Report: E-Commerce Saturation Will Create Super-Marketers

According to a new report by Forrester Research, Inc., the eventual saturation of the e-commerce marketplace will be responsible for creating a new breed of super e-marketers known as “post-Web retailers.”

The report estimates that by 2004, more than 49 million U.S. households will spend over $184 billion (US$) online. Given the number and scope of consumer options, only the shrewdest retailers will be able to maintain their market shares in such a mature e-commerce economy.

“Post-Web retailers will need to do more than just sell everything to anyone,” said Seema Williams, consumer e-commerce analyst with Forrester. “To succeed, they must anticipate customer demand, expand their product and service offerings into adjacent categories and simultaneously sell through multiple retail channels including stores, catalogs, call centers, Web sites, Interactive TV and mobile devices. None of today’s merchants are prepared for post-Web retail.”

Anticipate Future Needs

According to Forrester, the key element to becoming a successful post-Web retailer will be the ability to anticipate shoppers’ needs in advance. These new super marketers need not become mind readers, the report says, but instead must learn to cull such information as customers’ purchase histories, direct mail responses, and Web store click data to identify their customers’ future needs.

Additionally, the same information should be used to target the most profitable customer segments in order to adopt new product categories that will appeal to these groups. These actions will transform this elite group of super marketers from reactionary sellers into anticipatory marketers.

The Right Balance

Nonetheless, the biggest challenge facing these post-Web super marketers, Forrester predicts, will be finding the right balance between product categories offered and customer niches served.

For instance, superstores such as PETsMART and Linen ‘n Things will either have to expand their product offerings or partner with a post-Web powerhouse in order to deliver a particular developing niche.

“Consolidation will reshape the post-Web retail landscape as merchants expand into complementary product categories,” Williams added. “Meanwhile, consumer data will become the measure for all retail business decisions, from product launches to company mergers. The post-Web winners will be brand-name merchants with a strong offline infrastructure and the ability to establish an online retail gateway.”

A Leveling Off

The report also notes that although online retail sales will continue to soar over the next five years, the number of online shoppers in the U.S. will level off at about 50 million households. This trend will be offset by a steady increase in the average online spending per household — growing from $1,167 in 1999 to $3,738 in 2004, as consumers shift from making only large, researched purchases via the Internet to buying everyday items such as groceries from Web merchants.

According to Forrester, the next surge in e-commerce will come later in the next decade as today’s “Gen Y” consumers enter their prime earning years.

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