Hershey makes big push into e-commerce, reflective of retail market’s new approach

For some retail companies, the rise of the Internet and the prominence of e-commerce has been an insurmountable challenge. Others have made changes to their company’s structure and adjusted resources to react toward the changing retail landscape and accommodate for a more online-orientated consumer base. Michele Buck, president and CEO of The Hershey Company, recently made announcements of the company’s big push into e-commerce and listing online retail as a major focus and an area of growth, as reported by Business Insider.

Physical retailers are now pressured to make advancements in e-commerce technology as the online and physical markets have begun to meld together. Amazon, one of the world’s leading e-commerce platforms, has made recent acquisitions and investments into the physical market and in doing so is disrupting the landscape. Competition from Amazon can harm even the biggest and most promising companies and IPOs.

“Right now, we’re focused on partnering with retailers and investing in capabilities to unlock growth for our brands online. I believe we are in a really good position to win in an omnichannel world. Todd Tillemans, President U.S., The Hershey Company, 2017

Investment in e-commerce, especially among the retail market, has been on the rise. Walmart, the largest retailer in the world, launched their brand new e-commerce branch “Store No 8,” which will work with startups that specialize in robotics, virtual reality, machine learning and artificial intelligence to expand the company’s e-commerce efforts. Investment in offering an omnichannel shopping experience has become an increasingly popular option for businesses of all sizes. A survey conducted by LinkedIn discovered 41 percent of business owners saw omnichannel will revolutionize the market.

 

While some businesses are of the belief that e-commerce will encompass the entirety of the retail experience,most people prefer in-store shopping in every product category aside from “Books,” “Consumer Electronics” and “Office Supplies.” But that’s not to say that business don’t benefit when e-commerce and the in-person retail experience work in tandem.Consumers have shown an increasing tendency to conduct research online in order to compare prices and products from multiple companies before making a final purchase in-store.

Dirxion online catalogs offer businesses the ability to tap into the rising consumer preference for the omnichannel shopping experience and serves as a complementary product to any e-commerce operation. Dirxion online catalogs are versatile and optimized with HTML5 to ensure cross-platform and multi-browser performance standards are met. Customers are armed with a strong tool to allow consumers to do their own research. The search feature directs users to the exact product they’re looking for without having to search through tabs and pages of results. Customers are able to interact with linked images that open to Quick Views or iFrames of the e-commerce site. Customers can then read pictures, look through photos and even add to their cart without having to leave the online catalog.

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Fraudulent online advertising practices exposed, e-commerce businesses potentially affected

The online advertising market continues to undergo radical changes as it finds its role within e-commerce and the Internet. Anti-trust legislation, market duopoly’s and the role of organic searches have all been under debate within the last year. Most recently, fraudulent advertising techniques have come to light, which has created issues for buyers, sellers and hosts of online advertising of all sizes.

Market growth for online advertising has increased by billions of dollars annually. Advertisers globally spent a collective $170 billion in 2016, according to Ironpaper. With the increasing amount of advertising spending globally, fraudulent advertising practices are taking larger shares of potential revenue. Global revenue wasted on fraudulent traffic might reach over $16 billion in 2017, as per reports from Business Insider. That cut is only expected to increase, with recent projections predicting as much as $50 billion within the next 10 years.

 

Fraudulent online advertising could come in the form of bots delivering artificial views on a purchased ad or sellers buying cheap ad space on low-traffic websites and listing it as a premium spot on a highly-populated website. Ad exchange websites list potential online ad space, often at a discount compared with major companies like Facebook and Google. Some scammers place ad listings for popular websites in what could appear to some as being too-good-to-be-true. But some unsuspecting buyers might pay for this ad space, thinking their ad would appear on a popular website when, in reality, it’s appearing on a low-traffic site that the scammer bought. Also, Integral Ad Science estimates 9 percent of online advertising bought through programmatic channels (essentially using machines to buy advertising space as opposed to human negotiation through trusted avenues) is fraudulent.

Google’s solution, ads.txt, allows web publishers to clearly outline who is and isn’t allowed to sell advertising space on their website. With participation from web publishers and buyers actively making an effort to buy from authorized sellers, fraudulent advertising practices could be curtailed. The incentive to purchase space through ad exchange services has been higher in recent years as Facebook and Google have become the dominant players in online advertising. E-commerce businesses who wanted to increase traffic participated in “Pay-Per-Click” programs, allocating a monthly budget to achieve a certain number of impressions. The cost per click (CPC), however, rose as the platforms became more popular and competition rose for popular keywords. Businesses were drawn to ad exchanges that promised high-traffic ad space for a fraction of the cost.

For e-commerce businesses, growing their websites through organic traffic is sustainable in the long-run, cuts costs that would be used to purchase advertising space and raises traffic at a higher rate than a PPC program would. Dirxion online catalogs offer SEO guide pages that involves a process of indexing every page of the printed catalog. This practice helps boost the overall SEO of the online catalogs site, as well as increase the likelihood of someone finding a catalog page when searching a company’s brand name. In addition, Dirxion online catalogs offer a variation of ad platform services for customers through widgets. The widgets, which come in a variation of sizes and implementations, can be either integrated into an existing advertising program or the customer can sell space directly to customers without having to use an external advertising service.

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Amazon accounts for nearly half of all U.S. online sales, e-commerce

While Amazon has been a powerhouse in the e-commerce market for years, a recent article published by Digital Commerce 360 outlines the extent of the Internet giant’s reach. The article reveals that in 2016, Amazon-owned sites accounted for 43 percent of all online sales within the U.S., followed by a report from Slice Intelligence that discovered more than half of e-commerce growth in the U.S. could be attributed to Amazon.

 

It is incredibly rare for one company to hold 40 percent market share of any retailing segment. To compare, retail giant Walmart has consistently held only 9 percent of the market share for U.S. retail sales since 2012. About 18 percent of Amazon’s growth is accounted under “electronics & accessories” and 19 percent for “other.” The growth stems from a number of in-house developments and acquisitions of other companies. The amount of Echo devices with the Alexa digital assistant sold to shoppers increased by 173 percent from this time last year. Amazon also recently acquired Whole Foods and launched an “Amazon meal kits” service to reportedly compete with new Internet startup Blue Apron.

Amazon has become a primary destination for people to not only make purchases but to research as well. An Internet Retailer survey conducted in December discovered 52 percent of consumers go to Amazon first when searching for products, with Google as the second-most popular option at 38 percent. Research has been an increasingly important role in the product purchase cycle for consumers, as the Internet has made it easier than ever for consumers to compare different products through a variety of sources.

The market for online advertising is in a similar situation, finding itself in a duopoly with Facebook and Google, who have accounted for 99 percent of the growth within the online advertising industry. Because of the new nature of the e-commerce and Internet markets, concentrations of power are fairly common. Innovations are developed within a handful of industry-leading firms.

Dirxion offers tools for businesses to capitalize on the shifting trends and growth in the e-commerce market via online catalogs services. Through differentiation of their shopping experience and engaging in the omni-channel experience, businesses can stake a stronger claim within the market. Dirxion online catalogs are versatile and optimized with HTML5 to ensure cross-platform and multi-browser performance standards are met. Dirxion online catalogs can be integrated into existing e-commerce platforms and live directly on a company’s website to ensure a seamless, optimized shopping experience for customers.

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Stories of brick-and-mortar struggles don’t account for e-commerce adaption mindset

The retail industry in the past two decades has seen a myriad of changes due to the evolving expectations of consumers and the persistent rise of the Internet. Reports and articles across the market have highlighted layoffs, foreclosures and bankruptcies of some of the industry’s biggest players, essentially constructing a narrative where online-exclusive stores will eventually phase out the brick-and-mortar experience. These reports, however, don’t account for the costs associated with e-commerce development and implementation and how stores are finding new ways to create an omnichannel experience for their customers.

There’s been no end of stories lately about retail store closures, layoffs and bankruptcies, but the real story isn’t about physical retail dying. It’s about evolution — and that outlook is very positive.
Ifti Ifhar, CEO, ComQi

E-commerce growth has been somewhat misleading in recent years when analyzed in an isolated scenario. For instance, according to ComQi, e-commerce sales have grown by 14.7 percent in the past four quarters and physical stores have grown by 4.3 percent in the same time period. But when converted to sales, e-commerce brought in $13.5 billion whereas brick and mortar reeled in $47 billion.

But that’s not to say that e-commerce hasn’t taken some of the market away from physical stores. From 2009 to 2017, the percentage of total sales accounted for by e-commerce grew from 4 percent to nearly 9 percent. Consumer preferences across generations have continually preferred to make physical purchases. According to BigCommerce,across all generations, an average of 54 percent of all purchases are made in-store.

Physical stores have been in an adaption mindset, returning to old concepts and evolving them to work in this new market. Most recently, many large brands such as Patagonia and Athleta found success after bringing back or revamping their print catalogs. However, at the same time, other businesses found print to be too expensive, with high printing and shipping costs as well as the risk of shipping out catalogs with very low returns on their print investment. The market eventually found a comfortable medium in online catalogs, as the demand from consumers for companies to deliver a coherent, on-brand omni-channel shopping experience rose.

Dirxion online catalogs have successfully combined the aesthetic and familiar feel of a print catalog with the connectivity and versatility of the e-commerce experience. Dirxion offers custom features such as minimal UI and embedding within an existing domain to create a seamless transition from website to digital publication. And because these online catalogs live within a website URL that is accessible anywhere with an Internet connection, shipping costs are essentially eliminated. Most decisions are a matter of how and when to send an e-mail blast or promote the material on social media sites — an opportunity cost, but not heavy expense.

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E-commerce values merge for international millennial customers

Due to the rise of e-commerce and the Internet, integrated technology has become a daily aspect of everyday life. As covered in a recent TechCrunch article, marketers and industry analysts are discovering these changes are diminishing the power of geographical differences,with generations across the world becoming more alike than ever.

“If you want insight into Chinese millennials, you’re better off looking to their American peers than their Chinese parents. This wasn’t always the case: a Chinese person in their sixties grew up listening to and worshipping Chairman Mao, while an American did the same for the Beatles.” — TechCrunch, 2017

Millennials, those aged 18-34, account for 200 million in the Chinese population and 80 million in the U.S. population. Globally, this generation has been known as “digital natives,” those who have grown up in the digital age, causing customer values to merge. The article points out that the two demographics are unlikely to reach a point in which they’re exactly the same, especially considering the Chinese and U.S. market has large logistical differences in mobile versus desktop preferences, delivery networks and rival in-store shopping options.

For millennials in both the U.S. and Chinese markets, e-commerce has changed to a brand loyalty dynamic. E-commerce performance and brand consistency are held in high regard and are graded under strict scrutiny. Studies conducted by Taylor & Francis Online concluded consumers make an evaluation of a website or e-commerce platform within 50 milliseconds. If expectations aren’t met, consumers are more likely than ever to switch over to a competitor. Online purchases account for 67 percent of all purchases made for millennials, according to BigCommerce.

 

Other international markets have characteristics that make it easy for e-commerce to take hold. Areas who are mobile-first and have economies built without suitable offline shopping options generally thrive as e-commerce rises. New markets within the Chinese economy have taken a similar approach, taking tried and true business models in the U.S. and localizing them. Dirxion online catalogs give businesses an opportunity to tap into the developing global e-commerce market. Dirxion online catalogs can support a variety of languages that allow businesses to deliver an on-brand experience across international barriers.

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MSC Industrial increases customer support to match growing e-commerce

As reported by Digital Commerce 360, MSC Industrial attended the Internet Retailer Conference & Exhibition June 6-9. Senior Director of E-Commerce Mike Roth discussed the company’s balance between investing in the digital shopping experience while still retaining a personal customer service experience. The article points out MSC’s high ranking (72/300) on the 2017 B2B e-commerce 300, a list of high-profile B2B companies that represent 72 percent of B2B e-commerce sales in the U.S.

Steve Baruch, senior vice president, chief strategy and marketing officer, also spoke at the presentation. He highlighted the positive relationship between digital and customer experience and how when digital presence rises customer support has to follow. He and Roth then go on to describe the three ways a B2B business can successfully combine e-commerce and customer service.

MSC Online Catalog

 

1. Know your audience. According to the article, MSC has applied a variety of digitally-driven marketing research to supply their sales teams with information valuable in making personal connections with their customers. By examining certain customer habits, MSC gained valuable information about their customer’s buying behaviors. Such data opens news doors for MSC’s sales team.

2. Listen and respond. By gathering and evaluating customer feedback from a multitude of avenues, MSC has been able to evolve their customer interaction methods. For instance, after analyzing feedback data, the company realized customers wanted their shipping data in real time and changed their website to include shipment tracking. The company adjusted to the changing needs of their customers.

3. Build loyalty by winning your customer’s trust. MSC knows the preferred communication and ordering methods of a business can vary. Baruch mentioned, for instance, that some small customers prefer to work through the website for communication, order management and inventory control but prefer to speak to a dedicated customer care team for real help. MSC also pushes to promote their customer care phone number as a way of balancing online presence and personal care.

 

Dirxion provides MSC with new ways to meet the growing e-commerce needs of their customers through Dirxion’s online catalogs. MSC’s Big Book is embedded within their website and can be accessed from anywhere without having to leave the site. This allows customers to work within their preferred methods of ordering. Other Dirxion features, such as Google Analytics support, allows MSC to know what products their customers are interested in and interact with the most. Dirxion’s customization capabilities keeps the catalog on-brand, an aspect of building brand loyalty and earning customer trust.

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Online catalogs give businesses a way to meet generational needs

E-commerce creates a unique scenario for many businesses. The rise of the Internet in the early 1990s has divided generations and given way to various expectations, values and skepticism with regards to the online shopping experience.

The Pew Research Center discovered 77 percent of U.S. adults own smartphones. But when divided by age group, the data shows a much clearer picture. For instance, 92 percent of U.S. adults ages 18-29 own a smartphone, compared to 74 percent when looking at U.S. adults ages 50-64. How U.S. adults interact with those devices, especially with regards to e-commerce, can help explain shopping trends among different generations.

E-commerce is at a crossroads where consumers who grew up in the Internet era and those who were introduced to it in a later stage in their lives share a space within the online market. Studies conducted by BigCommerce, an e-commerce software development company, have revealed online shopping and e-commerce takes up varying degrees of shopping per generation. For instance, Millennials do 67 percent of their shopping online whereas Baby Boomers do 59 percent of their shopping in-store.

Despite this, across all generations, certain trends remain consistent. Large retailers make up a greater majority of the places U.S. adults shop (73 percent on average). What each generation considers “influential” in deciding to make online purchases follows the same pattern. With a commanding average of 71 percent, reviews have the biggest influence on a consumer’s decision to purchase, followed by friends and family and then advertisements.

In order to capture the attention and trust of customers across all generations, businesses have realized a strong and trustworthy online presence is key to meeting the values and expectations of each customer. Dirxion’s online catalog services provide a strong complimentary product to any business’s e-commerce site. Capitalizing on a familiar layout and easy-to-use format, the online catalogs create a hassle-free experience for any Generation X or Baby Boomer customer. Similarly, the fast-loading, integrated shopping technology meets the needs of Millennial shoppers.

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Rise in e-commerce exemplifies change in consumer habits

In this year’s first quarter, U.S. consumers spent a collective $106 billion and drove e-commerce sales up 14.7 percent from a year ago, according to a recent article published in U.S. News. The article includes the Quarterly Retail E-Commerce Sales report for Q1 2017, as published by the U.S. Department of Commerce. The study includes data from 2007, wherein retail e-commerce sales made up only 3.5 percent of all retail sales, having now increased to 8.5 percent in 2017.

Tim Stringfellow, president and chief investment officer of Frost Investment Advisors, is quoted in the U.S. News article: “the big winner (and more indicative of the health and mindset of the consumer) was the online retailing category.” Statista, a statistics and studies gathering website, estimates total retail e-commerce sales will reach roughly $354 billion dollars in the U.S. in 2017.

 

The article suggests consumers are changing the ways in which they spend their money. For many companies, this required a replanning of how much time and money they spend on the physical aspects of their businesses. In April of 2016, Victoria’s Secret announced it would discontinue producing its physical catalog, once used as a means for customers to buy items from the catalog via a phone call. Arnie Preston, the investor relations officer of the parent company L Brands, estimated Victoria’s Secret spent between $125-$150 million annually on the catalog.

As both retail and B2B companies cut back on print, Dirxion continues to be called upon to create a strong online catalogs experience. Dirxion’s online catalog services allow retailers to stay alongside consumer’s evolving online habits while delivering a seamless and on-brand shopping experience. This is done by integrating existing programming from e-commerce sites and hosting a catalog on a dedicated URL. This allows the catalog to live within the customer’s website.

A good example of this is through Dirxion customer David’s Bridal. Dirxion integrates programming developed by David’s Bridal’s website. When customers interact with linked products throughout the catalog, an iFrame opens within the catalog that is pointed directly at the URL where a product is hosted. This allows customers to look at available sizes, colors and even add that particular item to their shopping cart, all without breaking the shopping experience. Such practices allow for the publisher’s e-commerce strategies to take hold within the online catalogs, creating a common user experience and easier path to purchase.Davids Bridal Online Catalog

 

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Studies show manufacturers favor distributors with strong e-commerce

The message from manufacturers to distributors is to get your e-commerce up to snuff, according to recent surveys conducted by Modern Distribution Management (MDM). A post earlier this month summarized some of the findings and analyses that pointed toward the importance of online transaction practices.

Dean Mueller and Jonathan Bein of Real Results Marketing are quoted in the MDM article, and they believe manufacturers understand that “the path to sales growth includes offering products in multiple channels, with e-commerce at the forefront.”

Mueller and Bein state that manufactures want to partner with distributors who have a more-established e-commerce channel because they “don’t have time to nurture distributors without solid e-commerce options.” MDM supports this claim with statistics that show manufacturers are actually further along in their e-commerce development than distributors. According to MDM, the percentage of manufacturers who report e-commerce as less than 10 percent of total revenue is lowering (from 57 percent in 2015 to 41 percent in 2016); meanwhile, the number of manufacturers reporting 10-30 percent e-commerce revenue is growing (15 percent increase from 2015-2016).

Distributors, on the other hand, haven’t been as quick to shift from the nascent (fewer than 10 percent revenue) to the mature (10-30 percent of revenue) stage. There has been only a 7 percent drop in the nascent stage and a corresponding 5-percent gain in the mature stage. In other words, distributors aren’t growing their e-commerce revenue as quickly as manufacturers.

MDM also claims that manufacturers are deliberately looking for distributors that will help develop markets and drive traffic to online channels. “They want partners that will help sell product benefits through the online channel, such as adding short videos about the products to their websites,” the article states.

Dirxion has seen an emphasis placed on rich media among its online catalogs customers. This emphasis has resulted in new developments like the “Videos” tab that stores a library of videos within the online catalogs interface. HD Supply showcases 14 different categories in its online catalogs videos tab, which can be found on the left-hand side of its interface.

HD Supply Catalog

In linking product numbers to e-commerce pages, Dirxion plays a vital role in strengthening the distributor’s e-commerce results. One of the most notable examples of this is MSC, whose e-commerce revenues continue to climb. Please visit the previous link for more information on Dirxion’s work with MSC.

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