I. Executive Summary
During the first ten years of eCommerce, sites grew rapidly by tapping into the rapid flow of new customers and from the intrinsic convenience of the medium. However, due to assumed constraints, technology limitations and inadequate resources, the vast majority of sites still offer a surprisingly similar, utilitarian shopping experience. While retail stores and catalogs offer uniquely good experiences, eCommerce is still just scraping the surface of its potential. The leaders and innovators are now "loading the cannon" to bring some dramatic changes to win and differentiate in the next phase.
This whitepaper discusses historical factors that have brought the industry to its current state, identifies five key principles expected to guide the next phase of eCommerce, discusses specific "glimmers" already appearing in new implementations from visionaries that support the five key principles and outlines barriers and considerations for typical Web teams making significant changes.
II. eCommerce Background
In the mid '90s, a slew of new Web sites such as CDNow and Amazon.com were born and the modern era of eCommerce was underway. This was much to the delight of "early-adopter" consumers who could now purchase computers, books, CDs and a variety of other products and benefit from both larger selections and greater convenience. As with any early-adopter community, these first customers were very forgiving of the imperfections of the experience and, instead, just enjoyed having an entirely new and cool experience. The hype began around the industry, and investment and talent flowed in. A large number of new category specific sites ranging from toys and furniture to gifts and pet food were launched.
In the first phase of eCommerce, sites focused heavily on selection and adding as many products as possible. "Going transactional" - the moment a site began taking orders - was a big milestone. A great deal of effort went into reliability and how to make sure the site did not break or hit dead pages. Also, a priority was placed on basic search to help consumers find products. In the second phase, the focus was on refinement and growth. Techniques used included enhanced search to improve results, wiring in analytics to understand customer behavior, search engine marketing, advertising and email to drive more site traffic, as well as scaling the back-end to handle the growing volume of transactions. Additionally, many innovative sites began weaving in multi-channel connections to make things like gift card programs and store pick-up a benefit for the consumer. All of this effort paid off. According to Forrester Research, Inc., the eCommerce industry grew from $51 billion in 2001 to $176.4 billion in 2005 - more than a 3X increase.
So where is the problem? According to data assimilated over the past year from the Scene7 client base, it has become evident that some serious change is afoot. Leaders are becoming impatient with incremental changes on their sites. They clearly have begun to turn their attention to finding the next horizon of eCommerce. Further discovery from Scene7 clients has uncovered that the industry is on the edge of substantial changes that will unfold over the next 12 to 24 months.
At the core, companies have grown tired of providing surprisingly similar, utilitarian experiences to their customers and, for the most part, of looking more or less like all the other major eCommerce sites on the Web. There is also an underlying sense that this mediums potential has not been maximized. Those who have been around the industry from the early days have developed a real impatience for change. While consumers can walk into an Anthropologie retail store and have a uniquely great experience, or receive a Restoration Hardware catalog in the mail and have a uniquely great experience, they have not experienced something uniquely great on the Web beyond convenience and selection - yet.
In addition, an external motivation for change has entered the scene - the "billion dollar site" phenomenon. For many years, corporate executives have been unsure about how to measure and set goals for Web teams since the medium was not mature and limited benchmarks existed. However, over the past two years, a new "club" has emerged - the billion dollar club.
