An Oracle White Paper March 2011
E-Commerce Technology Investment Priorities for the Midsize Enterprise: A Research Study
E-Commerce Technology Investment Priorities for the Midsize Enterprise: A Research Study
Introduction ......................................................................................... 1 Survey Overview ................................................................................. 3 Research Highlights ............................................................................ 5 Most Critical Sales Channel ............................................................ 5 Dissatisfaction with Current Business Tools ................................... 5 Priorities for Action .......................................................................... 6 Most-Important Sales Growth Metrics ............................................. 6 Confidence in Current Commerce Platform to Drive Growth .......... 7 Survey Results .................................................................................... 8 Methodology ...................................................................................... 13 Conclusion ........................................................................................ 13
E-Commerce Technology Investment Priorities for the Midsize Enterprise: A Research Study
Introduction In late 2009 and early 2010, ATG (acquired by Oracle in 2010) commissioned a survey to look at two key questions: •
Among midsize and rapidly growing companies, how much confidence do merchants have that the technologies and business tools they are currently using can fuel future growth?
•
What tools and technologies do these companies expect to invest in to achieve their growth objectives within the next one to three years?
This online study polled e-business executives at 60 midsize companies ranging from retailers and consumer product manufacturers to telecommunications and technology providers. Specific topics covered in the survey include the following: •
The importance of the Web channel to midsize merchants’ overall growth strategies
•
Merchants’ satisfaction with the customer experience offered by their current Websites
•
Website features that merchants plan to significantly improve in the coming months
•
The role that segmentation and targeting play in merchants’ Web and cross-channel merchandising strategy and whether their current business tools deliver the functionality they need to drive additional sales growth
•
The level of confidence at midsize companies in their existing business platforms and whether they plan to replatform or invest in new e-business services to optimize their Websites to drive conversion rates and order sizes
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E-Commerce Technology Investment Priorities for the Midsize Enterprise: A Research Study
•
The incorporation of tools such as automated product recommendation engines, live help solutions, social commerce features, and mobile offerings
The results of this survey are presented in this white paper, highlighting the types of e-commerce tools in which fast-growing organizations plan to invest in the coming years.
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E-Commerce Technology Investment Priorities for the Midsize Enterprise: A Research Study
Survey Overview As consumers’ options for researching and purchasing products or services have expanded, the Web has emerged as one of the most critical touch points within the broader cross-channel shopping experience. Today, fast-growing companies are targeting the online channel as strategic to their business growth. Many such organizations are starting to feel the growing pains associated with firstgeneration e-business Websites that no longer support their needs while, at the same time, e-business is rapidly becoming more complex and more competitive. To differentiate from competitors and capitalize on Web growth opportunities, these merchants are investing in new technologies, services, and business tools that empower them with more control and greater agility to improve the customer experience. Some merchants are looking to accomplish these goals by optimizing their sites with new features and capabilities that enable them to target specific segments of customers with personalized promotions, product recommendations, and live help. Many organizations are finding they need foundational change and are completely redesigning and relaunching their Web stores on a more fully functional business platform. To learn more about how fast-growing companies are responding to this challenge, the survey (commissioned by ATG prior to its acquisition by Oracle) polled media, entertainment, travel, and financial services brands with overall revenue up to US$500 million and Web revenue up to US$100 million. The study analyzed their investment priorities pertaining to e-business technologies. The survey also gathered data about their experience with current tools and business platforms and about their plans to incorporate emerging sales channels, such as mobile and social commerce capabilities, into their overall Web and cross-channel strategy. Key findings of the survey include the following: •
Dissatisfaction with current online presence. An overwhelming majority (80 percent) of fastgrowing merchants identified online growth as very important or critical to their overall business in the near future, yet a substantial number of respondents are not satisfied with the customer experience offered by their current site. Although merchants place value on increasing return visitors to drive repeat business and on encouraging new visits as growth metrics, they are not as high on the list of priorities as encouraging larger order sizes and higher conversion rates for the visitors that are already coming to the site. Midsize companies are already expending significant resources on marketing to and attracting visitors; to get a higher return on this investment, they need more browsers to convert to buyers.
•
Dissatisfaction with Web and cross-channel merchandising tools. Nearly all fast-growing merchants (98 percent) said segmentation and targeting are important to their overall Web and crosschannel merchandising strategy, yet more than half are not satisfied with the business tools they have for merchandising and promotions. As midsize enterprises continue to grow and compete with more-established companies or market leaders, they are concerned about improving the customer experience and want to use more-sophisticated business tools for merchandising, catalog
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E-Commerce Technology Investment Priorities for the Midsize Enterprise: A Research Study
management, and promotions. These brands are looking to gain a competitive advantage, drive conversion rates, and increase order sizes by personalizing the site experience.
Figure 1. More than half of respondents are not satisfied with their business tools for merchandising and promotions. •
The drive to invest in new e-business platforms. One-third of fast-growing merchants will invest in a new business platform, presumably driven by the need to improve the customer experience and gain access to advanced merchandising features for segmentation and targeting. Merchants are likely looking to upgrade to more-modern platforms that have rules-based segmentation capabilities built in as well as sophisticated search functionalities.
Figure 2. Almost all respondents indicated that segmentation and targeting are important to their strategies. •
The drive to invest in mobile and social commerce and add-on technologies. More than half of fast-growing merchants plan to enhance the customer experience by experimenting with emerging sales channels, such as mobile and social commerce, and 42 percent of respondents plan to improve
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E-Commerce Technology Investment Priorities for the Midsize Enterprise: A Research Study
their sites by investing in add-on services, widgets, and tools they can implement on their existing sites. Of those looking to optimize their sites with add-on technologies and services, more than half identified automated recommendations engines as a technology in which they will invest to drive conversion rates and average order sizes up, while nearly 30 percent said they are looking to implement live help solutions.
Research Highlights Fast-growing companies are making e-business technology a high priority. The following survey highlights provide insight into merchants’ experiences and their plans for capturing the vast online market.
Most Critical Sales Channel When asked which sales channel is most critical to fostering customer loyalty and driving sales, more than three-quarters of midsize merchants identified the Web as a critical channel, with 80 percent of respondents stating that e-business growth is very important or critical to their overall business in the next one to three years. Merchants acknowledged that delivering a compelling cross-channel customer experience is important (including the Web, bricks-and-mortar stores, mobile technology, social networks, third-party sites, resellers and sales partners, and call centers), with nearly one-third of respondents calling all sales channels equally critical (respondents were able to select multiple answers). It is clear that driving Web revenue is a primary business objective for midsize companies and yet, on average, 40 percent of the merchants surveyed said they are not satisfied with their site’s current ability to maximize revenue potential. Nearly every survey participant sees the value in using personalization to improve customer experience and drive sales online. According to survey results •
98 percent said segmentation and targeting are important to their overall Web and cross-channel merchandising strategy.
•
Half (51 percent) identified segmentation and targeting as very important or critical to their merchandising strategy.
Dissatisfaction with Current Business Tools When merchants were asked which aspects of their Website’s shopping experience they would like to significantly improve in the next 6 to 24 months, half (52 percent) cited dissatisfaction with the business tools they use for merchandising and promotions. According to survey results •
62 percent said they would like to improve their ability to offer, control, and manage cross-sells and up-sells to encourage more sales.
•
60 percent said they would like to improve their site search functionalities.
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E-Commerce Technology Investment Priorities for the Midsize Enterprise: A Research Study
•
55 percent said they would like to improve their ability to offer, control, and manage promotions.
•
37 percent said they would like to improve their site’s help and customer service features.
(Respondents were able to select multiple answers.)
Priorities for Action When asked about their plans and priorities to make the improvements discussed above, 74 percent of merchants said that improving their business tools for merchandising and promotions was an important priority. 78 percent said that improving their business tools for content and site management was an important priority. These findings highlight a clear demand among fast-growing merchants for better business tools that offer more control and flexibility in applying segmentation and targeting to merchandising. The results underscore the need for these companies to tap into technologies and services that enable personalization in everything from promotions and product recommendations to search results and customer service options. In examining the challenges midsize merchants face with their current merchandising and promotions tools, merchants responded as follows: •
66 percent said they are too manual and not automated enough.
•
38 percent said they are difficult to use.
•
30 percent said they do not have enough control over site content.
•
23 percent said they do not have enough control over the product catalog.
Most-Important Sales Growth Metrics When asked to rank the sales growth metrics they are most looking to improve, the majority of midsize merchants noted that the dual goals of encouraging larger order sizes and higher conversion rates for visitors already shopping their sites are higher priority than encouraging new and return visitors to their Web stores. Specifically, 68 percent of respondents stated that increasing conversion rates is one of their most important growth metrics and 67 percent highlighted their desire to increase average order sizes. In comparison, 51 percent said that driving new site visitors is an important growth metric and 41 percent named driving return visits as an important growth metric.
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E-Commerce Technology Investment Priorities for the Midsize Enterprise: A Research Study
Figure 3. Increasing conversion rates and new site visitors are top priorities for midsize merchants.
Respondents were asked to select specific features in which they plan to invest to achieve their prioritized metrics: •
Nearly 70 percent selected improved search/faceted search functionality.
•
More than half (52 percent) selected multivariate (A/B) testing capabilities.
•
More than half (52 percent) selected automated recommendations engines.
•
40 percent selected social media/community features.
•
34 percent selected mobile commerce capabilities/applications
•
Nearly 30 percent selected click-to-call and click-to-chat live help options
Confidence in Current Commerce Platform to Drive Growth A substantial number of fast-growing merchants admitted a lack of confidence that their current commerce platforms could handle and drive additional growth over the next one to three years. Nearly a third of all survey participants said they were not confident that their current platform could handle their growth, and 37 percent said they were unhappy with their current site availability and uptime. When asked how they plan to improve their sites’ ability to drive additional growth in the near future, merchants responded as follows: •
33 percent plan to completely replace their existing commerce platform and relaunch their Web store.
•
42 percent plan to invest in add-on services, widgets, and tools that they can implement on their existing site.
•
53 percent plan to experiment with emerging sales channels, such as mobile and social commerce.
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E-Commerce Technology Investment Priorities for the Midsize Enterprise: A Research Study
Survey Results The survey featured the following questions, along with the responses as represented in the accompanying charts. •
On a scale of one to five, how satisfied are you with your Website’s current shopping experience, as it pertains to maximizing your revenue potential?
Figure 4. 40 percent of merchants surveyed are dissatisfied with the shopping experience on their current Websites. •
On a scale of one to five, how satisfied are you with the business tools you have access to for controlling, creating, and managing merchandising and promotions?
Figure 5. More than half of respondents are not satisfied with their business tools for merchandising and promotions.
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E-Commerce Technology Investment Priorities for the Midsize Enterprise: A Research Study
•
Which aspects of your Website’s shopping experience would you like to significantly improve in the next 6 to 24 months? (Select all that apply.)
Figure 6. Strategies for cross-sells and up-sells top the list of ways merchants will improve their Websites in the near future. •
What challenges do you have with the merchandising and promotions tools you have access to? (Select all that apply.)
Figure 7. Automation of merchandising and promotions tools would address the top challenge cited by midsize merchants.
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E-Commerce Technology Investment Priorities for the Midsize Enterprise: A Research Study
•
What is your average conversion rate (percentage of site visits that result in purchase)?
Figure 8. With nearly half of respondents reporting conversion rates of 3 percent or less, midsize merchants put increasing conversion rates at the top of their priorities for growth metrics. •
On a scale of one to five, how important are segmentation and targeting to your overall Web and cross-channel merchandising strategy?
Figure 9. Almost all respondents indicated that segmentation and targeting are important to their strategies. •
What sales growth metric is most important for you to improve? (Please rank them in order of priority, with 1 being most important and 4 being least important.)
Figure 10. Increasing conversion rates and new site visitors are top priorities for midsize merchants.
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E-Commerce Technology Investment Priorities for the Midsize Enterprise: A Research Study
•
In which of the following sales channels is it most critical to deliver a superior customer experience, to foster customer loyalty, and to drive sales? (Select all that apply.)
Figure 11. The Web is by far the sales channel most midsize merchants consider most important to drive sales. •
On a scale of one to five, how important is e-commerce growth to your overall business over the next one to three years?
Figure 12. E-commerce growth is critical to nearly half of all respondents. •
How do you plan to improve your site’s performance and drive additional growth in the near future? (Select all that apply.)
Figure 13. Midsize merchants are committed to making major changes to drive growth online and in emerging channels.
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E-Commerce Technology Investment Priorities for the Midsize Enterprise: A Research Study
•
How confident are you that your current e-commerce platform will be able to handle and drive additional growth over the next one to three years?
Figure 14. 61 percent of respondents are less than “very confident” that their current e-commerce platform can handle future growth. •
Which of the following features do you see as potentially improving the overall experience on your site and helping your business meet the metrics prioritized above? (Select all that apply.)
Figure 15. Product search and viewing capabilities top the list of features merchants see as improving the customer experience.
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E-Commerce Technology Investment Priorities for the Midsize Enterprise: A Research Study
•
How important are each of the following business drivers to improving your site? (Please prioritize the below options, with 1 being most important and 5 being least important.)
Figure 16. Midsize merchants by far put improving the user experience as a priority that would drive business.
Methodology Responses to the “E-Commerce Technology Investment Priorities for the Mid-Market” survey, commissioned by an Oracle affiliate, were generated from a pool of 60 midsize merchants that opted in to the company’s Commerce Trends Research program. Participants included both current customers of the Oracle affiliate running the survey and customers of other companies not currently using the technologies of our affiliate. Survey respondents were comprised of executives responsible for their company’s e-commerce initiatives at companies with total revenue up to US$500 million and Web revenue up to US$100 million. The study was commissioned and deployed in late 2009 and early 2010.
Conclusion As the Web has rapidly become one of the primary ways in which consumers find out about and purchase products and services, fast-growing companies are catching up by updating or overhauling their Websites. This survey of e-commerce executives across a wide range of industries in the midsize market revealed that improving Web and cross-channel strategies is at least very important to a large majority of these merchants (80 percent), but the tools they are using are not getting the job done in key areas. A substantial number of merchants are not satisfied with the customer experience their Websites offer. The survey showed that segmentation and targeting are important to almost all merchants (98 percent), and yet more than half are not satisfied with their current merchandising and promotions tools. Not surprisingly, given these levels of dissatisfaction with critical e-business tools, one-third of merchants will invest in a new commerce platform. More than half will move into tapping emerging sales channels such as mobile devices and social media, and nearly half will invest in other tools to improve their Websites such as add-on services and widgets.
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E-Commerce Technology Investment Priorities
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