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I'm sitting here at the excellent Channel Advisor Cataylst conference drinking coffee and waiting for the next keynote to start. Wondering what I found so compelling about this conference that I just had to attend (it was a long day yesterday and these things aren't really my scene...). When it all finally clicks!

My clients aren't interested in the latest e-commerce fads. But they do rely on Squiz to pick up on key trends and make sure the consulting they receive and the software platform they use to run their online buisnesses is ahead of the game. And there are two trends I've observed at this conference that are not going to go away.

Lesson 1 : Your own website can only reach 25% of the market

Whilst total e-commerce sales continue to grow at around 20% year on year, the share of online sales that come from a customer typing in the direct web address or brand name of a retailer has gone from 50% to 25% in the past 3 years. What??? I know, I couldn't believe it either...

So what does this mean?

In the early days, major retailers could rely on the fact that half of the people buying something online would start looking for what they wanted by typing in the name of a retailer they already knew ie I want a swish new LCD TV, I remember seeing a great looking Samsung model in John Lewis so I enter www.johnlewis.com in my web browser and start shopping. I search for Samsung LCD TV. Up pops a beautiful black 40 inch model (LE40A558)…mmm…sexy. I part with my £999 and it rocks up 7 days later.

But in 3 years the percentage of people doing this has halved. Where have they gone?

Customers have got more savvy. There is a plethora of comparison shopping engines and online marketplaces they can use to search for products from hundreds of different retailers, compare prices and buy the product from the retailer with the most attractive offer. Lets stick with the search for a TV. This time I go to www.kelkoo.co.uk and type in Samsung LCD TV. The site suggests I search for the inches I’m after so I click Samsung 40 inch LCD TV. Up comes the LE40A558. And I walk away with it £50 cheaper from RGBdirect. It’ll also be here in 5 working days…

What does this mean for retailers?

There are now thousands of retailers who have built their businesses around selling products through ebay, amazon and comparison shopping engines (CSEs).

Traditional retailers used to be able to rely on their strong offline brands to cut this new breed out of 50% of the deals (the good old ‘clicks and mortar’ model).

Now this percentage is falling, their models need to change. Investment in serving product and pricing information to marketplaces and CSE’s is critical. They need to be on Amazon, ebay and have all their products listed on Kelkoo. Marketers have to fret about the level of customer feedback being left on these sites as well as the prices because this influences where they appear in the listings!

The good news for the big retailers is they can get this right quickly. A quick step by step:

+ Don’t limit investment to your own site. It can only reach 25% of the market.
+ e-commerce is now a content management issue. You need to get the right product data to the right place at the right time.
+ Start building a reputation in the online marketplaces – NOW!
+ Search engine optimisation is everything. Get your products listed everywhere. And keep up. Are you on Google product search yet? If not, you wont be in the top 3 Google results when someone searches for that TV you have on special…

And, of course, invest in a decent content management system (CMS). Your CMS needs to be able to collate and manage all of your product data, match it up with your marketing content and serve it to the right place at the right time…

Lesson 2 : Checkouts will standardise and there will only be a handful of winners

23 million people in the UK alone have a Google account. The new Google checkout service provides them with a 2 click ordering process directly from the search listings for any retailer signed up to use it.

What does this mean?

Rather than having to fill in contact and payment details in a different way on every single e-commerce site they wish to use, customers can remember one username, one password and one method of payment for thousands of retailers.

Google will have competitors in this field (Paypal and Amazon spring to mind) bt it’s clear that this model is going to work.

What should retailers do?

Retailers won’t abandon their expensive and carefully optimised shopping cart and checkout systems just yet. But they should run Google Checkout (and any major competitors to this system that spring up) alongside them. There is little risk in doing this and the potential upside is huge.

The benefit to the retailer is not just a better user experience, standardised checkout and payment systems can also lower costs. For instance, Google is offering transaction processing up to 10 times the value of your adwords spend for free and a transaction charge of just 1.5% after that. This is substantially lower than many of the traditional systems.

Again, if you’re running a decent CMS, you’ve got a much better chance of taking advantage of developments like this. The integration is very easy when you’re site is already on a CMS like MySource Matrix. Actually, given how rapidly we roll out new releases, I’m sure it won’t be long before you see a pre-packaged Google checkout template in the CMS…

Conclusions

So far, two main points have come out of this conference that will be of interest to Squiz clients and prospects:

1. If you’re not on online marketplaces and CSEs you’re missing out on 75% of the market.
2. Keep an eye on the standardisation of checkout systems. Something like Google Checkout could really quickly spell the end of bespoke checkouts.

Of course, we look at this stuff with excitement not trepidation because our clients can very quickly take advantage of new developments ;)

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