Pitney Bowes is weeks away from our second annual Retail (R)Evolution event, which is being held May 14-16 in Orlando, Florida. In all, 79 percent of the attendees at Retail (R)Evolution 2017 said that the content exceeded their expectations, and this year’s invite-only event is set to do more of the same with a packed agenda.
The event is headlined by a keynote from Shark Tank’s “Mr. Wonderful,” Kevin O’Leary, who will speak to his unique experience in high-growth retail. We’ll also feature highlights from the 2017 Pitney Bowes Global Ecommerce Report, which is one of the biggest studies ever conducted in the global retail space and seeks to answer a major question driving the industry today: how can retailers grow?
The global ecommerce market is evolving at a rapid pace. Paradigm shifts occur so frequently that many merchants are struggling to catch up to one trend before industry pressures and consumer expectations force them to move on to the next one.
This is a difficult balancing act that has only grown more difficult in the last few years. On one hand, we’ve seen retailers make steady investments in new ecommerce technology and strategies that provide solutions to long-standing challenges, improving everything from customer acquisition and retention numbers to cart conversion rates. On the other hand, the financial requirements involved with these investments also call for making decisions around business model and process changes that are much harder to implement for merchants without large budgets – particularly when there’s no guarantee that that model or process won’t last as the new norm for very long.
It’s to that end that Pitney Bowes commissioned the first Global Ecommerce study to look at this industry through two distinct and equally important perspectives: that of the consumer and the retailer. With help from IDC Research and ORC, and feedback from 1,275 retailers across eight countries and 12,000 consumers spanning 11 global markets, the Pitney Bowes 2017 Global Ecommerce Report takes a both consumer- and retailer-focused look at the industry, examining both the current obstacles to growth in the retail industry and the opportunities to expand in the future.
The retail industry is continuing to make investments into consumer-facing technology solutions at a steady pace. In fact, our study found that spending on retail tech is expected to grow 14 percent annually between now and 2020. What we don’t know, is what shape these investments will ultimately take.
While omnichannel retail – the idea of leveraging physical and digital channels to improve retail experiences for new and current customers – has dominated the conversation in recent years, it also comes with great complexity and costs that are often not sustainable for many retailers. That doesn’t mean merchants should abandon omnichannel, but rather than they should consider how they can enhance their strategy through a more sustainable and profitable unified commerce approach.
There’s a second problematic side effect of omnichannel: more channels can make it hard for retailers to prioritize their investments. Should they spend more on building out engaging, in-store experiences to drive more revenue from brick-and-mortar stores? Should they invest more in automated processes to facilitate efficient digital experiences? Or, should investments be made equally across both areas?
There isn’t a clear hierarchy of priorities, and it becomes harder to corral those priorities when they’re going to be different for every retailer.
Three trends highlight defined growth levers for retail.
Our research has enabled us to identify three key levers that retailers can leverage to drive growth:
01. Take a cue (or two) from marketplaces. Optimize the domestic share: With the frequency of online purchases growing by only 2 percent each year, and online marketplaces attracting the majority of consumer mindshare in nearly every country surveyed, the domestic market is nearing maturity. As a result, retailers are looking for ways to build loyalty with, and increase value from, long-time customers. They could take a cue or two from marketplaces, which offer low-cost, fast and accurate delivery to encourage repeat business. Some retailers are exploring operational improvements to ensure they can efficiently and cost-effectively meet those aggressive delivery demands.
02. Don’t rely on brand alone. Capturing near-border markets: Retailers recognize the significant opportunity of cross-border ecommerce, but many are first dipping their toes into countries that are geographically or culturally adjacent. It’s a priority to keep purchase costs low to eliminate friction for cross-border buyers, 58 percent of whom say shipping costs and fees would prevent them from buying from a foreign retailer. Retailers also want to build brand awareness in these near-border markets, but it’s important to not rely on brand familiarity alone: customers expect fully localized marketing, product information and purchase experiences when they shop online.
03. Look like a foreigner, talk like a local. Expanding into global markets: At the same time, prioritizing near-border markets as a matter of convenience or familiarity has meant that retailers under-serve other countries where customers are already eager to shop cross-border. That could mean missing out on markets with stronger growth potential. Our study found that nearly half of retailers remain hesitant to enter new global markets, and many under-invest in cross-border ecommerce despite the fact that its growth potential rivals that of domestic ecommerce revenue growth. There’s high reward for retailers who invest in cross-border retail: average cross-border order values are 17 percent higher than domestic AOV.
The Pitney Bowes 2017 Global Ecommerce Report provides a deeper dive for retailers to better understand these prime opportunities available to them. And, this is the only beginning – the 2017 report kicks off a series of market insight analyses that will further examine opportunities for retailer growth. We look forward to sharing its findings at Retail (R)Evolution 2018.
To learn more about how these trends can provide key growth opportunities for retailers optimize domestic ecommerce and expand cross-border operations, download the full 2017 Pitney Bowes Global Ecommerce Report. Register now for the Pitney Bowes 2018 (R)Evolution event.