Instrumented Interconnecteds Intelligent

Richard Feinberg, PhD, Professor of Consumer Sciences and Retailing, Purdue University

By Richard Feinberg, PhD

(Fifth in a Series on the Holiday Shopping Season. For the Complete Package Go to the Bottom of this Post.)

We tend to forget that E-Retailing is a relatively recent phenomenon.

eBay and Amazon launched in 1994, but it is only in the past five years that e-shopping has attained a power place in our shopping lives.

Cyber Monday may be the most significant and interesting signal of the role that Internet plays in our lives and what the future holds. Objects in our side view mirror appear larger than they really are and Cyber Monday appears much larger than it actually represents in understanding the role of “e” in retailing and shopping.

The facts are clear. Early results based on the IBM Digital Analytics Benchmark show online retail sales up 30 percent over last year. Close to 20 percent of consumers used a mobile device to purchase up 70 percent from last year. Mobile sales were 13 percent over last year an increase of almost 100 percent. The iPad was the dominant device used (7 percent of online shopping) followed by the iPhone (6.9 percent). Black Friday online sales were up 36 percent compared to last year.

Social media has played only a small role thus far this year but its growth was significant. Our research at Purdue University suggests that all of these facts and figures actually underestimate the total impact of the Internet channel as retail websites provide information and motivation that propel consumers into the stores to buy.

The findings for the growth and development of online sales on Cyber Monday, Black Friday and the whole weekend has exceeded even the most optimistic of predictions. We will be looking back at growth of online retailing on the busiest four week period of the retail year as the birth of how the Internet will redefine and redirect our lives and the way retailing is conducted. Right now, online sales from Black Friday to Cyber Monday to post-Christmas will amount to 10 percent of all holiday spending, but this may signal a tipping point where the growth of online spending even accelerates at a greater pace even as in store retailing struggles to grow at modest single digits.

The size of spending and the size of the increase is an important warning to retailers to take the Internet more seriously. If the E-Channel is not their most important strategic focus it will be. In terms of size, the Internet will become the largest store in a retail chain. The resources assigned to the e-retailing should reflect that size. The consumer has the power. When e-retailing was just a blip on the holiday spending radar for retailers they did not have to devote attention to it. Overnight it has become a monster and we cannot wait for retailers to think they know what to do to meet the multichannel needs of the consumer – we have to expect that they do.

The consumer will get what they want…from someone. The growth of online holiday sales will propel all online spending. Try buying on the Internet once and it will become a habit. E-retailing will probably not be 100 percent of consumer spending in the near future, but five percent has become 10 percent in three short years, and the growth is not linear but geometric. Fifteen percent by 2015, 20 percent by 2018, and 25 percent by 2020 is not out of the realm of possibility given what we have seen this holiday season so far. 25 percent…that’s a lot of retail dollars. 

Please join me (@RichardFeinberg) for an IBM twitter chat on December 3, 1-2 p.m. EST where I will be joined by IBM Global Retail Leader, Jill Puleri (@jpuleri) in an in-depth discussion on the trends and lessons learned from the holiday shopping weekend. Sucharita Mulpuru (@smulpuru), vice president, principal analyst serving Ebusiness and channel strategy professions for Forrester, Inc. will serve as the chat moderator. Please follow the #smartershopping hashtag to join the chat. I look forward to a great discussion!

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