Exploring The Latest E-Commerce Industry Trends

With the largest e-commerce conference in the nation taking place in Chicago next week (June 8th through 11th) and e-commerce sales expected to account for 53 percent of all retail sales in 2014, according to Forrester Research we were excited to explore the latest trends in e-commerce with Alex Schmelkin. Alex is the co–founder and president of New York based, Alexander Interactive (Ai). Ai has been helping companies build their business online since the advent of the Internet and we picked Alex’s brain a bit on the e-commerce industry and where it is going by asking him the following questions.

How did you get involved in the e-commerce industry?
I have been involved in the web industry since the mid 1990’s.  My first digital agency focused more closely on backend technology and transactional web development.  When I started Ai in 2002, I brought this transactional expertise to the company.  The other Ai co-founder, Josh Levine, Chief Experience Officer, comes from the user experience and graphic design side of the business.  The combination of our personal talents–my focus on transactional development and Josh’s on user experience design–quickly compelled a very natural service offering for e-commerce companies.

What are some consumer web retail trends that entrepreneurs might be interested in knowing?
Group buying: offering discounts or exclusive merchandise to shoppers based on their activity is an exciting, word-of-mouth-building trend. Shoppers must sign up to receive merchandise sale alerts, which are offered to members and often have a minimum purchase amount: “we can offer this discount if 12 people sign up for it.” This makes for compelling purchase opportunities.

Flash sales: Maintaining an attentive userbase is crucial in this era of email overload. One way to keep shoppers focused is to give discernible time limits to offers. Many sites (led by Gilt Groupe) are offering sales with defined start and end times. This gives items an air of exclusivity and forces people to come to a site at regular intervals, encouraging them to buy while they can.

Location-based interaction: the continued rise of mobile devices and improved IP targeting means that sites can give experiences based on location. A website can give localized prices and different product arrays based on the origin location of a user.

What are some of the latest transactional intelligence tools that are being employed?
Happy to see the reference to Ti.  Three of the most important tools in today’s arsenal are dynamic personalization technology, multivariate testing, and contextual visualization.

Dynamic personalization presents an online retail experience specifically tailored to an individual customer’s needs.  It’s our way of attempting to replicate the skills of an in-store retail sales associate.  The more we learn about a shopper, from the first landing page through which she entered a site, to her purchase history and wish-list items, we can better present both products and a precise UX to which we know she will favorably respond.  If you browse the flat-panel TV of a website close to the Superbowl, the site can take a guess that you’re a football fan and here to upgrade just before the big game.  Dynamic personalization technology will pick up on this and other queues, attempt to establish a correlation to similar shoppers that match your profile, and adjust the promotions, calls-to-action, and recommended products accordingly.  There are a few examples of dynamic personalization implemented on our client sites upon which I’m happy to expand (BizFilings.com, Steiner Sports).

And while nothing new, multivariate testing still reigns supreme as the most effective tool in an e-commerce company’s Ti arsenal.  Small incremental improvements to the homepage, browse, product, cart, and checkout paths can yield dramatic sales increases in aggregate.  Connecting multivariate tests to the dynamic personalization strategies is our solution to the next level of optimization.

Another Ti tool is contextual visualization.  Shoppers increasingly expect to visualize how a product will fit into their life and style. Retailers who allow shoppers to visualize how products look on them and match with other products they are shopping for and already own will have a significant leg up in the e-commerce marketplace.  Two great examples of this (not our work) are Lowe’s Sunnyvale and Laudi Vidni.

What are the effects of social networking on the e-commerce industry?

A brand’s fans and loyalists can be an incredibly powerful publicity engine.  We have found that consumers are going to have an online conversation with their friends and colleagues about a brands’ products in the places where they are already hanging out: Facebook, Twitter, group/flash sale shopping sites, and other social outlets.  It’s an obvious advantage for e-commerce companies to take part of, contribute to, and attempt to shape this conversation.

Despite much of the backlash about privacy in recent weeks and months, we find that consumers are not racing to delete their online social accounts.  Instead, they’re cautiously embracing the latest advanced.  We were quick to add the Facebook “I Like This” function to one of our client sides, SteinerSports.com.  Within hours, and a bit to our surprise, shoppers by the dozens were taking advantage of the feature.

What are the effects of the mobile boom on the e-commerce industry?
Mobile is the fastest growing segment of visitors to e-commerce websites.  While still a small percentage of the whole, many sites are experiencing 50% to 500% growth over the last year.  One of the sites in our client portfolio is projecting over 10% of site traffic to come from mobile by the end of the 2010 holiday season.  2008 and 2009 were the years that people finally believed m-commerce was here.  2010 is the year that many sites are moving beyond mobile catalogs to mobile-based transactions.  2011 and 2012 will bring a competitive mobile environment that will begin to affect the revenue of major online brands.  If you’re not allowing customers to both browse your catalog and conduct transactions on a mobile device, your customers will seek out other brands that offer such experiences.

With user experience being crucial in the shopping experience online, what is the biggest thing that is often forgotten or overlooked?
Anticipating and allowing for human error, also known as Defensive Design.  UX designers focus a majority of their time putting a structure in place that is built to avoid error and to make things easy to find and buy, as they should.  However, they often overlook the fact that people will still make mistakes – regardless of how perfect is an e-com design.  E-commerce sites need to be more forgiving and designed to allow for human error.  Proper error messaging and very clear, concise calls to action are the primary tenets of Defensive Design.

Photo Attribution: Shopping Cart photo by Mykl Roventine

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Written by:
Frank Gruber is the cofounder, CEO and Executive Editor of Tech.Co (formerly Tech Cocktail). He is the author of the book, Startup Mixology, Tech Cocktail’s Guide to Building, Growing, and Celebrating Startup Success. He is also a startup advisor and investor to startups. Find Frank Gruber online and follow him on Twitter at @FrankGruber.
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