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July 11, 2011 – The ‘New e-Normal’ and the rosy outlook it brings

July 22, 2011
Filed under Uncategorized

There is a line in the world of e-retail that some of us simply hesitate to cross.

Not that we don’t see value or the trend toward more online consumer spending, but it’s that techie part of the e-commerce world with which so many of us simply feel uncomfortable. We’re becoming adept with our smartphones, but start with the acronym soup of SEO and SEM and our comfort levels and attention spans decrease in equal measure.

The level of complexity in today’s online atmosphere rivals that of a 1,000cc sport bike engine. Heck, there are even tools now that test the speed of a website, little PC dynos if you will.

Surveys reveal most Web shoppers expect a site to load in less than two seconds. If it’s a second more, they disengage and probably don’t return.

Can you imagine having to meet the same level of service in the shop?

So the technology is a little overwhelming, our attention spans a little underwhelming, but the payoff just keeps climbing. A recent quarterly report for U.S. e-commerce provided some surprising news — not only has U.S. online shopping returned to pre-recession levels, it has eclipsed them. That’s according to comScore Inc., a respected source of digital market intelligence.

For much of the past two years, we’ve fretted not only about reduced consumer confidence, but what the long-term scars on our industry would look like after new unit sales plummeted some 50 percent or more in some key unit categories. We’ve come to accept a general negative industry outlook by referring to our near-term expectations as the “New Normal.”

Well in one part of our industry — e-commerce — the new normal is appearing to be a lot better than the old normal.

And not just because of the amount of business that category is generating, but the diversity of that clientele. As comScore noted in its quarterly U.S. e-commerce report, the demographic of the e-commerce buyer is incredibly varied. In fact, the consumer who has an income of less than $50,000 a year spent more money in the first quarter this year online than the year-ago quarter. That’s wonderful news for the dirt bike segment. Equally positive, the highest income level — think the V-twin crowd — also spent more online in the first quarter than the year-ago period.

And that’s reflective of the results we see with the industry’s sales, at least those reported by one of the industry’s leading e-commerce providers. Same store parts sales for more than 900 dealers nationwide were up 3.2 percent in May 2011 over the year-ago month, according to ADP Lightspeed. As a percentage increase, industry e-commerce sales continue to significantly outperform stores’ parts department sales, as indicated in the same store sales, as well as the nation’s total retail sales.

So how to cash in?
First off, re-examine some of your e-commerce biases. The discount mentality, for example. Yes, there is quite a bit of discounted product sold online, but it’s far from the only product moving. Saks Fifth Avenue and Recreational Equipment Inc. (REI), not exactly destinations for the discount shopper, report that more than 10 percent of their total sales are now coming online.

Second mentality: I can’t compete with the big Internet retailers. While it’s true that on a national scale, the top 25 Internet retailers, Amazon included, capture the lion’s share of the revenue, there is a sizable chunk — think billions — still in the pot. More importantly, the market share controlled by the top Internet retailers has decreased in the past two quarters, a trend that is likely to continue if recent history is an accurate indicator.

But to cash in, there has to be attention to this part of your business. If you want to generate additional online sales of PG&A, then ensure the top of your website home page is dedicated in some part to these sales. One of the more effective brick-and-mortar dealers in selling e-commerce has a large “OEM Parts Finder” button directly below its name banner on its home page. OEM hard parts are big sellers online, and this dealer has clearly indicated to his shoppers that he’s their source.

Secondly, don’t forget Facebook. While you don’t want to turn your social networking into solely a sales channel, it shouldn’t be overlooked as a PG&A marketing tool.

Lastly, don’t discount the impact of shipping costs on the consumer mindset. The percent of online transactions utilizing free shipping jumped to nearly half of all orders in the most recent quarter, comScore reported.

While our collective e-business acumen and comfort level is still developing in the industry, clearly there is no such hesitancy with our clientele.

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