2008 Predictions for Internet Retail

by Greg Howlett

Everyone else is making predictions, so I guess I will get in on the fun too. The best thing about making predictions is that you will never remember them by the end of the year anyway. (unless I get them right, in which case I will remind you!)

Here goes…

1) Death of the little guy. This is already happening, and the trend is going to continue. It is simply going to become more and more unfeasible for small budgets to compete online. That is not to say that there will be exceptions, but you will hear about fewer and fewer of them.

If you fall into this category, you are feeling the squeeze already. Your revenue is stagnant or falling, and you are finding it harder and harder to get sales. Here is my best advice for you. Take 2008 and focus on your brand instead of revenue. Your success depends on it. Yes, it is not easy, but it will be necessary in the coming years. If you cannot sell products under your own label, focus on your company image as a whole.

2) Retailers will depend less on SEO. SEO success is not going to be easy or even possible for most retailers, and smart retailers are going to learn to get their traffic in different ways.

Ironically, moving away from search engine optimization will probably help your search engine rankings in the long run. There is little doubt in my mind that the most popular companies will eventually dominate their retail niches in search engines. If you can generate your traffic based on your brand itself (increase your popularity), you will eventually see good results in the SERPs.

3) Social marketing explosion. Online advertising continues to be inflated in most sectors, and more and more marketers will attempt to create demand with such strategies as viral campaigns and stealth marketing. Things are about to get very crowded out there in the social networks.

While a bit risky, social marketing still is more cost effective than CPC advertising. That will be the case for a while until the whole phenomenon collapses under its own weight. We are already at a point where you have to take every user review with an gigantic grain of salt. Before long, social marketing will become the new MLM model where armies of individuals parrot marketing hype online in order to make a few bucks selling something to a friend.

While I probably sound a bit cynical on this topic, I am a big believer in social/viral marketing. You should definitely explore it for your business.

4) Online fraud. Wow, these fraudsters are coming out of every where. They are getting more sophisticated all of the time. While we used to be safe in this area (what thief would steal vitamins?), we are now rejecting an amazingly high percentage of orders.

If you do not strategies to protect yourself, it is time to come up with some. Collecting the CVN number on credit cards and calling to verify customers who place large orders are two procedures that are becoming necessary.

5) Manufacturer action to control pricing. I have said many times that internet retailers can be the biggest enemy of a brand. If you own a brand that you let internet retailers sell for you, you have to be very careful.

Fortunately, in 2007, the Supreme Court has opened the door for manufacturers to better control the price their products are sold at. Many manufacturers are already implementing MAP policies with teeth in them and cutting off retailers who break the rules.

If you have built your business by piggy-backing on your competitors’ advertising while under-cutting them, you are in trouble. It is time to come up with another marketing strategy.

6) Online retail will grow X%. OK, I have no idea what X is, but I would guess less than 20%. Who cares anyway? You can grow faster than average anyway if you work hard!

So, in conclusion, it really comes down to this. I am bullish on retailers who have a strong brand and bearish on retailers who have not focused on their brand. Have a happy and prosperous 2008!