Product Managers’ Customers Are Now Shopping Online [The Accidental Product Manager]

What does it mean if your customers are now shopping online?
Image Credit: Elliot Stokes

The times they are a changing. As product managers it is our responsibility to stay on top of trends that are affecting our customers. One very important trend is just exactly how our customers are going about buying things. In the old days, customers would decide that they needed something, get in their car and drive to a store or a mall, go browse a store, find what they wanted, and then buy it. Our product management activities were designed around this behavior. Now things have changed. Our customers are buying more and more things online. We’re going to have to change our product development definition.

More Things Are Being Bought Online

So what’s going on here? The folks over at United Parcel Services (UPS) really care about where we are buying things. This is why they commissioned a study to be done about consumer’s online buying habits. What they have discovered is that for the first time, consumers have purchased more things online than in stores. 51% of purchases were made on the web in comparison to 48% that were made there the year before.

The product managers who are associated with traditional stores are having a hard time keeping up with all of the changes in consumer’s shopping habits. 44% of smartphone users have said that they made a purchase from their device. This is up from 41% of smartphone users who made a purchase a year ago. What the product managers are finding out is that only 20% of purchases were made the “old fashioned” way – going to a store, browsing, and then making a purchase. 42% did it all online while the rest said that they used a combination of online and in store techniques. None of this is going to look good on a product manager resume.

This represents a big shift. What seems to be happening is that consumers are getting more and more comfortable making purchases online. The result of this is that it has hit traditional retailers and their product managers very hard. It is forecasted that more than half of the U.S. population, or about 190M people, will shop online this year. What the experts believe is going to happen is that there is going to be severe continued pressure on traditional stores such as Macy’s, Nordstrom, Kohl’s, and even Walmart. It is believed that traffic is going to peel away from these stores and instead go online to Amazon.

What This Means For Everyone Else

It is important to realize that online spending does not make up all retail spending in the United States. In fact, it just comprises about 7.8% of all retail purchases. One of the biggest problems that product managers for traditional retailers are facing is that the online giant, Amazon, is starting to set its sights on the apparel and fashion industries which were traditionally the domain of physical stores.

One of the key drivers for so many people starting to make their purchases online is that they can physically get their hands on their products much faster than they used to be able to do. The survey revealed that 20% of the time buyers selected the 2-day shipping option. This is up from 16% the previous year. A big driver for this is probably the Amazon Prime service that offers its members free 2-day shipping. Amazon Prime members select 2-day shipping 31% of the time. This is in comparison to 8% for non-members.

Just to make sure that you understand how big Amazon is, last year they accounted for 60% of the total U.S. online sales growth. What Amazon has done is to change the paradigm. Amazon has changed customer’s expectations because they are offering customers speedy delivery with low cost shipping. The mentality of the consumer has been changed and now they have come to expect both of these things. This is especially true among millennials who make 54% of their purchases online. However, the rate of adoption by older people is growing at a faster rate.

What All Of This Means For You

Product managers at traditional retailers have a real problem on their hands that is not covered in their product manager job description. According to a study that was commissioned by the package delivery service UPS, for the first time more people in the U.S. have made purchases online instead of traveling to a store and making their purchase there. This changes everything. What is a retail product manager to do?

What these product managers are discovering is that not only are more people making online purchases, but they are also using their smartphones to make the purchases. Fewer and fewer people are making purchases the “old fashioned way” where they go to a store and pick out what they want. As more than half of the U.S. prepares to shop online this year, this is starting to cause a lot of pressure on the traditional retail stores. Amazon is a very large online seller. They continue to experience rapid online sales growth. The availability of 2-day shipping has made this option become even more popular with consumers. Customers have come to expect that they can get the things that they buy online quickly and cheaply.

Traditional retailer product managers are now going to have to adjust to the new world that they live in. Their traditional store based companies are going to have to go online in order to be where customers are shopping. At the same time, they are going to have to come up with ways to leverage the physical stores that they have in order to compete with Amazon in a way that they can’t match. This game is not over yet, but traditional retail product managers are going to have to change how they are playing the game!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: If you were a traditional retail product manager how would you go about competing with Amazon?

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What We’ll Be Talking About Next Time

Unless you’ve been living under a rock for the past few years, you’ve probably heard about a company called Theranos. They are a Silicon Valley startup that attracted a lot of attention. They claimed that they had invented a product that with just a minute amount of blood from an individual could run a large number of health tests. This blood testing device was called Edison. It didn’t hurt that the company’s CEO, Elizabeth Holmes, was an attractive and well-spoken lady.

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