Dec. 23, 2016
By Mike Shapaker
2016 was an interesting year in retail. Many traditional, established brands died a bricks and mortar death, outpaced by the changing role of e-commerce in today's digital economy. While many thought this signaled the demise of the physical store once and for all, some pure play etailers then shifted their clicks to bricks, perpetuating the age old debate of online versus in-store.
Amid the confusion of whether or not the digital age has a place for the high street, online retailers kicked their tactics up a gear, in response to appetite from the time-poor, brand promiscuous consumer. Mobile came into its own this year, as shoppers flocked from their desktops to their smartphones and tablets to browse and purchase from their favorite brands. As a result, retailers were forced to look at more mobile-friendly tactics to engage an ever-distracted audience; mobile apps, social networks and snackable content.
Given increasing consumer demands and the evolving retail landscape, here are challenges and opportunities that await brands in 2017.
Mobile sets the pace for online shopping
More services than ever are available to consumers on the go, via mobile, and retail is no different. Over the past two years, mobile has come into its own as a dominant force and driver for retail growth, dethroning the desktop as the device of choice for searching and purchasing goods online. For the first time this year, 50 percent of all online retail orders during the Black Friday / Cyber Monday period took place on mobiles or tablets.
Consumers' appetite for shopping on mobile devices will continue into 2017 and beyond and this will have huge implications for brands, especially those that don't currently offer mobile-optimized websites or dedicated mobile apps. Unfortunately these retailers are not long for the world if they are not adapting to this change in shopping behavior.
2017 will likely see an increasing number of retailers offering a more personalized retail experience via mobile. This could include strategies like using geolocation to push personalized offers to a shopper’s device, or taking advantage of marketplaces that do have mobile optimized websites or apps. Retailers will also need to adapt their content strategies in tandem to ensure consumers’ attention is held as they flit from website to website on their small screens.
Experiments in social media
2016 saw a growing number of retailers experimenting with new social media strategies, particularly around the festive period. We expect this experimentation with social platforms to continue next year, all year round.
A key trend from 2016 was the use of Facebook Dynamic Ads to retarget consumers and promote products based on the previous actions of the shopper through the website. We recently conducted some research amongst U.K. retailers, which found that Facebook Dynamic Ads have become one of the key strategies for reaching and converting those all-important sales through social media during the Christmas period. This comes as no surprise as these ads reduce the need to configure thousands of individual ads and brands can reach an immense number of users on a personalized level.
The use of dynamic ads on platforms like Facebook will continue in 2017, as advertising on these platforms also allows retailers to trial more ways to offer an interactive shopping experience. In the same way that Amazon is dominating the marketplace space, Facebook and Google have become the leaders in social media advertising, having adapted to mobile very strongly. In 2017, we'll see the likes of Facebook and Instagram taking things a step further in social commerce, with the ability for retailers to tag products in photos and make them instantly buyable. While we might not be at the point where significant commerce can be driven from such tactics, we'll continue to see social experimentation — for advertising or marketing — at the forefront of retailers' minds in 2017.
Fast and free delivery is here to stay
Fifty-three percent of consumers say free shipping is an important factor when figuring out where to buy. Many of those consumers will no doubt turn to Amazon, which has set the bar high when it comes to delivery. Ordering via the site means consumers can now opt to receive their order on the same day as making a purchase. This Amazon Prime option comes with a fee, yet the marketplace's one- and two-day delivery options are in many cases free of charge. The 'Cyber Five' shopping days over Black Friday weekend, for example, saw 80 percent of marketplace orders shipped for free.
This has established the dual consumer expectation for fast and free delivery. Amazon's free shipping may have begun as a novelty, but with free shipping now commonplace, in 2017 it will be those retailers who fail to offer this that will be considered the odd ones out.
In addition to free shipping, consumers will demand greater control over the time and date of their delivery. Having to stay in for a delivery with a broad time window, or missing a delivery and having to pick it up elsewhere present barriers to buying. It is therefore those retailers who extend the personalization of the shopping experience to the options for delivery who will stand out in 2017.
Marketplaces become a second home for retailers
Over a third of consumers now begin their online shopping search on Amazon, and the size and scope of the marketplace means this is hardly surprising. In Q4 2016 the marketplace represented 51 percent of all retail growth in the U.S., and Amazon's growth will show no sign of slowing in 2017.
Many smaller retailers have in the past viewed this as a challenge, however, the growth of marketplaces like Amazon and the convenience they offer the consumer means that they should be embraced by retailers as another way to drive sales. In 2017 more retailers will take advantage of the popularity of marketplaces and form new partnerships. By paying for Fulfilment by Amazon, retailers stand to make use of its huge distribution and logistics services, and access a wider pool of consumers who may not have headed directly to a retailer's own platform.
As a challenge to this, 2017 will likely see the creation of more niche marketplace platforms which offer a select range of products. These may benefit high-end retailers, but those looking to boost profits next year should regard Amazon and other major players as friends, not foe.
Mike Shapaker is vice president and managing director, EMEA, ChannelAdvisor, where he is responsible for developing the company’s local strategy and direction for growth. He previously held the position of vice president of brands and manufacturers at ChannelAdvisor, where he was responsible for leading the ChannelAdvisor for Brands initiative. Prior to joining ChannelAdvisor, he held leadership roles in product management and marketing at Nortel Networks and TheraSim. He began his career as a consultant at Booz Allen Hamilton. He received a Bachelor of Science in electrical engineering from Virginia Tech and a Master of Business Administration from Vanderbilt University.