Thirty to fifty percent of all retail sales could be online within five years, say researchers
Online reaches 17% of retail sales, nears tipping point Thirty to fifty percent of all retail sales could be online within five years, say researchers. UK shoppers spent £26.5billion online in the first six months of 2008, up 38% on the £19.2billion recorded for the same period last year, according to the latest IMRG Capgemini e-Retail Sales Index. That means online sales are now accounting for 17p in every pound spent, equivalent to half of all supermarket sales.
The researchers are now predicting that between 30% and 50% of retail sales will be online in five years. “This is because, as online reaches 20% of all retail sales, retailers experience a tipping point which forces them to seriously re-think the future viability of their business model,” explained Mike Petevinos, head of consulting for retail at Capgemini UK. “We have seen this happen for books, music/DVDs and electricals and as the industry as a whole reaches this tipping point in 2008, more categories are sure to follow.” Sales growth did begin to slow in June, however, with the normal dip in growth experienced in the month “significantly more pronounced than 2007.” That said, Capgemini and IMRG expect rising fuel costs, falling disposable income and smarter consumer shopping habits to drive strong online sales growth throughout the rest of 2008. “Whilst online retail is not immune to the credit crunch, it is showing greater resilience than the high street,” Petevinos explained. “The online channel continues to grow its share of retail spend thanks to the traditional drivers of convenience and choice but these drivers appear to be magnified by the current economic environment.
Convenience has a sharper edge in a world of soaring fuel prices and the ability to research and make more informed choices in a time of heightened price sensitivity is a key advantage of the online channel.” The most pronounced sales increases during the first half of this year have come from both the top end and the bottom end of the market which, say the authors, shows that consumers are becoming smarter shoppers, buying everyday items at discount retailers whilst adding a touch of luxury with select items from high-end retail outlets. This is further backed up, they say, by recent research which found that UK internet visits since June 2007 to mid-market online retailers have fallen by 6%, while visits to lower-end retailers, such as Primark, have increased by 12% and visits to high-end retailers, including Harrods, increased by 14% over the last twelve months.
“Clothing and footwear sales were the biggest losers in physical stores in June, with sales either flat or lower than last year despite heavy and widespread discounting,” explained James Roper, IMRG’s chief executive. “Online, however, they were big winners; internet clothing sales were up 32%, while lingerie sales rose by 37% and footwear 38%.”
Online retailing is continuing to boom in the UK despite a gloomy economy outlook, according to new research. The consumer survey of 4,000 shoppers, conducted by retail analysts Verdict Research, indicted that the amount of money spent by consumers shopping online increased by 35% to £14.7bn last year.
The growth rate was the fastest in six years, and represented about 10 times that of the UK’s retail market as whole. The top answer for opting for the internet over the high street was ‘making better use of leisure time’. The growth in internet access and users making more regular and expensive purchases online meant the growth would continue, Verdict’s report suggested. It forecast that online retail sales would reach £44.9bn by 2012, about 13.8% of total spending. But while some of this was “cannibalisation” - people buying via their computers what they would previously have gone to shops for - physical shopping was far from doomed, the report said. “There is still a need and place for physical locations - the key is to ensure that synergies with online retailing are exploited to drive footfall to stores,” Verdict said. “While having an Internet presence is vital, giving the consumer choice by establishing strong links between the in-store and online offer is now essential.”
The development of faster broadband had made the process of shopping quicker and easier for many people, Verdict concluded, while many saw it as a way of getting cheaper prices. “The internet is widely perceived as a cheaper and easier way of finding lower prices and bargains in most sectors,” said Malcolm Pinkerton, Verdict’s senior retail analyst. “As the cost of broadband falls, consumers become accustomed to internet shopping and retailers continue to enhance their online propositions, the channel will find itself extremely well-placed to capitalise on the falling consumer confidence and lower levels of disposable income currently impacting the retail market.”
www.wdsinternet.com/ecommerce.aspx
Online sales of clothing and footwear soared by 20% in April, while internet lingerie sales have risen 72% year-on-year, according to the IMRG Capgemini e-Retail Sales Index.
The index found that consumers spent £326 million online on clothing and footwear in April.
Since April 2000, when the index began monitoring online sales, more than £150 billion has been spent online in the UK.
www.wdsinternet.com/ecommerce.aspx
Could eCommerce boost your company’s annual revenues by an additional 5-10%?
It is very interesting and important to compare high-street retailers with mail order companies. In the UK more than 1 in 10 books are now purchased online, that is over 10% of the actual market share.
John Lewis’ online sales now exceed total sales of it’s largest Oxford Street department store and many specialist mail order companies have expanded online revenues to exceed 25% of total turnover.
Littlewoods has ramped up its target for the proportion of business it wants to do online from 50 to 70 per cent, having achieved its original goal three years ahead of schedule.
www.wdsinternet.com/ecommerce.aspx
Essentially, all aspects of managing your online shop should be easy and efficient. The shop should provide the right kind of service and experience for your customers and at the same time provide you with an effective and profitable means of online selling.
Bearing in mind that the facilities of your online shop depend on the system you adopt, you should aim for:
Easy shop management
This may include full control of:
- product listings
- product categories
- descriptions and images
- prices
- delivery options
- availability indication
- special offers
Easy client management
This may include:
- order notification
- customer ordering history
- database of customer details
- mailing list facilitycompliance with legal processes
Effective payment processing
This may include:
- versatile payment options
- customer confidence in security
- smooth and speedy transaction of funds
Fulfilling orders
You must make sure that you can:
- dispatch and deliver goods on time
- cope with large demand
