Ecommerce all ye faithful
With Christmas shopping now in full swing, e-commerce has fast become a leading channel for retailers, and continues to grow. Justin Cooke, CEO of Fortune Cookie discusses the sector and Amazon, Argos and their other retail rivals as they wage war to conquer new ground in consumer spend.
In December 2009 the digital world was set alight by revelations from The Sunday Times that Amazon - Earth’s most customer-centric company had launched a secret plan to open retail stores in the UK. On the face of it the article made total sense. Online accounts for at least 18% of all retail sales in the UK so tapping into the high street to reach the other 82% seemed smart. Even more so when you consider that at least 18% of online purchases at the UK’s leading clicks, flicks and bricks retailer Argos are collected in-store. Perhaps Amazon was looking to emulate the huge success of Apple, the world’s biggest company since launching its pioneering Apple Retail Store concept in Tysons Corner Virginia back in 2001. Now one of over 358 stores worldwide.
Since the beginning of the Web the war between clicks and bricks has continued to be waged with some heavy casualties on the high street. But it’s not all one way. Traditional retail still delivers the goods with an average basket value 80% higher than mail-order or online only retailers. This symbiosis exists in other sectors too – when the New York Times launched its pay wall, overall subscriptions – including print increased.
However, rather than looking at polar opposites my view is that digital and more specifically mobile is becoming the key to success, acting as a bridge between both worlds and there is a festive flurry of examples to prove my point. Amazon is paying US consumers up to $15 off on purchases if they compare prices using their app in store - not only encouraging use of its bar-code-scanning app but also collecting valuable intelligence about users and prices in stores. Last week IBM reported that mobile sales reached 6.6 per cent of all online retail sales and PayPal announced that mobile transactions had increased by a staggering 552% increase on Cyber Monday.
Who is going to win the war? Over the past five years Amazon’s share price has risen 352%. With a market capitalisation just over double of Amazon’s, Wal-Mart, the world’s biggest retailer has risen 22.84% - it gets you thinking. With NFC, Google Wallet about to become more mainstream in 2012 and the rise of social mobile shopping things are going to get even more interesting.
So will we be seeing Amazon on the high street anytime soon? Unfortunately not, within hours of the story breaking a spokesperson for the company denied that they had any plans to open stores anywhere in the world. For now...