Analyzing the current and future Polish e-commerce sector against the backdrop of the global market challenges
Both market giants and SMEs are currently trying to mark their presence on the e-commerce market – not only to build their competitive advantage, but to keep up with new consumer habits.
Asia in the lead
The dynamic growth of e-commerce is a global phenomenon. Interestingly, the market keeps growing the fastest in the Asia and Pacific region. According to eMarketer, this part of the world enjoys a 52.5% share in the global e-commerce market, generating $877 billion in online sales. The YoY growth equals 35.7% (2015 data). It is estimated that 80 million new buyers opting for online channels will soon be active in the Asia and Pacific region. The forecasts referred to above bear some meaning for the European market as well. The European Union has four strategic partners in the Asia and Pacific region: China, India, Japan and the Republic of Korea.
Are online stores ready to accommodate the needs of the new consumer?
The conclusion is simple – customers are willing to purchase online, but businesses are not always able to keep up with customers’ needs. According to the Central Statistical Office’s 2016 data, only 13.6% businesses that maintain their own website (67% of all businesses) enable customers to order or book their products online.
According to the report titled Digitization of the Polish SME sector, only 15.2% of SMEs maintain websites that are specifically adapted for viewing on smartphones or tablets. The majority of SMEs fail to notice the potential of social media (69.1%), where their customers are spending more and more time.
Today’s consumers switch between different sales channels and rarely end their shopping journey at the original point of entry. The following phenomena may be distinguished here:
- ROPO (Research Online, Purchase Offline);
- Showrooming (checking and trying products on in a stationary store and then purchasing online. Those two activities are often taking place simultaneously – the customer researches a product of interest during a visit to a physical store);
- ROTOPO (Research Online, Test Offline, Purchase Online);
- M-commerce, i.e. purchases made with the use of mobile devices.
Mobile devices may serve as a link between the online and offline worlds. Only 7% of consumers who own a smartphone never use them while shopping (source: M-commerce. Buying online, November 2016) – the remaining 93% compare various offers, look for discounts, take images of the product, log in to their social media accounts, use coupons or discounts received by e-mail, or pay with their mobile device. Smartphones have completely changed the position of the customer, who may now easily make a purchase from any location, but may also use a mobile device to verify opinions about a given store or product, and publicly share their opinion about a given brand. The customer may become an ambassador, or may cause a serious crisis – all in the blink of an eye.
Delivery: where is the customer looking for value?
When buying online, customers are neither willing to wait for the product, nor pay extra for its delivery. That is why the click & collect model is so popular. It is a hybrid of online and offline shopping and one of the most important trends in the modern e-commerce industry.
The click & collect approach allows the consumer to purchase the products online and then collect the order from a physical shop. This solution combines the advantages of both channels: the customer buys whenever and wherever they desire (in the evening, in the confines of their home, or while on a trip), and then collect their purchase from a store, e.g. on their way home from work. This model helps customers save time – they no longer have to wait in line or be stressed about the availability of products or about locating them on the shelves. Simultaneously, this approach offers costs of delivery that are lower than in the case of a courier service, and the customer may choose on their own when to pick up the products – they don’t have to be worried about being present at home when the courier calls.
This specific model continues to gain in popularity. In Great Britain, where the share of e-commerce is the highest in the world (13%), click & collect accounts for one third of that figure. In 2015, Britons placed 140 million click & collect orders, and the value of the market is estimated at $8.7 billion – twice as much as in 2012 (source: The Deloitte Consumer Review Digital Predictions 2015).
E-commerce vs. Big Data
Big Data provides the e-commerce market with completely new opportunities involving numerous aspects of business operation – from communications, to logistics and production. These include, inter alia, the following:
- More in-depth knowledge about the customers, building complex customer profiles, researching their behaviors and needs
- Personalization of messages and products; marketing campaigns based on user behaviors
- Predictive marketing, i.e. automatic prediction of what our customer is going to need, based on the history of his purchases and on the shopping paths of other users. Based on such data, more relevant product recommendations may be made
- More efficient measurement of business activity and tracking profits generated by the individual channels, campaigns or product groups
- Increasing customer’s loyalty and profit-per-customer
- Dynamic price definition depending on the availability of products and on customer profile
- Better procurement management (e.g. ability to predict which products will be in higher demand over a specific period of time).
The amount of data will grow, as will be the number of devices that collect it – smart watches, cars or household appliances may all become precious tools in the hands of marketers. The technical resources required to process the data will play a key role as well, just as will the knowledge enabling marketers to translate the data into a competitive business strategy.
Cross-border commerce or e-exports
The consumers of today are operating on the global market: they often buy from a country that differs from their place of residence. It is expected that the value of cross-border online sales will break the barrier of $1 trillion by 2020, with the number of cross-border shoppers increasing from nearly 400 million at present, to over 1 billion (Cross-Border eCommerce: Threat or Opportunity). Cross-border shopping is motivated primarily by prices or availability of goods, as well as by the quality of products. The commodities that are most frequently purchased abroad include clothing, shoes, electronics, cosmetics and books.
Consumers are not the only ones affected by the global market. Numerous local companies will be impacted by the international expansion associated with cross-border commerce.
Increased customer awareness
All trends observed involve a growing level of customer awareness and deeper knowledge about the e-commerce market. This applies to B2B and B2C segments, as well as to the consumers’ shopping behaviors. Retailers are ever more frequently adopting the omnichannel approach in an attempt to meet the expectations of consumers who are using online and offline channels on a regular basis to compare offers, look for information about products and choose the most advantageous and comfortable method of finalizing the transaction. Popularization of the omnichannel model means that the online market will be entered by the largest sales chains, that online stores will cease to operate on the web only and will have to “meet” the customer at stationary locations for click & collect orders, and that additional collection and delivery services will be required. It is, however, the combination of all sales channels into a single, coherent system suiting the needs and habits of the buyer that is of key significance here.