Welcome to our new E-Commerce Insider newsletter, a morning email with the top news and analysis on the e-commerce industry, produced by BI Intelligence.
ECONOMICS OF E-COMMERCE: Josh Hannah, a general partner at private equity firm Matrix Partners, published an insightful piece about scaling a successful e-commerce business. Hannah focuses on customer acquisition costs, and why it’s important for online retailers to reduce the cost of re-acquiring existing customers. “Retail customers are fickle and forgetful. They will find other merchants they like, and even if they continue to like your business, they will forget to come back to shop. That is, unless you create a systematic method of re-engagement with no marginal cost,” explained Hannah.
Online retailers can keep their marketing costs down when trying to re-engage customers by offering loyalty programs, flash sales, or subscriptions for products that consumers typically purchase on a recurring schedule. Entire e-commerce companies have been built around these models (such as BirchBox’s subscription business, and Gilt’s flash sales). Hannah argues that there is still a lot of room for innovation. (Pando Daily)
KEEPING YOUR TOP CUSTOMERS HAPPY: Related to Josh Hannah’s piece about the economics of online retail, retail analytics company RJ Metrics released some new data showing how critical it is to retain top customers. RJ Metrics looked at data from hundreds of online retailers and found that the top 10% of customers spend $US163 per order, which is three times more than the remaining 90% of customers spend on average. What’s more, the typical online store generates 43% of its revenue from repeat customers. Many retailers focus their efforts on acquiring new customers, but it’s important to not forget about keeping loyal customers happy in order to retain their business. (RJ Metrics)
STARBUCKS LOOKS TO MOBILE REVENUE: Mobile is becoming increasingly more important to Starbucks’s overall business. The company revealed at its annual shareholder meeting that mobile transactions have grown from 10% to 14% of U.S. sales. Starbucks CEO Howard Shultz said the coffee chain’s mobile success is due to investments made ahead of the growth curve. The company recently announced two new features for its iPhone app — digital tipping and “shake-to-pay.” The company is also planning to test an order-ahead feature this year, allowing customers to place their orders before arriving in-store. (Mobile Commerce Daily)
ANOTHER REASON WHY MOBILE IS SO IMPORTANT: Mobile shopping might only account for a sliver of total retail sales, but its influence on consumers and where they decide to shop cannot be overlooked. Fifty-five per cent of retail marketing emails are opened only on tablets and smartphones, according to a new study released by Yes Lifecycle Marketing (a unit of Yesmail Interactive). For comparison, 36% are opened only on PCs and just 9% are opened on both desktop and mobile devices. Because email is a core marketing tactic for so many retailers, it’s important that they format their email campaigns so that they are viewed easily on device screens that vary in size. (Yesmail)
WELCOME, E-COMMERCE INSIDERS: This is our new newsletter covering all things e-commerce. Please email [email protected] with news and tips. Click here to sign up for E-Commerce Insights today, and receive it every morning in your inbox.
VULNERABILITY OF OMNI-CHANNEL RETAILERS: Cross-channel (or, omni-channel) retailers are finding it difficult to deter theft and fraud. In addition to credit card fraud, retailers who allow consumers to buy online but return products in-store without a receipt have “created a perfect fraud culture,” said Wal-Mart’s Director of Global E-Commerce Investigations Fred Helm. Fraud often plagues new financial opportunities, and so it’s important for retailers to mitigate their risks by investing in cyber-security. For example, Helm says that he helps lead a team of data analysts and investigators at Wal-Mart who monitor unusual customer activity. (Internet Retailer)
WET SEAL RAISES MONEY TO BOLSTER E-COMMERCE EFFORTS: Teen apparel retailer Wet Seal raised $US27 million from an institutional investor to shift its focus from offline, to online shopping. “This transaction enhances our capital structure at a time when our industry is challenged by a number of macro issues, most notably mall traffic and teen shopping patterns,” said Wet Seal CEO John Goodman. Wet Seal plans to invest heavily this year in its e-commerce business to compensate for declining offline sales. (Business Wire)
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