I am loving the report just come out Verdict Consulting for Web Loyalty on etailing for the future. There are 10 trends predicting and a lot of them talk about things close to my own heart.. Have Verdict been reading my blog? Here is a brief synopsis of what they are:
1. Growth will be more difficult
Since 2004 growth rates for internet retailing have been in the twenties even rising 35% year on year but this kind of rapid growth has now slowed largely due to the recession and more careful shopping, Verdict are predicting nevertheless a significant growth of 13.3% during 2009. Verdict recommends that etailers need to be more strategic in maximising online revenue.
My Comment
The slowdown means companies could well get more out of concentrating on converting customers rather than fighting for the attention of more new customers.
2. The recession has impacted on line
Verdict estimate that £1.6 bn of revenue has been lost due to the recession. It is thought that customers have moved towards a clear low price and value message and that a critical lesson for the online channel will be to add value and persuade customers to trade up in what they buy.
My Comment
We mustn’t however confuse low cost with value. Customers want to pay the right price but this may not be the lowest price. Consumer still take brand and service into consideration. People are still buying during a recession but they often want their purchases for a better price. It is up to companies to demonstrate the value of their products.
3. Acquiring new customers will be tougher
A key driver of the rapid growth in online retail appears to have been simply the numbers of new online shoppers, in other words the movement from offline to online. However this trend will also inevitably slow in the next few years which means that online retailers will need to work harder to find their growth in other ways. Verdict advise switching more marketing budget to maintaining existing customers and driving repeat business.
My Comment
Couldn’t agree more!
4. There will be more mouths to feed
Another challenge is that the online retail space is now far more crowded than ever before. This, in short, means consumers now have a great deal of online choice. More confident consumers, a greater choice of online retailers, and higher price sensitivity of shoppers means that the average number of websites visited by consumers has increased markedly. Verdict advise deep knowledge of your competitors’ online offerings coupled with sophisticated testing of different customer acquisition strategies to stay ahead of the market.
My Comment
Companies will really need to differentiate themselves and be improving their customer experience constantly to stay ahead of the game. Verdict think that consumers are more willing to try brands that they haven’t heard of, I don’t think this is necessarily true for bigger purchases. In any case less known brands will need to offer lots reassurance on their sites to give consumer the confidence to purchase.
5. Expectations will rise
It will become increasingly difficult to service online shoppers in the coming years. They are becoming more demanding and their expectations are escalating, which means that going forward retailers will have to work much harder to meet their needs.
My Comment
This is so important and yet so many companies fail to spend enough time telling customer why they should shop with them. Another great point.
6. Loyalty can be increased
The ease at which customers can flit from website to website and compare products means that loyalty in online retailing is significantly lower than in store retailing. That said, there remain many opportunities for retailers to foster online loyalty across range, price, convenience and service functions. Verdict recommend a combination of one-off tactical deals to excite the customer, combined with long-term strategic programmes with extra value benefits to lock in customers.
My Comment
What’s more, if your customer experience is good, purchasers will tell their friends all about you as well as coming back to you.
7. Conversion will be key
Another major challenge facing online retailers is how to boost conversion –the proportion of site visitors who actually buy something. Further ways in which to boost conversion often surround making it easier for customers to check out and make a purchase. Rapid check out functionality, and offering cheap, reliable and quick delivery and return procedures also help here. Verdict also recommend personalisation.
My Comment
Back to ROVER. Reception (greeting), options (that are personalised – even better), value for money, efficiency and reassurance. Enough said.
8. Basket abandonment is here to stay
This is when a customer places products in to their virtual basket but does not go on to complete the transaction. We estimate over £2bn of potential sales are lost every year due to abandoned baskets; a figure which is likely to grow slightly over the next few years. Providing clear, accurate and detailed information on products, prices and additional charges is a key way to reduce basket abandonment.
My Comment
Quite often it is the sum of a few online difficulties that means customers abandon the shop. Usability studies can help to iron these out. Keeping the customer in control of their purchase at all times is also key.
9. Customers will be channel blind
Traditionally there have been three standout ways in which people buy goods. These are in store, via a catalogue or online. Customers generally purchase goods through a single channel from beginning to end, though on occasion through a combination of two channels for example a customer researching the product online before going into store to purchase it. However, going forward not only are there more channels through which products can be bought, but also the lines between the channels are blurring. The buying process may well move through three or four separate channels from conception to creation. For example, a shopper might choose their shopping on their mobile phone/PDA, order it online and collect in store. Others might use an affiliate site as a start point which then directs them to a retail site for further information and the product might be bought in store.
My Comment
And this is exactly why your customer experience needs to be consistent across all channels. Love it.
10. It’s more than about selling
Retailers invest significant amounts of money in order to attract visitors to their websites so that customers will spend money with them. However, these customers can also generate revenue in the form of monetisation. This involves allowing third parties to pitch their offers to a retailer’s web traffic.
My Comment
The business should be careful that the offers make sense to their consumers and add to their brand, not detract from it. If you are in luxury goods, having an Aldi offer will not help your brand image but having a test drive offer of the new Audi might enhance your brand.
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