Brick-and-mortar retail stores selling everything from clothing to high-ticket items like flat-screen TVs will turn into warehouses where consumers can touch and feel the merchandise. Web sites, supported by search engines and site search, will become the cash cow for the retail store. Advertisers will have more of an opportunity to address consumers because many will spend the time online that they would have spent in the store. Tracking sales and pulling in data from social sites to target consumers with specific ads, coupons and discounts will become much easier for marketers.
Google has already begun to turn the search results page into a comparison shopping engine with Product Extensions, detailed in a post on the Clix Marketing PPC Blog. Product Extensions marries a retailer's AdWords campaigns with the product feed from its Web site. The feed contains images, prices and detailed product information via Google Base.
Clix Marketing CEO David Szetela says moving sales online is inevitable. "It's not only feasible, but it could be driven by the brick-and-mortar stores," he says. "No one wants to ship around a big LCD from one warehouse to another. They would much rather ship it to a consumer."
While online sales growth has slowed since 2003, overall sales continue to rise. Online sales during the months of November and December 2009 are expected to climb 8% to $44.7 billion this year, compared with 2008, according to Forrester Research.
There are several reasons retailers would want to move sales online. For starters, it's less expensive to sell that way. Retailers can stock less inventory. Most well-run online sites pass on the order to a fulfillment house or manufacturer. That can mean 100% margin when drop-shipping the order, says Sucharita Mulpuru, Forrester principal analyst.
Sales on the Web have been outpacing store sales for several years. In fact, online divisions of multichannel retailers typically outpace their brick-and-mortar counterparts by between 20% and 30%, Mulpuru says. "It should be cheaper to transact business online," she adds. "You don't have to pay for visual merchandise or for physical stores."
Chris O'Neill, retail director at Google, says this year retailers took a more aggressive approach on Cyber Monday, moving bargains and sales online earlier than in prior years. Consumer electronics, which accounts for roughly 28% of all online sales, should reach about 35% within two years, he says, citing data from Forrester. Some Web companies, like Amazon, are as much about excellence in the supply chain as they are about marketing and customer service, O'Neill says. "It's a story that covers many important business points," he says. "Retailers like Wal-Mart pioneered something called cross-dock. Amazon has figured out how to do this in the ecommerce world."
Cross dock saves a step in the distribution process when items received at the warehouse get unloaded from the truck. Instead of being stored at the warehouse, the merchandise is immediately prepared for shipment to another location, such as the consumer's home.
And, notes O'Neill, "You will start to see more retailers tap into trends like printable coupons -- not reacting to it, but riding the wave by understanding what this really means."
Commerce will grow up with its consumers. The trend toward multichannel sales powered by search engines can be found in the lexicon used today by teenagers. O'Neill says that when teenagers talk about their phone or buying something online, they don't talk about their mobile phone, or ecommerce. Teenagers don't differentiate between buying online and buying in a brick-and-mortar location.
EMarketer Senior Analyst Jeffrey Grau says store-based retailers will compete more aggressively against Amazon and other pure plays in 2010 as they turn to the Internet as a source of growth. "They must be envious of Amazon's strong 2009 sales growth figures," he says.