Shopatron Client Conference: Sucharita Imparts “Conventional Wisdoms”

Published May 16, 2012 Share

In case you missed it, Shopatron had its fifth annual onTarget Client Conference this past week. Over 120 brands on the Shopatron network showed up at The Cliffs Resort in Shell Beach, California to learn not only about the newest features at Shopatron, but also about the most important trends in eCommerce as a whole.Over the next blog posts we hope to share with you some of the insights right here on the Shopatron blog. Just don’t expect to see any dancing videos or karaoke highlights – because what happens at onTarget, stays at onTarget…

One of the highlights of day one was a keynote presentation given by Forrester Research’s VP and Principal Analyst for eBusiness, Sucharita Mulpuru. The topic of her keynote was the “State of eCommerce.” And in it she listed five of the top trends – or as she elegantly put it, “Conventional Wisdoms” – in eCommerce today.

One of the hottest topics discussed at onTarget was the growing role of mobile devices and mCommerce (see our last blog on smartphones vs. tablets or view our webinar on the present and future of mobile for more thoughts on the topic). And Sucharita’s take on the subject pretty much aligns with our thinking, which is: mobile commerce will be significant.

According to Forrester, only 9% of businesses said that they didn’t have a mobile strategy last year. In 2010, that 9% was actually closer to 40%. However, the actual effects of mCommerce to date are fairly small because sales via the medium are still relatively small. But Sucharita and the folks at Forrester predict that mobile sales will grow to $31 billion – or 7% of all eCommerce – by 2016.

Her takeaway here was that businesses need to understand that consumers are no longer tethered to their desktops, so optimize your sites for as many devices as you can to accommodate the increasingly mobile consumer.

The next topic Sucharita tackled was internet behemoth Amazon and how it's a “force to be reckoned with.” In fact, it’s not just a force to be reckoned with, according to Sucharita it could be the new Wal-Mart – in that it can dictate commerce trends that others must follow.  (Note, I said “commerce” trends and not just “eCommerce” trends. Yes, Amazon is becoming that important.)

It’s well known that Amazon has become this juggernaut of online sales by being a price leader – even selling below cost on many items. But one aspect to its business model that is highly profitable is Amazon’s marketplace, which acts as a profit driver for the company. Add marketplace revenue to an otherwise break-even business model and you can get a lot of sales, mostly driven by price. But for Amazon, it’s really the marketplace that is driving its profit.

The question that remains is how long Amazon can afford to keep its core business at break-even and if other retailers will agree to continue to support this business model with their own sales through Amazon. I guess time will tell…. But keep an eye out for Amazon, because its reach already extends far beyond the web. Just ask Best Buy, or better yet, Border’s Books.

Sucharita’s third topic was the importance of free shipping (you can download our whitepaper on the subject here. In her keynote she stated that free shipping is now just the stakes necessary to play the eCommerce game, as 55% of consumers now expect free shipping on all their orders. This means that shipping can no longer be a means of profit for businesses – because it’s better to lose the margin to shipping costs than lose customers to competitors who offer the discount you won’t.

The fourth conventional wisdom Sucharita presented is this: Social networks are great interactive marketing tools, but are not quite ready for wide scale eCommerce use. By being social you can get information to consumers in an interactive way – it’s a great communication vehicle – but as many retailers begin to close their Facebook commerce (fCommerce) stores, there still remains a large disconnect between the social network and retail. While there are a lot of great aspects to Facebook, there is currently no way for big brands to effectively use it as a sales tool. As a Delta Airlines representative supposedly said, “Delta flies more corpses every day than they sell tickets Facebook.” (Sorry Facebook, but I love that one. And unfortunately, based on our own experience to date, I can believe that. )

Sucharita did say, however, that smaller businesses could find tremendous value with the social network as their eCommerce solution. For example, she pointed to a local bakery that was taking most of their orders through the social network, but Facebook’s value for most businesses is only at the top of the sales funnel in generating awareness. It’s there where you can build your brand and get your ROI with social media.

The final point Sucharita made was about the false assumption that search engine optimization and email marketing are old-hat. While newer mediums are being developed, it’s interesting to note that most budgets are still spent on these two types of marketing. Not really exciting or new, but the takeaway here is that these traditional web-marketing channels should not be ignored; so don’t give up on them just yet (to see more on this, register for Shopatron’s webinar on the topic).

Sucharita’s keynote was a great jumpstart to the Shopatron conference. Take it from her, she’s an expert on the subject. Oh, and stay tuned for more updates and lessons from a great couple days spent next to the beach.