Time To Get Serious About E-commerce

ComScore recently reported that the first 34 days of the 2011 holiday shopping season reached $20 billion in online sales, a 15% increase from last year. This good news has many marketers dancing with glee, knowing they are well positioned to take advantage of the flurry of e-commerce activity.

Others, however, spent the days leading up to the holiday anxiously wondering how best to capture their share of the growing online retail pie. For many, their anxiety is well placed: although brands have long talked about getting serious about online commerce, they have only recently begun to put their money where their mouse is.

Take Target for example. As recently as late 2009, a Conductor study found Target acquired nearly half its online search traffic by purchasing it from Google: 47% of online search traffic came from paid search at an exorbitant cost of nearly $300,000 per day for that traffic.



This, while comScore states up to 92% of clicks occur in natural search (not Paid) and studies by The Center for the Digital Future say half of Internet users never even click on Web advertising.

(By way of comparison, Target's nearest brick-and-mortar competitor, Walmart, obtained 91% of its traffic from natural search traffic while spending less than $25,000 per day for the nine percent of their traffic that is paid.)

To make matters worse, analysis at the time showed Target was wasting up to $10,000 per day on Google Adwords advertising for products it didn’t even carry.

Primed for Change

Blindly throwing money at the e-commerce problem is a tactic that is increasingly falling out of favor with most major brands. With the explosive growth of online commerce, the stakes have never been higher for retailers. According to comScore, between 2004 and 2010, U.S. retail e-commerce spending grew from $66 billion to $142 billion. This year, the total is expected to jump to $162 billion.

Perhaps the most sobering statistic has arguably been the strongest catalyst for change -- forcing brands to view the online channel on equal terms with its brick-and-mortar counterpart and take e-commerce seriously. According to Deloitte, one-third of U.S. shoppers' holiday purchases will be ordered online this year. In the last two years, the separation in growth rates between online and retail sales has continuously widened, as e-commerce growth rates trend up while retail trends down. The era of e-commerce has arrived.

So How are Brands Getting Serious About E-Commerce?

Dedicated Resources

The first way brands are showing they are finally taking e-commerce seriously is by the resources they are devoting to it. No less than The Wall Street Journal recently reported on the phenomenon of retailers bringing on executives to head their e-commerce initiatives. Wal-Mart plans to announce a new CEO of global e-commerce in January, and Kohl’s is bringing on a new senior vice president to head e-commerce. “For us to be successful, we have to increase the amount of dedicated executives devoted just to the digital world pretty dramatically,” says Kohl’s CEO Kevin Mansell.

The rush to bring on e-commerce executives, the article goes on to say, has been so dramatic that e-commerce heads that once earned $50,000 to $100,000 and were relegated to the back office or tech support are now commanding between $300,0000 and $500,0000 and have joined the C-suite. E-commerce superstars can earn more than $1 million in annual compensation.

(Go ahead. I’ll wait while you check to see if there’s any way your resume can be tuned to reflect e-commerce experience.)

Focus Extends Beyond the C-Suite … From CEO to SEO

The increased emphasis on e-commerce has brands giving attention to more than just the executive suite. In focusing on natural search engine visibility -- the online channel that offers the largest potential for organic, recurring traffic -- brands are increasingly devoting resources focused entirely on growing natural search as a channel. A recent study we did found that companies with in-house SEO resources among the Internet Retailer 500 grew by 24% in the second half of 2010.

Brands Move to Mature Tools

In addition to growing resources devoted to e-commerce, brands are also reaching for the tools that will equip them to become serious players in the e-commerce arena. As a SEO company, we have watched brands evolve over the last 12-18 months from managing their most important online channel in an Excel spreadsheet to utilizing a full-featured, automation-enabled SEO platform. Today, more than 500 brands use an enterprise SEO platform of some kind to manage the most important online channel in their e-commerce efforts.

Conclusion: Get Serious, Or Get Left Behind

Clearly the writing has been on the wall for some time now: much of consumer purchasing is moving online. If the staggering growth in online sales we’ve seen so far this holiday season is any indication of what’s to come, we are headed for another record-breaking year online. So while it may have been okay for brands to dabble in e-commerce until now, 2012 will prove itself to be the year brands start taking e-commerce seriously: by getting themselves the resources, the tools, and the education they need to succeed.

Remember our major national retailer? Today, its Paid search spend is one-tenth of what it was in late 2009, they no longer throw away money advertising on products they don’t stock, and their online traffic acquisition is a far more proportioned 80/20 natural/paid split. It is also hiring a new president of its .com division to stabilize e-commerce after a recent painful Website crash.

So if you are a brand or a retailer and are not yet taking e-commerce seriously (and for many, it may take some real soul-searching to determine if that is, in fact, the case), make a decision to start doing so in 2012. Or you may soon find yourself left behind by your more mature competitors.

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