During this year also, some things have changed in online retail. 2016 also held one or two challenges in store for retailers and brand manufacturers. We have compiled the various developments into a small market analysis and look back in the following article over the year in eCommerce.
“Our sector is doing very well. Accompanied by a stable consumer climate and an increasing buying propensity, we will be concluding this year with double-digit, above average growth” – Christoph Wenk-Fischer, Managing Director of bevh.
Market concentration in eCommerce has increased further
Online giants like Amazon, Zalando and Otto.de can look back positively over the year. By year’s end, the eCommerce association bevh is estimating a growth in turnover of 15 percent, in comparison to last year. Responsible for this growth in eCommerce are largely the major top players. 40.4 percent of total sales of the top 1,000 online shops were generated by the ten strongest-selling retailers combined – which itself corresponds to 14.3 billion Euro.
Small to medium-sized shops, on the other hand, are having to fight ever harder against crowding out by Amazon. Although some retailers did determine the appropriate strategy against the market giants, many are attempting to differentiate themselves with own brands or by emulating online-first concepts.
Manufacturers are also confronted with increasing displeasure at Amazon. After all, its demands for advertising subsidies can in part no longer be accommodated. But at the same time, Amazon is too important a sales channel to withdraw from the marketplace.
Market analysis: Unstoppable power in online retail
The growth in eCommerce is being driven above all by the digital latecomers of furniture and furnishings as well as DIY and garden. Online-foodstuffs retail in particular, about which we recently reported in our blog, has gained significantly in dynamic. For the first time, online-foodstuff retailers have entered the rankings of the 100 strongest-selling shops.
Across all sectors, mobile shopping is and remains an unstoppable driver in eCommerce. Responsive design or mobile shopping apps have been the strongest additional sales channels of 2016. 82 percent of the top 1,000 have optimised their online shop for smartphone & co.
Promising trends: Virtual reality and voice concepts
2016 has seen a major advance towards voice and virtual reality technologies, which represent an exciting developmental potential to online retail. New devices are steadily turning up, which are turning the existing market upside down. Examples here would be the smart home assistants named Amazon Echo and Google Home, which are revolutionising the interface of man-machine interaction. Speak rather than type! Information about making products responsive to voice-capability or virtual/augmented reality will become a new challenge to eCommerce. Whether these concepts will really dominate online tansactions in the future will be decided ultimately by customers. But you will need to be prepared for this new way of interaction whilst shopping.
Big data – From hype to business reality
The developments involving big data have this year shifted to the extent that the hype surrounding the topic has now been levelled. Big data has become much more than just a buzzword – and the discussions are becoming increasingly more business oriented. The management, the evaluation and the monetary value of these data volumes stand at the focus. After all, with the growing infrastructure of the data, also the methodology and the software for evaluation constantly develop further. For this reason, the analysis and application of big data for retailers is becoming increasingly certain.
The intelligent analysis of customer and competitor data represents an enormous competitive advantage to retailers in eCommerce. But only those who can understand and integrate the information, which remains obscured within huge data volumes, will stand ahead of other providers in the competition. The correct deployment of tools today helps retailers to incorporate big data analysis into strategic decisions. This helps online retailers to increase sales at their webshops. Our blackbee Retail Intelligence Suite also collects millions of product datasets daily on the Internet – and does so at a matchless precision. We then structure and process this data so that retailers and brand manufacturers can utilise the supplied information directly for market analyses.
Progressive digitisation is increasing pressure on prices
Most companies overlook the topic of price observation on the Internet in their digitisation strategy or feel overwhelmed by it. This was the central finding of the Global Pricing Study 2016 from SKP.
“Many companies confront the challenges of digitisation with the tools of yesterday. But the fact is the test-phase in eCommerce is completely over! Also with pricing on the net, companies need to keep up with the times“ – Georg Tacke, CEO at Simon-Kucher & Partners.
Digitisation, however, does not necessarily pose a risk to margins and prices. Quite the opposite, in fact: Using tailor-made software solutions for price optimisation online retailers are unlocking potential from the market much better. This was proven in 2016 by the best companies in the Global Pricing Study, who recorded 27 percent higher profits.
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