Mining Retail E-Commerce


Retail has notably changed since the advent of the Web. No longer must we visit brick-and-mortar locations to purchase goods. Far from catalog shopping, e-commerce offers us many benefits, including faster comparison shopping, greater price efficiency, and 24/7 shopping (truly a "shop 'til ya drop" experience).

The U.S. retail industry is a $3.6 trillion industry. The industry currently spends 2.1 percent of its income per year on technology (up from 1.8 percent in 2001) according to IBM Global Services 2003 survey of 78 chief information officers. That is a 15 percent increase in technology spending, much of which is targeted at creating a more effective e-commerce-channel. Currently, e-commerce accounts for more than $60 billion per year, but that is a paltry 1.7 percent of the total retail expenditures. Experts expect this to grow to 12 percent, nearly $430 billion dollars, by 2010.[3] This represents significant growth in consumer use as well as a matching back-end infrastructure build-out.

[3] http://www.clickz.com/stats/markets/retailing/article.php/3401181.

E-commerce shifts the balance of power from the retailer to the consumer (although the retailer also experiences many gains). Web-based shopping gives consumers nearly an endless set of tools for

  • Price comparison of competing retailers

  • Competition between shipping methods and cost

  • Formal and informal product comparisons

In general, e-commerce gives us the time and the freedom to be better-informed shoppers. It is an environment where we vote with our dollars. E-commerce is good for retailers, too. The information they can glean from a Web-based shopping experience is all electronic, and gathering this data does not require video cameras, RFID tags in stores, etc. For example, when a shopper is referred to a Web site via a search engine, the site gets what is called a "referrer" header in the HTTP transaction. This enables the retailer to better track how its customers got to its site and where they are coming from.

After the shopper is on a Web site, the retailer can track not only how much time a shopper spends on any given Web page, but also how often the shopper puts things into and takes thing out of an electronic shopping cart, and even how often the shopper completely abandons a cart (easy to do on the Web, whereas it is more intimidating at a brick-and-mortar store). Conversion rates are still appropriately measured (that is, how often a basket of items turns into a real purchase), along with other metrics as well, yielding data that goes far beyond what can be gathered in-storedata that helps retailers better understand the effects of their marketing campaigns. Many sites solicit feedback and ask questions that help them get closer to the consumer, and consumers are more willing to provide information when it is just a matter of clicking a check box or selecting a pull-down rating level. Because there is no physical interaction, all the interaction is electronic, and thus quite naturally in a form to be scrutinized and analyzed and cross-correlated with other data streams.

Are retailers with a presence in shopping malls suffering as a result of the rise of e-commerce? Not now, at least according to parking and foot-traffic measurements. Shopping malls are becoming more and more a social and entertainment experience. Perhaps the new-found freedom of fewer in-office work hours and increased personal efficiencies made possible by cell based e-mail and messaging have given people both the time and the need for casual physical shopping experiences. Many consumers now spend time in malls "taking in" the new fashions and getting an understanding of prices and trends and simply just meandering about. A percentage of these consumers, who relish the convenience and shop-on-your-terms experience of e-commerce, will then choose to purchase online at a later time.

Over time, however, the Web's vast array of information and efficiencies may not eliminate storefronts, but perhaps will reduce their numbers. Shopping malls (and the stores themselves) might get physically much larger, but quite possibly fewer and further apart, which may make them even more of a "destination" (much like a theme park). Or, perhaps the larger retail stores of the future will survive with less square footage and personnel, given that the educated consumers has first learned most of what they need to know ahead of time. In either case, the physical shopping experience for many products appears to be here for a whilealbeit augmented with the virtual one. The Web adds convenience and expediency, but is not a total replacement. (We have to do something with all the time Inescapable Data technology saves us, and strolling the aisles is among those sustaining distractions.)



    Inescapable Data. Harnessing the Power of Convergence
    Inescapable Data: Harnessing the Power of Convergence (paperback)
    ISBN: 0137026730
    EAN: 2147483647
    Year: 2005
    Pages: 159

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