eCommerce Is Having Unexpected Impacts on Offline Sales!
Image credits - all to KPCB report
“Reality is the dynamics of global innovation and competition are driving product improvements, which, in turn, are driving usage and monetization,” says Mary Meeker, a partner at venture capital firm Kleiner, Perkins, Caufield & Byers (KPCB) in her recently released annual internet trends 294-slide report that looks at a dozen online trends in detail.
Signifying its importance, more than 50 slides are dedicated to the B2C eCommerce trend. We recommend reviewing them all but, in case you don't have time, here are the points we think are most significant for B2B industrial suppliers:
- US eCommerce sales grew 16% year-over-year (vs. 14% the previous year)
- eCommerce now has a 13% share of total US retail sales
- Average US adult hours spent online increased to 5.9 hours/day
- When researching product purchases, 49% of shoppers begin with searches on Amazon.com (36% begin with search engines). Amazon’s market share has increased to 28% of that up from 20% in 2013 – see our posts here and here about selling via Amazon
- Product discovery online is increasing - social media referrals to e-commerce purchases rose 6% in 2017
- eCommerce is helping reduce prices for consumers – “Online prices are falling – absolutely and relative to – traditional inflation measures like the CPI. Inflation online is, literally, 200 basis points [2%] lower per year than what the CPI has been showing.” - Austan Goolsbee, Professor of Economics, University of Chicago Booth School of Business, May, 2018
Here's Our Take for Industrial Suppliers:
It’s old news that eCommerce continues to grow and gain overall share - we’ve blogged about B2B eCommerce dwarfing B2C eCommerce and repeatedly recommended that industrial suppliers add their own eCommerce capabilities or use Amazon (or preferably both) to keep up with this trend.
It’s also old news that technology (such as eCommerce) is disrupting existing businesses but did you know (as the graph on the right shows) that the new technology adoption rate is actually accelerating as new technologies are widely adopted faster!
So what's the NEW NEWS?
- Online sales are no longer just purchases of products being searched for with text descriptions. Product discovery has moved online too as products are being ‘discovered’ then purchased. For example:
- in social media, information ‘feeds’ customized to individual’s needs or interests provide discovery (see pie chart on right)
- images presented by users are analyzed by artificial intelligence (AI) to recognize products
- for industrial suppliers product CAD models syndicated to CAD portals (such as 3DModelSpace) are discovered there
- eCommerce competition and cost reductions are leading to falling online prices. This occurring in B2C implies that B2B industrial suppliers should anticipate competitors with eCommerce capabilities will use them for price competition online and then offline too. As Hal Varian, Chief Economist at Google, put it in May 2018, “We've seen how technology can make online shopping more efficient, with lower prices, more selection & increased convenience. We are about to see the same thing happen to offline shopping.”
At CDS we review and share all available research, like this KCPB report, as we continue to develop our industrial marketing technologies and services to help B2B industrial suppliers succeed with online marketing and eCommerce. As always, please share your comments below or, if you'd like our opinion on your B2B eCommerce plans, please call us or click either button below: