January 15, 2017
With 2017 well underway, Magento surveyed 2,200 branded manufacturers, multi-channel, and web-only merchants from over 15 vertical segments to find out about their key eCommerce initiatives for the coming year. The survey encompassed insights about retailers forecasts for 2017, investments and marketing.
What We Found
Online retailers are expecting another bumper year of growth. In fact, more than half of the merchants we surveyed expect their online revenues to grow by at least 20% and a fifth of merchants expect online revenue growth to exceed 50% in 2017. The big winners are set to be web-only merchants who are forecasting faster revenue growth than their branded manufacturing or multi-channel peers as millennial consumers increasingly gravitate towards buying from online merchants offering differentiated online experiences that facilitate ease of doing business.
So, with bullish forecasts and optimism in the air, we asked our merchants:
What’s going to be hot in 2017?
A focus on making mobile experiences great. In 2017, almost three-quarters of Magento merchants expect that mobile transactions will total more than 20% of their total online revenues while two-thirds of them expect mobile revenues to exceed 40%. Just a few years ago such forecasts would have met serious cynicism in the eCommerce boardroom, but with mobile transaction growth now firmly in the stratosphere, it is perhaps unsurprisingly then that 45% of the merchants we surveyed are planning to increase their investment in mobile experience during 2017. One emerging mobile technology that promises to bring the speed and slick experience of the native app to the mobile browser are Progress Web Apps (PWA’s), with 12% of merchants already using or planning a trial of PWA’s in 2017 and a further 30% actively watching adoption of the technology.
Taking omnichannel integration from checkbox to maturity. Of the 668 omnichannel retailers that responded to our survey, almost half have already instituted ship-from-store programs and buy-online-pick-up-in-store (BOPIS) programs although, of these, only 53% agreed that their programs were operationally mature. In 2017, omnichannel retailers will double down on benchmarking to ensure that programs that are already in place are delivering the right consumer experience. Of the holdouts (those yet to implement omnichannel integration), a significant number intend to introduce trials in 2017 bringing adoption of ship-from-store to 64% and BOPIS to 68% by the end of 2017. Furthermore, by the end of 2017, 60% of omnichannel retailers will make their store inventory visible online, 57% will have a cross-channel return program and 46% will enable ship-to-store.
Pushing content marketing to social channels. Of all the programs that merchants plan to invest in during 2017, product content (e.g. video, imagery) ranked #1. Driving this investment is the desire to proliferate high quality, differentiated content that drives discovery and interaction via social channels early in the consumer’s discovery lifecycle. While today only 7% of the merchants we surveyed are advertising on social commerce platforms such as Pinterest, a further 19% plan to invest in a trial during 2017 and 39% are actively watching. So great is the importance of social as a channel for merchants, 38% of the merchants we surveyed expect to increase their paid social media budgets in 2017.
What Won’t Be So Hot?
Hyped Technologies. VR, AR, Drones, 3D Printing, IoT, 2-hour-shipping are all the rage with the media, but our survey showed that online merchants are taking a very conservative approach to any investment in these potentially disruptive technologies. Three-quarters of the merchants we surveyed stated they have no current interest in 2-hour-shipping, 3D printing, AR/VR or voice search initiatives in 2017. Interestingly some emerging technologies are faring a little better – more than half of the merchants surveyed cited that in 2017 they are either watching or plan to invest in trials for predictive pricing, virtual assistance tools and mobile payments (Apple / Android Pay)
Obsessing about Amazon. When asked about the biggest obstacles facing merchants in 2017, only 25% cited competition from Amazon versus 40% who cited competition from other online retailers (not including Amazon). Consequently, although 42% of merchant’s plan to increase their spending on marketplace advertising and listings in 2017, 59% plan to increase spend on search engine marketing to compete with other (non-Amazon) retailers. Topping Amazon as an obstacle to growth, are shipping and fulfillment challenges (39%) and the ability to scale in international markets (31%).
In-Store Digitization. The past few years have seen a dizzying array of vendor solutions for digitizing the store experience, but our survey found that in 2017 omnichannel retailers are less than enthused about the ROI on these investments. Only 12% of the omnichannel retailer surveys have active mobile point of sale (mPOS) or clienteling tools deployed and only a further 25% of merchants are planning a trial of mPOS or clienteling in 2017, leaving most firmly in the category of “staying away”. Even the merchants that have operational mPOS and clienteling programs are struggling, with only two-fifths reporting their capabilities to be operationally mature.
See predictions and expected digital trends for 2017 from leading Magento Solution Partners: