The Context For eCommerce
There is no foreseeable control or ending to the raging global pandemic. This is driving the need and realization for online fulfillment and convenience.
As the COVID-19 pandemic reshapes our world, more consumers have begun shopping online in greater numbers and frequency. According to new data from IBM’s U.S. Retail Index, the pandemic has accelerated the shift away from physical stores to digital shopping by roughly five years.
In the first six months of the year, consumers spent $347.26 billion online with U.S. retailers, up 30.1% from $266.84 billion for the same period in 2019, according to the latest Digital Commerce 360 analysis of U.S. Department of Commerce data. Comparatively, eCommerce sales during the first half of 2019 grew just 12.7% year over year.
Department stores, as a result, are seeing significant declines. In the first quarter of 2020, department store sales and those from other “non-essential” retailers declined by 25%. This grew to a 75% decline in the second quarter.
Large retailers like Walmart and Target have embraced omnichannel fulfillment to their advantage. Both reported stellar earnings this month thanks to their earlier investments in e-commerce. In Walmart’s case, the pandemic helped drive e-commerce sales up 97% in its last quarter. Target set a sales record as its same-day fulfillment services grew 273% in the quarter. Amazon, naturally, has also benefited from the shift to digital with its recent record quarterly profit and 40% sales growth.
This will drive a global/local trend that will evolve to be the new norm.
Some Facts Pertaining To Global eCommerce
- Global eCommerce revenue: 4.2 Trillion. It is estimated that there will be 2.05 billion global digital buyers by 2020.
- The number #1 reason people shop online is that they’re able to shop at all hours of the day. 81% of consumers conduct online research before making a purchase online. 81% of consumers trust the advice of friends and family over businesses. 65% of shoppers look up price comparisons on their mobile device while in a physical store. 80% of people stop doing business with a company because of poor customer experience.
- Consumers are most likely to trust a business that makes it easy to contact people at the company. On average, only 2.86% of eCommerce website visits convert into a purchase. 69% of shopping carts are abandoned. The unexpected extra cost is the number one reason shoppers abandon carts. Abandoned cart follow-up emails have an average open rate of 45%.
- On average, 52% of online stores have omnichannel capabilities. This means they sell to and communicate with customers through multiple channels. For example, you might have a website, Facebook Shop, Instagram account, and an email list. Nearly half (48% ) of online shoppers simply head straight to a large eCommerce marketplace.
- Mobile eCommerce is expected to account for 67.2% of digital sales in 2019. Users who have a negative experience on a mobile website are 62% less likely to purchase from that business in the future. Longer mobile page load times drastically increase bounces.
- Younger people spend more time shopping online than older people.
Key Pillars For eCommerce Success
01 #1 eCommerce platform software
The need for ground-up development of eCommerce software is no longer a mandate due to the availability of robust platforms on both Open Source and Commercial Models to suit the needs and context of eCommerce requirements. These are well-established alternatives with 100,000+ global deployments.
The challenge is to customize these for the #1 UI/UX experience and seamless process integration from order to delivery.
02 Secure hosting infrastructure for throughput and scale
Hosting infrastructure which can scale and perform within reasonable cost parameters.
Tier 1 cloud computing facility is widely available at commodity pricing on utilization based charging models.
03 Payment gateway
Many choices are available at affordable rates from Paypal to local offerings through banks and third party establishments.
04 Delivery (courier) both local and overseas
Many choices from global courier giants to local establishments for prompt local deliveries at affordable rates and published delivery cycles.
05 A product portfolio which makes sense for online commerce and revenue
The notion that anything can be sold online does not hold water. There are two perspectives to be dealt with when considering what and what not to sell online.
From the customer's perspective will he/she make an online purchase of a given product. From a company's perspective is it profitable to sell a specific item online from a total cost, margin, and sales volume viewpoints.
06 Seamless execution from order to delivery and effective CRM.
The eCommerce platform is one piece of the jigsaw. The whole promise from purchase to delivery needs to be executed with tier 1 quality and consistency every time. This requires near-perfect coordination between software, people, processes and external entities. Customer sentiment tracking and effective product portfolio relevance is a must.
07 Digital Marketing
One of the most crucial pillars for success on any online platform which is mainly given step-motherly treatment. Having an effective online destination does not necessarily guarantee prospective customer reach and visibility. Digital marketing is key to create that reach, visibility, and subtle influence for the successful conversion of purchase through all the tools at disposal from SEO, SERP, SEM, SMM, etc.
eCommerce Context in Sri Lanka
Over the last decade, the pillars for effective eCommerce have evolved and are in place for capitalization. Sri Lanka businesses should look at capitalizing the eCommerce platform to make available its exclusive/exotic produce/products for the discerning global/regional consumers than just making available cheap imported substandard products through eCommerce for the Sri Lankan consumers - which is not sustainable due to high competition and low margins.