The consumer electronics industry is a fascinating case of study for ecommerce: an industry in which every company sees itself as a trendsetter and an early adopter of technological advances that could help expand its market share.
This process of adaptation gains more importance when we consider that, by 2023, around 47% of consumer electronic products will be sold online, according to Statista. So there’s even more of a motivation to be amongst the most adaptable competitors.
The COVID-19 pandemic didn’t start the process of evolution inside consumer electronics, but it did help test some of the biggest changes that companies had undergone in the last couple of years. Changes that are being closely observed by other industries, and that could be the blueprint for the growth of the whole of ecommerce in the years to come. Changes such as the ones below.
At the turn of the century, consumer electronics manufacturers would have entire sales teams solely dedicated to relationships with distributors, wholesalers and retail stores, since they didn’t have other routes to market. In other words, they had no direct-to-consumer presence, meaning the end-consumer was always sheltered away from the core business.
“By 2013, companies were starting to analyze direct-to-consumer approaches, because ecommerce had become more affordable and easier to manage. There was also this understanding that there was too much overreliance on retailers doing a good job online, while traditional brand websites were much more about product info.”
Thiago Garcia, VP of Customer Experience for North America at VTEX
Apple was one of the first companies to openly set up a DTC presence, triggering certain retailers to (understandably) feel threatened by this new business model. However, the bet paid off and, by 2017, apple.com was the second biggest retail website in the United States.
Today, Garcia thinks that many companies now understand that a DTC presence is not only a sales tool, but also a platform that can enhance the pre-sale and post-sale customer experiences, and help buyers move along their shopping journey in an easier and faster manner. Business leaders from Dell and HP also agree.
“The direct-to-consumer model not only brings a direct sale, but it also helps a sale wherever it occurs. I think it’s important for brands to recognize that most sales will not occur directly, but that this is fine because these sites serve the purpose of moving people through that funnel, from the first impression to the one that actually closes the sale.”
Thiago García, VP of Customer Experience for North America at VTEX
Consumer electronics has the great advantage of selling products that are easy to register, and sometimes mandatory to register in order to activate a guarantee. Year-long guarantees allow companies to stay in contact with their customers, suggest new products they might find interesting and even recommend similar products whenever the original is ready for an updated alternative.
“That is the power of direct to consumer. It’s not just the sale, but the relationship that you get with that end-consumer. All that information that eventually blindsides you if you just sell to a retailer.”
Thiago Garcia, VP of Customer Experience for North America at VTEX
Garcia also highlighted that some of the information obtained directly from end-consumers can be used in the R&D departments in order to manufacture products that better align with customers’ expectations. After all, if you want to sell to a certain customer, you should know what they want, right?
The growing number of “brand-dot-com” websites has led to better promotions across the board: brands can offer more competitive prices because they don’t need to account for the middleman’s profit, and retailers have to adapt to this new reality and try to compete in any way they can (for instance, via online marketplaces).
Customers have become more savvy to these practices, and studies have shown that up to 49% of the consumer electronic products acquired on Walmart’s website were first cross-shopped on Amazon.com in order to compare prices. This means that retailers can no longer compete just on a convenience-basis, and they need to have stronger MVPs in order to protect their market share from manufacturers.
For certain electronic products this has brought on a more competitive field, similar to the one inside the fashion industry: the introduction of Alibaba has caused established companies to face disruptive products coming from China, which undercut up to 90% of retail prices for similar products in their own catalog.
Chinese products have also been able to shake the perception of low quality in some segments such as hi-fi audio equipment, which turns them into a much more threatening presence for other ecommerce retailers.
Consumer electronics are a very peculiar industry, one that shares elements with the fashion and luxury industries, with the added pressure of being reference voices for innovation and new trends. This means that the evolution in consumer electronics ecommerce is far from over, and all its main actors will keep looking for a strategy that gives them at least a little advantage over its competitors.
This next strategy could come in the form of a better shopping experience, better post-sale customer service or even better and faster logistics. The consumer has the final vote, and the jury is still out.
The CCX Company, in collaboration with VTEX Commerce Cloud, expresses gratitude for having had the opportunity to enhance its understanding of the advantages, trends, and other elements addressed in the current topic. This article was jointly developed and is brought to you by the VTEX Commerce Cloud team.
