Changing trends in eCommerce

Throughout the world, eCommerce spending is increasing at a steady clip and is expected to exceed $7 trillion in 2008. As consumers increasingly opt for virtual stores over traditional brick-and-mortar ones, the manner in which buyers and sellers interact is also undergoing a paradigm shift. James Kuczmarski has an inserting take on this changing phenomenon, which he expressed in the business magazine Fast Company (April 2008). A quick look at his views on the matter:

A survey was conducted by Pui-lai To (writing in Technovation) with an intention to discover why consumers were increasingly shifting online to address heir buying needs. Pui-lai distributed questionnaires relating to shopping incentives to over 200 students and workers from Taiwan. Cost, convenience and the variety of selection were the expected answers; but what was new was the satisfaction of the users while using this new technology and the sense of adventure associated with trying out this new mode of shopping. Pui-lai calls these "hedonistic motivations"; and it was also noticed that consumers prone to these kinds of motivations had an inclination toward impulse buying when online. Knowing this, online sellers are designing their websites in such a manner that appeals to the sense of adventure and technological competence of these buyers.

Looks matter! While many consumers are still concerned about online security and poor vendor reliability, it has been noticed that these concerns are generally reduced when the customers comes across well-designed websites. They are more comfortable while buying form sites that project an aura of professionalism. Also, trust increases when the website is easy to navigate and is user-friendly in other ways (e.g, uses rich web applications intelligently). Comfort leads to an increase in the trust factor, which ultimately leads to more purchases.

Negative reviews can easily be overruled by positive experiences. In the online world, perceptions are volatile and prone to change fast. So even if a vendor has got a not-so-good review, the effects can be negated if the Internet shoppers have a positive, personal experience.

eCommerce, in spite of its recent gains, is still in its infancy. As more people come online, the more will the dynamics between the buyer and the seller change. But one thing seems certain – online shopping is growing fast, and there’s no turning back!

Global Ecommerce growth patterns

Ecommerce has become one of the mainstays for online players and the double digit growth figures tell a good story. Year-on-Year growth in global ecommerce has been growing at more than 40% per annum.

Though the data provided above is a bit dated, the growth has slowed down only by a few points and that does not really matter as the absolute figure now runs into '00s of billion dollars. Some of the encouraging signs for this growth stem from the fact that:

1) Many brick and mortar services such as financial services have moved on to the internet in a big way in the last few years. Banking, trading and a whole gamut of online financial services have helped increase the growth of online commerce.

2) Steady investments have gone into making the internet a secure place to transact in. Secured servers, encryption technology have made online transaction safer than they were 5 years ago. Other than that, increase in broadband availability, city-level Wi-Fi networks (specially in the US) have made it possible for users to access the internet very easily.

3) Small businesses are yet to go online and make ecommerce an important aspect of their bottom-line. This spells a huge potential in future ecommerce market as going online is not longer cost-prohibitive and ecommerce solutions are now available out-of-the-box for as little as $75 per month (http://www.easystorecreator.com/ is a good example). In September 2007, Small Business Research Board eCommerce Study further confirmed the fact that 30% of small businesses were expecting online sales to increase significantly in the next 12 to 24 months.

The US of A continue to lead in the ecommerce race with more and more Americans booking travel, completing their financial transactions and buying day-to-day needs online. However, Europe and most of Asia are fast catching up to the ecommerce phenomenon and is likely to speed in the next couple of years.

Reasons behind abandoned shopping carts

'Boston Consulting Group (BCG) estimates that some 65 percent of online consumers bail out of a transaction and abandon the shopping carts before the final purchase transaction took place.' Daunting numbers for any online retailer and something that is still not explained in very clear terms during analysis phase. Some of the known reasons for abandoned shopping carts are:

1) Price not equal to value received. This is really a perception thing, consumers might feel that the shipping and the online prices might be higher than what they would spend at a brick and mortar store and they abandon the shopping cart.

2) Too long a process. A frequent internet user might not be daunted by the long process of shopping online which is commonplace in online stores but a not-so-frequent user might loose patience. This might also happen when the site is slow making online shopping a frustrating experience.

3) No mood to really buy. Abandoned carts also result from the 'Window Shopping phenomenon' where the user is not really in the mood to buy anything and leaves the cart once he is satisfied with the browsing experience. there is really not much that can be done to control this just as brick and mortar stores are unable to contain users who leave without buying.

4) Security concerns also play a role in abandonment of shopping cart especially with first time users who are worried about using their credit card online. E-retailers can quell this issue by offering a detailed guideline for first time users and offering assurance regarding credit card theft. In fact, some creative e-retailers have converted to other forms of payments such as payment on delivery etc to ensure that these buyers stick with them.

Abandoned shopping cart is a serious bane of the online industry and recent research by www.DoubleClick.com noted that for every $1 sold online, $5 was in the abandoned cart. In spite of this, ecommerce is growing at a nearly 30% per annum (Source: Doubleclick.com) and that is a real silver lining!