectiveness of clients’ acquisition and customer management programmes. Recent posts have been consultancy based, building on client side experience as Customer Insight Manager for Britannia Building Society and Senior Analyst at Great Universal Stores.

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