EcommerceBytes-NewsFlash, Number 2974 - January 08, 2013     1 of 3

Online Selling Trends 2013 Part 1: Challenges, Opportunities

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What lies ahead for online retailers in 2013? EcommerceBytes kicks off the second annual Online Selling Trends feature in which we interview a panel of ecommerce industry experts on the biggest challenges and opportunities facing sellers.

The panel of eight experts represents diverse perspectives, from Google Shopping's Sameer Samat to former CEO of Etsy Maria Thomas. In addition to marketplaces and ecommerce platforms, the panel includes experts in online and mobile payments, shipping, strategy and venture capital.

Each panelist had the option of which nine issues they wished to tackle, and there was no constraint as the length of their responses. Last year's Online Selling Trends featured a different panel who answered questions in a 4-part series. Part 1 of 2012 Trends is available on this page.

This year's panel tackles questions about challenges and opportunities for online sellers, featured here in Part 1, and they'll address additional issues over the course of the week.

Axios Ventures founder and former Etsy CEO Maria Thomas (Online marketplace, angel investor)
Braintree CEO Bill Ready (Online and mobile payments)
Demandware Solutions Marketing Lead Gary Lombardo (Ecommerce platform)
DYMO Endicia co-founder and General Manager Amine Khechfe (Shipping service)
Google Shopping VP Product Management Sameer Samat (Shopping search platform)
One Million by One Million (1M/1M) founder Sramana Mitra (Global virtual incubator)
ShopRunner Chief Strategy Officer Fiona Dias (Members-only shopping service)
TIAS.com founder and CEO Phillip Davies (Antiques and collectibles marketplace)

In part one of this series, we look at the challenges facing online sellers in 2013 and the biggest opportunities ahead.

What are the biggest challenges you see online sellers facing in 2013?

DYMO Endicia General Manager Amine Khechfe: What I see in 2013 really started in 2012 and earlier is the whole concept of free shipping. If you think back a number of years ago, we expected to pay for shipping. Free shipping is really compressing the profits for the online sellers, they have to look at all those shipping options to optimize their costs.

For example, in our world, we work with the Postal Service a lot of under 5 lbs and B2C. But sellers are going to have to get better and better about understanding where they can take advantage of things to reduce their costs - whether they are going to consolidate it, when to use first class versus priority, when to use the retail box, or flat rate - all of that.

That's from the world of shipping. From the rest of the world, getting visibility to their products is going to be important because some of the marketplaces are getting to be really big and starting to sell some things on their own. Being able to get their products to be visible enough or specialized enough to be different is going to be really important. Because we see more and more taken by some of the big marketplaces.

Another thing I noticed this year - old, traditional retail is becoming more and more competitive. Offering extended hours, store specials, to get people to come back in the store; that seems to have helped online. The stores in my area are doing a better job making the experience better for buyers. But maybe that's more of a long term threat.

One Million by One Million Founder Sramana Mitra: Clutter. The Internet is very cluttered and crowded. Differentiating and rising above the noise remains a massive and escalating challenge.

ShopRunner Chief Strategy Officer Fiona Dias: Free (ground) Shipping Day is just not that compelling any more. Retailers need to offer much more to be competitive. Slow, free shipping is inadequate. Consumers expect fast and free shipping and to receive their packages in a couple of days. They also expect free and easy shipping on returns.

The best and fastest growing retailers offer free, fast, and easy shipping both ways,...and not one day a year, but every day.

Retailers who make it hard to return products risk losing customers.

TIAS.com CEO Phillip Davies: I would venture to say that for most ecommerce sites, Google search results are either the primary source of traffic or one of the top five. Many ecommerce sites that have relied almost exclusively on Google for driving sales and traffic have been burned over the past few years as Google continues to dramatically alter their ranking algorithm causing ongoing problems for many online merchants.

After the Panda and Penguin Google updates, many small reputable, ecommerce sites were forced to close or restructure their business as traffic and sales dropped dramatically.

I believe that in 2013, more merchants will put marketing resources into finding alternative traffic and sales sources for their websites. They will try to minimize their reliance on Google as their primary source of traffic.

Demandware Solutions Marketing Lead Gary Lombardo: I discuss six digital commerce shopping trends to watch in 2013 in a recent post on the Demandware blog. I think the biggest challenges are inverse of the trends I outline: how to make stores nimble and intelligent; how to converge store and online systems, etc.

What are the biggest opportunities for sellers (and marketplaces) ahead?

Axios Ventures Founder Maria Thomas: Lowering barriers of entry creates more opportunities. In 2013, sellers and individual service providers looking to build online storefronts can expect more choice, more ease, more features and - in general - lower barriers of entry to establishing an online presence.

Beyond the well-known marketplaces (Amazon, eBay and Etsy), some noteworthy companies focused on helping SMBs set up shops include: Shopify, StoreEnvy, SpreeCommerce, and WooCommerce (ecommerce plug-in for WordPress).

For individual service providers - especially for those selling their time and unique skills - some companies leading the way include TaskRabbit, Content.ly, ODesk and SideTour (disclosure: I am a minor investor in SideTour).

A discussion of platforms must also include Facebook. Many businesses, particularly larger businesses, have mixed experiences setting up storefronts on Facebook. Facebook doesn't have a coherent strategy in this area and it doesn't promote "shops." Still, many small businesses are experimenting and some are seeing positive results.

A few examples are: Voltaire Diamonds, LollyWallyDoodle, Spring Wools, and Got What It Cakes. Payvment, a Facebook commerce enabler, offers tools to help businesses create a Facebook storefront with a shopping cart and promotions like discounts and coupons.

To the extent sellers are using multiple platforms, they will need reliable systems to manage inventory across many sites and to market goods through many channels.

In 2013, I wouldn't be surprised to see new services emerge that help sellers seamlessly manage inventory, marketing, and accounting across these multiple points of presence.

Braintree CEO Bill Ready: Mobile is both an opportunity and a threat for merchants going into 2013, and merchants who are not optimized for mobile will miss out on a large number of profits.

Vendors who see the opportunity mobile presents and take action to capitalize on this opportunity will be the winners in 2013. For example, 27-31% of Braintree's Cyber Monday purchasing volume occurred on a mobile device (two times the ecommerce industry average, according to a recent IBM study) vs. 20% in 2011.

Braintree's clients, such as HotelTonight, ModCloth and Fab, are some of the early adopters of mobile optimization which proved successful in terms of purchasing this holiday shopping season. As consumer spending behavior shifts to mobile, vendors must adjust their online strategy to stay ahead.

Demandware Solutions Marketing Lead Gary Lombardo: The arrival of more intelligent, digitally-oriented, destination-based stores; the continued decline of the incredibly shrinking Point of Sale (POS); the arrival of smarter mobile shopping experiences; the emergence of the elusive digital wallet; the rise in new services to combat the "Amazon effect"; and the extension of personalized social commerce into the physical world.

DYMO Endicia General Manager Amine Khechfe: One of the biggest opportunities for sellers in 2013 deals with what I said before: being able to take your product differentiated enough - customize it, differentiate it - be able to stand out.

Doing something unique and optimizing your product, knowing how to do search marketing, those things, so you are not just a SKU on Amazon. Literally, you've got to be a little better than that.

And look for some of the specialized marketplaces. What's interesting is that three years ago we thought it had to be on eBay or Amazon. But Etsy's got its own following, and I think that's an interesting example of a marketplace that you can differentiate yourself with.

But it's both a challenge and an opportunity. With Etsy, you can only list there if you create the product. Yes, it's a challenge if you're sourcing your product from somewhere else. But then it's an opportunity if you're making your product.

You have to find your niche, because if you're only competing on cost, it's hard right now. You need that differentiation. There are so many online sellers out there who have a creative touch to their product or service that differentiates them so they're not just being shopped for price.

One Million by One Million Founder Sramana Mitra: Really sharp positioning. Instead of selling randomly, focusing on a category with a well thought through merchandising strategy is key.

ShopRunner Chief Strategy Officer Fiona Dias: As ecommerce grows exponentially, so does consumer expectations. Many retailers find it hard to compete with giants like Amazon and Walmart. ShopRunner's unique network solution powers customer acquisition and retention for retailers, enabling them to be competitive with consumer benefits like unlimited free 2-day shipping, but in an economically viable way.

TIAS.com CEO Phillip Davies: We are seeing dramatic increases in traffic and sales from portable devices. Although our system is compatible with smartphones and tablets, we want to make it even easier for both buyers AND sellers to use these devices on our system.

Imagine uploading your smartphone as the ultimate tool for photographing, captioning, pricing and uploading an item in just seconds. Simple easy to use smartphone apps for buying and selling will be the future of online marketplaces. At TIAS, we hope to spearhead that trend.

What Do You Think?
Part two of this series will tackle the issue of Cross Border Trade and how important it is for sellers to actively engage in selling to international markets, as well as the emerging trend of same-day delivery.

If you'd like to comment on these experts' answers or if you have your own thoughts about the challenges you face this year, let us know by participating in the discussion thread on the EcommerceBytes Blog.

Parts 2, 3 and 4 are now available:

Selling Internationally and Same Day Delivery

Mobile Shopping and Social Networking Impact on Sellers

Legal Issues and Boosting Traffic

Comment on the EcommerceBytes Blog.


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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