With the use of technology customers are able to browse in store and also at home or work via mobile and social media, and they can go on to make a purchase both off line (aka in store) or online.
Consumer perceptions of online retail are shifting and trust in online shopping is certainly growing. Yet 88% of the retail market is still currently shopping offline according to a study by Verdict on ‘The future of online and multichannel retailing’. By 2018 however, the offline market is likely to of have fallen to 85.5% with online climbing to 13.3 of which click and collect will see 1.2% of the share. According to Verdict’s study 25% of consumers say they are happy to buy from an online retailer that they have only just discovers by searching on the internet.
The attraction of online shopping is attributed to three key influences – convenience, lower prices and lack of time constraints. Other reasons to shop online include ease of price comparison, more product information and better selection. What’s more where as high street shopping was always considered to be an enjoyable and social activity, e-retail is beginning to take on the same appeal with clothing and footwear being the most popular products to shop for, followed by grocery, food and electrical products. “Cannibalisation of spend has had a major impact in market sizes as mobile phones and tablets have become more mainstream shopping devices, often replacing desktops and laptops”, explains Verdict Analyst Matthew Rubin. “Mobile phone spend has grown rapidly, though it remains relatively small, while tablet spend has grown from nothing to almost twice the size of mobile phone spend in just the two years to 2012, and that trend has continued into 2013.”
It’s not the ‘on the go’ mobile capability that is driving the online sales though, as most purchases take place at home or work, it is in fact the devices. Only 2% of online transactions take place outside of home or work, and most mobile transactions actually occur in the living room on a tablet. The tablet is considered more popular for its big interactive screen and sharing capability in that potential purchases can easily be shown to the person next to you or via integrated social networking apps. Mark Lewis, online director at John Lewis said: “Our customers’ shopping habits have changed over the past few years, and our peak time for browsing and shopping on johnlewis.com is now Sunday evening. With shoppers becoming more comfortable when purchasing via mobiles and tablets, coupled with better connectivity and the rise of smartphones so people can browse online through the day, it’s not surprising the way we shop has changed.”
38% of online shoppers research goods in store prior to purchasing online. “This appears to be a major concern for retailers with a physical presence” said Rubin, “however, with only 7% of mobile phone shoppers completing transactions in a store; there is still a major opportunity to convince them to make the transaction through the store itself or through its own website. This requires strong customer service and engagement, but with 57% of online shoppers comparing prices between websites, it is also essential that retailers with homogenous products match or come close to pureplay pricing.” While many physical retailers were slow to take advantage of new mobile shopping channels, Marks & Spencer invested early and is now reporting 140% growth in sales via tablets in H1 2013/14. Online giants Amazon and eBay were the most perceptive and agile of all retailers and now dominate via mobiles and tablets.
Verdict points out that with so many sales taking place on the sofa, mobile commerce is looking remarkably static and puts the lack of (truly) mobile purchases down to trust in public Wi-Fi and mobile telecommunications networks. In addition, 75% of online purchases were driven from seeing the product online for the first time, also negating the need for showcasing stores. The limitations of Responsive Web Design are also being blamed for the slow uptake of mobile commerce. While many retailers are opting for this method that reformats different versions of the same web pages depending on the size of screen available, Verdict believes retail websites need to respond to the location of the user as well. Tagging products while on a smart phone to be purchased later when at home is suggested as a route to increased sales.
The research indicates that most retailing tools can be categorised as a method to push either in store or online sales. Payment apps, kiosks, beacons and showrooms work well for in store, where as PC and mobile websites, retail shopping apps, e-messages, and click and collect are driving the online market. There is still light at the end of the tunnel for smartphones, which despite not leading online sales, are being used for comparing prices and finding product information, however it’s not clear whether they support in store or online sales more. While there is room for both, retail businesses are advised to follow five simple tips:
- Don’t use every channel, not all will be valid and affordable
- Pick relevant routes and tie them together
- Measure the results
- Test and adjust accordingly
- Tracks your ads with source codes
A multi-channel approach is essential for retailers that want to continue to meet customers’ modern expectations of shopping by the channel of their choice. Only time will tell which channels survive the current online shopping revolution. The nation’s love affair with online retailing shows no signs of slowing according to Jeremy Nicholds, Director of Commercial Development at Visa Europe, who said: “UK consumers’ love affair with online shopping will reach its peak on Mega Monday when we predict that we will process 7.7 million Visa transactions – a 16% rise on last year. Online shopping now accounts for more than 25% of spend with Visa in the UK, signifying the confidence that consumers have in the security of online payments and in the delivery of goods. With an average of £312,500 expected to be spent online every minute on 2nd December, the Christmas shopping season will certainly start with a bang!”