As someone who relies on the health of the online retail market to pay his rent every month, I’m probably not the first person you’d expect to welcome a forecasted slowdown in the annual growth in online sales. However, Verdict have recently announced that this growth is currently in the neighbourhood of 30% which, whilst still robust, is a marked deceleration from the 100%+ rates we were applauding a few years back.
So what’s behind this – is it the economic downturn we’re hearing so much about? And why am I so happy about it?
First things first. One of the anecdotal effects of the economic situation is that it tends on the whole to be driving consumers online. Historically, price has languished around number seven or eight in the list of reasons why people shop on as opposed to offline (after things like convenience, range and so on), but the news content of recent months will be slowly pushing this factor upwards in the list. Particularly with large, considered purchases, comparing prices online has never been easier or more of an imperative, so ecommerce is bound to mop up some of the custom leaving the high street. So the plateauing of online sales growth doesn’t seem to be entirely crunch-related.
The truth of the matter appears to be more that ecommerce is now an accepted part of the mass market’s retail experience, and the primary impact of this is that online retailers can no longer rely on developmental factors in the market at large to drive those KPIs. With a market that’s doubling year on year, it’s comparatively easy to deliver good-looking numbers to the board every April, but when this starts to slow, there’s only one place business growth can come from: good business practice.
This goes back to basic retail principles. Keep your shop clean, stock the right products at the right prices, put the right products in the window and be nice to your customers, and things will tick over nicely. Force them to stumble over boxes left on the shop floor, hide products out of sight and decline to communicate with anyone, and only the most determined shopper will actually bother. Early adopters of ecommerce mainly did so because it was something new; the mass market is much less forgiving of a sub-standard experience.
So for online retail, now more than ever is the time to get the basics right. Every stage of the user journey can stand to be optimized, from the marketing strategy which delivers the customer, to the merchandising and search tools they use to find their product, to the checkout process they use to pay for it, to the post-sale communication and the delivery of the order, careful attention paid to each link in the chain can squeeze another fraction of a percentage point onto the conversion rate. We don’t need to freak the user out with new toys to play with and new challenges to the experience – we just need to make better what they already understand.
It’s also time to look at more global factors. The mass market expects a multichannel brand to behave like an integrated organization. It expects store staff to deliver the same level of service as the website, and expects the ranging, pricing and promotions to be broadly aligned across channels. For example, if a customer takes a marketing email into a store, will they be met with blank looks, or will they be directed to a merchandised display featuring the same message as the email?
The former requires investment, it’s true, but development budget spent in these areas, whilst the results might not immediately be visible, will return on that investment. Any online retailer will know what an added 1% conversion would add to their bottom line – this and more is within reach with a program of analysis and optimization.
The latter is cultural and organisational. Encouraging a traditionally high street business to think as a multichannel organization is no small feat. Once implemented at a head office level, with global objectives clarified and business units moving out of their silos, the cultural change can be gently filtered out into the estate.
So with the market growth slowing (although by no means stopping), poor ecommerce will have few places to hide. The top UK retailers all have exacting and rigorously upheld retail standards in their stores – it’s time to apply those high standards and sound business practices to the organisation as a whole.
And this is the Reality of Retail :)