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No time for a novice

What a difference a year makes. Twelve months ago consumer confidence and its happy by-product - spending - were both sky high. Now, High Street retailers are taking a hit as consumers continue to reign in their spending. But it's a different story for online retail, writes Hannah Prevett

Despite a surprising surge in December and January, which can be attributed to heavy discounting, High Street sales have since slumped, according to statistics just released by the Office for National Statistics (ONS). Adverse weather conditions, a torrent of press coverage on the economic meltdown combined with higher prices resulted in would-be consumers opting to stay home rather than venture to the High Street this February.

Meanwhile, online revenues aren’t suffering as badly. Latest figures from the IMRG Capgemini e-Retail Sales Index show that the sector is continuing to show resilience, with 13 per cent year-on-year growth from February 2008 to 2009. However, despite the annual increase, February online shopping fell 11 per cent from the month before, the research shows. How then, can retailers do more to optimise their online performance and continue bucking the trend of the High Street? It seems clear that now is not a time for complacency online but the multitude of new hyped technologies that have come with the advent of Web 2.0, how can a retailer decide which are actually worth implementing?

Back to basics

“The rules have been the same for the last five years or more,” says Steve Davis, international executive vice president at full-service e-commerce specialist, GSI Commerce. “Customers should be able to purchase the products they want in as simple a manner as possible. If the checkout process becomes cluttered with unnecessary applications or media, rates of shopping cart abandonment will inevitably increase.”

Frank Lord, managing director EMEA at ATG, agrees that reducing shopping cart abandonment is one of the biggest challenges facing retailers. “Online conversion rates have always been low but in today’s tough market, retailers need to do everything they can to increase the chances of shoppers buying,” he says.

“Like every online retailer, we struggle with cart abandonment,” admits Mags Vaughan, operations director at fairtrade produce retailer, Traidcraft. However, Traidcraft’s customers are different to the average consumer as they aren’t just purchasing a product but buying into a way of life. “We actually find that if customers engage with us beyond the level of purely transactional, their stickability and our ability to retain them goes up quite significantly.”

The multi-channel integration challenge

For Neil Saunders, consulting director at Verdict, in order for retailers to get the most from their online offerings, they must streamline processes and systems as seamlessly as possible. “One of the challenges is integrating the web business centrally within the overall retail business. Most retailers to date have tended to view the web or the internet as something quite separate from the rest of the business - in operational terms, in marketing terms and so on. And actually that’s not how
customers see it; customers see it as just another route to market of a particular retailer,” he explains.
Integration is naturally a bigger issue for multi-channel retailers. While the existence of multiple routes to market can cause a logistical nightmare, it also creates opportunity. “Put simply, as long as the technology is sufficiently integrated across all channels, multi-channel retailers - by virtue of the fact that they have multiple channels - have significantly greater opportunities to cross and up sell than a pure play could ever have,” explains Verdict’s Davis.

Yet, despite the obvious advantages available to multi-channel retailers, it is the retailers trading exclusively online which are going from strength to strength. “The fact that retailers like play.com recorded such good results after the peak season is more indicative of the failure of multi-channel retailers than the good business models of pure plays,” continues GSI Commerce’s Davis.

This again is a question of integration, says Saunders. Multi-channel retailers have a plethora of opportunities to augment their customer service offering, if only they could pull it all together. “Retailers have got to really integrate their web offers and the web logistics very closely with the rest of the offer and the rest of the business. For example, the customer service function for the stores should be exactly the same as the customer service function on the web. If you buy a product online, you should be able to take it back to any store. If you buy a product from a store you should be able to send it back to the online returns depot if that’s what you want to do. It’s about that kind of level of integration.”

Aesthetics count

Traidcraft’s Vaughan says it is equally vital that the look and feel of the website is in keeping with the branding across all other channels, which at the organisation includes distributing catalogues, taking mail and phone orders and interacting with its 6,000 activists via an online forum. Improving the aesthetic qualities of a website is also key to retaining current customers, says Verdict’s Saunders.

“All of these softer things need to be tracked as well and understood because fixing cart abandonment rates is an easy win. You’ve already got the customer, you’ve got them to put things in their basket and they’ve dropped out at the final hurdle - fixing that final hurdle, shouldn’t be that difficult. It’s much easier than trying to get new customers in,” he explains.

Persuading customers to engage with a brand or a retailer in the first instance is often arduous, although marketing managers have a new weapon in their arsenal: Web 2.0. A number of retailers have added new tools to drive interactivity on their sites. Saunders cites Waitrose as an example of a retailer that’s added successfully added increased functionality. The upmarket grocery chain has added blogs, forums, message boards and an increased focus on feedback forms to promote a community feel. “For a brand like Waitrose that’s great, because people who shop there are foodies, they like being able to read blogs and so on.”

However, he is keen to point out that there can be no one size fits all approach and style and content of the website cannot be dictated even by sector, but by the customer. “I would say the average Tesco customer goes online to do a quick shop, they don’t necessarily want to stay on the site discussing the merits of one chicken breast over another, which is precisely what the Waitrose customers want to do.”
Neither must retailers look to implement Web 2.0 technologies for their own sake or to indulge their own self-interests. They must only be added if they can truly add to the customers’ experience, says GSI Commerce’s Davis. “Adopting Web 2.0 features for their own sake is a waste of time and only serves to impress those on the implementation team in their desire to win awards, it doesn’t impress customers,” he argues. “It’s simple really - implement smart, don’t implement sexy.”

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