The end of brick-and-mortar shopping and the rise of online shopping

I admit that I am one of those that do not want to be pushed and have to sweat in traditional retail stores. I much rather do my shopping at my laptop, have a cup of coffee by my side and enjoy the selection not just by looking at the product, but also looking at comparisons and reviews that are posted on the Internet.

According to Economist.com, last years online sales in America reached $188 Billion which is roughly 8% of total retail. Of this, Amazon.com did last year $48 Billion, so we are talking about a pretty sizable giant. Some even have concluded that it is Amazon.com that is killing the traditional retail. According to Economist article, retail sales is going to grow to $270 Billion by 2015. See chart below:

RetailSalesuntil2015

I do not have to even read any statistics to know that there is a tremendous change in consumer behavior. I just have to watch how my family behaves. My wife told me this Christmas that she tries to do everything online to avoid the traffic and crowds at malls. This was not the case in the past. Consumers where doubtful whether online was going to cut it and in many cases people avoided to even buy as they wanted to try out first. Today, you can ship everything back if you do not like it.

We used to spend lots of time in local Barnes&Nobles and also malls, but I can’t remember when I have done that. The only reason for me to go to a local Barnes&Noble is to meet a friend or business acquaintance for a meeting as they typically are adjunct or have a Starbucks cafeteria. I can get everything online when it comes to magazines and books and in fact what I have noticed is that bookstores do not even carry anymore their entire inventory as that is costly. The same thing is happening to BestBuy who has really struggled this year. CompUSA and Circuit City already want belly-up and these used to be places where I went on regular basis.

According to Jose Alvarez of Harvard Business School, traditional retailers with pricy products will probably lower their inventories and focus instead on big investments in showrooms while commoditized items should have large inventory and less flashy displays. This of course makes sense, but many retailers can’t afford maintaining inventory in ways that Amazon.com has.

Amazon has been pressured to charge sales tax in states where they have distribution centers (34 now and 15 in the workings). This year, every Texan has to pay same sales tax as any traditional retailer would charge and that has evened out the play for some local retailers. Other well-know electronics online retailers such as Newegg.com still do not charge anything in Texas, so if it is one-to-one, Amazon will loose as the sales tax adds to the bill.

It is going to be interesting to see how 2013 is going to play out in the online shopping space. I would expect smartphone shopping to increase and based on some research from Aegis Media Americans, by 2014, mobile internet will overtake desktop internet usage in shopping. Those are pretty radical numbers and we that work in the software space, need to keep in mind the behavioral change that is taking place also in respect to devices and how things are done.

What types of influencers are increasing your web-site or blog traffic?

The Internet has really changed how we can be heard without really being physically seen. My company has done a bunch of influencer intelligence ecosystem research studies in the competitive intelligence domain and I get constantly questions from my clients how and what they should do to be heard in the cyberspace. If you are a software vendor and want to play in the cloud area, you’d better create a strong strategy how to be heard.

Let’s first analyze what you can do and what type of people you should try to attract to your web-site or blog. I recently run into an interesting blog entry by SEOMOZ that lists the main types of influencers that you should be interested in. They are as follows and SEOMOZ calls these for Linkerati:

  • Bloggers – this is the main group of influencers that you want to attract. Bloggers not only drive traffic, but they also influencer others.
  • Forum posters – people that comment in forums but according to SEOMOZ, these entries does not necessarily drive traffic from search engine perspective like bloggers would. This group is still very important target group for you to attract.
  • Web News Writers – these are the writers that people follow on different topics such as Mary-Jo Foley from ZDNet “All about Microsoft” blog. Mary Ann tracks Microsoft and what happens inside Microsoft.
  • Content Creators – people that maintain web-sites and seek valuable resources to link to. This is extremely useful as many people link their own sites to these sites and search engines like this kind of link building.
  • Resource Editors – people at government institutions, non-profit organizations and educational establishments that add content to web-sites.
  • Social Taggers – people that add links using Digg, Del.icio.us, Reddit and other similar services.
  • Viral Connectors – influencers that e-mail, use Twitter to send links and posts of different topics.
  • Journalists – Online or offline content creators and if you get linked to Wall Street Journal, New York Times or other similar sites, the traffic to your site will skyrocket.

I am still running to executives in companies that do not realize that they have to be present in the cyberspace whether they want it or not. The new generation of workers expects the management to have at least some type of clue what social behavior in the Internet means and the tools including software has to reflect this as well. If you are working in the software area and still ignorant of Twitter, Facebook, blogging and other similar services means that you are ignoring the marketing potential that the Internet brings to the table.

If you do not have a strategy in place how you want to appear in the social media world and if you social footprint is zero, do not expect that to change overnight. As with everything in life, to achieve something, you have to change your behavior and if you do not actively engage yourself in the cyberspace, you will not be heard nor do you maintain your status in services such as Technorati.com and similar services that ranks your social influence. If you want to learn more about Web Monitoring, I recommend the book by Alistair Cross and Sean Power Complete Web Monitoring: Watching Your Visitors, Performance, Communities, and Competitors. The blog entry from SEOMOZ did not address the “community” concept, which is a key area for software organizations in their efforts to build an ecosystem. This was also evident in the recent Nokia and Microsoft announcement for a broad strategic partnership between the two companies. Nokia is betting on having a third-party ecosystem building key applications around the Windows Mobile phone and bring the competitiveness back to Nokia against Apple and Android ecosystems.

Building social connections in the cyberspace takes time and will take a tremendous effort. Social connections are earned on trust and that is something that people tend to forget. If you want to learn more about influencer intelligence, there is quite a few books about it such as Robert B. Cialdini’s book Influence: Science and Practice (5th Edition) or Duncan Brown and Nick Hayes book Influencer Marketing: Who Really Influences Your Customers.

Summary:                                                                                                                                                                    

For you to be successful in increasing web-site traffic or digital footprint, you have to proactively change you behavior and identify the influencers that you want to propagate your message in cyberspace and you will eventually increase the awareness of you, your solution or product or whatever you happen to represent. It takes time and you have to be patient and consistent. It is like with everything in life. Without persistency, you won’t achieve anything.

From outbound marketing to inbound marketing – Is your current web-site representative of your business?

We call know that one of the toughest things we have to deal with is our own web-site and the messaging within it. I can’t remember how many times we have renewed our web-site during the past five years, but it is quite a few times. Smaller companies can’t afford to put marketing dollars/Euros in expensive outbound marketing campaigns and have to focus more on lead generation campaigns that are based on inbound marketing. In my previous post about social media marketing, I concluded that organizations and business owners need to have a wake-up call to understand the ramifications of it. Today I read an interesting article from BusinessWeek with the topic “Stop Wasting Time on Social Media” which includes valuable information what can happen to you if you are not careful in your time management.

I really like the data from Hubspot.com and their site that includes huge amount of valuable information about inbound marketing.  that provides excellent information of their client’s behavior in the net and based on a recent study of theirs, 2010 lead generation budgets (a sample of 2500 companies), 24% of the budget will go to outbound marketing while 39% to inbound marketing. This is logical if you think about it. Inbound marketing includes at least following elements:

  • SEO
  • Pay Per Click
  • Blogging/Blogosphere
  • Social Media/Buzz
  • Targeted Landing Pages
  • Lead Intelligence
  • Conversion Tools

So when it comes to the marketing efforts, the inside sales, email blasts, telemarketing, tradeshows and other media ads are not that effective as they used to or the audience will not put attention to them as they used to do. Ten years ago, outbound marketing was our only choice, nowadays effective inbound marketing is where you have to really invest things.

If you are a software vendor, specifically in the SaaS space, you will have new challenges in your marketing efforts as the traditional channel might be non-existent in some of the cases specifically if there is no integration or traditional IT consulting opportunities. I think Riitta provided valuable feedback to my previous post as she has to figure out an effective way to market her company Sopima that resonates to her audience and target market segment.

Back to my question of whether you have an effective web-site and whether your site drives business and leads.  Like in my post yesterday, let me provide you with a practical example of non-software related business. This is what happened.

One of our cooling systems broke down yesterday. We had 100 Fahrenheit yesterday (37.7 Celsius) so the temperature inside our house became almost unbearable. Luckily, my wife said that we had a contract with a heating/cooling chain that I could get to our house in the morning. I called and got this very arrogant lady answering the phone and she told me pretty much that somebody might come in the evening but no guarantees. So much about the maintenance contract…. What I did instead was to do an Internet search of local businesses, I found one and I got somebody to help me in 30 minutes. They came, fixed it and they got a client for life and all of the referrals that they get from me.

I called back the company that we have a contract with and asked them to never call us back. As a business-owner, I much rather give my money to other business-owner in my neighborhood than to some large chains that do not care if I and my three doggies melt in the heat.

The learning that I have of this is very simple. Make sure that your web-site has a good foundation for organic search results. Make sure that you are found by locals, if you do local business. Also, I would claim that the effectiveness of paid search is diminishing (I have also read research that this is the case) and I hardly ever click on the paid search and go instead with the ones that appear in the three first organic search pages.

If you do international business, make sure that your site makes sense across borders. I have unfortunately seen too many cases where a company wants to have success outside its home territory but has an awful web-site that turns away the possible prospect and future clients.

Check your web-site today and be honest to yourself. If it does not represent what it should, do something about it sooner than later.