Q&A: E-Commerce Waits Out The Age of Amazon

It’s that magical time in the retail industry calendar, when the disappointments of Holiday, ’15, have been tallied, and the pep rally of the National Retail Federation’s “Big Show” is wrapping up.

While stores struggle to reconcile slower growth in physical outlets with continued strength in online shopping, Forrester is predicting that this year, foot traffic in stores will continue to fall. (Last year, it dropped between 7 and 10%.) But since customers are more likely to be walking into malls primed with preferences gleaned online, “conversion rates and average order values will increase,” a balance it says has become “the new normal.”

Marketing Daily caught up with Forrester’s Sucharita Mulpuru, who follows e-commerce closely, for more insights.

Q. What changes are ahead?

A. Not many. E-commerce is growing at a low double-digit rate, and has been for several years, and I don’t anticipate that changing. Consumers now prefer to buy more often, and from more categories. And we continue to see the shift from desktop to mobile, in terms of traffic and even sales. I don’t think that’s going to change. And you’ll see Amazon continue to dominate the e-commerce landscape.

Q. Which companies are in the best position to compete against Amazon?

A. None. I think companies have to look at Amazon the same way we all saw Wal-Mart back in the mid- 1990s. It seemed unbeatable. You just weather the storm and wait for the next big disruption, because it is so dominant in everything it does. If you are in that space, you’re likely facing the most competitive headwinds you have ever seen. Jet.com is out trying to compete, but it’s just a little start-up. To me, the bigger question is what happens to Amazon next.

Q. What’s your prediction?

A. Amazon is incredibly innovative, and there are many high expectations. A lot of its biggest successes have been outside retail, in cloud, for example, or advertising, or hardware, like the Echo and Kindle. These businesses are more lucrative than retail, and growing faster. 

I think Amazon is ultimately going to find more success in these other businesses, and that is the path for the future. Gradually, we may start to see that Amazon doesn’t need retail as much as it has in the past. It can start changing the business model, and raise prices, so it becomes a little less competitive. And that may finally give other retailers some breathing room. 

Q. What changes are retailers making now?

A. They are working on a new kind of blocking and tackling, investing more in omnichannel, or seamless commerce. Many companies thought they were doing well, and mobile came in and kind of threw a curve ball. So now they are rethinking some pages in terms of a “mobile first” standpoint.

Q. Are they focusing more on creating a differentiated experience?

A. The good ones are focusing on the customer experience first. If collecting and using personalized data can enhance that initiative, that’s fabulous. Sending alerts that packages are ready for pickup, for example, is more focused on the customers’ needs. Retailers should ask themselves, “What is useful to our customers?’”rather than focusing on what is easiest for them.

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