March 15, 2007

What Does Your Website Look Like In 2017?

Doug Mack at Shop.org talks about the future of multichannel websites. In the article, notice that an individual at Gartner talks about everybody being held hostage by "Googazon". Remind your multichannel retailing co-workers that you heard that concept first on The MineThatData Blog!

The online channel is likely to evolve very differently, depending upon the business model employed by the retailer. Let's review three business models, and the likely evolution of the websites these business models manage.

Catalog + Online Retailer: Multichannel Forensics dictates that catalog customers are transferring loyalty to the online channel. Businesses with an older customer base are experiencing this transition much slower than businesses with a younger customer base. Over the next ten years, this evolution will drive a dramatic transformation of the catalog advertising channel. The catalog becomes a "brand advertising" tactic that drives business to the website, or communicates the general attributes of "the brand". The website must sell merchandise. This will drive website design toward the most efficient layout, one that easily facilitates a customer purchase during any one specific visit.

Direct + Retail Channels: As retailing splits into two niches (low-cost and high-end), websites will evolve accordingly. High-end retailers will see less and less value in e-commerce, and will see more and more value in using the website as the primary tool for customers to interact with a brand. For instance, L.L. Bean reported 73 million annual online visitors during 2006. I imagine that Neiman Marcus had more than 100 million annual online visitors during 2006. What the heck do you think will happen to these websites when brand marketers wrestle control of the website from the clutches of the technology folks? No other marketing activity replaces the experience of a hundred million individuals who volunteer their personal time to spend time on your website. If 100 million customers and prospects volunteer to spend their free time on your website, you have a responsibility to configure the website to facilitate any and all possible retail transactions. The Direct + Retail website will become the entertainment and information arm of a retailer --- e-commerce will be, at best, a secondary function that serves the purpose of meeting a specific customer need at a specific point in time. These businesses, in my opinion, are the most likely to use Social Media in the future --- integrating Social Media with the retail purchasing experience. Maybe most interesting will be the evolution of virtual-reality sites, as either competition to today's websites, or as the logical evolution of today's websites. The experience will be what matters, not e-commerce.

Online Pureplays: Expect online pureplays to compete with catalogers and retailers by hyper-innovation and hyper-price-based competition. These businesses will have to make their sites a destination, a place where people want to spend time. This strategy will be at direct odds with the intense pressure associated with the need to sell merchandise to survive. Darwinian evolution drives these businesses toward the lowest price, fastest shipping, and best merchandise selection. Expect these businesses to develop partnerships with Google and a likely family of search successors, so that traffic is diverted away from multichannel retail sites.

Ok folks, time for you to chime in. How do you think websites will evolve over the next ten years? What trends do you expect to come to the forefront for each business model?

3 comments:

  1. Anonymous3:34 AM

    Kevin,
    Interesting point about marketing taking over websites--in many cases it already has. The challenge remains--how do you take brick&mortar window browsing experience and translate that to web? Because window browsing is what drives most impulse shopping that the retail stores thrive on.
    You are definitely onto it with the Social media, as today, most online customers are functional in the sense they "need" something, they research on web, see a good price, debate risk of buying online from cheaper no-name brand, at B&M store or their related website, or the new online brands(Amazon, Overstock, Buy, etc), weight s&h and overall cost, and point is they usually buy based on price.
    If they "want" something, they are driven to web by catalog for a particular item(s), word of mouth(viral)* or possibly other advertising.
    However, most people don't go browsing retail sites, not even Amazon, as they would a mall.

    So as you point out for web 2017 buying becomes secondary to getting visitors--but how do you make a website like a mall or the old-fashion department stores(think Wanamakers or Marshal Fields)?
    First off, malls and old fashion department stores drive people to their stores by attractions, then by sales. A lego convention, the Wanamkers light show, an Ashley Tisdale appearance, etc. These are then coordinated with sales--I took my 3 daughters(9-13) to see a disney channel appearance at our local mall last month, which was obviously mobbed with kids all in that age bracket. Rave Girl was positioned right across from stage and of course had a sale going on and of course benefited.
    The website has to have another reason for you to go their website besides funtional sales need. If you go to a website regularly, not just to shop but to listen to a new music release or the hottest youtube type movie, then you could be pulled into buying something there. The trick is how to display so the tween there to hear the latest Ashley Tisdale song sees the cool Bobby Jack jacket on sale on your site.
    Other points--how do you advertise the attractions on your retail site without coming across as crass and manipulative? *Viral marketing helps but it can also backfire very easily.
    And how does marketing justify the expense of an online concert, etc., when actual retail sales from event will be harder to predict than at a mall or B&M store?
    Regarding your fear of hyper-price competition---do you see a "walmart" effect ever happening on the web? That is, one giant company able to compete just on price dominates the net?
    K

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  2. small sorta offtopic note: I think the phrase is Googlezon (that's how Wikipedia has it, despite the mangling by Gartner) and the phrase comes from Epic 2014 and Epic 2015, some breathlessly silly flash videos worth a watch

    Wikipedia
    http://en.wikipedia.org/wiki/Googlezon

    links to Epics
    http://epic.makingithappen.co.uk/

    Alan

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  3. Thanks for the links, Alan ... interesting!

    Regarding the evolution of the internet, Anonymous, I think this Web 2.0 thing is just the first in a series of iterations that eventually move the online experience to a "virtual reality" experience. Now this might be 10 or 20 or 50 years away ... but eventually, the online experience is a virtual version of the mall-based or retail experience. And when that happens, there will be a series of advertising-based processes that morph along with the retailing experience, driving traffic to the virtual sites. And maybe Google/Amazon or competitors we can't envision today will house a very-low-cost, mass-merchandise environment that attracts the most customers.

    Anyway, it's fun to dream. And none of that is relevant when trying to drive business today, with the tools available to us in 2007.

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