Shoppers Shift Supply Chains

Stephen Yagielowicz

For e-commerce website operators, consumer preferences, technology and economics combine to create a challenging playing field — but an arena which still has competitive advantages over many of their brick-and-mortar bound brethren.

Into this chaotic mix of factors come persistent warnings of an impending double-dip recession, which although an ill wind that blows no good, may be of some benefit to e-tailers and online adult merchants — at the expense of their physical world competitors.

The reasons for this shift in fortunes are myriad and include the often lower prices and wider selection offered online, along with the lower costs of shopping online as gas prices continue to soar; but the equation isn’t as simple as “online shopping is cheaper.”

Indeed, “adequate information” may be as important as “lower prices,” with today’s consumers using their Smartphones and other mobile Internet access devices to directly compare prices, products and online offers, even while examining the same or similar items inside of a physical retail location.

“The more price-sensitive consumers become, the more they’ll rely on online research for any considered purchase,” Mercent CEO Eric Best stated, pointing to this severe complication in traditional retail marketing and sales circles.

While it’s unlikely that many adult consumers will do such price-comparisons on DVDs or novelties while at a retail shop, the message that things have changed is clear.

But what can be done to turn back time — or to at least adapt to these new factors?

Even if primarily brick-and-mortar businesses choose to go the e-commerce route, it remains to be seen if they are even able and willing to do so, especially across the newer areas of online opportunity.

For example, a recent study by e-commerce solutions provider Ability Commerce reveals that only 10 percent of the top 500 Internet retailers sell directly on Facebook — despite the social networking site’s claimed audience of 750 million active users. Another surprising finding is that 20 percent of those top companies do not even have a Facebook presence at all.

“Facebook shopping provides a great opportunity for companies to market products and reach consumers through the ever-growing world of social networking,” states the CEO of Ability Commerce, Diane Buzzeo. “Companies should be more aggressive in pursuing the latest that Facebook commerce has to offer.”

Ability Commerce says that social buying is the cutting edge of e-commerce, tying online shopping with the social media revolution — although most companies currently settle for a simple brand awareness page.

The Ability Commerce report also revealed that while few mass merchants or luxury item retailers used Facebook to its full advantage, the majority (66 percent) of computer and electronics retailers employed Facebook pages. A further indication of the somewhat slow uptake of technology on Facebook is that only eight of the top 500 companies in the survey offered live chat support on their Facebook pages.

That is a bigger issue than you may imagine, because Ability Commerce says that sites using live chat support enjoy 55 percent higher per-sale amounts and are three times more likely to convince a prospect to become a paying customer. This situation is ripe for upheaval and is just one way that the little guy can still compete with the biggest players.

Some analysts look to the recession of 2008-2009 as an indicator of things to come, when larger e-tailers gained market share by maintaining their marketing spend during the downturn; however, the intervening years have seen smaller merchants become much more adept at marketing, including via the leveraging of social media initiatives.

“The lesson for e-retailers seems to be not to pull back too sharply on marketing during any recession that may develop, as many consumers still will be shopping online, especially those who are most price-sensitive,” says Internet Retailer editor Don Davis, adding that “if you don’t have a mobile commerce site, you should seriously consider building one.”

Wise words for any merchant, adult or otherwise — and a glimpse at a clear path to online success, as today’s shoppers continue to shift their supply chains; choosing online outlets to research their purchases, even if the actual sale occurs in the real world.