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Evolution of Online Shopping

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Evolution of Online Shopping

Faster, Better, Cheaper. This has been the mantra of the Internet since the late 1990s to save us time and money by shopping online versus in-store. And for over a decade, this mantra has held true. Consumers are hooked on online shopping. Despite the economic downturn in 2008, and leading into 2009, sales among the Top 500 online retailers continued to grow – increasing 11.7% – while total in-store retail sales only grew 1.4% according to Internet Retailer. In addition, among 41 of the 50 biggest retail chains, e-commerce revenue increased, while in-store revenue declined.

While online retailers are not immune to the economic downturn, they are somewhat protected compared to their brick-and-mortar counterparts. The costs to maintain a website are significantly lower than the costs to manage, stock, and staff a retail store. As a result, some retailers have not weathered the storm, most notably Circuit City who declared bankruptcy last year. However, savvy online retailers continue to survive.

Amazon.com reigns as the leading online retailer, showing a 30% increase in web sales last year to $19.2 billion. Amazon is king because it continues to expand and add new retail categories year over year. Amazon also has the benefit of carrying and cross-selling multiple products and multiple brands. Amazon is the one-stop-shop e-tailer for you name it: books, clothing, electronics, sporting equipment, garden supplies, etc. Amazon represents products and brands in over 75 retail categories and is continuing to expand with its recent acquisition of Zappos.

Other brick-and-mortar retailers have been working every angle to increase Web sales through Internet exclusives, daily deals, 2-for-1 promotions, free shipping, and loyalty programs. While these perks may offer some short-term gains, they do not guarantee long-term stability. The retail leaders that will withstand the test of time are those that are thinking Faster, Better, Cheaper for a new generation.

Amazon is obviously on to something = one-stop-shopping. Are brick-and-mortar retailers up to the challenge? Who will survive in this marketplace and still deliver a Faster, Better, Cheaper Web experience for the next generation?

Gap Inc. has taken on this challenge. Internet shoppers are tired of multiple usernames, multiple passwords, multiple emails, and now multiple credit cards to avoid spam and identify theft when shopping online. Gap has responded to this pain and consolidated its Web presence across its 5 major brands, including Gap, Old Navy, BananaRepublic, Piperlime, and Atletica under one umbrella site, Gap.com. This consolidated website not only allows users to browse all Gap Inc. brands within one single user session, but also leverages one global shopping cart for all brands. This offers a significant improvement for the customer experience by eliminating the need for multiple usernames and passwords, with one universal login, and offers a seemless checkout process with one flat shipping rate.

In addition, this consolidation offers a significant opportunity for Gap Inc. to diversify its audience and cross-sell brands to all visitors, for example introducing Old Navy to Banana Republic shoppers and vice versa. Moreover, the company can leverage cross-promotion of deals across brands, benefiting from larger transaction sizes, such as offering free shipping for all brands if a Piperlime product is added to the shopping cart.

With Gap Inc.’s e-commerce revenue increasing 15% in the first half of ‘09 to $491 million from $427 million in ‘08, while offline sales declined, Gap understands the power of online. Gap’s brick-and-mortar counterparts can benefit from this lesson on website consolidation. Williams-Sonoma’s e-commerce revenue decreased by 21.9% in the first half of ‘09, from $507 million in ‘08 to $404 million in ‘09. Opportunity exists for Williams-Sonoma’s brands including Williams-Sonoma, PotteryBarn, PotteryBarn Kids, PB teens, and Williams-Sonoma Home, to follow Gap Inc.’s lead.

So Gap Inc. is on to something = consolidated-shopping (aka one-stop-shopping). This evolution may not become the new mantra for the Internet, but it will be the foundation for delivering a Faster, Better, Cheaper web experience for both consumers and businesses alike in the next generation.

The Evolved Gap.com

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