Advancing technologies, shifting consumer shopping patterns and priorities, and new economic realities are all fast changing the way multichannel retailers do business. MULTICHANNEL MERCHANT’s Outlook 2011 research initiative aims to get a handle on what marketers are doing now and how they’re planning for the future.
We polled our audience earlier this year to determine what they’re doing in the functional areas of catalogs, e-commerce websites, general marketing, and operations and fulfillment. Nearly 600 merchant companies completed the Outlook 2011 questionnaire.
Who took the survey? More than half (53%) sell primarily to consumers, about a third (32%) sell primarily to other businesses, and 15% sell to a relatively even distribution of consumer and b-to-b customers.
Nearly all (96%) have an ecommerce website, while 65% have print catalogs and 38% have retail stores.
The results are weighted toward smaller merchants: Nearly a third (29%) have annual sales of less than $1 million, while 55% have sales of less than $10 million. Just 17% report sales of more than $100 million.
What did the responses to Outlook 2011 reveal? For a more detailed look at each area, you can download the full research reports at Multichannelmerchant.com/outlook2011. But in reviewing the overall findings, we uncovered six trends in the multichannel selling industry.
The catalog is more of a marketing tool rather than an order medium.
Merchants naturally hope that their print catalogs will generate sales. But as those sales come in though other channels, the role of the catalog continues to shift to that of brand builder and web/store traffic driver.
In fact, on a scale of 1 to 10 in importance (with 10 being the most important), respondents rated branding 7.86 — slightly higher than web traffic driver at 7.84. Respondents in 2010 rated web traffic driver a bit higher than branding.
When you look at how orders are coming in, the web is clearly the dominant order channel, and this is no surprise. A mean 45.2% of direct orders come in through the Internet, while 19.5% are placed via the catalog call center, 9.5% still arrive via good old-fashioned mail order, and 7.51% come in through fax.
Not that ordering is all about the web — especially for b-to-b merchants, who still rely on more personalized contacts with customers. A mean 39.9% come in via “other” methods; these include a direct sales force, outbound telesales, trade shows and mobile.
As more orders come in via the web, tracking the effectiveness of the print catalog is a must. Keycode capture is the most popular tactic, as 65% of total respondents this year do it, compared with 61% in 2010. Nearly half (46%) have a matchback program, about the same percentage as last year.
Sadly, the percentage of total respondents who have no formal program is also the same — in fact, it increased from 28% in 2010 to 29% this year.
As the chart directly above shows, the smallest respondents are skewing the results for this question: A staggering 68% of respondents with sales of less than $1 million do not have a formal program for tracking their catalog’s effectiveness. It’s still surprising that about 15% of larger companies don’t have a program either.
Mobile commerce adaptation is shockingly slow among multichannel marketers.
If 2010 was supposed to be the year that mobile commerce really took off, multichannel merchants apparently didn’t get the memo. Nearly three-quarters (74%) of the total respondents are not using mobile commerce this year. That’s fallen a bit from the 79% that were not doing mobile in 2010, but is still not acceptable — what are merchants waiting for?
And it doesn’t have much to do with company size. Yes, 75% of the respondents with sales of less than $1 million aren’t in m-commerce, but 68% of respondents with sales of more than $50 million aren’t using mobile either.
Given these findings, it’s no surprise that just 9% of the total respondents are using QR codes. That’s too bad, because these barcodes that work with mobile devices would be a great way for catalogers to bridge the gap between the print and web channels.
Merchant websites are getting richer.
We saw an increase in the use of almost all rich media techniques. Use of alternate views went up the most, from 21% in 2010 to 34% this year.
But use of widgets fell from 14% last year to 8% in 2011. Hopefully, respondents are putting the resources they might have used for widgets into mobile apps.
Merchants also stepped up their implementation of user-generated content. What types of user-generated content are hottest? Blog comments saw the biggest leap, from 18% in 2010 to 38% this year, while use of customer reviews/ratings went up from 44% to 57%. Integrating Share this/Facebook/Tweet this increased from 32% to 42%.
What’s not so hot anymore? Surveys and polls fell from 28% in 2010 to 20% this year, while use of forums tumbled from 24% to 13%. It’s likely that merchants are finding that these functions are time consuming to manage but deliver only a minimal payoff.
Print isn’t just about catalogs.
With the cost of catalog postage and paper constantly on the rise, merchants are looking at other print products to reach customers and prospects. The percentage of Outlook respondents who have tried postcards in the past 12 months increased from 46% to 50% this year, while the percentage that used fliers surged from 30% to 40%.
What’s more, the respondents who plan to use fliers in the next 12 months went up from 34% to 40% in 2011. It could be that merchants view fliers selling a few products as a cost-effective compromise between a postcard and a full catalog.
What’s not working so well in terms of noncatalog print? Direct mail, apparently. The percentage planning to use direct mail in the next 12 months fell from 22% in 2010 to just 8% this year.
Everybody loves email.
The most valuable online strategy is email, with a rating of 8.32 on a scale of 1 to 10. (The next most valuable strategy was SEO, with a 7.62, followed by social media with a 5.99.)
Further, 61% plan to increase their marketing spending on email this year, while 33% will keep it the same and 2% will decrease spending on email.
And if respondents had more money in their marketing budget, 47% said they would invest in upgrading their email programs, making this area the top target for any additional funds.
But just 36% of the total respondents are using trigger emails such as birthday messages or abandoned cart reminders — this should be higher.
Consumer merchants are more likely to deploy trigger emails — 41% do vs. 30% of b-to-b respondents. And larger companies are more likely to be doing triggers vs. small: Nearly half (49%) of those with sales of more than $50 million have trigger email programs, compared to 22% of respondents with sales of less than $1 million.
But the other half of the larger respondents (and the 78% of smallest merchants) are missing a huge opportunity by ignoring trigger email programs.
Social media is not that satisfying.
Social media is perhaps not all it was cracked up to be. In rating their satisfaction with their company’s social media efforts, respondents who are extremely satisfied fell from 12% to 9%, and those who are somewhat satisfied slipped from 62% to 53%.
Meanwhile, those respondents who are not very satisfied with social went up from 19% in 2010 to 28% this year, and the percentage who are not at all satisfied crept up from 7% to 11%.
Why has the love affair with social media cooled? Part of this may be managing expectations — social media was touted as the next big thing in 2008-2009, so merchants surveyed early last year who were getting underway with social may have been more hopeful about what it would do for their business.
Social media is also incredibly time consuming, which many merchants started to realize in the past year. Plus, direct marketers like to measure things, and determining the return on investment in social media is proving to be difficult — if not impossible — to do.
Those not using mobile commerce by company size:
|Sales of less than $1 million||75%|
|Sales $1 million-$9.9 million||86%|
|Sales $10 million-$50 million||69%|
|Sales of more than $50 million||68%|
METHODOLOGY On Dec. 9, 2010, an email invitation was sent out from the editor of Multichannel Merchant to subscribers to the print publication. As an incentive to participate, survey respondents were offered the opportunity to win one of four $50 Amazon gift certificates. Subsequent mailings were sent to subscribers of the MCM Weekly, I-Merchant and O+F Advisor e-newsletters, as well as to select members of the American Catalog Mailers Association and of the NEMOA trade organization. By Feb. 15, 2011, 753 responses had been received. Of those, 597 (79.3%) indicated that their company marketed products directly to consumers and/or businesses through a print catalog and/or e-commerce website. Those active respondents form the basis of the results of the survey.
In what social media outlets does your company maintain an active presence?