Global E-commerce Summit: Day 1

Multichanneling, social media and truly making the client the priority in a world that sees itself on the brink of an economic crisis. These were the important main topics treated on the first day of the Global E-commerce Summit. A report. Those attending’ The first annual gathering of global leaders in online retail' at the famous Hotel Krasnapolsky in Amsterdam were welcomed by Dieter Junghans of Emota.

The president of the European industry association for home shopping retailers pointed out the good prospects for webshopping, now that the European postal market is being liberalised, payment systems are gaining the trust of buyers, and serious efforts are being made in creating uniform regulations for the protection of consumers. ‘However, challenging and exciting times lie ahead for us.’

Six trends

Scott Silverman, frontman for Emota’s American counterpart, Shop.org, then discussed the six developments which are currently playing a dominant role within the e-commerce sector. The levelling-off of the growth of online expenditures (1), still forecast to be 17% for 2008 in the United States, indicates a market that is maturing. The number of new online shoppers is decreasing, although the impact of online has since become perceptible in every conceivable product category. New players continue to enter the market. Apart from Internet start-up companies, these include manufacturers and traditional retailers that are slowly ‘waking up’, according to Silverman. Then there’s the economy (2).

Most retailers are confident that online shopping is more capable of withstanding hard economic times than other channels, Silverman emphasises. ‘Good, not great’, was the opinion shared by American e-tailers regarding the current holiday season, according to the results from a recent Shopzilla study. The predicted growth in turnover for the end-of-the-year period was 12% for online sales, as opposed to a mere 2.2% for retail in general. Silverman also remarked that the discussion on cross-channelling occurring over the last ten years has not changed in substance (3). Plenty of opportunities, but how should these be seized? A subsequent development known as free shipping (4), results in plenty of worries for online retailers. ‘80% of American retailers feel that what is going on right now is quite painful’, according to Silverman, who adds that consumers love free delivery.

More than a mere promotional tool, it has become an absolute condition for online success. Silverman: ‘Webshopping has acquired a cost-saving image. If it hopes to keep this image, free shipping is a must.’ A major role seems to be set aside for social media (5), but the code for using this successfully has yet to be cracked, Silverman says. ‘Retailers are looking for the new Google’, the Shop.org director said in referring to the next Internet revolution. After all, privacy (6) is an issue that retailers must take seriously. Legislation is in the works which will limit the space for personalisation and segmentation, whereas relevance and a personalised treatment are exactly what consumers are looking for.

Office Depot
Interview Monica Luechtefeld / Office Depot from Marieke Verdonk on Vimeo.

Taking the stage as keynote speaker, Monica Luechtefeld of the American company Office Depot, is less sceptical on that point: she assumes that the requirements credit card companies are placing on the care with which companies handle customer information are much stricter than those governments will ever impose. This does not change the fact that retailers will have to find a way to win consumers’ trust in gathering any extra personal information which will help paint a better picture of their behaviour. A mere opt-in is no longer sufficient. Office Depot, an organisation specialising in office supplies and everything that has to do with working life, has succeeded in winning the trust of consumers and thereby becoming a relevant company. However, trust comes by foot and leaves by horse, as the saying goes.

According to Luechtefeld, on the basis of information gathered, online retailers must provide that information the customer is interested in at that time. In her view, the concept of pulling, or attracting customers, is slowly changing into pushing, where it’s the retailer's turn to make a move: ‘Customers expect us to come to them, because we know what they want, for example, that their anti-virus software subscription has expired.’ One of the most important lessons that Office Depot has learned in the past few years when it comes to multichanneling is that consumer segments must be managed through the entire chain and not merely within the individual channels. Luechtefeld cites the concept of customer loyalty programmes as an example. This has been launched in all channels simultaneously, and the information on this programme may be found everywhere. In Office Depot’s case, this includes in stores, catalogues, and on the websites it keeps online. But it may also be found in advertising messages published in newspapers. In Luechtefeld’s opinion, a holistic view of your customers is crucial to the success of multichanneling: ‘Engaging the brand, that’s what it’s all about.

Talking about channels only happens behind the scenes at retailers’ companies. However, it all revolves around the customer. At Office Depot, this concept results in customers who use the different channels interchangeably. For example, 79.1% of the online customers also make their purchases in the chain’s physical stores. Office Depot has experienced major international growth which is based on three pillars: the creation of standards, the sharing of best practices, and the leverage effect that arises as a result. Luechtefeld applies the adage: ‘Globalize what you must, localize what’s closest to customers.’ Office Depot is seen as a trendsetter when it comes to online sales, particularly to businesses. According to Luechtefeld, the company absolutely plans to adopt social media such as networking sites in the future. The company does not necessarily aim to be a trendsetter in this regard, since social media are essentially intended for voluntary contact between consumers and also because it is not yet entirely clear how companies can cash in on this media.

Pixels of separation

According to the following speaker at the first Global E-commerce Summit, Mitch Joel of the American marketing firm Twist Image, the interconnectivity of the Internet has changed the world for good. He refers to research which has shown that 40% of television viewers regularly fall asleep. This would indicate that the brain ‘shuts down’ from a lack of interaction. He also stresses that marketers must stop using the one-way communication technique to which they frequently give such a high priority. According to Joel, the ultimate challenge for marketers who, in general, are afraid of missing out on the masses, lies in starting to ask different questions. How many should become who in the approach to customers. With respect to social media, instead of asking what we should be asking why. Joel has observed that many new media are becoming embraced more and more by marketers to allow them to participate in an innovative manner, without asking the question what this now actually yields. He speaks of ‘digital masturbation’, in which marketers obtain satisfaction from the new features they offer.

Incidentally, this does not in any way mean that marketers shouldn’t take a serious look at new possibilities that satisfy the individual needs of customers. ‘Currently, 90% of marketing budgets are being dedicated to media for which there is no overview whatsoever of what it actually yields. What a waste.’ Joel presented six pixels of separation, or tips for participating successfully in communities and conversations. 1) Think in terms of tribes, such as families, co-workers, or groups of fans; 2) Everything you do should be done in addition to the other media you use, rather than replacing it; 3) Build, share and grow; 4) Earn the right to drag consumers out of their recliners; 5) The adoption of new opportunities is a question of attitude, not age; 6) Upload a video from YouTube now and then. Take action. Now!

Investing in e-commerce?

After the lunch break, Brett Hurt of Bazaarvoice tried to pick the brains of three delegates who invest in e-commerce: Michael Zeisser of Liberty Media, Jelle-Jan Bruinsma of Van den Ende and Deitmers and Dharmash Mistry of Balderton Capital. The discussions did not really come down to concrete statements about their own acquisition policies for the near future. They were however more open about the consequences of the credit crisis and were willing to give a few tips.

Bruinsma said that he expects that the financial crisis will lead to a shake-out in which a lot of retailers will end up getting the short end of the stick. The other participants on the stage nodded in agreement. Zeisser tossed a true doomsday scenario out into the audience. ‘Things are a lot worse than people think. There is still a lot of wishful thinking out there about what companies are really worth.’ Mistry pointed out the danger of the search for ‘the next big thing’, for example when it comes to social media. Instead of this, try to get the fundamentals in order, and to excel at a functional level, was his motto for online retailers. In order to survive, you have to set yourself apart from the competition. In today’s economic times, as far as he’s concerned, e-tailers would be wise to invest in ‘organic search’ techniques, to realise that these days, the world revolves around affiliation and to understand that the borders between content and commerce, or between media and retail, are blurred. ‘So let the community take over’. ‘Classical borders are blurring,’ Zeisser also concluded.

He expects that the competition between retailers and manufacturers will only solidify, since the latter will start selling directly on an increasingly frequent basis. ‘The advantages traditional retailers have in the analogue world disappear in the online world. For many of them, what is happening now affects their chances of survival.’ Doug Mack Adobe’s Doug Mack also looked to the future in his presentation. He named five developments which will affect e-commerce in the coming 18 to 24 months, and in doing so, emphasised the user-friendliness of webshops. 1) Motion has meaning The use of video will really take off in the coming months. 2) Search gets sexier Searching within websites has been neglected a bit recently, but is now experiencing a renaissance.

One example is the possibility of searching for products by colour, an option offered on Etsy.com. 3) Navigation when you need it – content is king In good webshops, customers are not bombarded with navigation options; the product is the centre of attention. Options do not become visible until they are relevant. Mack stresses that it is ‘extremely easy to make things difficult, but that it is even harder to make things easier’, citing NikeID as a shining example of how it should be done. 4) Mobility and Multichannel momentum Due to the growth in the number of devices on the market granting access to the Internet, retailers will start trying to entice consumers wherever and whenever possible.

The fashion shows that Dolce & Gabbana make available via mobile telephones further increase the temptation to make a purchase on its webshop which, incidentally, has the same design. 5) Shopping becomes social (again). In the coming months, online retailers will have to develop new methods for adding a bit of fun to the online shopping experience. A connection to other buyers, for example through the exchange of moodboards or declarations of love for a certain product, will play an important role in this. Etsy is also a forerunner in this technique, as is Polyvore.com. Wehkamp.nl Interview Paul Nijhof / Wehkamp.nl from Marieke Verdonk on Vimeo.

At the end of the afternoon, Paul Nijhof, CEO of Wehkamp.nl, revealed the new site and the company’s strategy, and explained to the international audience how the partnership with C&A is already bearing fruit. An interview with Nijhof on his presentation will soon be available on this site, as will a video interview with Monica Luechtefeld of Office Depot

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