Since 2000, e-commerce has more than tripled (a compound annual growth rate of 19%). And over the next ten years, Goldman Sachs projects e-commerce growth to be five times the rate of traditional retailing (CAGR 15% e-commerce vs. CAGR 3% traditional retail). E-commerce sales will reach $624.17 billion in 2020, as offline sales reach $3.64 trillion. This makes e-commerce equal to 17% of total U.S. retail sales in 2020, up from a current 5-6 percent of retail sales.
Bottom line: retailers need to be ready to support booming e-commerce sales.
We also see retail mindsets shifting. 90%+ of senior retail executives in a recent KPMG survey cited "product innovations" and "innovative merchandising strategies" (which includes online and mobile internet shopping) as their biggest revenue drivers over the next three years.
Analysts and retailers alike are recognizing the strategic importance of e-commerce.
Such significant shifts in channel sales require long-term foresight and technology evaluation. It requires looking at how to support future customer needs. It requires budget changes - cutting technology spend in slower channels and ramping up funding in fast-growth areas. Retailers need to ask themselves:
- What does our customer base look like in 2015? 2020? (customer intelligence)?
- What are the most effective ways to drive these future users to our site (marketing)?
- What are our biggest e-commerce platform needs (user experience)?
- What are our biggest sales needs (conversion)?
- What are our biggest payment needs (transactions)?
Likewise, e-commerce technology vendors need to be looking to the future. Product development needs to hone in on 2015 and 2020 retailer needs.
Of course, this is easier said than done. Retailers spend millions on customer intelligence activities, and its really quite impossible to predict the future - especially within the confines roller coaster economy. But there are still some sure-fire bets that retailers and platforms can make.
In my subsequent posts, I'll speak to these trends. Next up: "What does your customer base look like in 2020?"
