Today, 76% of Canadians are purchasing online - up from 51% in 2010 - and that proportion will almost certainly continue to grow. It is estimated that Canadians will spend $34 Billion online in 2016 - that’s just in B2C - and that 32% of these purchases will be made at Canadian companies.
To prosper (or survive), Canadian businesses must undergo a transformation to properly position themselves online and to cash in on online sales.As Canada’s main e-commerce agency, working with forward-thinking clients like Birks, Stokes, SAIL, Mobilia, Structube, Bentley, Dans un Jardin, Bizou, Linen Chest and Souris Mini, to name but a few, Absolunet has a front row seat when it comes to identifying upcoming trends in Canadian e-Commerce for the upcoming year.
So we did just that. Based on the digital business plans developed with our clients and on our understanding of the market, Absolunet has come up with its 10 Canadian eCommerce trends to watch out for in 2016. These are the pieces of the puzzle that every company will need to address to achieve outstanding growth online and in-store.
Click & Collect is Becoming Standard.
Depending on the types of products sold and the retailer’s network of physical stores, the proportion of consumers who prefer to pick up their purchase in store can reach up to 40%.
Better still: offering customers the option to “Purchase & Pick-Up” often increases the average purchase value. That’s right: 7% of customers who pick up their purchase in-store increase their spending while they’re on site (7% as measured in net sales). In Canada, where the prohibitive cost of residential shipping is an important challenge (the opposite is true in the U.S., where residential shipping is extremely inexpensive.), Purchase & Pick-Up becomes a win-win proposition!
Here are the main reasons why purchase & pick up is a must for Canadian retailers having a network of physical stores:
Increasing net sales by improving the average transaction, which occurs once customers are on site to pick up their purchase.
Increasing conversion rates by making it easy for the customer to get their merchandise quickly and easily.
Decreasing returns thanks to in-store exchange.
Reducing shipping expenses and improve profit margins.
A great example of Purchase & Pick-Up generating returns is Quebec children’s clothing retailer Souris-Mini. 40% of online customers choose to pick up their purchases in-store at one of the retailer’s 30 outlets.
Souris Mini loves this, as it provides them the opportunity to deepen the brand experience with the online shopper with an in-store interaction, as well as generating additional traffic.
Other Absolunet clients report similar results.
The Rise of In-Store Digital.
In a time where we are always connected, at work and at home, digital is also taking over the retail experience. Feels like a sci-fi movie? Then welcome to the future. Welcome to the dawn of “In-Store Digital”.
Not only is it possible to make an online purchase while in store, technology now makes it possible to improve the customer experience; to better serve them by creating a more personalized, customized brand experience thanks to integrated information gathering that allows retailers to better understand customers and customer behaviour.
The first phase of In-Store Digital is the increasingly common sighting of in-store advertising screens and the rising use of tablets, which make it possible to search the complete selection of products and to purchase on the spot. Tablets also make it easy to obtain the customer’s Email address, in turn making it possible to sign him or her up to the newsletter or to send them the receipt for the purchase they just completed in store.
Going forward, customization tools and possibilities will go even further to improve customer experience. Paper posters and printed displays, for example, are being replaced by connected kiosks and displays which allow real-time, contextually-relevant messages to be displayed.
Here are a few real-world examples of retailers who are innovating in-store:
Years after having implemented online purchasing in store, Aldo is prepping high-tech store updates (including customer-facing technology) for several North-American locations this fall, which will be implemented internationally in 2016 and are expected to double the size of the business over the next 5 years.
American fashion brand Rebecca Minkoff has partnered with Magento to create a « smart » dressing room. This system allows customers (who create a profile with their phone number) a fully-tailored experience which recognizes the items that were tried on in the dressing room, which ones were purchased and which ones were left behind. The store can then send updates to the client to notify her that what she tried on is now available in her size or color. Many, many more customization options are being explored for this system – think of it as “cookies” (like your Web browser) that follow you around in the real world.
Social Media Profitability!
Any doubters about social media’s powerful role in converting prospects into customers need to immediately re-evaluate their position. Like, now. Though their pure conversion rates are lower than those of organic results or Email, they are powerful tools that promote brand loyalty and are a great way to share the brand’s values. Through community-logic, social media is a valuable resource to convert curious prospects into new customers.
Great social media management can generate results that are getting closer and closer – sometimes superior - to SEM results; the paid ads (AdWords) you see on Google – no small feat.
Social platforms understand the value that they can bring to retailers. Functionalities are currently being developed to quickly guide the shopper towards a product page with the goal of converting that traffic into a sale. You may have noticed more and more “direct purchase” options popping up on social media platforms like Twitter, Pinterest and Facebook. Retailers need to move quickly to capitalize on this; once the big, established eCommerce players will have fully implemented these tools, it’s going to be a lot harder – and more expensive – to stand out.
Facebook is the source of 64% of social sales worldwide.
On Instagram, integrated applications now make it possible to go from an Instagram picture directly to a product page (Banana Republic, for example, uses stylepick).This gets even more interesting when celebrities and/or influencers promote products.
93% of pinterest users have bought something online in the last 6 months. also worth noting that pinterest is the source of 16% of all social sales. pinterest’s rich pins functionality allows retailers to fully integrate the retailer’s site, automatically synchronizing any change on the product’s page with the product’s “pin”. clicking on the pin automatically takes the shopper to the product page, optimized to convert this prospect into a sale. american retailers j.crew, gap and nordstrom were quick to capitalize on this new, exciting funnel.
All things being equal, Polyvore is the queen of all platforms. The average shopping cart, all retail partners combined, is $383. Fashion retailers Neiman Marcus and NET-A-PORTER have customized their digital marketing strategies, focusing on outfits and combinations to follow trends, sure, but especially to turn engagement into sales on their transactional sites and platforms.
Brands Creating More Content!
eCommerce sites are no longer simply online galleries or displays for brick & mortar shops, nor are they a means to a transaction; they have become a place people go to learn, be inspired and be immersed into a brand’s universe.
According to Smart Insights, content was 2015’s most important commercial trend and its importance will likely continue to take center stage for years to come. Instead of simply trying to get customers through the checkout process, brands are now producing an ever-increasing quantity of original content, which they hope will captivate their public and drive them to visit their platforms, where they can enjoy the breadth of the brand’s content and a deeper brand experience.
Furthermore, businesses are increasingly working with influencers to increase brand recognition and to positively influence perception. The product is no longer the star; it is now an element in a broader story about the product. It therefore makes sense to produce visually appealing content (video will be super important here!) to create something that people will want to share, extending your brand’s footprint.
Let’s not neglect content’s technical value for search engine optimization (SEO). A brand that operates a blog that constantly uses terms related to its industry is more likely to nudge its way to the top of search engine rankings, provided of course that the content is relevant, viewed and shared.
Structube, a furniture retailer, has generated brand awareness and interest with its “Beyond the Product” campaign, a 10-episode, video-based series on the people and stories who build the products. The images are strong and beautiful, the editing is smart and artful and the concept just works; it takes us on a beautiful, human, guided tour of a world many aren’t familiar with. It’s impossible NOT to understand the company’s values and it’s vision while we are enjoying how its products come to be (and how they look). Combined with a contextually driven lookbook that allows customers to shop by style and interest, Structube has put together a brilliant campaign.
RW&Co, a clothing retailer, struck gold with a campaign featuring hockey player (and crowd favourite) P.K. Subban’s family, a perfect example of this type of content-driven brand interaction,this case leveraging celebrity klout. The retailer’s execution was impeccable and went viral very quickly, especially since it was launched around the start of the new hockey season. Oh, what timing! The section of the site where this campaign is featured has a humorous video, a profile of each Subban brother, “shop the look” sections, campaign pictures, a “behind the scenes” ideo and several interviews. Well executed and complete. Sportium, SAIL’s new sportswear and sports equipment banner has just completed a similar campaign with Montreal’s star goalie Carey Price. Hockey players are definitely “a thing” these days!
B2B Overtaking B2C!
In Canadian e-commerce, there are 2.1 B2B transactions for every B2C transaction. Surprised? Don’t be. B2B e-commerce is growing fast and should reach $1.3 Trillion by 2020, according to Forrester Research. It’s no wonder that e-commerce powerhouses like Amazon and Alibaba are looking to gain market share in this segment, incidentally speeding up e-commerce adoption by businesses. In fact, many businesses are using these marketplaces to conduct market tests before investing in their own transactional platforms. For these reasons, Absolunet has teamed up with partners Magento and InSite to be among the first agencies in Canada to be able to truly help businesses capitalize on B2B e-commerce.
Complex pricing grids (think volume pricing, variable agreements, (extremely) vast product selection, payment options, terms and credit, etc.)
The sheer amount of products is often overwhelming and product information is not always ready for or adapted to commercialization.
Integration with aging ERP systems is often complex.
The emergence of new channels – such as marketplaces – brings new competition, along with new opportunities. This effect is compounded by new pressures on traditional distribution channels, as manufacturers are increasingly bypassing the “middle man”.
Support from the top: buy-in from upper management and/or the board is often a stumbling block, as the scale of the initial investment, combined with the difficulty involved in measuring or showing a return on investment during the first few months – let alone how it could complicate quarterly results – makes the “internal sell” a challenging one.
Get it right, though, and you can reduce the cost of processing transactions by an average of 52%, says InSite, by exploiting an efficient e-commerce setup.
Adding rich functionalities for clients helps organizations stand out from their competition and increase market share. B2B client loyalty and engagement improve as his or her supplier provides a high-quality e-commerce experience.
The Game Changer: The key is a complete integration of all of a company’s systems. This will make it easier for the organization to position itself as a smart and intuitive choice for both clients and prospects, who value a complete, end-to-end service offering and efficient processes. Know that 74% of B2B buyers look up at least half (50%) of their work-related purchases online and that 30% complete more than half their purchases (50%) online.
In short – and not unlike B2C companies – the e-commerce shift will require long-term vision. That vision, however, should take into account the decision’s lucrative potential, one rich with reduced costs and increased customer engagement.
Buroplus, a Canadian retailer of office products, has successfully integrated online B2B transactions. They provide clients with exclusive B2B services, including pre-negotiated volume pricing, product returns, the option to cancel back-orders and more. Naturally, the online account creation process is as simple as it is easy.
Globalization: More Canadian Retailers Expanding Worldwide.
The Web is borderless. This concept is not only understood by many retailers, manufacturers and distributors – it is embraced. Many, in fact, intend to leverage their eCommerce sites to expand into new markets in 2016 – a smart strategy given the breadth of options it provides, including the use of a progressive approach, which reduces the financial burden of expansion. Another advantage is the simplification of market testing, among many other advantages. This has been a hot topic of late at the office with retailers like Structube, Birks, La Vie en Rose and m0851, who are more eager than ever to grow into new geographical markets.
Exciting stuff, to be sure – but going global also brings with it a variety of new challenges: Logistical complexity (warehousing and distribution), multiple currencies, working with several taxation and regulatory issues, customs and duty, returns processing, customer service, adjusting the marketing mix (Product, Price, Placement, Promotion) to fit different markets and managing fraud, to name a few.
For this type of expansion to have the best chances of succeeding, retailers will be wise to use a “step-by-step” approach and even more importantly, a well-defined strategy that takes into account the big picture as well as the challenges inherent to selling internationally, such as understanding the particularities of each territory.
Products, fort example, must sometimes be presented differently in different markets; something that sells well in the United States may not fare so well in Asia. So too must we adapt customer service to the customs and calendars of each given region – the same is true for marketing communications – think Cyber Monday in North America or Single’s Day in China.
several canadian retailers have made the move towards international ecommerce, with many more yet to come! structube’s online showroom and store is a perfect example of a retailer who, in spite of a particular set of challenges, is successfully expanding into the american market. for a furniture retailer like structube, shipping very big, very heavy items requires some pretty serious logistics.
Birks is another great example. Shipping jewellery is delicate, serious business and many challenges awaited the iconic Canadian jeweller when they decided to expand into the American market. Leveraging a handful of physical stores in the U.S. through its Mayors subsidiary, Birks must provide an impeccable level of customer service and shipping and return policies that are both appealing and reassuring for the customer.
Product Information Management.
More and more retailers are integrating Product Information Management (PIM) systems to better manage all the information concerning their products.
The quality and depth of information available for any given product is a crucial element which helps increase conversion rates. The better the information your site provides (information, measurements/dimensions, spec sheets, etc.) and the better the media or visual support (multiple angle product pictures, video, products displayed in context, etc.), the better your conversion rates will be. Furthermore, more complete product descriptions lead to better search engine rankings.
Presenting one’s entire product selection online is another important challenge for retailers and distributors. 81% of consumers will research a product and shop around online before actually purchasing a product, whether in store or online. A retailer or distributor who doesn’t display their entire product selection can lose potential sales, which brings us to our next challenge:
Making your entire product selection available and providing rich content or information for every item is a serious challenge for any business. Retailers usually have to deal with multiple Excel spreadsheets and too often their suppliers provide poor product information. The best way to address these issues is to implement a system or solution that improves product information management. That’s where a PIM system comes in. PIM literally stands for ‘Product Information Management’.
A PIM is the ideal tool to reclaim control and better manage your product catalogue. This type of solution allows you to centralize, standardize and constantly improve/enrich product information across the board, all the while exploring merchandising options. You even have the means to broadcast that info on different channels. That’s right, it’s possible to have the same information on the eCommerce site, on marketplaces, digital displays, even on printed media – how’s THAT for uniformity and consistency?!
Furthermore, a PIM will help to reduce go-to-market time, standardize your content across different channels and improve product management. What does this mean? It means increased productivity and better conversion rates across your channels. Better still, a PIM plays an important role in product evolution, as many products evolve over time. Take fashion, for example, where there are constant changes and adjustments between the prototype and the final commercialized product. In cases like these, a PIM quickly becomes a valuable asset you can build on.
Surprisingly, PIM solutions are still a relatively unknown concept. Several forward-thinking retailers discovered PIM in 2015 and we fully expect many more to do the same in 2016!
Sail is a good example of a retailer who has successfully integrated a PIM – InRiver, in their case – into its Web infrastructure. Sail, who deals with many suppliers, wanted to grow its product offering tenfold, from 2,000 to 20,000 products. Not only has the PIM made it possible to achieve this ambitious growth target, it has also simplified the production of its printed catalogues.
Souris Mini, a children’s clothing and accessories retailer, is currently implementing a PIM. This solution will facilitate the commercialization of new products and will make it easy to broadcast or publish product information across its channels.
The Simplification of Order Processing
The past 3 years have seen Canadian retailers experience a rapid growth in online transactions, which were previously relatively low. With this increase comes the opportunity to optimize inventory, reduce shipping delays and shipping costs as well as improve order processing. In 2016, many Canadian retailers will take their first steps towards managing more orders with fewer resources.
Many Canadian retailers have multiple online or brick-and-mortar sales outlets from which their inventory is distributed. Orders, on the other hand, come from various regions across Canada and across the world. Every modern retailer dreams of having a centralized inventory and distribution that takes into account resource optimization. This may involve a "ship from store" approach, where inventory is transferred between stores and warehouses, or by “smart” order allocation, which takes multiple parameters into account (shipping costs, available human resources, parcel/package dimensions, inventory). Both situations would maximize product availability and reduce operating costs while allowing the customer to receive their order faster.
The good news is that this technology now exists! An Order Management System or OMS makes it possible to optimize order management across the board. It also encompasses the processes that make “Purchase & Pickup” possible. Reduced costs, lower shipping expenses and faster shipping – who could ask for more?
4 major OMS providers occupy much of the landscape, according to Forrester; IBM, Manhattan Associates, eBay Enterprise and Hybris. It’s worth mentioning that many retailers have their own OMS, which was developed in-house, while others have OMS-type functionalities in their ERP or POS solution. Others still prefer basic order management systems like Temando, which provides interesting features, including “Ship from store”, optimizing transport providers, optimizing package dimensions and more.
Shoe Carnival popped up (almost) overnight with a “ship from store” approach and an ecommerce site powered by eBay Enterprise. To date, over 99% of orders are shipped within 48 hours directly from the stores, instead of being limited to the distribution center.
By connecting their POS to their eCommerce platform, Benny&Co have developed a “purchase & pick up” AND a “ship from store” process that is perfectly suited to their needs. Customers can either get their meal delivered quickly or they can define at what time they will pass by the restaurant to pick it up.
Client Data For All!
Today’s consumers expect brands to be relevant and they expect them to provide a personalized experience. They want to receive Email communications that are relevant to them, to be recognized when they interact with customer service and to see merchandise that “fits their profile” when they are in-store. They want an experience that extends from one channel or context to the next. In other words, they want an omnichannel experience.
A Marketing Charts study suggests that the key elements to consider while developing your marketing strategy should include complexity, fragmentation and the degree of customer personalization, as consumers have high expectations regarding content and interactions with your brand.
To meet customer expectations, retailers and businesses who transact online must centralize and organize customer information in order to put this data to good use. A Customer relationship Management system (CRM) can help you convert your customer data into tools of mass conversion (and loyalty)!
The goal is to document customers’ purchasing history - both online and in store - in the CRM, subsequently completing each profile with the various interactions that customers have with your brand, be that newsletters, customer service, social media or any communications channel.
Getting a CRM is just the start. You need to use it and use it well! Sure, understanding B2B provisioning cycles and B2C purchasing cycles in order to send the right message at the right time may seem complex and time-consuming, but at the end of the day the ROI speaks for itself. You need to really adopt the software and start testing it (now is a good time to start A/B testing) in order to improve results over time and meet the ever-increasing expectations of your customers.
La Vie en Rose is a good example of a Canadian retailer who stores its clients’ profiles in a CRM. Profiles include online and in-store purchase history, how customers have interacted with promotional Emails as well as interactions with customer service. All of these details are then used to craft communications that are better customized to the brand’s customers.
Pandora, the jewellery retailer, implemented the Microsoft Dynamics CRM to better understand its in-store and online clientele, to improve client management, to speed up new account creations and to send out customized offers. Linked to the ERP, the CRM makes it easy for the retailer to analyse franchise performance worldwide. This type of CRM solution helps Pandora, its retailers, wholesalers and franchisees to experience a streamlined, problem-free purchase experience.
Fraud – And the Tools to Fight it – on the Rise.
Online fraud is a huge problem for Canadian retailers and without proper measures to counter it, fraud can have devastating effects on the profitability of your eCommerce investments. It gets worse: fraud-related costs are on the rise. In 2014, every $1.00 of fraudulent purchases led to a loss of $3.08, a $0.29 year-over-year increase. Worse yet, when a fraudulent purchase or transaction occurs, retailers lose not only the merchandise, but they also lose the time it took to prepare the order as well as the shipping expense.
The ways in which people fraud retailers are also evolving: “Friendly fraud”, for example, occurs when a consumer buys something, claims it was never delivered and receives a refund while keeping the article.
Mobile: interestingly, fraud is twice as likely to originate from an Android device than from an iOS device. It is generally agreed that Android’s broader distribution and bigger client base explains this statistic. A J. Gold Associates study found that up to 15% of Canadian businesses experience fraudulent activity that affects nearly 25% of their revenue; mobiles account for 25% to 49% of these fraudulent transactions. With mobile eCommerce transactions on the rise, we expect fraud numbers to increase accordingly.
At this point, it is essential and urgent for businesses and retailers to equip themselves with an anti-fraud solution that is adapted to their eCommerce platform. The statistics speak for themselves: 86% of refund requests are fraudulent! Sadly, finding the balance between preventing fraudulent transactions and losing legitimate transactions is no easy task. Having said that, today’s solutions are more sophisticated than ever and can allow you to contain the problem without having a significant negative impact on your legitimate sales.
Either way, expect online fraud to be a hot topic in 2016
Activate an Address Verification System (AVS). Combined with IP addresses, this makes it much easier to confirm the legitimacy of an order.
Offer PayPal as a payment option. Not only do many clients prefer it, all transactions come with fraud-protection.
Invest in an anti-fraud system like Signifyd or eBay Enterprise. These solutions provide a comprehensive analysis of available data to determine the propensity of a transaction to be fraudulent. Analyzed data can include, for example, the IP address of the device used to place the order, the time, any history of fraud linked to that Email address, the physical distance between the delivery address and the cardholder’s address and several other factors. This type of solution provides merchants with a somewhat algorithmic defense against fraudulent transactions. This protection does come at a cost: expect a fee based on the percentage of the transaction amount.
Use a GPS system. Often available for free (Google Maps, anyone?), it allows you to determine the physical location of IP addresses.
Several Benny&Co restaurants, a popular Quebec chain of rotisseries, experienced fraud with online orders. Culprits would pay online with stolen credit cards and have chicken delivered to their home – we’re talking several thousand dollars per month per restaurant. Because a solution such as Signifyd requires manual processing, it would seriously slow down order processing, which means it would not be a viable option. Furthermore, its cost is relatively high in comparison with the restaurant chain’s average order. On a per-order basis, it wouldn’t make financial sense to implement it. In this case, Absolunet addressed the process and deactivated the online payment option for the locations that were most affected by this problem, which means that clients have to pay upon delivery using an actual, physical credit card. By clearly indicating on the Website that the credit card will be verified and that the client must provide I.D., the likelihood of fraud was greatly reduced.
Wayfair, an eCommerce site with almost 1 billion dollars in annual sales successfully implemented Signifyd and saw a huge reduction in fraud. Chargebacks decreased 78% (that’s huge!!), fraud detection saw a 29% improvement and cases requiring revision went down 2%. Over time, Wayfair’s anti-fraud service was able to reduce the average time required to revise an order by 20%. What a brilliant example of how to address online fraud!
Thanks for reading our 2016 ecommerce trends.
If you want to learn more about how Absolunet can help you with your ecommerce needs,
get in touch with us at firstname.lastname@example.org