Business

4 things you should know about e-commerce in 2014

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This sponsored post is produced by Siva Kumar, Co-Founder & CEO, TheFind, Inc.

U.S. e-commerce touched $230B in 2013 according to Forrester research, and grew 13% year over year. This growth is poised to continue as more and more consumers move their shopping dollars online. More than 30% of e-commerce traffic is driven by Search, making it a dominant force according to Internet Retailer.

However, over the past year, the shopping search landscape has changed dramatically. Major search engines, Google and Bing have moved their shopping results to a 100% paid model, driven by Product Listing Ads (PLAs). Comparison-shopping engines, like NexTag have always been commercially driven, but as retailers scale down their participation to spread their advertising dollars, shopping results for consumers are suffering.

What impact has these changes had on the consumer shopping experience? What opportunity does this open up?

According to comScore, mobile traffic to retailer sites now exceeds 45%. How are these changes affecting m-commerce and user experience on smart phones & tablets?

Consumers are paying more, and seeing less.

The consumer shopping experience, driven by new commercial models, has degraded significantly. Consumers are seeing only selected products, from a subset of stores, resulting in less choice and in most cases, higher prices. Retailers have to spread their advertising dollars more to gain traffic. Many retailers have had to trim down their advertising to a few core products in their catalogs; often ones with higher margins to offset increased advertising costs.

TheFind recently conducted a study to compare shopping searches across major search engines and comparison shopping sites, to quantify the impact to consumers. The study which compared results over 50 searches in 6 shopping categories found that Google’s price is 12% higher on average, compared to the lowest available online, with Bing at 25% and Yahoo at 31% premium.

Above: TheFind Shopping Search Comparison Test, Mar 2014

Lowest price isn’t the only thing. Consumers want local, coupons and reviews and more.

Comparison shopping engines are focused on just the price aspect of comparison, and with retailers scaling down participation they are not always delivering the best results. Consumers, however, want much more. Purchase decisions are being driven by other elements like local stores, seller ratings, product reviews, visual search, coupons, return policies, shipping costs, payment options, etc. Most shopping search options for consumers do not provide these elements, leading to a very disjointed and often time consuming and frustrating shopping experience.

Above: TheFind Shopping Search Comparison Test, Mar 2014

Finding all the stores selling something is becoming increasingly difficult.

Huge online retailers like Amazon and eBay only show stores in their own marketplaces. With the changes to shopping search, consumers will find it difficult to find all the stores selling a product. As part of the comparison study, TheFind found that the comparison-shopping sites found significantly fewer stores across searches, and hence the limited scope of their results.

avgsearchresults_stores

Above: TheFind Shopping Search Comparison Test, Mar 2014

M-commerce is impacted even more so, given the scarcity of visual real estate.

This reversal by search engines, to show just ads, has clearly impacted consumers’ shopping experience, especially on mobile devices. Once, shoppers figure out the difference, they shift their usage to a new search engine, one geared to providing the best results and experience for shopping search, and saving time and money. Changing search engines is now easier than ever because users don’t even have to shift the default search engine on their browser. All they have to do is to download the best shopping search app onto smart phones and tablets, and use it for shopping searches anywhere and everywhere.

Implications and Opportunities

Shopping search is a technically difficult problem that requires both cutting edge computer science and state-of-the-art Big Data to scale high quality product information across shopping categories. TheFind, for example, scales 500 million unique product offers, across over 500,000 online stores, where usually 160 million of these offers change daily. The only others to have scaled this combination successfully are Google and Amazon.

Near-term, the challenges with shopping search are in delivering a comprehensive consumer experience on mobile devices, addressing online and offline shopping, helping consumers with “what to buy” type searches and delivering better discovery and post-transaction experiences.

Retailers are not in a position to solve this across shopping categories and search engines have made the decision to focus on advertising revenue. The opportunity to provide a comprehensive, vertical shopping search experience, across web and mobile platforms for consumers is wide open.

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This is the first in a series of three posts. To be continued…


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