“One customer can shop with us in so many different ways — in stores, on their phones, at home, we’ll win one customer at a e.”tim

– Doug McMillon, CEO of Wal-Mart, announcing a $1 billion investment in e-commerce


E-Commerce today is the fastest growing segment of the Retail industry. In Q1 2015, online sales accounted for 7% of total retail sales but grew by 14.5% per year over 2014. Sales Conversion FinalMeanwhile total retail sales grew by just 1.6 % a year.1 To put this in perspective, in the fiscal year 2014, Wal-Mart’s global e-commerce sales rose by 22 % to $12.2 billion while total retail sales grew by just 1.8%.2 With these numbers it’s easy to understand why a $1 billion investment in e-commerce makes sense.

However, e-commerce continues to face significant challenges and missed opportunities because the end game boils down to converting online visitors into buyers. In Q4 2014, a mere 2.84% of online visitors to e-commerce websites actually bought anything. Worse, analysis of traffic patterns showed that less than 1% of shoppers on mobile devices actually made a purchase. Even when online shoppers added items to their carts, two out of three – or 66% – did not end up completing the transaction.3


Why is Retail Missing Out on the E-Commerce Opportunity?

Simply put, most retailers just don’t meet the needs of today’s digital consumer. Fulfilling consumer needs online calls for four key capabilities that most retailers lack:

1. Precise Search. Can your consumers find what they’re looking for? Regrettably, online retail suffers from a classic case of the Goldilocks Syndrome – the porridge (or product search) is either too hot or too cold – but rarely just right for consumers! Let’s look at some examples:

  • Let’s say you wanted to buy a wireless sound system for your home. An online search for “wireless sound systems” on www.bestbuy.com will yield 1,271 results. If you tried to narrow the search by clicking “wireless” you’d narrow this down to 271 options. For comparison, a similar search on www.walmart.com would yield 13,232 results and filtering on “audio speaker systems” would get that down to 1,180 results. The overall experience would be a lot different from walking into a store where an associate would point you to the wireless sound section that holds just two major brands Bose and Sonos and talk you through the differences between them.
  • Or you could try to buy a 17-inch laptop on www.cdw.com by performing a search for “17 inch laptops” and your top ten recommendations would include five privacy filters followed by a series of laptop bags. Certainly not likely to induce anyone to buy a laptop computer!
  • Alternatively, a search for a “summer male jacket” on www.target.com may yield a women’s denim vest, a Barbie doll summer dress, and two sets of earrings. For contrast, on www.sears.com a similar search yielded a men’s cologne, four CDs, and an extension cord. Online search clearly delivers a very different experience than can be found by walking into a store and asking about summer styles in jackets.

Mobile app for fashion shopping2. Personalization. Consumers want to be treated as individuals and offered targeted products and promotions that meet their needs. However, most online consumer offers today are ignored as generic or dismissed as “spam.” You can confirm this just by looking through your Gmail and AOL accounts or even your recommendations on Facebook. It’s obvious that most retailers are unable to link and enrich disparate consumer data sources like consumer demographics, locational, loyalty and past transactional data – making targeting and personalization impossible.

3. Value. Price and value continue to be the major focus of today’s shopper who has constant access to online apps to scan and compare pricing. This level of pricing transparency erodes away the key advantage retailers had in terms of location and the ability to confuse shoppers with multiple options at different price-points. Example apps include:

  • Shop Smarter and Organize lists (www.GroceryIQ.com)
  • Access Promotions and online coupons (www.Coupons.com)
  • Consider pricing and availability options (www.RedLaser.com)

4. Omni-Channel Convenience. Today’s shoppers want to be treated individually and consistently – regardless of channel. Having a consistent view of and facilitating a seamless experience to your customers across all touchpoints in-store, online, via kiosks, mobile, digital and social media is critical to success. I’ve addressed some of these considerations in my earlier post Removing Roadblocks to Omni-Channel 360 in Retail.

To summarize: Any solution for driving e-commerce sales growth must provide consumers with superior search capability, personalized promotions, value and convenience. And it must be able to do all of this in real-time. For a$3 billion online retailer, the business case is clear: Just a 2% increase in online sales conversions, from 3% to 5%, could result in sales growth of $2 billion. So what’s holding back the retail industry?

Next week, I will discuss the challenges retailers face in meeting the needs of digital consumers and explore solutions for addressing them.

Please be sure to read my other articles in this series:

1. Big Data, Little Insight: Challenges for the Retail and Consumer Industries

2. Removing Roadblocks to Omnichannel 360 in Retail

3. Consumer 360: Reaching Each Consumer With a One-in-a-Billion Message

4. Retailers: Are You Meeting the Needs of Digital Consumers

5. Why do Retailers Miss Out on E-Commerce Opportunities?

6. Reinventing Your Retail Loyalty Program to Win

7. Build Better Retail Loyalty Programs With NoSQL


1. New York Times June 5, 2015
2. US Census Department
3. Wal-Mart’s annual report
4. Monetate E-Commerce Quarterly Q4 2014 Report

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