What Black Friday can tell us about the state of E-Commerce in the US Today

With it being the peak season for online retailing over the next few weeks I thought this would be a good opportunity to provide some further insights into how Advertising Online has changed from the old Browse With Us, By From Them model to the new improved Browse With Us, Buy From Us model.

By cross referencing ComScore’s report on Holiday E-Commerce Spending and IAB’s Half Year and Full Year Online Advertising Reports we discover that US E-Commerce Retailers will do more business in November and December than the US Online Advertising Industry does in the whole year.

Indeed the Retail E-Commerce continues to be roughly 6 times the size of the online advertising industry.

US Retail E-Commerce vs Online Advertising Revenues 2009-2010

The simple message is if you have a web site and it isn’t a shop front that allows you to sell more products and services what are you doing online?

A question that leads me to another report released this week by Zoomerang on SME Business Marketing Practices [PDF] that was covered by Mashable.

The report suggested that Web Sites were a key ingredient of the SME marketing mix. 54% of respondents already had a web site and it was the marketing tactic most likely to have a budget increase next year. Most had built the site to provide general information about the business (i.e. 80%). However less than 15% had spent money advertising online or on SOE to drive traffic to the web site.

This of course is a common marketing error. Building a web site for this purpose is no more productive that printing a color brochure making it available at the reception desk.

Just as people won’t read the brochure unless they have found the office. Nobody will look at the web site until they know the business exists. Put simply: Building a web site and hoping they will come is a proven waste of precious marketing dollars. You would be better off “blowing” the whole budget on a one-off TV spot or a full-page Newspaper Ad because at least your message would be out in the marketplace. As I have said before you would be better off placing a billboard in the desert.

What was also interesting was the news that only 30% of those SME’s employing the web site marketing tactic had built an E-Commerce site. This suggests that after 15 years of the web as a B2B platform only 16% of SME’s have some kind of E-Commerce strategy in place. Again this is probably a key indicator of why the B2B E-Commerce hubs have consistently failed to ignite the marketplace (Think: Ariba)

On the mobile front Retail Touch Points reports that Mobile Could Be Real-Time Game-Changer For Black Friday Shopping with industry experts suggesting the real-time access consumers can find via smart phones could be a potential threat to the usually-high expectation for in-store traffic. Meanwhile a new report from IHL Services [PDF] indicates that 41% of smartphone owners have checked competitive prices on their smartphones while in a retail store either with Amazon, Red Laser,or other comparison engine (Think: ShopSavvy).

This upward trend in mobile price comparison data dovetails nicely into the data released by the old school ad agency Leo Burnett who has published a report for retailers that suggests 50% of consumers say that the in-store shopping experience and seeing a product in real life is still irreplaceable. This supports a recent paper in the American Scientist on why Brains Like To Keep It Real.

“In this age of fierce competition between Internet marketing and traditional retail, merchants want to know: Which approach stirs potential customers most?

Experiments by neuroeconomist Antonio Rangel and his colleagues suggest that the old pop song chorus—“Ain’t nothing like the real thing, baby”—might have it right.” – American Scientist

Throw in the arrival of Facebook Deals, well publicized start-ups like Groupon and mobile deal aggregation apps like Dealmap into the mix and you can see why the potential for mCommerce (Circa 2010) is so much more exciting for bricks and mortar than the old eCommerce model (Circa 1995).

Further Reading

C0mScore 6-1-2011 - U.S. Online Holiday Shopping Season Reaches Record $32.6 Billion for November-December Period, Up 12 Percent vs. Year Ago

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