3 New Rules for Winning at Ecommerce in 2016

In 2008, when Mary Meeker predicted mobile would overtake the traditional web by 2014, few anticipated that would mean use would grow from 400 million users to 1.6 billion in 2015. In Mary’s latest edition of the KPCB Internet trends publication, she continues to point to mobile’s overthrow of desktop usage in the U.S., with 51% of daily media usage taking place on mobile devices (compared to only 42% on desktops).

Despite mobile’s massive growth, consumers have been slow to adopt the mobile device as a significant purchasing channel, even though they’re actively browsing on it throughout their purchasing journey. Times are changing though. Consumer preferences are quickly shifting as they’re now more often buying via mobile. Our data shows that the share of mobile transactions grew 15% in Q3 2015, while e-commerce in the U.S. has seen a modest overall growth rate of  4% per quarterPayPal research agrees, forecasting that from 2013-2016, the multi-country average compound annual growth rate for mobile commerce is 42% vs. 13% for all ecommerce (including mobile commerce).

As brands enter 2016 eager to capitalize on today’s tech-savvy, Internet-friendly mobile shoppers, which retailers are going to be the next generation of e-commerce winners? Below are a few secrets to success for building the next e-tailer empire.

Consumer Retention Pays Off Online

New customer acquisition is costly—and seldom yields the same benefits as retaining existing ones. In fact, 70% of companies say it’s cheaper to retain a customer than acquire a new one. And, according to Bain and Co., a five percent boost in customer retention can boost a company’s profitability by 75%. A large part of a successful consumer retention strategy is making sure it doesn’t drop off online.

When it comes to retaining consumers, Nordstrom has long topped the charts. Empowered by their one guiding rule, “use good judgment in all situations,” Nordstrom employees are known for doing whatever it takes to keep consumers happy. And, now they’ve extended that consumer-first ethos to the Web. The Nordstrom Rewards loyalty program provides early access to sales, special VIP events, free tailoring, and “Nordstrom Notes,” which can be used for future purchases. Program benefits increase in line with a buyer’s annual spending, with an iPhone app that puts program status and Notes balances at their fingertips. If that’s not enough proof that Nordstrom is an expert at consumer retention, the leading retailer reports that 4.1 million loyalty program members shop twice as often and spend three times as much as the average customer.

Made for the Mobile-First Economy

Starbucks CEO Howard Schultz is smart to follow the lead of top executives who are making customer centricity a priority, including Amazon’s CEO Jeff Bezos. Like Bezos, Schultz is driving his business around the consumer experience and is turning to technology (especially, mobile) to improve the consumer journey. According to Schultz, “We are building an unassailable position that will only strengthen and become more relevant as today’s mobile-first consumer economy evolves.”

It’s a bold vision to turn a coffee shop into a technology, mobile-first business, but necessary in today’s always-on, tech-savvy and hyper-connected world. So, how exactly is Starbucks supporting a mobile-first focus? It’s doing things like capturing birthdays from consumers, and offering them a free drink on the special day. Starbucks is also turning to its app to let consumers order there, and then pick up the drink at a desired location. By doubling down on mobile, Starbucks has already gotten tremendous traction. In the latest quarter alone, about 21 percent of all transactions in the U.S. came through mobile payments for the company.

Consumer Stickiness with a Bit of Fun

With more than 1.5 million apps on iOS and Android, and 12 to 24 million ecommerce sites around the world, getting and maintaining attention for a digital business is intimidating and challenging. Going beyond the table stakes of a well designed website and mobile experience, doing something bold and outside of the box can set the winners apart from the losers.

Not historically known for its digital presence outside of placing orders online, Domino’s is rolling out new strategies to stand out and is expected to generate $4 billion in digital global sales by the end of this year as a result. For Domino’s, its newly launched app is fueling digital engagement and success. It allows consumers to order by voice, ordering their meal selections directly from Dom—Domino’s personal Siri. To make things even more entertaining and improve stickiness with consumers, Domino’s released a new app called Tummy Translator where a user rubs his or her stomach in order to get food recommendations. According to the digital campaign manager at Domino’s, “We like to push the barriers of innovation – and also, give our consumers little moments of joy along the way.”

Bottom Line: Ecommerce sales are predicted to reach nearly $500 billion by 2018, with a large part of that figure representing mobile transactions. The consumer buying journey is increasingly online, and across all devices. Customer retention, leading with mobile and stickiness will be critical drivers as brands look to win consumer attention in this new norm.

Mollie Spilman is Chief Revenue Officer for Criteo

 

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