Growing Challenges in the E-Commerce Marketplace
Shopping online is becoming the new norm for consumers. Consider that U.S. e-commerce sales grew 14.6 percent in 2015 year-over-year, according to data from the U.S. Commerce Department. The fast-growing popularity of e-commerce brings new challenges to retailers, however.
In a Market Track 360 Strategy whitepaper, four of these top challenges were identified and analyzed. It’s not enough for companies to just know these challenges exist, however. They need to know why they're harmful and how they can be overcome.
Let’s take a look at two conditions that impact a retailer’s ability to succeed in the e-commerce marketplace:
1. Volatility: Prices of products sold online are unpredictable. Shoppers can see one price for an item at one time during the day, then return later to find the price has changed. Amazon.com has been known to change the prices of the items it sells millions of times per day. In the graph below, you can see that the price for a Linksys e900 Wi-Fi Router changed seven times on Amazon over a 24-hour span. Shoppers have no way of knowing if they're getting the best deal possible.
Price volatility isn’t just a headache for consumers. Retailers have been forced to invest in technology that dynamically changes prices on products multiple times a day in order to keep up with their competition, most notably Amazon.
Over time, these price fluctuations have become less predictable and more frequent. Companies that want to remain competitive in the fight for price-sensitive consumers need to be able to track prices when they change. Consumers have many options when shopping online, so making sure you're using the right technology to track prices and keep your customers happy puts you in a better position to succeed.
2. Brand protection: Black market, gray market and counterfeit sales largely take place online. Counterfeit products usually have lower prices and are of lesser quality than the authentic ones. It’s easy for resellers to enter the online marketplace with fake products and instantly access customers worldwide.
Apple is one just one of many companies affected by counterfeit merchandise. When the iPhone 6S and 6S Plus debuted in India, authorized retailer sales were 40 percent lower than usual. The reason why? Gray market sales of the phones were thriving.
Companies like Apple depend on brand equity to win new customers and retain current ones. It becomes more difficult for companies to protect their brands the more these illicit industries grow. Retailers are being forced to monitor thousands of reseller sites, verifying listings and removing the fraudulent ones. There's over $2 trillion in potential sales on the line every year.
With more and more resellers and counterfeit items popping up online every day, businesses need a solution fast. Being able to identify every single place a product is being sold and at what price is a good start.