eMarketer: What's the mood of online retailers based on what you saw at the Shop.org Annual Summit in September?
Scott Silverman: Online retailers remain enthused about the industry. Growth is still strong, and there is a talent shortage in the industry. It’s always nice to feel wanted.
eMarketer: Any major shifts in e-commerce since last year?
Mr. Silverman: The idea that the growth of new online shoppers is slowing down is beginning to sink in and retailers are beginning to make adjustments. Primarily they are shifting their investment from customer acquisition to customer retention.
eMarketer: Is e-commerce accounting for a larger slice of the overall retail pie? What's its share vis-a-vis other channels such as stores, catalogs and television?
Mr. Silverman: E-commerce in 2007 will be more than 9% of total retail, which is up from less than 3% in 2001. Additionally, the Internet continues to influence sales in offline channels, strengthening traditional store brands as well as catalogers.
eMarketer: What's the anticipated e-commerce spend and percentage growth for 2007? How much was spent on e-commerce in 2006?
Mr. Silverman: E-commerce is expected to grow to $259 billion in 2007, an increase of 18% from 2006's $220 billion.
eMarketer: What does the growth in spending say for e-commerce?
Mr. Silverman: People are feeling more comfortable shopping online and using the Internet to research, compare prices and shop. This creates a bit of a Catch-22 for retailers, though. As our customers become more comfortable online they start expecting more from us.
Smart retailers will not be sitting on their laurels. They will continue to invest in sophisticated customer service options like live chat, provide additional product detail and imagery on their sites, and keep customers coming back with social networking and Web 2.0.
eMarketer: Surely there are some ongoing concerns that retailers have.
Mr. Silverman: No matter how much retailers preach the safety of shopping online, there will continue to be a segment of the customer base that does not feel comfortable using a credit card to pay for online purchases. Retailers are responding by investing in alternative payment systems like Bill Me Later, PayPal and Google Checkout.
Additionally, with a quarter trillion dollars in sales, e-commerce is more likely to feel the effects of macroeconomic trends. If the US economy were to slow down, online retailers will definitely feel it.
Finally, the growth of online retail is hard to ignore, including by politicians. Retailers need to vigilantly monitor what’s happening on Capitol Hill and be prepared to help educate policy makers on the business impact of proposed regulations and laws.
eMarketer: Is sales tax collection in states where online retailers don't have a physical presence still an issue?
Mr. Silverman: Shop.org is continuing to monitor the movement on this issue through our parent, the National Retail Federation.
eMarketer: Are customers by and large happy with the shopping experience online? Are retailers meeting their expectations?
Mr. Silverman: Customers remain satisfied with their online shopping experiences, which is pretty impressive given the fact that the bar keeps on being raised because of ongoing innovations among online retailers.
eMarketer: Social networks and widgets are big this year. But online retailers don't seem to be buying into that. Any reason?
Mr. Silverman: Good question. Web 2.0 has been a hot topic among Shop.org members for the past two years, yet adoption of Web 2.0 applications outside of customer reviews is fairly low. At the same time, we see significant growth in consumer usage of social networks.
Of course, retailers on- and offline are certainly feeling the impact of the customer empowerment created by social media. The customer voice keeps getting stronger and retailers not listening to their customers do so at their own peril.
eMarketer: What are your expectations for this holiday season?
Mr. Silverman: We expect another strong holiday for online retailers. The National Retail Federation is forecasting a 4% increase in total retail sales because of concerns about the economy. Mature online retailers need to watch this closely.
eMarketer: Which marketing strategies and tactics seem to be working?
Mr. Silverman: Search continues to be a key marketing tactic. As retailers shift to customer retention, we can expect to see e-mail becoming a bigger priority.
One of the interesting findings in the Shop.org-Forrester Research "2007 State of Retailing Online Part 2" report, released in September, is that e-mails emphasizing new products outperform e-mails promoting sales. The Internet as a communications vehicle provides unique opportunities to develop relationships with customers.
eMarketer: Is free shipping still king?
Mr. Silverman: Unfortunately, yes. It’s become a cost of doing business. However, retailers can continue to offer free shipping with conditions. The trick is finding the right conditions that deliver value to customers and are most profitable to the retailer.
eMarketer: Any standout retail efforts that you like that other retailers should emulate?
Mr. Silverman: Enhanced product detail, whether it’s through customer reviews, rich Internet applications or other methods. Customers see the Internet as a source of information and retailers need to meet this expectation.
eMarketer: Words of advice for retailers as they go into the holiday season?
Mr. Silverman: At this point, I hope that most retailers have completed their holiday planning. That being said, my advice is very simple: Don’t underestimate the role of your customers and the importance of listening to them.
