How Walmart and QVC compete with Amazon for e-commerce sales In 2017, Amazon was responsible for 44% of all U.S. e-commerce sales. In fact, the online giant accounted for 4% of all retail sales, according to One Click Retail. The fastest growing product groups were beauty and grocery, which you can read more about in past posts on this blog (here and here). According to One Click Retail CEO, Spencer Millerberg, "every major trend we see across 2017 can be explained by the fact that more of Amazon's core demographic (millennials) are growing up: they're increasingly owning homes, raising children, and buying a TON of stuff to go with it.” How does any company compete with such a giant? Walmart holds the number two spot for e-commerce sales, and since a merger with the Home Shopping Network in January, QVC has jumped into third place. Here are a few factors that have contributed to their success: Stick to what you know Walmart knows groceries. In fact, they captured 17.5% of all U.S. food and beverage sales in 2016, according to Business Insider. This makes Walmart the largest grocery store in the U.S. Since this is a category that Amazon has showed a recent focus on (primarily with its acquisition of Whole Foods), Walmart has also turned its attention to online grocery delivery. In the coming year, Walmart plans to leverage its brick-and-mortar locations to add 1,000 online grocery pickup locations across the country (CNBC). It is imperative that Walmart keeps a strong hold on groceries since it is already integral to the retailer’s success. For QVC, their formula for live broadcasts of unscripted product demos is what sells. Amazon tried to mimic this program by launching “Style Code Live” in 2016. The online show was canceled just a year after it began. “The retreat proved that QVC’s formula—unscripted hosts demonstrating products to an audience of mostly women on live television—isn’t as easy as it looks,” wrote Bloomberg Businessweek. In this case, QVC’s unique format be their biggest selling point when competing with Amazon. Buy the competition Mergers and acquisitions are hot for online retail right now. Amazon has been gobbling up competitors since it first acquired Audible in 2008. Most recently, Amazon acquired Whole Foods in 2017 (and rumors of the giant buying Target have been swirling for months). Both Walmart and QVC have also made recent deals to position themselves in e-commerce. In January 2018, QVC completed a merger with the Home Shopping Network. This merger propelled QVC to the number three slot in online sales. QVC had already purchased the flash sale site Zulily two years ago--helping to bolster online sales. Walmart has acquired online giants like Jet.com, but also boutique brands such as Bonobos and Hayneedle. It’s not enough to compete with Amazon alone--even for a behemoth retailer such as Walmart. Buying up competition and merging to create a larger group of retailers seems to be a popular strategy for these top e-commerce players. Create an experience Finally, the way a brand positions itself is imperative to capturing the online millennials who drive Amazon sales. “We’re establishing a relationship with viewers,” longtime QVC host David Venable told Bloomberg. “If you go to other online retailers, it’s a transaction. When you come to QVC, it’s a social experience.” In a February episode of the resurrected sitcom “Will & Grace,” the show’s lead characters try to sell a home line on QVC. Not only that, the clip shared a real phone number for viewers to call and connect with the show. Although this “social experience” is what QVC is betting on to attract new viewers and retain existing shoppers, their average customers skews much older than the millennial who purchases on Amazon. For retailers to keep up with Amazon’s large market share, they’ll have to carve out a niche and make it appealing to multiple generations. Have you noticed any indicators to succeeding in the online retail space? If you have tips on competing in the e-commerce world, leave a comment below! Ironbridge recommends leveraging your data to gain business insights that drive smart decisions. Drop us a line to learn more about our suite of products to help you take your data analysis to the next level. Written by Kim Kelly Consulting

We hope you’ve enjoyed our latest series of blog posts on e-commerce trends. Starting in September, we’ve written about e-commerce and how it has cut into brick-and-mortar sales and disrupted several industries. We’ve also put hours of research into building a matrix that looks at the impact e-commerce has had industry by industry.

Click here to view the entire matrix (pdf)

In case you missed a post, here’s what we’ve published on e-commerce thus far:

• When does e-commerce reach a tipping point?
• Why does e-commerce matter to us? More e-commerce insights from Ironbridge
• Is the grocery industry insulated from e-commerce competition?
• How will retailers fare on Black Friday and Cyber Monday, 2017?
• Are grocery delivery services the next big thing, or destined to fail?
• How the beauty sector innovated its way to the top of retail sales

So what have we learned from this research? Here are three major takeaways from the time we poured into researching e-commerce trends. Some markets are faring better than others in the face of an e-commerce takeover For varying reasons, some retail categories are seeing much more e-commerce growth than others. For instance, apparel, electronics and software are all experiencing rapid online growth. But the reason for each industry varies slightly. Apparel should benefit from in-store experiences where shoppers can try on clothes and touch fabrics. But retailers have adapted to online apparel sales by offering free shipping and returns as well as subscription fashion services. This model has helped grow online apparel sales at a fast pace. On the other hand, both electronics and software are easily sold online. Electronics can be compared using consumer reporting sites and the specs of a TV or speaker system matter more to most customers than seeing it in person. Software can be delivered via download and many consumers see no reason to own a “hard copy” of these products anymore. Both of these industries were ripe for e-commerce growth and don’t require much innovation from retailers to sell these products online. If you take a look at the matrix we assembled, you’ll be able to see which categories adapted to e-commerce growth and which were just a good fit. Some industries, such as groceries, are still trying to find their way in the world of online sales. Grocery delivery services have been around for a decade, yet the industry’s sales are still rooted in brick-and-mortar stores. While new startups are trying to change this (and Amazon’s acquisition of Whole Foods certainly makes some headway), this industry may just be less suited for online sales. Omnichannel marketing is taking off and can ensure success in this new landscape While researching the rise of e-commerce, we encountered the idea of omnichannel marketing again and again. This is the idea of bringing together all your marketing platforms in a cohesive strategy. In-store experience marketing works seamlessly with social media marketing efforts and online campaigns. Many retailers achieve this through hashtags and gimmicks such as displaying consumer-generated images (like Instagram and Snapchat) online or in-store. The reason omnichannel marketing is so important is because it blends the brick-and-mortar experience with online shopping. This can draw online shoppers into a physical store and vice versa. Engaging customers is key and it’s no longer enough to only provide a great website or stellar in-store customer care. Each platform needs to work with the others to build customer interaction and ultimately drive sales. Check out our blog post on the beauty industry to read about Sephora’s success in omnichannel marketing.

Click here to view the entire matrix (pdf)

Innovation and adaptation are key to moving with e-commerce trends While e-commerce hasn’t truncated all brick-and-mortar sales, most economists forecast online sales to keep rising. The retailers and manufacturers who will fare best are able to not only adapt to these times, but also innovate ahead of the curve. One prime example is Domino’s Pizza. Instead of waiting for online trends to catch up to the pizza business, Domino’s has positioned itself as a technology company leading the way in mobile ordering and so much more (read about it here). How can companies stay ahead of the curve? Innovation takes research and a reliance on big data. Not only does your company need to collect data, but it needs to know how to use that data to produce change-making business insights. Ironbridge can help you discern which data to collect and why it matters to the future of your business. Drop us a line today to find out more about our expertise in big data insights. That wraps up our deep dive on e-commerce trends. Tell us what you think in the comments below! Which insights surprised you? Do you have questions left unanswered? How has e-commerce impacted your industry? We’d love to hear from you. Written by Kim Kelly Consulting.

Not long ago, most beauty purchases had to be made in a department store. Counters were segregated by brand and shoppers had to navigate puffs of perfume as they wandered from counter to counter. Today, retailers like Sephora and Ulta are bent on changing that experience. And online sales for beauty are strong, despite the tactile nature of the product. Here’s how they did it. In-store experiences speak to millennials and gen Z One of the biggest differences in the beauty sector versus other retail segments is the draw of experience. While most retailers strive to create an “experience” through marketing, social media and weaving together online and in-store visits, beauty has a particular edge. "Nobody goes shopping because they want more expensive colored powder in their bedroom," Jason Goldberg, senior vice president of content and commerce at SapientRazorfish told RetailDive earlier this month. "They're shopping for cosmetics because they want to look beautiful at their spring dance or on their date or whatever the case may be. They're literally shopping for an experience, so delivering an experience during the shopping occasion is super important, [whereas] you don't necessarily want a real high-tech immersive shopping experience to get more toilet paper." When it comes to in-store experiences, Sephora is leading the way. First, the retailer’s ability to gather all the best brands under one roof has disrupted the department store model of yesterday. In 2015, Sephora opened an innovation lab in a San Francisco warehouse to test new technologies that combine in-store and online experiences. Today, Sephora stores have a suite of technology to help customers experience new products. Laura Holson of the New York Times writes, “Want to try 50 shades of lipstick without getting chapped lips? There is a mobile app using augmented reality for that. Customers can scan their faces to get their Color IQ, a reference number used to find products that match their skin tones, or sit at digital workstations to take classes in contouring cheekbones. Sephora even has its own version of Smell-O-Vision, a touch screen with a fan that lets visitors smell the scents — floral, earthy — that characterize most fragrances.” Cracking online sales with Birchbox, Glossier and Amazon One of the reasons the beauty sector is doing well is due to the experiential nature of the business. Couple that with social media and YouTube beauty experts and you have a booming market driven mostly by young female consumers. “That's part of the reason newcomers like Birchbox and Glossier have managed to successfully break into the market, with Birchbox reaching profitability in April, Glossier making plans to expand overseas and rumors of a Birchbox acquisition beginning in early August,” writes RetailDive. While Sephora and Ulta coax shoppers into physical stores, online beauty is also booming as well. Glossier is an online beauty site that uses videos and influencer reviews to break down barriers to buying before trying. Birchbox is a subscription box that delivers monthly beauty samples. Subscribers can buy full-sized versions of items they love and keep trying high end brands at a lower cost. Of course, Amazon is also participating in the beauty sector. Currently, Amazon sees most sales from buyers who want to “restock” a beauty item and have already tried it and bought it elsewhere. According to Digital Commerce 360, Amazon was responsible for more than 21% of all online beauty sales in 2016. Industry experts are keeping an eye out for Amazon’s next big move and some believe it could be in the beauty sector. After successfully shaking up groceries by acquiring Whole Foods, who knows what’s next for the biggest fish in e-commerce?

(click to view pdf / enlarge)

Innovation and technology are key While the beauty sector does invite experiential marketing that’s well suited to today’s technology, the winners in this category invested in innovation. Rather than pining for a simpler time that is long passed, retailers like Sephora and Ulta created in-store experiences that harness technology and compete with the online space. True, other categories may struggle to tap into experiential marketing in the same way, but innovation can’t be ignored. We’ve written here before that those who invest in technology and delivering a new experience come out ahead in these shaky times (take a look at our e-commerce matrix to see what Domino’s Pizza is up to). The beauty sector seems to be no different and is especially flourishing when it leverages new technologies. If you like what you read here or would like to share your own take on a topic, please leave us a comment below! Do you need a partner to help you innovate? Ironbridge can help. We offer clients a fresh look at their business using big data and visual analytics. Solve your toughest business challenges by requesting a demo today. Written by Kim Kelly Consulting.