Market Trends March 2018
Ecommerce Should Set Records
US ecommerce sales will represent 10% of total retail sales this year, growing 16% to $526.09 billion, according to a report by eMarketer. Total retail sales will grow 3.7% to reach nearly $5.3 trillion. Mobile commerce (mcommerce) will continue to surge, rising more than 32% this year to $208.29 billion. Mcommerce will make up 39.6% of ecommerce sales as well as 4.0% of total retail sales this year and is expected to account for nearly half (49.2%) of total ecommerce sales by 2020. The bulk (71.5%) of mcommerce this year will come from smartphones, which will continue to capture a growing share in the US, while tablets’ portion will continue to decline, according to the report. The report also predicts that ecommerce will grow to 12.4% of US retail sales in 2020. This year, there will be 190.3 million digital buyers in the US, nearly 70% of the population, up 3.2% over last year. The largest share of digital buyers (20.5%) are between 25 and 34, followed by 35-44-year olds and 45-54-year olds. In 2018 there will be 155.5 million mobile buyers, up 5.6% over last year. About 64.7% of those mobile buyers will use a smartphone to make the purchase.
Amazon is preparing to launch a business delivery service that will directly compete with FedEx and UPS, according to the Wall Street Journal. The service, Shipping with Amazon (SWA), will entail Amazon picking up packages from businesses and shipping them to consumers, according to sources who talked with WSJ. It’s the latest move by Amazon to create their own parcel and freight delivery network. They’ve already expanded into ocean freight, built a network of drivers who can deliver inside homes, leased up to 40 aircraft and established an air cargo hub. Amazon already delivers some of their own orders in at least 37 US cities and is rolling out free two-hour delivery from Whole Foods for Amazon Prime members in some markets, with plans to expand nationwide this year.
Millennials Impact Warehouse Clubs
Millennials are relying on online sites and Amazon when they want to order items in bulk, or make other purchases their parents went to warehouse stores to make. Analysts say core club members are older and are generally people with a home and a family. Analysts say warehouse retailers have been very slow to shift business online, offer home delivery or make other big changes to better compete with Amazon and online shopping. Warehouse clubs and supercenters cut an average of 2,500 jobs each month in 2017, reversing a longtime trend of steady growth. Between 2009 and 2016, warehouse stores had added an average of 3,000 workers each month. Many millennials are turning to online retailer Boxed, which offers free delivery, usually within two days, and no membership fee. More than 60% of Boxed shoppers are between 25 and 44.
Amazon Go Store: Cool or Creepy?
Now that Amazon has opened their Amazon Go store in Seattle to the public, journalists and analysts are speculating how people feel about the high-tech store where customers scan an app on their smartphone, shop and just leave without going through a checkout. Hundreds of cameras in the ceiling look down on shoppers as they roam the aisles. Amazon wants shopping there to be “effortless and magical.” Customers on the first day reported grabbing items for lunch and leaving in less than two minutes. Write-ups about the store range from “it’s supremely techy-cool” to “it’s creepy, as if you stepped into Big Brother.”
Technology Monitors Workers
Amazon has patented a bracelet that can track the position of warehouse workers’ hands and monitor their actions. If an employee starts to place products in the wrong container, the device will indicate an error. In theory, this method is supposed to improve the efficiency of the personnel. The bracelet is composed of three components and emits ultrasonic and radio signals. There are special receivers placed around the perimeter of the work area. The computer module processes the data and determines the position of the employee’s hands in relation to the storage basket. The patent application was submitted in 2016 but not approved until January of this year.
Artificial Intelligence with a Personality
Amazon’s unique commercial for AI voice Alexa was the top rated ad in the Super Bowl, according to USA Today’s 30th Ad Meter. The commercial claims that Alexa is losing her voice and uses celebrities who appeal to different age groups who try to replace her. Alexa already seemed “real” to many devoted users; by the close of the Super Bowl, she had achieved celebrity status. Just the mere fact that everyone refers to Alexa as “she” instead of “it” is a good indication of how real she seems. The commercial did not say how Alexa lost her voice, but if you ask Alexa if she’s sick, she answers “I came down with a case of the acting bug, but I’ve got it out of my system...for now.”
Interacting with Customers is Key
The value of a brand in today’s world is precarious at best, if the brand is not able to interact with customers directly and constantly across multiple devices. It’s important to bond with customers, know who they are and talk to them in their own language, according to a recent report in eMarketer. If customers bond with brands they will be more loyal, according to a study by Media Post. Until now, brands have used digital as a means to reach a broad audience. Now the goal is becoming finding ways to interact with individual consumers in ways that resonate with them. Building this sort of direct relationship builds business, cements relationships and provides a wealth of valuable data that can be used to fine-tune marketing efforts.
Nest Moving Back into Google
Alphabet is moving their smart home appliances subsidiary, Nest, back into Google as part of their efforts to ward off growing competition from Amazon. Nest has been operating as a standalone business for the past two years. Nest was the largest generator of revenue within Alphabet’s “Other Bets” businesses, part of their strategy to find the next big thing outside of advertising. Other companies within the “Other Bets” category include driverless firm Waymo and healthcare group Verify.
Consumers on Hi-Tech Shopping
Many consumers already know which technologies they'd like their favorite retail brands to offer in the near future. According to a global survey of 2,250 internet users conducted by retail management platform provider iVend Retail, in partnership with AYTM Market Research. Roughly a third of respondents said they would like to make automatic payments using digital shopping carts, but only one in five wanted biometric ID and payment. Consumers also see hi tech as an opportunity to liven up the overall shopping experience, with 24.9% of those polled saying they'd like their favorite retailers to offer interactive fitting rooms, and another 16.7% liking the idea of voice-activated shopping. Virtual/augmented reality and interactive signage (19.7%) were also popular, as well as in-store robots to assist with customer service. However, not everyone embraces shopping technology; 36% of respondents did not want to use new technologies when they shop.
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