Top 10 UK E-retail priority issues

The IMRG (2006) report is very upbeat about UK e-retail and so it should be. The headline figures are impressive:

• Online retail has increased by 2900% in the last 6 years
• 10% of UK online retail purchases are forecast to be made online by the end of the year
• This will amount to £26 billion spent online by UK shoppers
• On average, online shoppers will spend £1,000 each
• 540 million parcels will be shipped to the UK’s 26 million Internet shoppers
• For every pound spent online, the web will influence another pound spent in traditional retail outlets

The growth in e-retail sales of individual companies is also impressive with Alison Lancaster of John Lewis Direct quoted as saying:

“John Lewis Direct continues to show very strong sales growth. Sales for 2005/6 were 70% ahead of 2004/05 levels - which is in line with the average annual growth rate of 70% achieved in the last four years. This year has started very positively and we expect to continue this pattern of strong growth through out the year”

Achieving this growth hasn’t been straightforward though with many retailers having to adapt their processes of product targeting, marketing and distribution.

Top 10 priority list of key e-retail issues in the UK

• 1= Usability / Customer Journey (mentioned by 56.5% of IMRG respondents)

By implication improving conversion of site visitors to sale is the joint top issue. This is perhaps surprising, since it might be thought that with many usability studies and site redesigns over the last 5 years, this might be resolved. However, average E-commerce conversion rates remain low, typically much lower than 10%, so it is easy to see why retailers of all sizes will be trying to improve their performance in this area (See my E-commerce conversion rates statistics compilation).

• 1= Customer Retention Strategies (56.5%)

Less surprisingly, customer retention and growth, is also top. This will continue to be a key issue, particularly with the ease with which the web facilitates switching between retail brands for different product categories through use of search and price comparison engines.

• 3. Interactive Marketing (54.4%)

Customer acquisition is a close third. Applying the right e-communications techniques to deliver new customers at an acceptable cost per acquisition is also a key issue.

• 4. Industry Statistics (46.1%)

This seems to be a request for by members for a more industry benchmarking data on the key areas of acquisition, conversion and retention.

• 5. Multichannel Integration (45.6%)

The importance of integrating channels is seen from the summary figure that for every £1 spent online, £1 is spent in-store, so facilitating this is important.

• 6. Exploiting New Technologies (39.4%)

This is a new entry into the top 10 for 2006, doubtless fuelled by the hype around "Web 2.0". Many retailers are starting to look again at Mobile commerce which is at number 12 in the list, mentioned by 29.5% as an issue.

• 7. Delivery / Fulfilment (37.3%)

The proportion mentioning delivery and fulfillment highlights this as a key issue that is important in terms of cost effectiveness and the overall customer experience.

• 8. e-Crime (34.7%)

Reducing fraud and identity theft are also seen as important.

• 9. Email Strategies (34.2%)

Although not that high in the top 10, e-mail marketing is a key tactic to the top-placed issue of customer retention strategies.

• 10. Payments (34.2%)

I’m not sure why this is a concern, perhaps its the cost of payment systems, or simply getting paid given the amount of E-crime!

IMRG (2006) Internet Media in Retail Group. Annual Statement 2006. May 2006. www.imrg.org. Read E-retail key strategy issues report

So, what’s missing? Well perhaps it’s because of the questions posed by the IMRG to its members, but I would have expected to see more reference to the good old, still relevant, marketing mix. Some online marketing mix issues are covered, for instance, Promotion, Place and Physical evidence (equivalent to usability online), but what about the Product and Price? With online price transparency it would be expected that this would be highlighted. Perhaps product and pricing issues are what is really behind the top 2 challenges!