Digital report: Ecommerce - The great ecommerce opportunity

Ecommerce is revolutionising the business landscape and, as every brand has the potential to become a retailer, the stakes are high, writes Adam Woods.

ASOS: offers fully integrated fcommerce store
ASOS: offers fully integrated fcommerce store

Two-thirds (65%) of chief marketing officers feel under-prepared for new channels, while 68% feel out of their depth with social media, IBM's Global Chief Marketing Officer Study revealed last month. Yet ecommerce contributes an estimated £100bn to the UK economy, according to Boston Consulting Group, with 'fcommerce' the flavour of 2011.

Somewhere between the heady revenues and the marketing directors' terror lies the truth of brands' renewed engagement with ecommerce. A dozen years after the peak of the dotcom bubble, major retailers are still working hard to translate their high-street impact to the web, but recent years have provided new technology and insight.

For many brands, ecommerce is an umbrella for a multitude of strategic goals, including cutting-edge positioning, relationship building, product-launch activity, and a degree of innovation and flexibility that can't be engineered in-store.

From Heinz's personalised ketchup labels and Tesco's pop-up Facebook Halloween store to the fully integrated fcommerce stores of ASOS.com and French Connection, much of the sharpest recent activity draws on the social capabilities and mass reach of social-media channels, and functions as both revenue stream and marketing tool.

Elsewhere, big retailers such as B&Q and Tesco work with increasing sophistication toward integrating their physical and online operations, with sales their goal.

Meanwhile, FMCG brand-owners such as Unilever, GlaxoSmithKline and Procter & Gamble, not retailers in their own right, are becoming keen assisters, driving ecommerce purchases through social media for brands as diverse as Magnum and Dove.

For brands and retailers alike, ecommerce offers plenty of attractions, from jogging people out of ingrained trolley routes to less obvious advantages. Unilever ecommerce director Andy Houghton estimates that people buying online are up to 15% more brand-loyal than offline shoppers; such customers can also be expected to spend more on an average online shopping trip than they might in-store.

'A lot of rules for in-store marketing are written,' Houghton told last month's IGD Online Grocery Retailing conference. 'For suppliers, there is a lot of room online for creativity and collaboration with retailers to try different things and work with new technology. We enjoyed that element of being slightly away from the traditional, process-driven, execution side of things.'

Unwanted distraction

As consumers have become comfortable buying a wider range of products online, there is a growing opportunity for brands. For many marketers, however, it remains an unwanted distraction from core business practices that have always worked well.

'Retail, in lots of respects, is a pretty passive environment,' says Chris Buckley, director of social engagement at agency TMW. 'Retailers have been good at controlling elements of the purchase experience, but have been slow to get behind other things.'

Christian Gladwell, chief executive of social-media research agency Human Digital, is more direct about traditional executives' antipathy toward ecommerce.

'I recently sat with the chief executive of a well-known lingerie brand, who said, "I hate ecommerce. I built my brand on the in-store experience,"' he says. 'So I said, "How much does it cost you to sell a pair of tights through an outlet? And how much does it cost you online? So why would you not want to do more of that?" But it's the friction between the known and the unknown.'

It remains the case that the average marketing director is no digital native and, in the medium term, the sharp rise of ecommerce will shift the balance of power in traditional marketing departments.

'The decision-makers are about 40,' says Gladwell. 'They didn't grow up with this world, and they feel threatened at a personal level. They are scared internally, because the young thruster on the ecommerce site is 28 or 30, and they don't understand the reports they are reading.'

Social media buzz

Underscoring the strangeness of ecommerce to marketers of a certain age is the increasing importance of social media. Setting aside the rush among retailers and brands to embed ecommerce functionality into Facebook pages, or promotional activity such as discounts in exchange for Facebook 'likes', there are examples of social media creating a buzz that the equivalent conventional advertising spend never could.

Shoes Of Prey, an Australia-based etailer of bespoke women's shoes, created a startling case study when it sent a pair to teenage YouTube blogger Blair Fowler. Having had 200,000 visitors to its site in total before the (paid-for) video aired in March 2010, the figure rose to 700,000 in one week.

'We're still in the process of picking ourselves up off the floor after witnessing first-hand that a 16-year-old YouTuber can deliver us three times the traffic in a couple of days as some excellent traditional media coverage has over five months,' blogged Shoes Of Prey co-founder Michael Fox.

Such outsider marketing isn't necessarily a great fit for major brands, although the uniquely knowing Facebook environment provides plentiful opportunities for smart brands to connect, with an ecommerce twist.

'It is more of a marketing opportunity than an ecommerce one,' says Robin Grant, managing director of We Are Social, which built the fcommerce experiences for Heinz and Tesco. 'It is more about giving communities of fans an opportunity to buy things exclusively, as a reward for being fans.'

Consequently, fcommerce represents an intriguing new boutique side to ecommerce, where revenues don't come at the expense of a massive and complex fulfilment operation.

'The jury is out on whether ecommerce retailers need to put their entire store on Facebook,' says Grant. 'But for FMCG brands, there are opportunities to reward their advocates, and in a way that is simple to fulfil and involves only one or two products.'

Archibald Ingall Stretton is building an fcommerce site for an electronics retailer. Creative director Geoff Gower says: 'It is marketing in its own right. There is not a real business case behind it, but social commerce is seen as a valid piece of brand marketing.'

Harsh reality

CRM-driven, quasi-commercial activities avoid many of the harsh realities of hardcore ecommerce, which remains a risky and complicated business with the ability to enhance or cannibalise in-store sales. Fashion retailer French Connection has thrown itself into ecommerce during the past two years, recruiting a management team to lead it into fcommerce and 'Youtiques'. Other retailers will no doubt be paying attention to the commercial return from its gamble.

For clicks-and-mortar retailers, online sales may be cheaper to make, but they will happen only if the online experience maintains the values of the offline brand - although perhaps not in too literal a sense.

'When supermarkets came online, you went up and down a virtual aisle, which was ridiculous,' says Catherine Becker, chief operating officer at AdConnection, which works for Sofa.com and Poggenpohl.

Driving customers toward ecommerce requires different methods from directing them to a store, which makes it tricky for marketers attempting to balance the two.

'For online, we have found TV works well, as you are likely to have an iPad or an iPhone or a laptop on your knee,' says Becker. 'Maybe outdoor or a Bluetooth voucher code is the one you see when you're near the store.'

The real challenge may well become how to drive people into shops. In fact, as bricks-and-mortar stores shut their doors at an alarming rate, the future of ecommerce seems secure, if only by default.


Imran Ahmed, Founder and editor, The Business of Fashion

  1. Social curation 'Everyone is an editor in social fashion. Before, (it) was confined to Vogue, GQ and Vanity Fair, now it can be anyone.'
  2. Subscription retail 'Sites such as GlossyBox.co.uk offer a pack of samples of new and breakthrough products every month.
  3. Mass customisation 'Luxury products from brands such as Prada and Burberry can now be customised to your every whim.'
  4. Pre-commerce 'Fashion Week has gone from being a trade event to a consumer event - consumer participation is key.'
  5. Transmedia story-telling 'We don't have to tell the same story on the same channel any more. Just look at Glee. There is the TV show, it's on iTunes and there are live concerts. That's the way we can tune into these new platforms.'

Ahmed was speaking at the Walpole Luxury Ebusiness Forum 2011