You are here: News / Growth in online sales has stalled so what exactly can retailers do to improve their top-line?
Growth in online sales has stalled so what exactly can retailers do to improve their top-line?
Archived article dated Friday December 12th 2008
Retailers having an easy time is not something you read about much today but it has certainly been the case with their online operations - until now maybe.
By Mark Chirnside
They have been able to overlook the poor levels of service they've provided and gloss over the numerous technology glitches they have inflicted on shoppers because people have been willing to put up with such inconveniences as they have continued to flock online to do their shopping.But we are now entering a slowdown in the growth of sales online for the first time since the internet came to prominence and things will have to change. Consider that Hitwise reported internet traffic had fallen 0.5 per cent between October 2007 and October 2008 and IMRG Capgemini revealed year-on-year growth was 14 per cent in September compared with 73.2 per cent the year before.
This is following the trend seen in the US. Until recently all eyes might have been on the thrilling presidential election but on Monday attention shifted to the retail sector and what has been dubbed 'Cyber Monday'.
Even this key online shopping day for American consumers showed sales a mere one per cent up on last year. And when you consider the first four weeks of the US 'holiday season' then the picture is even bleaker with online sales having fallen by four per cent.
The early signs in the UK are also pretty poor as we head down the same rocky road as the Americans. The IMRG reported that on Monday transaction volumes were slightly up but in terms of value it is flat compared with last year.
The result is that UK retailers are going to have to take a peek under the bonnet of their online operations. They will have to fix the persistent problems and long-standing issues that have irritated (but not completely turned off) customers during the boom time, otherwise they run the risk of losing sales to more efficient rivals.
The online proposition has to be just as good as their stores in terms of presentation and customer service. There also has to be an end to sites going down, and shopping has to be convenient with any unnecessary obstacles in the checkout process stripped out.
Retailers will also have to tap into new markets. Apparently a meaty 22 per cent of internet users have never shopped online, according to the recent 21st Century Life Index from BT. This group represents a massive opportunity for merchants to grow their top-line.
For some of these individuals their non-shopping status is a result of a fear of online fraud, while others are unwilling to wield their payment cards online as they fight to keep a tighter rein on their finances during these tough times. Another chunk of people are still without bank accounts and do not therefore have credit or debit cards.
One way of attracting these potential new shoppers is to accept additional forms of payment on websites that compliment debit and credit cards. This is something that many retailers haven't given much thought to but when the sales figures for Christmas and New Year prove to be worse than expected then these overlooked consumers might suddenly become a greater priority. My guess is that many retailers' shareholders will demand this is the case.
Mark Chirnside is chief executive officer, Ukash
Share this article:
Should your colleagues be reading the Retail Bulletin?
Let them know about us.
