2013 Retailer ecommerce Study

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1 2013 Retailer ecommerce Study shopatron.com

2 Executive Summary The retail industry has changed significantly over the last decade, and it is continuing to evolve. As a veteran technology provider in the space, Shopatron has been at the forefront of the retail revolution, working alongside retailers and branded manufacturers as they embrace omni-channel commerce and adapt to the changing ecommerce landscape. In May, we queried over 8,000 of our most active retail partners and asked them to share their thoughts on topics ranging from mobile in-store shopping trends to online marketplaces such as ebay and Amazon. Nearly 900 responded, providing us with the foundation for our annual retailer report. This survey gives us the opportunity to measure how effective Shopatron is at helping both brands and their retail partners increase sales. Additionally, through the responses we gather, we are able to glean insights about the trends that will continue to transform ecommerce in 2013 and beyond. Key findings in this year s report include: Shopatron effectively improves local retail businesses. 51% of retailers report that fulfilling Shopatron orders has either increased store sales or improved customer acquisition, with 18% reporting that it has accomplished both. Shopatron requires very minimal additional effort from retailers. 66% of surveyed retailers spend less than one hour on Shopatron per week. 81% spend less than two hours. Shopatron influences the buying decisions of retailers. 49% of survey respondents report that Shopatron sales are a factor in buying decisions. 53% report that they would consider increasing their purchases from a brand if they found out the brand was launching on Shopatron. Retailers spend more with brands that send them orders. 57% of retailers increase their spend with a brand when the brand starts sending orders using Shopatron. 27% increase their spend more than 10%. Retailers are less likely to buy from brands that sell direct to consumers. 71% of retailers report that they would reduce spend with brands that started to sell direct to consumers. 35% report that they would stop buying completely or buy as little as possible. ecommerce is contributing to the overall business success of brick-and-mortar retailers. 60% of responding retailers (mostly brick-and-mortar shops) sell online. 24% of those that sell online report that more than 10% of their business comes from online sales. Retailers love in-store pickup as a fulfillment option. 65% of retailers would like to be a pickup location for orders placed online at brand websites. 60% increase their purchases from brands that send in-store pickup orders. Mobile phones play an increasingly important role in the in-store shopping experience. 86% of retailers report that at least some customers use mobile phones to help them with shopping while they are in the store. The most common uses are: comparing prices, getting product information, and looking at product reviews. Retailers are extending ecommerce into online marketplaces. 44% of responding retailers (mostly brickand-mortar shops) sell in online marketplaces like ebay and Amazon. Of retailers that leverage marketplaces, 45% increased year-over-year marketplace sales Shopatron, Inc. 2

3 In-store sales increases are outpacing direct online sales for many retailers. Between 2012 and 2013, many retailers saw increases in both brick-and-mortar and online sales. However, 52% more retailers saw increases for in-store sales (47%) than saw increases for direct online sales (31%). But Shopatron online sales performed better. While 31% of retailers report year-over-year online sales growth via their own ecommerce websites and only 23% report online sales growth via other online sales channels such as ebay and Amazon 42% of retailers reported online sales growth via Shopatron. Omni-channel sales from branded manufacturers continue to outpace the market. By what percentage did the following sales categories change in 2013 compared to the same period in 2012? Retail in-store sales: 52% Online sales on my website: 31% Online sales via Shopatron: 42% Other online sales (ebay, Amazon.com, etc.): 23% Retailers find value in Shopatron. To gain some insight into the broader benefits, we asked retailers how important Shopatron is to their overall business. It is clear that retailers find it valuable with 61% of respondents reporting that Shopatron has some importance for their overall business. Moreover, Shopatron is an effective way for retailers to increase incremental sales and expand retail distribution. Virtually all survey respondents (99.4%) report receiving at least one order from Shopatron per week, while 51% report that fulfilling Shopatron orders has either increased store sales or improved customer acquisition. Perhaps more compelling is that 18% of respondents report that Shopatron has both increased store sales and improved customer acquisition. Select the statement that applies best to you. Since we started fulfilling for Shopatron brands, these incremental sales have: Both improved store profit and improved customer acquistion: 18% Only increased store profit: 26% Only improved customer acquistion: 6% 2013 Shopatron, Inc. 3

4 Shopatron requires very minimal additional effort from retailers. Retailers find that Shopatron often requires very little effort to generate incremental sales for their business. 81% of surveyed retailers spend less than two hours on Shopatron per week, with 41% spending less than thirty minutes per week. The results for this down-time effort are incremental sales, with 44% receiving more than one order per week, and 17% averaging one or more orders per day. On average, how much time do you spend working with Shopatron per week? Less than 60 minutes: 66% 1 2 hours: 15% 2 5 hours: 12% 5 10 hours: 4% More than 10 hours: 3% This level of effort can often be accomplished simply by using store associate down-time. On average, how many orders do you receive from Shopatron per week? One order: 56% 2 5 orders: 27% 6 10 orders: 11% orders: 4% More than 20 orders: 2% Shopatron influences the purchasing decisions of retailers. To learn more about how retailers make purchasing decisions, we asked them if and how they take Shopatron sales analytics into account during the buying process. 49% of retailers report that Shopatron sales are an important factor in purchasing decisions. Specifically, when a brand starts selling on Shopatron, retailers often purchase more from that brand. As an indication of this, 53% of respondents report that they would either immediately increase their spend on a brand that was launching Shopatron, or increase spend if that brand sells well Shopatron, Inc. 4

5 If you are aware of a new brand in your industry launching on Shopatron, how would you prepare your business? Place an opening order, or increase spend with the brand: 8% Monitor how well this brand sells on Shopatron before increasing your spend: 45% Not change your purchasing behavior: 28% Not sure: 19% Retailers will reduce purchases from brands that sell direct to consumers. Retailers simply don t like it when brands compete with them for business by selling direct. Yet channel conflict is rampant in today s retail market. Brands are selling direct via branded outlet stores, as well as through online channels. As a result, retailer-manufacturer relationships are strained, and our survey confirms this fact. 33% of retailers said they would never purchase products from brands that sell online directly to consumers, and another 37% would consider this as a factor. Do you, or would you, purchase products from brands that sell online directly to the consumer? Yes: 30% No: 33% Maybe: 37% Furthermore, 71% of retailers report they would stop or reduce their spend with brands that started selling direct to consumers, with 12% reporting they would completely stop buying, and 23% reporting that they would buy as little as possible. Would your buying patterns change for brands that you already stock if they decided to start selling directly to end-consumers on their website? Yes, I would stop buying from that brand: 12% Yes, I would buy as little as possible from that brand: 23% Yes, I would reduce my buying from that brand: 36% No, I would not change my buying from that brand: 14% Not sure: 15% 2013 Shopatron, Inc. 5

6 Retailers spend more with brands that send them online orders. Brands are often challenged with determining how to get their retailers to stock more product. In order to be willing to stock more product, retailers need to move more product, and Shopatron provides an easy way for branded manufacturers to help retailers accomplish this. For the last several years, our annual retailer survey has proven that selling with Shopatron is an effective way for brands to help retailers increase sales and, in turn, stock more product. In fact, 57% of retailers increase their spend with a brand when the brand starts sending orders via Shopatron, and 28% increase their spend more than 10%. In your estimation, how much do you usually increase your spend with a brand when they start sending orders to you on Shopatron? Over 50% increase: 3% 21% 50% increase: 7% 10% 20% increase: 18% Less than 10% increase: 29% ecommerce is contributing to the overall business success of brick-and-mortar retailers. More brick-and-mortar retailers are expanding into the online marketplace. This year, 59% of survey participants are selling online, and our results show that selling online is having a positive impact on overall retail sales. 34% of retailers with an ecommerce website report that more than 5% of their business comes from online sales, with 11% noting that more than 50% of their business comes from online sales. If you sell through your own ecommerce website, what percentage of your business comes from online sales? Under 5%: 43% Between 6% and 50%: 39% More than 50%: 18% In today s omni-channel world, it is quickly becoming a business requirement to sell online, and align that online offer with the in-store offer. As omni-channel trends continue to evolve, those who sell online will be positioned to take advantage. Retailers love in-store pickup. The seamless shopping experience that today s customers demand includes the option for in-store pickup of online orders. Large retailers like Sears, Wal-Mart, and Best Buy have pioneered in-store pickup technology for retailers, but an in-store pickup program is valuable for branded manufacturers, too Shopatron, Inc. 6

7 In fact, retailers are very excited about fulfilling online orders in-store. 65% of survey respondents report that they would like to be a pickup location for orders placed online at brand websites. And 59% of retailers would increase their purchase from brands that send them in-store pickup orders. Would you like your store to be a pickup location for orders placed online at brand websites? Yes: 65% No: 16% Not sure: 19% Collaboration between brands and retailers can result in a successful in-store pickup program that benefits both parties and, of course, customers. How would the opportunity to host in-store pickup offers affect your stocking of brands that send you those orders? I would significantly increase purchases from brands that send me in-store pickup orders: 9% I would increase purchases from brands that send me in-store pickup orders: 50% Mobile phones are playing an increasingly important role for in-store shopping. Much has been written about the proliferation of mobile commerce. But many experts believe that the real benefit of mobile devices is not mobile sales but mobile in-store activity. We asked our retailers how their customers use mobile devices in their stores. 86% report that at least some customers use mobile phones to help them with shopping while they are in the store. And there are several ways customers are using mobile phones. According to retailers: 58% of mobile phone users to compare prices. 38% of mobile phone users to get product information. 22% of mobile phone users to look at product reviews. 14% of mobile phone users to look at additional product options. 7% of mobile phone users to scan QR codes Shopatron, Inc. 7

8 In your estimation, what percentage of your customers use mobile phones to help them while shopping in your store(s)? Under 5%: 38% Between 6% and 10%: 19% Between 11% and 25%: 16% Over 25% 13% No one uses mobile phones in my store(s): 14% Retailers are seeing success with online marketplaces. It is advantageous for both brands and retailers to consider new online sales channels. Earlier, we showed the positive results retailers see when they sell online. Online marketplaces, such as ebay and Amazon, are additional channels that retailers are starting to experiment with. 45% of survey respondents are selling in online marketplaces, but almost 4x the number of retailers that work with one marketplace work with ebay (23%), versus the 6% that are working with Amazon. 11% of responding retailers work with both ebay and Amazon. Do you work with ebay, Amazon.com or other online marketplaces for online sales for your store(s)? I work only with ebay: 23% I work only with Amazon.com: 6% I work with both: 11% I work with other marketplaces: 5% I do not sell on any online marketplaces: 55% And there is a clear sales benefit to expanding into popular online marketplaces. Of retailers that are selling in online marketplaces, 45% increased year-over-year marketplace sales. Also noted was that over 50% of retailers would like the brands they stock to sell on ebay and other marketplaces if the resulting orders were sent to them for fulfillment Shopatron, Inc. 8

9 Conclusion Omni-channel ecommerce is mutually beneficial to both retailers and branded manufacturers in several ways. Shopatron has a major influence on retailer purchasing decisions retailers purchase more from brands that send them online orders via Shopatron, and they purchase significantly less, if at all, from brands selling direct. Omni-channel also effectively expands retail distribution, improves customer acquisition, and increases store sales. Yet despite the successes retailers have seen with Shopatron over the last year, there is still a lot of opportunity for growth. Mobile in-store usage is growing, and retailers should improve mobile-specific in-store tactics in order to optimize that channel. Additionally, there is clearly high demand for in-store pickup programs, which requires that retailers partner more closely with their branded manufacturers to implement them. Lastly, continuing to extend ecommerce programs into new online channels is having a positive impact on sales for many retailers. Taking advantage of online marketplaces, such as ebay, could further increase sales revenue for both brands and brick-and-mortar retailers Shopatron, Inc. 9

10 About Shopatron Fulfillment Partners Currently, over 20,000 retailers are registered with the Shopatron system. Participation is spread across more than 40 industries and sub-industries, including toys, gifts, consumer electronics, sporting goods, automotive parts, equestrian, apparel, furniture, housewares, powersports, music, and more. Participant Demographics 69% of responding retailers represent a single store with less than 10 employees. A combined 85% of retailers polled represent businesses with one store and less than 30 employees. 60% of respondents currently have an ecommerce website, while 40% do not, confirming that a significant portion of omni-channel retailers don t have any other ecommerce business but still use Shopatron for online orders. What is the size of your business? Single store, under 10 employees: 69% Single store, 11 to 30 employees: 17% SIngle store, over 30 employees: 3% Multiple stores, under 30 employees: 5% Multiple stores, 31 to 100 employees: 4% Multiple stores, over 100 employees: 2% Methodology Over 8,000 of Shopatron s most active retailers were polled via to participate in this survey. Between May 8 and May 22, close to 900 responded to the online study. Any questions on this survey, or regarding Shopatron s omni-channel model, can be directed to the contact information below. North American Office Shopatron Inc. 825 Buckley Road, Suite 200 San Luis Obispo, CA United States Telephone Outside US Fax European Office Shopatron UK Ltd. Newport House Newport Street Old Town, Swindon SN1 3DX United Kingdom Telephone +44 (0) Fax +44 (0) Shopatron, Inc. 10

11 is the world s leading provider of cloud-based, ecommerce order management. Shopatron is the world s leading provider of cloud-based, ecommerce order management solutions. Our patented Shopatron Order Exchange allows manufacturers and multi-channel retailers to seamlessly leverage the available inventory of every retail storefront and distribution center when fulfilling online orders. Unlike legacy order management software or custom-built solutions, Shopatron makes it easy and affordable to deploy advanced capabilities like in-store pickup, ship-from-store, inventory lookup and vendor drop-ship. With Shopatron, retail channels join forces to increase sales, turn inventory, and deliver a superior purchase experience to online shoppers. For more information about Shopatron, visit us online at shopatron.com. North American Office Shopatron Inc. 825 Buckley Road, Suite 200 San Luis Obispo, CA United States Telephone Outside US Fax European Office Shopatron UK Ltd. Newport House Newport Street Old Town, Swindon SN1 3DX United Kingdom Telephone +44 (0) Fax +44 (0) Shopatron, Inc.

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