Ecommerce in 2010 started off with a healthy dose of skepticism, but quickly turned into a skyrocket of success. Reaching historic revenue totals, online businesses across the world enjoyed new platforms to boost sales, but also faced fresh, unexpected challenges.
Recession. Growth. Facebook. Coupons. Mobile.
If these words sound like a complete cluster, you probably weren’t selling online in 2010. But for those of us in the trenches, we’re sharing a communal nod as we reflect on how these ideas changed the way we do business.
From price-conscious customers to unbridled social media growth, check out my ecommerce recap for 2010:
2010 Takeaway #1: Recession? What Recession? Consumers Increase Spending
Remember how 365 days ago we were in a panic because of the 4-headed beast called, “The Recession?” We convinced ourselves that customers wouldn’t buy and that it would be another year of lackluster sales. Fortunately, this doom and gloom didn’t carry over into 2010.
Yes, consumers were still weary to shell out their credit cards, but their overall confidence increased. Check out this chart, which tracks the Consumer Confidence Index for each month of 2009 and 2010:
Great! Consumer confidence is up. Now take a look at overall spending, both ecommerce and retail:
Based on these two data sets, the recession was more of a hanging cloud than an actual obstacle.
The bad news? Customers only bought things that were on sale.
2010 Takeaway #2: Price, Discounts and Promotions Dominate the Purchasing Process
Even though online shoppers spent more in 2010, they refused to do so without a coupon or discount. Also, thanks to the rise of comparison shopping engines, customers could find the perfect product at the lowest price. Thus, in order to stay competitive, e-tailers had to offer more promotions on their products.
Here are some interesting stats that illustrate this point:
- 57% of consumers who used a coupon code during their last online purchase said that if they had not received the discount, they would not have bought the item(s). (Compete)
- 35% of online shoppers say they use comparison shopping engines when looking for products online. (Compete)
- Eight out of 10 U.S. adults plan to continue using coupons even if economic conditions improve, according to a study conducted for Coupons.com by research firm Harris Interactive. (Internet Retailer)
However, there is a silver lining to the increased usage of coupons:
- The average order value was $216 for shoppers who used a coupon, compared to only $122 for those who didn’t use a coupon. (Compete)
- 91% of customers who used a coupon said they would make another purchase from that online store, as opposed to 86% of shoppers without a coupon. (Compete)
- Adults with a household income of more than $100,000 are twice as likely to have redeemed coupons from an online source than adults with household incomes of less than $35,000. This means that online shoppers using coupons have much more money to spend. (Internet Retailer)
After looking at this data, it becomes clear that coupons, discounts and promotions had a huge impact on ecommerce in 2010. Free shipping was by far the most popular coupon utilized, and price-conscious shoppers have now been trained to look for, and expect, discounts on their purchases. (Keep that in mind for 2011.)
2010 Takeaway #3: Social Goes Bonkers, Becomes Legitimate Business Outlet
Not only was “The Social Network” one of the top movies in 2010, it became one of the biggest buzzwords in ecommerce, and rightfully so. Facebook topped over 500 million users, and online businesses flocked to this channel to build relationships.
One of the most interesting impacts of social media was the loss of control over our brands. Instead of feeding one-way marketing messages, we had to turn our focus onto listening and responding to customers. In other words, 2010 showed us that relationship-building, along with reviews and recommendations, are the new form of online marketing for ecommerce sites.
Are you still clinging onto the notion that social isn’t impacting your bottom line? That’s so two thousand and late.
Check this out:
- High product ratings will increase likelihood of purchase for 55% of consumers. (eConsultancy, July 2010)
- Nearly half of all Americans are now members of at least one social network, double the proportion of just two years ago. (MediaPost)
- 51% of active Twitter users follow companies, brands or products on social networks. (Social Media Today)
- For businesses of all sizes, companies that have blogs have 79% more Twitter followers than those that don’t. (HubSpot)
- Social media adoption by small business doubled from 2009 to 2010. (Social Media Today)
- Companies with 100 to 500 followers generated 146% more median monthly leads than those with 21 to 100 followers. (eMarketer)
Another major truth regarding social media and ecommerce is the unknown. eMarketer reports that almost 80% of business owners agree that reporting social media’s ROI is one of their biggest struggles. But to offer a counterpoint, Erik Qualman from Clickz succinctly notes, “The ROI of social media is that your business will still exist in five years.”
That’s pretty powerful stuff.
2010 Ecommerce Takeaway #4: Mobile Matters, But Not as Much as We Thought
After looking through several predictions for 2010 (including my own), the ecommerce world was aflutter about the holy grail of mobile commerce. And while mobile made great strides, it didn’t completely revolutionize the industry, or at least not yet.
Penetration of smartphones was impressive, as more and more consumers are turning to their mobile devices for product research. But growth in direct purchases from mobile was less than expected, which is understandable. Think back to the early 90s when we were all afraid to purchase from our computers. Thankfully that time is long gone, and much will be the same for mobile.
Here’s some data to summarize mobile’s impact on ecommerce in 2010:
- 27% of all consumers used their mobile devices to browse and research products at least four times over a 12 month period. For the 18-34 age group, this figure is 41%. (ATG)
- 19% of US smartphone users have purchased music on their phones, 14% have bought books, DVDs or games, while 12% have purchased movie tickets. (Compete)
- 74% of online retailers either have in place or are developing an m-commerce strategic plan, while 20% have fully implemented their plans. (Forrester)
- Revenues from shopping via wireless devices will reach $3.4bn in 2010, measured against $396.3m in 2008 and $1.4bn in 2009. (ABI Research)
Mobile matured in 2010, but expect it to really shine once advertisers and ecommerce sites ramp up their marketing efforts in the coming year.
2010 Ecommerce Takeaway #5: Ecommerce Becomes a Force to Be Reckoned With
Regardless of the technological breakthroughs, shifting consumer behaviors and new marketing tactics, the biggest takeaway from this year is that ecommerce has officially arrived. It’s truly a shining moment for anyone involved in the industry – no longer are we the red-headed stepchild of retail. In fact, I’d even say that ecommerce is becoming the preferred shopping method of choice for many users.
And to back up that statement, I present you the evidence:
And if you look at quarterly ecommerce growth as compared to quarterly retail growth, you’ll see how fast ecommerce sales are growing:
To summarize this data, ecommerce revenue has jumped, ecommerce is stealing share from retail, and ecommerce is growing faster than ever. Clearly, our industry has made its mark in 2010, with much more to come in 2011.
And there you have it – the top 5 takeaways from a stellar year for online business. From all of the trends and truths we’ve seen in 2010, there’s only one way I can sum up the year:
It’s been one hell of a ride.
See you in 2011!
-Matt Winn, Online Communications Specialist, Volusion