by | February 15, 2012

The State of the E-Commerce Market

By: Jim Wehmann, Senior Vice President of Global Marketing

Gartner, Inc., the world’s leading information technology research and advisory company, released its latest Magic Quadrant for E-Commerce (Nov 3, 2011)*.

The report is designed to assist companies in evaluating e-commerce vendors. It opens with a succinct market overview that is packed with valuable insights into the industry’s current position and future direction.

Digital River has reserved the right to share this report until May 9, 2012. You can review the report in full at Gartner Magic Quadrant for E-Commerce.

Current market conditions: Strong

Internet Retailer states that from 2009 to 2010, e-commerce sales for the top 500 North American retailers grew by 18% to reach $150 billion. TotalU.S. e-commerce sales increased from $144.1 billion to $165.4 billion, a 14.8% jump.

The strength of these statistics has not gone unnoticed. According to Gartner, more companies of all sizes and in more industries want to invest more in their own e-commerce programs. Decision makers increasingly see e-commerce as a way to improve sales revenue, boost profits, better engage new and prospective customers, and reduce staffing expenses.

More B2B businesses also want to enter the e-commerce arena. As much as this creates new sales opportunities, it creates complex challenges. B2B companies need to enter the market with fully functional e-stores because their clients expect the same online experience and strong capabilities that the B2C sector delivers.

What this means for online businesses.

It means more and more competition for customer attention. Companies’ e-commerce programs must stay current, if not ahead of the curve, if they want to meet the increasingly high expectations of online shoppers – whether businesses or consumers.

All this market demand means that e-commerce vendors, including Digital River, will be pulling out all the stops to create better solutions. In addition to investing top dollar in new technologies and talent, companies increasingly have been acquiring complementary technologies to expand their capabilities. It is easier than ever for businesses to find a single vendor who can supply most, if not all, of their e-commerce solution.

What do today’s businesses want?

In the Market Overview, Gartner notes that it continues to see strong demand for e-commerce solutions, as demonstrated by an increase in client inquiries. Inquiry topics include …

  • E-commerce strategic planning, such as entering new geographic markets and launching new businesses aimed at a new customer base
  • Platform upgrade plans
  • Integrating mobile and social capabilities

Basically, clients want to know how to get e-commerce – a constantly moving target – correct. They also want complete solutions that make sense in terms of cost, implementation and resources, to name a few areas. The challenge is finding the right vendor or vendors for the job.

Using the Magic Quadrant.

The report applies 15 weighted criteria to create a “wide-angle view” of how different vendors perform in the e-commerce segment.

When using the Magic Quadrant, Gartner advises businesses to begin by identifying their needs and current business situation. They stress that a vendor in any category can be a good match depending on what exactly a company is looking for.

If you have more questions about how Gartner develops this research document, you can review Gartner’s Magic Quadrant research methodology online.

* Gartner does not endorse any vendor, product or service depicted in our research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

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by | December 8, 2011

10 Reasons for Entering the Subscription Economy

By: James Gagliardi, Vice President, Product and Innovation

A recent Gartner Inc. research report issued a strong recommendation for businesses selling online:

If you don’t offer subscription plans already, you need to make this popular offering a top priority.

The report, “Building a Strategy for the Subscription Economy,” makes a compelling case for why every digital and media content business – and even some high tech and life sciences companies – should add subscriptions to their online strategies.

On-Demand Demand Consumers can’t seem to get enough of on-demand content. The explosive popularity of tablet devices and smart phones has only fueled consumers’ desire for immediate access to the content, products and services they want. Subscription models monetize this demand better than any other purchase method.

  1. Higher Revenue Moving from a one-time sales model to recurring subscriptions can increase revenue. (We’ve seen Digital River clients boost revenue by as much as 30%.)
  2. Stable Revenue Subscriptions are a proven way to smooth out the seasonal peaks and valleys that characterize one-time sales models.
  3. Incremental Revenue Companies who ignore how effective subscription programs can be in generating additional revenue will definitely feel the loss. By 2015, 35% of Global 2000 companies with non-media digital products will generate incremental revenue of 5% to 10% through subscription-based services and revenue models.*
  4. Competition A traditional, one-time purchase model will quickly become one of many purchase models. By 2015, more than 40% of companies selling media and digital products will rely entirely on software as a service (SaaS) or hosted subscription management services to manage their fulfillment, entitlement, billing, renewal and customer loyalty requirements.*
  5. Flexibility Because there are numerous subscription models, companies can create subscription programs that cater both to their product mixes and different customer segments.
  6. Customer Satisfaction Many consumers appreciate the convenience and control that subscription models deliver. Even within a single product (like audio downloads), publishers can enhance customer satisfaction and capture more sales by offering a variety of subscription plans.
  7. Customer Retention Once trust is established through regular and familiar service delivery, subscription retention rates remain much higher than those of traditional business models. (Digital River has seen effective campaigns post renewal rates into the 90% range.)
  8. Research Gold Companies can use information gleaned from subscription programs to evaluate their products, revenue models, customer relationships and customer experience.
  9. 11…12… The Gartner study lists numerous additional benefits that reinforce its strong argument for offering subscriptions.

Footnote: *Building a Strategy for the Subscription Economy, Gartner, Inc., April 11, 2011

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by | December 1, 2011

The China Opportunity

By: Souheil Badran, Senior Vice President and General Manager

The growth of Chinese online retail has attracted a great deal of international attention—and for good reason.
According to Forrester Research, Inc., Chinese online retail and peer-to-peer commerce will grow from $29.1 billion in 2009 to $72.2 billion in 2011 on the back of a booming economy and rapid Internet adoption.* While exciting, this aggressive growth also has generated apprehension about how to select the proper mix of payment methods to satisfy Chinese consumers’ purchasing preferences.

To learn how you can join successful companies in addressing these issues, download a complimentary copy of Forrester’s recent report on “Online Payment Preferences in China.”
The China OpportunityThis free report can help you:
> Understand the immense market opportunity
> Identify preferred payment options
> Maximize your sales results in China

Download now.

*Online Payment Preferences in China, Forrester Research, Inc., July 5, 2011

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by | November 30, 2011

Five Tips to Create Integrated Marketing Across Web, Mobile, Social and Email

By: Jim Wehmann, Senior Vice President of Global Marketing

Integrated marketing across multiple online channels or touch points isn’t some passing fad. In fact, it’s based on three of the most fundamental principles of direct marketing. First, repeated and reinforced messaging drives a higher propensity to buy. Marketers can significantly improve the effectiveness of their online activities through repeated messages, whether, for example, announcing new seasonal products or highlighting a holiday promotion. Second, landing your message near the time the purchase decision is made will drive higher buying behavior. Integrated marketing improves the odds that your message will be seen during the active purchase decision period. And, finally, direct marketers know that you need to offer your products where your buyers already are, whether that’s through a search engine, social network, website or mobile device.

For marketers determined to improve direct response effectiveness through integrated digital marketing across channels, here are five tips to keep in mind as you roll out or enhance an existing integrated marketing program.

  1. Don’t manage interactive channels in silos.
    This advice speaks to how companies organizationally structure the teams working on these activities. For example, some organizations have sales or revenue owners manage the e-commerce store, while a CRM or customer service group manages email and the marketing team manages social media. This is especially true of social media, which many people think of as an activity to be managed independently of the website or other digital channels. This structure is suboptimal and it reminds me of the early days of the Web when brands built and managed their online websites and stores as separate businesses from their catalog or brick and mortar stores. Some even spun off or sold their dotcoms. Of course, in the end, common sense asserted itself – many of these brands reversed course and tightly integrated their online activities with the management of their brands in other channels. We are going through a similar phase with social media. It is new, important and high impact and, in many cases, managed separately. Over time, social media will be managed through inline work streams that are more tightly integrated with the online e-commerce business.
  2. Do implement cross-channel tracking and reporting.
    When managing integrated marketing campaigns, it is essential to understand the interaction and impact of decisions made across channels. The level of activity, promotion and engagement in one channel can significantly impact campaigns in other channels. For example, I have seen the introduction of display advertising campaigns improve the performance of search marketing campaigns and studies show that social media fans are much more likely to recommend and buy online from brands they follow. Negative impacts on other channels are also possible.  For example, exclusive discounts consistently offered in just one channel (e.g. social or mobile) train customers to seek out such offers to the detriment of other online vehicles. A sophisticated tracking and reporting system will include reporting for channel crossover, program attribution and cross-channel assists. By studying the impact of marketing initiatives through such reporting, marketers can gain insight into the cross-channel interaction taking place.
  3. Do offer most promotions across channels; but also reserve exclusive offers for each channel.
    Most promotions should cross channels to leverage the multiple impression opportunities and other advantages gained by spreading your messages widely. If a brand is running a 48 hour sale on the website, there is no reason not to broadly communicate it through mobile, social, email and other channels. This can only help the message break through. On the other hand, channel specific discounts and sales are important and in many ways are becoming expected. Facebook fans and Twitter followers in particular embrace the exclusive offers that are targeted to them. Flash deals, combined with interactive techniques, such as requiring customers “like” an offer to see the discount are increasingly popular. Another example involves affiliate marketing where “coupon” affiliates require an exclusive discount for greater prominence on their website.
  4. Do personalize each channel.
    Customers increasingly expect a personalized experience to varying degrees through each channel. This ranges from product recommendations, based on profile information to persistent login (or semi-login) on return visits. In addition to recommendation technology, marketers can use tools such as Facebook Connect to ease the registration and login process when visiting a site. Customers are choosing to share information about themselves to improve the overall quality of their online experience.
  5. Do optimize user experiences against the total of all channels rather than each channel individually.
    Pursue strategies in each channel that specifically benefit the others. Share to social links in email or on product detail pages are an obvious example. But, you should also design strategies to collect email addresses through mobile or social media. Or pay affiliates on social and mobile sales in addition to traditional Web sales. There are many other examples, but it’s important to remember the best outcome is a happy, engaged customer, not the most email addresses, mobile numbers, fans and followers to the detriment of the overall goal of growing the customer base and sales.

Integrated marketing can play big dividends because it works with and not against basic direct response fundamentals. Combine the rules here with the right criteria for success and you will take your interactive marketing to a whole new level.

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by | September 30, 2011

Met Office campaign shows value of gamification

By: Jim Wehmann

The Met Office has revealed that a game-based research project designed to assess how people respond to probabilities during weather forecasting has broken participation records to become the largest study of its kind. The game has users providing probability based advice to help an ice cream man character maximise his profits, and has been played nearly 8,000 times. The game takes five minutes to complete, and rewards those who take part with an entry to win a t-shirt. The Met Office hopes that it will give insight into how members of the public understand and use the weather forecast, therefore allowing them to provide more useful information.

This is a classic example of how gamification can go viral. Who would have thought that a scientific research project could garner a response such as this? When you deconstruct the game and its objectives however, you can clearly see how gamification can be useful in creating engaging user experiences that capture the attention and involvement of consumers.

The efficacy of a well-designed gamification strategy has been demonstrated brilliantly by the Met Office in this case. This project has boosted public engagement with the organisation in a fun and light-hearted fashion, and has also demonstrated how such an endeavour can have the side benefit of providing excellent marketing and PR value.

Meanwhile, it shows how gamification can provide a brand with actionable intelligence that can measure public perception, provide strategic insight and improve ROI. The Met Office is an organisation that deals with enormous amounts of data every day, so finding a way to articulate how best to explain this information to the public has proven invaluable. Organisations should look at what has been achieved in this campaign and consider how they can use gamification to increase customer engagement, generate valuable data and boost brand recognition.

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by | September 20, 2011

Helping Smaller Channel Partners Make the Sale

By: John Sekevitch

Most consumer electronics (CE) manufacturers today understand the importance of a strong direct-to-consumer (D2C) online sales strategy to sustain their brand over the long term, but robust partnerships with retail, distribution and value-added reseller channel partners are equally important. Ironically, even as OEMs strive to minimize conflict between these two critical sales pipelines, many components of a D2C strategy can be repurposed or adapted to help drive channel sales.

For larger channel partners – such as U.S. retailing and distribution giants like Best Buy, Amazon, Walmart, Target, Costco and Ingram Micro – consumer electronics manufacturers typically provide support through their direct sales organizations. When OEMs do participate directly in sales and marketing initiatives mounted by these major market players, they tend to play a supporting role.

For the small and medium enterprises (SME’s) selling consumer electronics products around the world, however, the scenario is quite different. In this case, CE manufacturers have a genuine opportunity to provide effective sales and marketing leadership. This can be accomplished by enabling SME channel partners to piggyback on the manufacturer’s established D2C infrastructure in an indirect manner.

Let’s consider a few examples of how that can be accomplished.

Leveraging Content Investments

Typically, CE manufacturers make a considerable investment in creating in-depth sales and marketing materials to support their direct-to-consumer initiatives. These core information assets can easily be shared with SME channel partners who need tools to engage and close customers but lack the staff, infrastructure and resources to develop these materials themselves.

The list goes far beyond brochures and data sheets to include interactive content such as YouTube videos that share customers’ product experiences, demonstrate products in action, or train salespeople. Social media assets like blogs and reviews as well as internal company product comparisons, discussion forums and white papers can also be leveraged to assist SME channel partners – all without reinventing the wheel.

SME-Specific Catalogs and Pricing

Another area in which consumer electronics manufacturers can leverage existing D2C capabilities to support SME channel partners involves supplying electronic catalogs tailored to each partner’s product selection and pricing. The manufacturer’s complete product portfolio can be filtered to present only those items that a given SME is authorized to sell, and pricing can include quantity discounts, buying quantity limitations, special promotions and/or other bundling opportunities unique to that retailer, distributor or value-added reseller.

Again, the ability to deliver this kind of sales support rests on a strong D2C foundation. Without first developing the tools required to implement a direct-to-consumer sales and marketing strategy, OEMs cannot produce partner-specific catalogs cost-effectively, nor provide the level of interaction and self-service that fully supports the partner’s client service needs.

Payment/Financing Options

One of the cornerstones of a successful D2C sales strategy is the ability to provide a wide range of online payment options, including credit card, wire transfer, PayPal, multiple currencies and localized payment methods unique to individual countries. Once that payment infrastructure is in place for direct-to-consumer use, manufacturers can provide the same tools to SME channel partners for self-service online sales.

In addition, automated support is emerging for SME-specific payment types such as purchase orders and credit lines. These additional payment alternatives can help drive cost-effective expansion of the SME’s business.

Bottom line: an effective D2C sales strategy that is free of as much real or perceived channel conflict as possible can also help nurture (rather than inhibit) a robust partner network that can drive substantial sales for the manufacturer as well as the individual channel partners.

With 62 percent of all retail foot traffic today starting with an online search, almost always including a visit to the brand website, investing in a direct-to-consumer online brand experience is not a choice but a necessity. The good news is that the same investment can help generate business in the channel at virtually no incremental cost. That’s a powerful formula for multi-channel success.

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by | September 15, 2011

The Growing Impact of Gamification on Interactive Marketing

By: Jim Wehmann

Gamification has arrived. As the influence of the games culture continues to grow through social media, mobile apps and multi-player online games, marketers and designers are increasingly turning to gamification – the application of video game techniques to online, mobile and social user experiences – to market their products. The combination of ever faster broadband speeds and more powerful and easy-to-use rich media development software are creating a perfect environment for marketers to design high
engagement, game-like promotions. And we’re seeing this influence across marketing channels, including display advertising, websites and microsites, email, social media, mobile and others. Two recent examples are worth noting,
both from a global camera manufacturer.

The first example is a high engagement campaign that cleverly ties in the product to the “game play”. Customers are directed to a landing page with a densely populated beach scene. The rules of the game are displayed alongside a “play now” button. On clicking the button, the digital camera view screen is displayed which allows the player to zoom in their view of the beach scene as it is dragged around the image. Just above the screen fold appears three close up snipits of the beach scene. The goal is to find those scenes and snap a picture of it with the camera within 45 seconds. Upon completion of the game, the player is rewarded with a significant instant discount on a bestselling digital camera. What sets this campaign apart from the more simple interactive game display ads that have been around for awhile, is its high production values, strong tie to the product and more complex and rich user experience.

Another example from this manufacturer is a promotion where the offer is communicated, but the actual discount varies and is not know until the “game” is played. This offers high engagement potential, because customers are curious about what their discount could be. In this version, customers are sent an email with a “Play to Save” headline and a mock slot machine image.
Recipients are directed to “Give it a spin to find out what you’ll save on your next purchase!”. The “play now” button links through to a landing page with the same mock slot machine. A click spins the slot machine reels and the pay line reveals the discount. The entire user experience is very engaging and effective.

These are just two examples of many that marketers are using to leverage the increasing popularity of games in their target markets. Because online games have jumped across demographic groups and segments around the world, this isn’t the last we’ve seen of the gamification of interactive marketing.

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