| First, the good news…E-commerce in the UK will grow at six per cent a year over the next six years, according to a recent Forrester Research report. This shows that more than half of UK consumers shop online today - about 28 million people. By 2014, 37 million UK consumers will be online and will spend nearly £56 billion on the web. UK consumers outspend their European and even their American counterparts. It’s estimated they fork out £1,312 per year online. And it gets better. Online shopping boasts those all important green credentials - it’s more environmentally friendly than driving to the shops, according to a new report from the Logistics Research Centre at Heriot-Watt University. The research compared the carbon footprints of online and conventional shopping for small goods such as books, CDs, cameras and household items. It was found that a typical van-based home delivery produced 181g CO2, compared with 4,274g CO2 for an average trip to the shops by car. An average bus trip by a shopper produced 1,265g CO2.
Now for the bad news…The Forrester report notes that: “Leading UK retailers like Argos, Next, and Tesco have begun integrating their channels in search of seamless cross-channel customer
experiences to help drive substantial sales growth.” However, these companies would appear to be in the minority. While the internet has changed the retail landscape for consumers, in reality most retailers have responded by simply adding channels to their existing operations. They have not integrated to the extent that they can offer buy online, pick-up in-store, for instance. This facility would give High Street retailers a vital advantage over their pure play competitors - if you were shopping online for a DVD and
needed it quickly, you would be far more likely to order it from the site of a Bricks and Mortar retailer and then pick it up from your nearest branch rather than wait three to four days for it to arrive from play.com.
“To develop a more e-business mindset organisations need to develop systems that can be consolidated and integrated into a central structure. This will enable the customer to have a
cross-channel experience that fully incorporates online and in-store - an integrated approach from start to finish. An integrated business approach will mean that the systems of both the online and in-store part of the business will hold common information,” says Phil Offord, director of sales for the industry
sector at CA, an IT management software company. “Looking ahead, there will be a shift where online will become more central and we are already starting to see this with large retailers. However, for those yet to enter this stage, in order to remain a competitive and successful retailer this integration needs to come sooner rather than later.”
In the here and now, however, incidents of routine maintenance, sites crashing and slow levels of online service continue to cause problems and make headlines. In February, the Sainsbury’s Online Groceries website went offline for routine maintenance which, for reasons that were not entirely clear, took an entire weekend. There have been reports that the supermarket giant lost more than £1 million as a result of this move. Not to mention the hit its reputation must have taken among customers. In a chirpy email sent to customers, it portrayed the maintenance as just one of those things - a bit of spring cleaning and we’ll be back before you know it. Sainsbury’s currently delivers groceries to more than 90,000 people a week, but how many of these will now be tempted to go elsewhere? As Graham Moore, e-retail specialist at Zeus Technology, an online application delivery specialist, puts it: “Consumers have so much to choose from online that if they encounter slow service they’ll simply shop elsewhere. What’s more - stories of downtime, such as when the Debenhams site crashed after launching an online sale, are reported on in the press in greater frequency, causing significant negative damage to
brand reputation.”
Despite these issues, Moore believes that retailers can easily ensure they deliver excellent and consistent levels of online service to customers by investing in software solutions that manage web traffic and can quickly scale up to cope with peaks in activity. These solutions can be deployed in a matter of hours and re-direct traffic to different parts of a site when one part becomes
overloaded with visitors. This is particularly useful for retailers when they launch online promotions.
“Intelligent software is also able to distinguish between types of customers visiting a site and tailor the service offered to them. For example, if a site is busy and a high-spending customer logs on, the technology can ensure the high-spending customer does not experience any change to the level of service and is able to continue their purchase as normal. If a site does crash, retailers should present shoppers with branded messages rather than standard error messages in a bid to maintain loyalty,” he says.
Frank Lord, managing director, EMEA at ATG, a provider of e-commerce solutions, notes that closing sales online has always been tough but with retailers large and small struggling to remain in business this has now become a major challenge. He argues that retailers should respond to this by deploying intelligent technologies that allow them to build personal relationships with consumers. Technology such as ‘Click to Call’ gives shoppers the chance to speak directly to a customer service representative about their purchase. The technology can be especially useful for those new to online shopping that require personal contact before deciding to buy expensive goods.
“Today’s shoppers are a picky bunch and have high levels of expectation when it comes to online customer service,” Lord observes. “Retailers need to rise to this expectation by making sure they treat their online site like a virtual shop window; offering customers products and services most relevant to them. Shoppers will quickly go elsewhere if they don’t think a site can meet their needs, so investing in personalisation technology should become a big focus.”
Lost sales
A 2008 report from Verdict Consulting, entitled How to pull customers online, shows that online customers abandon 24.8 per cent of their shopping carts before sales are completed. The solution? “Offering customers a tailored shopping experience should be a top priority for all retailers. As a first step, they should ensure they have technology in place that monitors how consumers use their site so that improvements can be made. Retailers should also deploy online product comparison tools. If shoppers are drawn to the web because they are looking for bargains, comparison tools can be especially useful, particularly in the case of products with many different specifications such as consumer electronics. At a time when people are watching their wallets, comparison tools help shoppers feel confident about their purchase and reduce shopping cart abandonment,” says Lord.
A web analytics package should be put in place to measure the conversion rates at every incremental conversion point, argues Pontus Kristiansson, CEO and co-founder at Avail Intelligence, which specialises in maximising the value of visitor traffic to e-commerce websites. This will ensure that problems can be identified and remedied immediately. “One of the most effective remedies for this is to be found through merchandising excellence. The solution to the returned goods issue lies in making sure that customer expectations are in line with reality. That means making sure that the quality of the product is optimal and service is good. Equally important is ensuring that the customer has realistic expectations. Letting the customer community share their experiences online through ratings and reviews will provide the solution,” he says.
Ultimately, it’s all about ensuring visibility of the customer experience and having the right processes in place to react to any arising issues, according to CA’s Offord. To achieve this level of visibility, online retailers need to be able to monitor customer movement around the online store right through to checkout, delivery and the customer service received. Gaining a detailed level of visibility and being able to react when operations falter is the biggest challenge.
“To ensure grade A site performance and a smooth customer experience, the supporting technology has to be able to provide information to the core business which shows what clients are enjoying a good service - checking out time, feedback, and not abandoning sales,” he says. “For example, if you look at a multi-channel retailer such as a supermarket, when a customer enters a physical store, there are established processes and resources in place to monitor and ensure the customer’s experience is a positive one. When the same occurs online, the visibility is not so clear and therefore the retailer’s ability to react to a negative situation is greatly inhibited. The retailers need to address this lack of visibility to make sure the customer experience is positive from entry point to checkout.”
The future
It wasn’t so long ago that many people balked at the idea of using the computer to do their shopping - it was too much effort, security issues etc etc. But the mystery surrounding it has now vanished and we all know somebody who shops online - from working mums through to retired couples. The Digital Britain interim report, recently presented to Parliament, touches upon this digital revolution. It notes: “Our take up of first generation broadband has grown faster than that of almost all the other major economies. Britain has the highest proportion of internet advertising of any developed economy. By 2012, £1 in every £5 of all new commerce in this country will be online.”
And it continues: “More importantly, the digital economy underpins our whole economy and builds our national competitiveness. Our readiness to adopt digital technology has driven productivity gains throughout our wider economy.”
2009 will be a tough ride for many retailers as they contend with a bleak economy, intense competition and increasingly fickle consumers. Mastery of online is the retailer’s best defence against an uncertain future and a powerful weapon for taking on competitors. “I can only see the growth it is enjoying at present accelerating further. As retailers get better at online retailing, more and more people will buy in this way. The economy is tough but it’s a good opportunity to shift business to a less expensive option then bricks and mortar and move online. As statistics show, online retailers are bucking the market trends. From a CA perspective, increasingly we are focusing on this area and we have a lot to offer to support the growth of online retail,” says CA’s Offord.
But this growth brings with it an increasing number of challenges, making it more important than ever for online retail to get the basics right. According to the Forrester Research report mentioned at the top of this feature, more than half of UK consumers shop online today but that leaves millions of people who are thus far resistant to the online revolution. Certainly, the technology is out there to assist the sector in helping them overcome their fears and concerns. ATG’s Lord believes that individuals are far more likely to listen to the views of peers than rely on the product information provided by suppliers so expect to see retailers embracing user-generated content in the year ahead. “Also expect to see mobile commerce embraced by an increasing number of retailers. Mobile commerce is set to become a major sales channel in 2009 are more shoppers use their phones to research, shop and share product data among peers.”
Avail Intelligence’s Kristiansson, meanwhile, is confident that the online retail industry will continue its rapid growth path of around 20-30 per cent annually, despite the otherwise weak economy. “I believe that it will continue to do so until it has reached its maturity level of around 30 per cent of total retail sales. Other than that, I think we can expect to see increased adoption of community intelligence, as online retailers strive to deliver a more satisfying shopping experience.”
All of which brings us back to the here and now. Online sales remain a bright spot for retailers, the IMRG Capgemini e-Retail Sales Index showing 13 per cent year on year growth for February. At the same time, however, this is the second lowest yearly growth the Index has recorded since its launch in April 2000. Acquiring and keeping customers in 2009 will be tough, both online and on the High Street, so the emphasis must fall on providing the kind of excellent service that makes people come back again and again - i.e. well designed, easy to use sites, attractive offers, search results that deep link to correct product pages, stringent security measures and convenient delivery options with supportive information. There are retailers who are making great strides in replicating the in-store experience online, but the fact remains that many others are treating their online operations as bolt-on channels. This may have sufficed in the days when internet retailing was easier, when huge numbers of customers migrated to this brave new world and, as a result of its novelty value, the tolerance of poor customer service was higher. But it won’t cut it in the long term.
The search for seamless cross-channel customer experiences continues apace.
top
|
