Guest Comment: Slowing sales focuses the mind for e-tailers
- Added:
- Nov 27, 2008
Although e-commerce continues to grow, Tealeaf’s Geoff Galat argues that now is not a time for online retailers to become complacent.
Whilst the recent IMRG Capgemini e-Retail Sales Index reveals a year-on-year increase of 15% for online sales in Q3 this year, that figure still represents a massive slow-down from the 54% increase enjoyed by online retailers this time last year.
The wave of online growth that etailers have been riding in recent years is slowing down as the web reaches maturity and the financial crisis takes hold. Problems related to the current economic climate aside, competition online is reaching epic proportions, making it more crucial than ever for online businesses to capture all possible revenues.
As more and more businesses move online, Google’s dominance at the core of any web purchase continues to increase. Fail to satisfy a customer’s need and the competition is literally a click away. Search levels the playing field and throws down the gauntlet: give unparalleled customer experience and reap the rewards, get something wrong and lose that sale (and potentially even more).
In such conditions, companies need to take a good hard look at their online channel and make sure that the customer experience is optimised, particularly in the run up to Christmas when consumers will be looking to “beat the credit crunch with internet prices”, as IMRG chief executive James Roper puts it.
But it’s not all doom and gloom. The Web still has unparalleled opportunities for those that get it right. That consumers choose to go online makes sense: as well as being able to shop around for the best deal, the web offers potential customers the convenience of a massive variety of products at their fingertips.
In fact, a recent survey that we commissioned with Harris Interactive revealed that in the UK, the preference for conducting business online has overtaken in-person by about 10 percentage points among adults who go online: 52% of all online adults generally prefer to conduct business online versus only 41% in-person.
But there is a flipside, with 90% of consumers expecting the same high levels of customer service online as they do offline. This online/offline dichotomy represents a huge challenge to companies without visibility online.
What happens when a consumer tries to purchase online and something goes wrong? Perhaps they were not allowed to log in, their shopping basket mysteriously emptied or the site returned a cryptic error message. In a physical store, a shopper might seek out an assistant, since leaving the store and finding a new shop would require unwanted effort. Online, as we have already mentioned, the barrier to switching is considerably lower.
The impact of poor online customer experiences is much bigger than many might think. The Harris survey identified a rapid wave of consumer abandonment after encountering online problems. 49% of British online adults who experience problems when conducting an online transaction would abandon it or switch. This datapoint is even more remarkable in that it represents and increase of 12% in the last year alone, again highlighting the increasing ease of taking your business elsewhere online.
Given that the IMRG research highlights ever increasing competition in the online arena, it seems inconceivable that some etailers are seemingly throwing away these potential sales. The 2008 rate of abandonment revealed by the Harris research suggests that £11.9 billion in revenue could be affected by issues on shopping sites alone[i].
In this current climate of belt-tightening consumers, this is an even more precarious situation for online companies. Businesses must realign their efforts to focus on customer retention by perfecting the online customer experience.
Online success requires an effective, intuitive website, much in the same way that offline profits rely on good customer service either in-store or at a call centre. A fully integrated customer experience strategy ensures success across all channels – and, ultimately, the bottom line. Those that get it right can expect to continue to enjoy the fruits of the online channel and take a slice of that £11.9bn potential reward.
By Geoff Galat
VP Marketing and Product Strategy
Tealeaf
