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e-Commerce Industry News

February 3, 2014
Forrester predicts an even better 2014 for retailers, discusses 'last-mile' wars
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February 3, 2014
Retailers are expected to compete over shipping. Retailers are expected to
compete over shipping.
If retailers and online stores had a great 2013, they may want to begin posturing aggressively for the new year. At the recent National Retail Federation BIG Show 2014, Forrester Research analyst Sucharita Mulpuru spoke extensively about forecasts for 2014 and some of the major trends for the upcoming year.

Looking ahead at 2014
Last year, the average online merchant saw approximately 29 percent growth, Mulpuru noted. Citing findings from a new Forrester report, "State of Retailing Online 2014: Key Metrics and Initiatives," she forecast total retail sales this year of close to $300 billion.

However, the reach of online far exceeds the boundaries of a desktop computer, the NRF blog reported. Consumers may not always buy products online, but activities conducted before the purchase via the Web will influence which items people buy and where they get them from. Mulpuru estimates that close to $1.4 trillion of retail sales will be influenced by digital shopping channels in one way or another.

Given the still-recovering economy and a turbulent 2013 holiday season that saw a shorter-than-usual shopping deadline, the growth of both direct online sales and indirect, Web-touched transactions means that 2014 promises to "be even better," Mulpuru added. Capturing more consumer dollars in 2014
With more potential revenue up for grabs this year, the retail space will grow even more competitive. Merchants will need to work on improving their strengths and mitigating or eliminating any of their weaknesses.

One area that will be a particularly hot battle ground for online retailers this year is shipping. Mulpuru deemed shipping "the Achilles heel" of eCommerce. A separate study from UPS suggested that both paying for shipping and waiting for an item to be delivered were among the top complaints by customers in recent years, which lends further credence to Mulpuru's assertion. It shouldn't come as a surprise that customers actively sought after and redeemed free shipping offerings significantly more often during the 2013 holiday shopping season than they had in years past. "Consumers expect to have free shipping and expect retailers to subsidize free shipping," Mulpuru said.

While offering free shipping eliminates one of the hassles of shopping online, it doesn't address the issue of delivery. In 2014, Mulpuru expects retailers to compete heavily over better delivery options, which she called the "last-mile" wars - the war to ensure same-day delivery and go the last mile. This issue grew unexpectedly hot over the 2013 holiday season, when companies such as the United Parcel Service failed to deliver gift to customers on time. The answer for that quandary isn't as apparent. Merchants continue to struggle with finding cost-efficient delivery mechanisms to offer same-day delivery universally, but offerings such as in-store pickup, ship-to-store and other similar strategies can be used to make the waiting time less of an issue.

Other hot topics for 2014
Although the war for the last mile will be the primary challenge that online merchants deal with in 2014, Mulpuru did note some other challengers. With smartphone adoption continuing to grow (more than 150 million Americans now have smartphones, according to comScore), adding mobile to the omnichannel mix will be a top priority for many businesses. Customers have come to expect full integration of mobile channels, which may be a challenge for some merchants.

Pricing will be another hot topic. Looking to maintain their value, several key product brands will look to roll out their own stores, much like Sony and Apple have, which may create more competition for conventional retailers. Otherwise, dynamic, real-time pricing that allows merchants to remain competitive will be key.