Direct-to-Customer Commerce

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Strategic insights into the direct commerce industry, including ecommerce, direct marketing and related fields

Direct Commerce Sales thru July 2013

Here are the latest figures on Direct Commerce sales (non-store via Mail Order & Electronic) from the Department of Commerce.

Retail Sales 1992-01 thru 2013-07

Retail Sales 1992-01 thru 2013-07

We’re seeing the normal growth from the 4th quarter of last year. But the drop after Christmas, was much more dramatic and we still have not fully recovered.

Filed under: Direct Commerce, ,

Direct Commerce Sales, thru March, 2013

It’s critical to first, define terms.  By Direct Commerce, I’m referring to electronic & mail order retail sales, as reported by the US Dept of Commerce.

There are several similar reports out today, but they define their reporting term differently.  For example, comScore issued a quarterly report on non-travel ecommerce sales, excluding auctions, etc.  They reported about $50 billion of sales in 2013Q1.

The chart below includes all Retail Sales, compared to Direct Commerce sales, as defined above.  The 2013Q1 sales for Direct Commerce is $94.422 billion, year-over-year growth of 17%.  Direct Commerce now represents 7.52% of total retail sales

As you can see from the narrowing of the gap, Direct Commerce sales is growing almost twice as fast as retail sales, overall.  Retail sales in 2013Q1 grew only 1%, while Direct Commerce sales grew 4.2% in the same quarter (quarter-over-quarter).

Screen Shot 2013-05-13 at 1.19.20 PM

Filed under: Direct Commerce, News, , , , ,

Is show rooming a problem?

Well clearly, it is for some brick & mortar retailers.  At least they think it is.  It’s even reached the pages of the NYTimes (subscription required).

The NYTimes article even postulates that retail merchants should prepare a script of what to say when they catch customers using their store as a show room.

This is a losing battle.

Customers are going to use your store for a show room … at least if you’re selling products where there is a lot of content, a lot of price competition, or the products are simply expensive in the eyes of your prospective buyer.  You cannot stop it.

But you can combat it … but only by differentiating your business from the competition:

  • provide better prices
  • provide better customer service
  • provide a better guarantee
  • provide training
  • provide more information (content)

If you think show-rooming is bad now, this is only the start.  Younger buyers are ever more dependent upon their smart phones.  As they continue and increasingly dominate the buying public, show-rooming will become more and more prevalent.

This is a disruptive pattern.  Consider yourself disrupted.

Now what are you going to do about it.

Filed under: multichannel commerce, Omni-Channel Commerce, Opinion, , , , , , , ,

The Impact of Omni-channel on Retail

The Wall Street Journal published a story this week about Macy’s, which focuses mostly only the perceived impact that an omni-channel strategy is having on their business, going forward.  It’s worth reading here. (subscription required)

What struck me in this story is the twist on the concept of localization.

Most of my conversations with ecommerce folks, in which “localization” comes up, the subject is a reference to localizing a web site to a country.  And, of course, the resulting need for translation, alternate payment processing methods, separating inventory, separating marketing campaigns.  All to be expected.

What Macy’s professes to recognizing is that a store in Fairfax, Virginia (where I live) may demand a different inventory and different marketing than a store in Dallas, Texas.

Now, we’ve all recognized those type of differences — up to a point.

But with the tools available to us now, we can buy uniquely for each store, vary marketing by micro-segment, and attempt to match available inventory (and by extension our merchandising & buying tactics) to these clearly identifiable segments.

But where is the balance … can we focus one segments that are so small, we cannot manage to them profitably? And if that’s true, then what is the smallest segment we should isolate to maximize profitability?

A whole new form of optimization!

 

Filed under: Direct Commerce, Ideas, multichannel commerce, Opinion, , , , , , , , , ,

Dept of Commerce stats on Electronic & Mail Order Sales for 2012

The Dept of Commerce has released it’s final report on Retail Sales for 2012.  Below is a graph of the monthly report for Total Retail Sales (the blue line against the left axis) and Electronic & Mail Order Sales (the green bars against the right axis).

Total Retail sales grew 3.7 percent, over 2011, and totaled just short of 4.9 trillions dollars.  Electronic & Mail Order Sales grew 13.2 percent, over 2011, and totaled 324.4 billion dollars.  Electronic & Mail Order Sales represent 7.4 percent of Total Retail Sales.

I don’t want to over analyze what all of this means.  But it is clear that Electronic & Mail Order Sales (what I call Direct Commerce) is growing faster than Retail Sales over all.  And the growth curves changed noticeably, at the beginning of the last recession (late 2008)

Retail Sales by Month

 

Filed under: Direct Commerce, News, , , , ,

Amazon’s Same-Day Delivery Will Shake Up Retail

The title of this post is the headline of an article posted at Ecommerce Times on Jan 17, 2013.  Here’s a link.

The article points out the very convenient solution Amazon can provide in some high-density markets for customers who are willing to pay for the convenience of not having to actually go to a store themselves for something they need today.

The author then proceeds to describe some of the warehouse systems, which Amazon uses to facilitate their same-day delivery service, including a reference to Kiva Systems.  Kiva Systems provides robots for use in the Pick & Pack process of direct-to-customer fulfillment centers.  It’s a great systems … I met with the founder when he was looking for both initial funding and early clients (back in 2003 or so).

But we need to keep this “same day delivery” thing in some context.

According to data from the Department of Commerce, under the category of Retail Sales, Mail Order and Ecommerce Sales still amounts to only seven percent of total retail sales … yes, 7%.

Now, that’s still a significant number.  And for some retailers, it may even account for a major percentage of their annual profit.

Please take note that in most direct commerce research, “free shipping” remains among the most effective promotions.

But given that same day delivery will only appeal to the more affluent, for whom delivery cost is not as significant as convenience, and given that all direct commerce accounts for only 7% of total retail sales … it’s somewhat of a stretch to say that same day delivery will “shake up” retail.

A bit too much hyperbole, for me

Filed under: Direct Commerce, Ideas, Opinion, , , , , , , ,

The eighth step to multichannel commerce

Step 8 is marketing & promotion.

What a can of worms that is … or at least can be!  And obviously, in a single post, I’m not going to cover this topic.  This is a topic of unending variables.

I really only want to make a few points.  First recognize the difference between the channel or medium and the activity.  You can advertise by mail, market by mail and promote by mail.  Mail is a medium of communications.  Advertising, marketing and promoting are the activities.

Multichannel commerce, it seems clear, by definition refers to conducting commerce (which means generating sales) thru multiple channels.  So, I’m not taking about advertising, which is just sending a message.  I’m thinking about making an offer to a customer or prospective customer to conclude a transaction with me.

We have more channels than ever, for commerce:

  • brick and mortar stores (fact-to-face)
  • paper mail (flyers, postcards, letter packages, catalogs)
  • electronic mail
  • social media
  • web store
  • smart phone app
  • tablet app
  • telephone
  • direct response broadcast (radio, television)

… and I’m probably leaving something out.

So, in the ideal world, your marketing & promotion efforts will generate commerce transactions with your customers.  And it should be your customers choice to use any particular channel.  Your offers, products, promotions should all be visible to your customers across all channels.  And that takes no small effort.

Here’s the next important point:  If you can’t measure it, consider not doing it.  The beauty of direct marketing, direct commerce, whatever you choose to call it, is that it’s measurable.  And with technology you can almost measure everything.  But not everything is worth measuring.  But if you’re not measuring anything, you’re wasting a lot of time and money.  And if you’re measuring so much you can’t comprehend the data or analyze the data, you’re still wasting a lot of time and money.

So, be deliberate about what you measure.  The most basic and most useful things to measure are:

  • customers who got an offer
  • customers who bought
  • how much they bought
  • how many they bought
  • what it cost to make the offer
  • what it cost to fulfill the offer

You’ll know a lot, if you keep these six data points for every channel and every promotion.

Think about this … it’s a lot to think about.

Filed under: Ideas, multichannel commerce, , , , , , , , , , , , , , ,

Monthly Retail Sales Numbers

The Economics & Statistics Administration released its, Advance Monthly Sales for Retail and Food Services

Retail sales in October 2010 were $373.1 billion, an increase of 1.2 percent from September and an increase of 7.3 percent from October 2009.  Excluding autos, retail sales were $306.1 billion, up 0.4 percent from last month and up 6.0 percent from last year.

Retail sales peaked back in Nov 2007 at $379.4 billion.  So, you can see we’re getting close to a complete recovery from a pure sales point of view.  Retail sales have been growing at a rate of $1-3 billion per month for most of 2010.

However, Electronic and Mail order sales dipped in Dec 2007, after peaking at $17.6 billion.  Sales wobbled up and down in a very narrow window for a number of months, but surged passed the Dec 2007 peak in Aug 2009 and has not looked back.

In Sep 2010 (the most recent monthly report available), Electronic and Mail Order Sales reach $23.3 billion a full 30% higher than Sep 2009.

Direct Commerce is where the action is, but Brick & Mortar retail is still the name of the game.

Direct Commerce constitutes only 6.321% of total retail sales.

Filed under: Direct Commerce, News, Opinion, , , ,

Rising Package Shipments A Sign of Hope

Rising Package Shipments A Sign of Hope.

This is an article in Multichannel Merchant about the increase in parcel volumes at the three major parcel carriers (FedEx, UPS, USPS).  This increase, of course, parallels the uptick in direct commerce sales reported here earlier.

Filed under: News, , ,

Direct Commerce sales double since Aug 2003

Direct Commerce retail sales, reported by the US Dept of Commerce as “Electronic & Mail-Order Sales,” have doubled since Aug 2003.

The chart shows total retail sales on the blue line against the left axis.  Direct Commerce sales are the green bars against the right axis.

During this same period, Aug 2003 to Aug 2010, Total Retail Sales have risen only 18.2%.

Perhaps even more significantly, Direct Commerce Sales as a percent of Total Retail Sales has risen to 6.16%, its highest ratio, ever.

Good news, but we also need to be careful not to read too much into this.  Direct Commerce has always succeeded in large part due to its convenience, and in a major recession, those with larger incomes are more concerned with convenience and more able to continue spending.

So, this could be most the effect of the current economic conditions.

Filed under: News, Opinion, , , ,

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