I was prompted to write this blog in a sort of pseudo response to an article in the FT article http://tinyurl.com/RetailFT around the predictions of ecommerce and why there is not the glutton of mass adoption of this medium. Well firstly it is doing very well just now, thank you very much, across Europe online retail sales grew from €98bn in 2007 to €116bn with year on year growth at around 10.8% – so before the economic landslide of the last few months things were, going well, and to plan…
However the reason why I included €uros and €urope rather than UK is that one of the key pushes for retailers in 2009 & 2010 really should be how to expand and cross border into other €uropean territories as this is going to be a great growth area for the next 5 – 10 years as companies and consumers get used a virtual “global high street” It is almost expected and in some cases demanded by the consumer that if they see goods / services in France, Germany, Luxembourg – then they should have the right to purchase them online… I couldn't agree more – why not??
Well this has been a growing concern and pain point for may companies and governments for the last 10 years. What if there are other products and services that are available in other countries the consumer using the web will see the products and, quite rightly will have no understanding of cross border IP restrictions, copyright control, product license etc.. the list is of course endless. The fact that Amazon.com has more traffic from Europe rather than its dedicated regional sites either shows that they users are just typing “.com” or in fact see that the home site for US has a plethora of products that the European audiences would much prefer to buy and at an exchange rate that they prefer.
The debate has been raging on for some time and in May this year a report was published about how to really get your head around the cross boarder controls and allow a much more liberal and freer online market place – read it all here http://tinyurl.com/RetailEU
So is this ecommerce or digital formats failing? Yes & No – Some traditional catalogue companies are almost at 50% of their orders coming from online and the rest is phone / mail – so there is a distinct shift and win there and that sort of split statistic is becoming more the norm rather than the exception. traditional content owners who used to sell their content via physical medium (whether that be a CD, DVD etc..) who, incidentally, have been much maligned in their inability to show any real growth in the digital sphere with some now generating over 50% of their sales via digital downloads – so the tide is of course turning and I would expect to see this trend continue to rise over the coming years – and actually expedited with the current economic climate as more retailers and content owners look to reduce their cost base and be able to deliver, quicker, smarter and more cost effectively.
As for retailers – even now we are still seeing these internal silos that go all out to protect their core business, and always see online, ecommerce, new media as an expensive challenge, a distraction and with the current social climate – a loss of brand control! Coming from that side of the fence before becoming a consultant, I can empathise with companies that feel threatened with the web, I can equally get frustrated and throw down the gauntlet which is you either have a joined up approach to traditional and new ecommerce or your business will die! There is a simple choice really!! We see this in the publishing world as well where there are 3 factions:
- Old Guard that think that printing has survived the last 200+ years, and were talking rubbish, there will be a renaissance!!
- Fence Sitters Middle Ground – the people that want to suck up to their publishers and say what they want to hear that there is a future for newspapers & publishing, while secretly blogging about its demise!
- Blog Generation The forward thinkers that need to look at new business models and new ways for their existing business to continue and new directions – as well as adding value to their archives
So the continuing, and growing battle between traditional business and the required investment to continue business as usual vs new channels and the amount of new investment that is required to step up the ecommerce channel as well as maintain and sustain this new medium and the pace that it changes.
We are a nation of shoppers (both online & traditional) and although we may not purchase everything online, as it may not be practical or appropriate – people will of course, and increasingly more of us do this as standard, use the web to price check and find out information about the product, customer reviews (honest and varied) detailed pictures and video – they will make up their mind more or less from the information on the web before moving back into traditional retail to purchase. So if your company is a high street brand and well known and your web site is neither good, visible, relative, up to date or just not there yet – then you are gambling that your high street name & presence is as such that you don not need the web as either a commerce or marketing vehicle – the good luck to you!! Even the smallest independent high street one off store can create a single web page that although may not be transactional can be a good online advert for what you do – with very little investment and technical knowledge you can have that page with little bits of news and offers that can be fed to any RSS reader and suddenly you have a new audience.
Equally all the pure play online retailers could benefit from additional high street presence, beyond the usual marketing and promotional literature, by creating some excitement by Pop Up Retail (read my blog from a couple of years back) so the two mediums can really coexist. Twin that with web technology in traditional stores, from kiosks, Surface tables, interactive touch walls etc.. the future can be much more exciting that the bleak one being painted.
So back to my statement at the start – for ecommerce what is going wrong with a lot of the big brands? I think it is the mentality and lack of retail understanding – which is still vital whether you are an online retailer or bricks and mortar only the basic principles of retail prevail. Easily the biggest mistake to make is thinking that your home page / landing page is the vehicle to cram as much stuff on there as possible and in an instant confuse and sell the customer anything and everything!!!
To use some retail analogies - A homepage is not the traditional shop floor – and this is one of the major failings of e-tailers in that thinking – the homepage is not where you ram as much product on there as possible! In effect the homepage is a window to your store. It’s your marketing piece, it’s your foot fall driver – when you walk down a traditional high street or shopping mall – you see posters explaining offers, showing key highlighted products of the week / day, you see from your vantage point a store layout and some of the internal retail theatre (sights, sounds, smells, vibe as you will) you know that on a busy high street or shopping mall, you have under 10 seconds to attract, entice and get into your store. So think of that theatre online as well – there is thin line between too much theatre and delivering a massive 3D tilting wall vs something that delivers some rich interactivity that adds value to the users experience upon first arrival. Once you have enticed the first time “passer by” into your store, if you do not show them what led them into your store, offers, deals, promotions (and by this I mean simple way to get to that content and not on the very next page throw everything at them (including the kitchen sink) – in the real world you look at the customers journey throughout the store and lead them round in an intuitive way – again the same must be done online and think of the users experience and journey and plan this accordingly. At the same time once you have done this – don’t just leave it for a year – traditional retailers move the layout frequently based on reports of sales, footfall and new ranges etc.. so why leave your website for a year the way it was launched? Always keep that planning and analysis going and change accordingly.
So homepage is your shop window to entice the passing trade (or online the passing traffic) don’t try and put your entire shopfloor on the homepage or else you just look like a market stall that doesn’t really know what it’s trying to do… and as we have seen with plenty of brands and retailers – this is just what they did – and then wonder why they didn't get the same level of conversion as they do in store! There is also how do you communicate with this next generation of e-shoppers?
I’ll leave the online marketing, SEO, etc.. to the people that deal with that day in and day out – of whom we have some very cool and highly rated people here but if you want to use some of the social tools read this little brain dump on how you should start to look at the social networks to communicate with the next generation – which is how to speak and communicate / collaborate with your next generation of consumers
As for the future – as with a lot of other businesses – times are a changing and they need to step up and decide what they are going to do – dabble or jump in and really move forward working out how to combine their traditional with new commerce – it does mean that they may need to make sacrifices elsewhere within their existing traditional business, of which most are still not willing to do… as with the UK, that may be seen as a failure!
This debate will continue and what we will see is more failed e-commerce sites (due to real lack of understanding) and more failed high street retailers (due to not understanding the new high street shift and the multiple channels that are on offer for everyone!