EcommerceBytes-NewsFlash, Number 2977 - January 11, 2013     1 of 5

Online Selling Trends Part 4: Legal Issues and Boosting Traffic

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Online Selling Trends concludes with our panel discussing what regulatory and legal issues online sellers will face in 2013; where merchants should be focusing in terms of getting traffic; and their parting thoughts on ecommerce trends for the New Year - from shipping, to mobile, to returns.

So far our panel of experts have weighed in on the challenges and opportunities online sellers face in 2013 in Part 1, available on this page, about selling internationally and same-day delivery in Part 2, available on this page, and about the impact mobile shopping and social networking will have on online sellers in Part 3, available on this page.

Our panelists include:

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)

Amazon has joined large retail chains lobbying for a federal law to resolve the online sales tax debate. Congress is facing a delayed fiscal cliff debate in 2 months. The New Year brings lots of potential for new regulation and laws that could affect retailers and small businesses.

Our panelists weigh in on the issues. "The politics of debt and deficit will catch up with merchants as it unravels," says 1M/1M founder Sramana Mitra.

They also address where merchants should be focusing in terms of getting traffic, and share their thoughts about ecommerce in the year ahead.

There are always regulatory/legal issues around selling online (state sales tax, Form 1099K, etc.) - what could have an impact on merchants in 2013?

Demandware Solutions Marketing Lead Gary Lombardo: Clearly, the two biggest are the current debate on the fiscal cliff and the taxing of online sales by major online sites, namely Amazon.

The fiscal cliff is a macro issue that would impact consumer spending, and hence retailers. My guess is that we'll see a solution and this will be averted as a major issue for consumers and retailers.

Amazon's taxing of online sales will be mushrooming issue (Amazon has agreed to put a sales tax on purchases in Massachusetts), and could have a great trickle through effect to other states and other online sites that are tax free at the moment. We've always said it's a matter of time and with the need to find more revenue by the government, it may be an issue in 2013.

One Million by One Million Founder Sramana Mitra: Depends on whether the US ends up issuing VAT (value added tax). The politics of debt and deficit will catch up with merchants as it unravels.

TIAS.com CEO Phillip Davies: Local sales tax. What is local?

Where should merchants be focusing in terms of getting traffic?

Demandware Solutions Marketing Lead Gary Lombardo: The real answer is it depends upon the retailer and their consumer...that stated, if we were to generalize and if I were allocating the spend on marketing to drive site traffic, I would allocate 50% to SEO/SEM, 30% to marketplaces/CSEs, 10% to online ads, and 10% to "other" (i.e. email).

Google and other search engines drive an incredible amount of traffic and are typically the first place shoppers begin. However, marketplaces (such as Amazon) and CSEs (such as Google Shopping) also have a big level of influence, so they warrant a lot of attention.

One Million by One Million Founder Sramana Mitra: I am a huge fan of SEO, especially content marketing as a mechanism for SEO.

TIAS.com CEO Phillip Davies: Merchants should test different venues to drive traffic and sales. If you don't adapt to market trends, your business will suffer.

Any other thoughts about ecommerce in the year ahead?

Axios Ventures Founder Maria Thomas: Yes, the increasing integration of ecommerce models under one brand. Amazon is, of course, the poster child for this approach: it's a classic 1.0 e-tailer (controls customer experience by holding and distributing inventory), a marketplace, local deals provider and distributor, and - via MyHabit.com - a private/flash sales retailer.

There are other examples too: Asos in the U.K. is a traditional e-tailer but it recently added a marketplace serving both boutiques and individuals who want to sell new or used items. In 2012, One King's Lane introduced Vintage and Market Finds, a dedicated part of the site where verified third parties can sell product. Now, about 25% of the products on OKL are third party products - that is, sold not by OKL but direct from third parties.

Men's street ware site, KarmaLoop's, also operates a marketplace called Kazbah. West Elm extended its business models to include the West Elm Market and Collaborators.

In general, the idea is to diversify revenues and add higher margin businesses to the mix by leveraging existing traffic and presenting more items from different sellers.

DYMO Endicia General Manager Amine Khechfe: Looking at numbers and the economy, it's pretty stunning. I still see the growth.

I do think that for the smaller sellers, knowing how to differentiate themselves is going to be key, because you have a lot more big players today than when we all started way back.

Learning how to work within those niches, whether it's same day on one side or free shipping on the other.

Really knowing all your shipping options and your rates and how to optimize your shipping mix, is really important. Know your customer.

When we were smaller my motto was, diversify, because I had to protect myself from those downturns and insulate from one big problem. This is where you add global to the mix because it helps diversify your income and insulate yourself from downturns in the economy versus another.

Is 2013 going to be a good year for ecommerce? Yes, I'm totally bought in.

Google Shopping VP of Product Management Sameer Samat: Consumer behavior is not a funnel anymore; it's a flight path. According to our research, 44% of users research online and buy products online, 51% research online and visit store to purchase, 17% visit a store first and then purchase online - 32% research online, visit a store to view the product, then purchase online.

Shoppers are savvier than ever, and successful ecommerce players will need to help them stay informed and create a better user experience than ever in order to compete in a competitive marketplace.

One Million by One Million Founder Sramana Mitra: Niche ecommerce will continue to see huge momentum.

ShopRunner Chief Strategy Officer Fiona Dias: Online returns are an essential but often overlooked aspect of online shopping. Retailers need to look at the entire shopping process, including returns, and make it friction-less or risk losing customers to competitors who have superior customer experiences.

While there has been much anecdotal evidence, a recent Washington and Lee University study showed that customers who were required to pay for their own returns universally decreased their spending at that retailer between 75% and 100%. Conversely, customers who received free return shipping universally increased their spending with that retailer between 158% and 457%. That's a clear indication for retailers to get on board with free shipping on returns, and not just free shipping on purchases.

ShopRunner recently conducted a study and found that 81% of online shoppers are unlikely to purchase again from retailers who charge them for return shipping. That's a dire consequence for retailers who must stop viewing returns as a necessary "evil," but rather an opportunity to build a long-term relationship with their customers.

Demandware Solutions Marketing Lead Gary Lombardo: Nope, just that it's going to be an exciting year!

What Do You Think?
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.

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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