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eCommerce

ANALYSIS: Why was H1 2019 online growth the lowest recorded?

A boost in June wasn’t enough to save online retail in the first half of 2019, with records showing that sales slumped to their lowest ever growth rate of just +5.4% Year-on-Year (YOY), according to the latest IMRG Capgemini eRetail Sales Index.

The Index tracks the online sales performance of over 200 retailers with a combined annual spend of £28bnComparatively, the same time period in 2018 saw results of +16.9% YoY, with consumer spending buoyed by events like the Royal wedding, World Cup and the Spring heatwave.

This slowdown in growth was also broadly reflected across the sectors, with all but three recording reduced but still positive increases. Health & beauty (+13.0%), home & garden (+9.3%), and clothing (+7.3%) saw the strongest growth, with clothing in particular having a substantially better Q2 (+11.2% YoY growth) than Q1 (+2.6% YoY), due to the hot weather and retailers starting their summer sales early. 

Looked at individually, one of the largest YoY declines in growth was seen in garden (-34.4%), although this reflected a fall from a particularly high growth rate in H1 last year thanks to the standout weather from April onwards.

Elsewhere, the sectors which fared worst were electricals (-22.7%), gifts (-22.8%) and lingerie (-8.9%), all of which have experienced a continuous decline in sales over the past six months.

Bhavesh Unadkat, Principal Consultant in Retail Customer Engagement at Capgemini, said: “The year started with a lot of gloom in the retail sector following the drop off in performance in H2 2018 and consumer confidence also fell to all-time lows. During the first half, consumer confidence settled in negative territory, on average 5.5points below 2018 and growth was lowest recorded 5.4%, a third of last year.

“In addition to this, consumers are cutting back on non-essential according to a Barclaycard survey, and sectors such as electricals are taking a hit online (-23%).

“If this year continues to mirror performance of last year, we can hope for a stronger second half.  However, with Brexit happening just before peak period and still uncertainty around what it will bring, we cannot know whether the index will recover or growth under 10% will be the new norm, at least for this year.  Caution and volatility within the market remain for the foreseeable.”

Andy Mulcahy, Strategy and Insight Director at IMRG, said: “In this country we have a tendency to regard online retail and physical retail (high streets) as being completely separate; an idea that has been feed over the past few years by the consistent growth in online even as the high street struggled. What we are now seeing is that they are not separate at all, but in fact deeply interconnected – hence growth in the first half of 2019 was the lowest yet recorded.

“With so much media coverage of well-known retailers announcing profit warnings and store closures, customer confidence in shopping with them is low. This forces them into heavy discounting to drive sales and their competitors get dragged into it too. It has now become so widespread that shoppers are used to the wide availability of discounts and many retailers – whether online-only or with a store portfolio – seem a bit stuck in it even before we reach the Black Friday peak.

“That said, from an online sales growth perspective it is the multichannel retailers (+5.2% for Jan-Jun 2019) who are currently experiencing lower growth than the online-only retailers (+7.4%). It may be that the old perception of getting better value online still persists, and that shoppers associate high street retailers with the highest chance of falling into administration, so they are having to work even harder than their online-only competitors to build sales.”

Online retail ‘must try harder’ to avoid basic mistakes

Online retailers could be making more in revenues if they applied simple measures, such as appropriate product imagery.

That’s according to research carried out on 1,213 UK adults by agency MarketingSignals, which found a staggering 61 percent of those polled were put off purchasing from a website by insufficient or poor product imagery, followed by 57 percent that found product descriptions inadequate.

The survey also found that more than half (52 percent) of these businesses are failing potential customers with their lack of customer service, while 47 percent have overly intrusive discount pop ups on the home page, which can potentially detract users from making a purchase.

43 percent of those polled were put off by websites that has an over complicated checkout process, while 41 percent would be deterred by an e-commerce business which has little or no social media presence.

A third (34 percent) of those questioned said that a lack of delivery options would deter them from from making an online purchase, whilst a website that wasn’t optimised for mobile devices would put off 27 percent of respondents.

16 percent said they’d be put off from making a purchase if they couldn’t see company information or an ‘about us’ page. Completing the top ten reasons which deter users from making a purchase was customers who prefer to use alternative payment methods, with over one in ten (11 percent) saying that they’d seek to make their purchase elsewhere if a website did not accept the PayPal or Apple Pay.

Gareth Hoyle, managing director at marketingsignals.com, said: “It’s clear from the research that many potential customers are being put off from making a purchase from websites they are not familiar with, which makes it so much more important for e-commerce businesses to make the checkout process as simple as possible in order for them to complete their transaction smoothly.

“In this social media age, it’s perhaps unsurprising that 41 percent of Brits would be put off from making a purchase from a website that is unfamiliar to them and doesn’t have a visible social media presence.

“Internet savvy consumers are always keen to spot a bargain, though can be put off by over complicated or seemingly untrustworthy websites when attempting to make a purchase, instead opting to buy from a site they already know and trust. So what this research demonstrates is that it’s clear that there are simple steps e-commerce businesses can take in order to improve conversion rates from first time visitors to their site.”

The top ten reasons that deter customers from making an e-commerce purchase:

  1. Insufficient or poor quality product imagery – 61 percent
  2. Inadequate product descriptions – 57 percent
  3. Lack of customer service – 52 percent
  4. Distracting/Intrusive pop ups – 47 percent
  5. Over complicated check-out process – 43 percent
  6. Little or no social media presence – 41 percent
  7. Lack of delivery options – 34 percent
  8. Desktop-only site design – 27 percent
  9. Insufficient or lack of company information – 16 percent
  10. Not accepting alternative payment methods including PayPal and Apple Pay – 11 percent

Image by StockSnapfrom Pixabay

GUEST BLOG: Retailers need digital strategies to address the change in the way we shop

Grant Coleman, VP and Market Director, UK, SC and MEA, Emarsys

For the past decade, many brands have sought to create online shopping experiences to match, or even outdo, their in-store counterparts. Typically, this often consisted of activity specifically targeted at peak online shopping days or around one-off offers, causing a shift in how many British consumers opt to shop. So what differences are retailers experiencing and how can they react?

Combining the offline and online worlds

It’s certainly not straightforward for in-store retailers to keep up with the ease of online shopping, so the key to success is bringing them together to unify their online and offline customer experiences. By no fault of their own, a store’s retail staff can’t even tell on first glance whether that person has even ever shopped with the brand before. But when that same person visits the website, the experience can be automatically personalized. Offers, product recommendations, inventory, and other specific customer preferences populate within milliseconds — and be optimised to the screen size of the device they’re using, time of visit, location and language. Essentially, the online journey is geared to create an experience that’s pre-loaded with knowledge of previous browsing and buying behaviour.

The reason why this hybrid buying journey is becoming ever more important is down to the ubiquitous presence of technology. The rise of online and mobile shopping has not just changed how we shop – it’s reinvented the entire customer experience from end-to-end. For instance, according to our research, nearly two thirds (64%) of online shoppers are put off by shipping costs, which partly explains why nearly half (40%) of purchases are made through a combination of offline and online behaviour.

Optimising the offline experience, not just the online

Retailers like French beauty brand Sephora have successfully launched applications that seek to drive both online and offline sales through an interactive feature. Their app essentially attaches a service to their in-store offering by supplying its customers with tutorials on new makeup application techniques, often featuring selfies uploaded by users directly from their smartphones. Aside from its community-building impact, the app helps users to recreate Sephora’s in-store makeover looks, while also driving them to the nearest store thanks to beacon alerts, effectively unifying online behaviours with offline interactions. 

The rise of on-demand commerce, and the resultant expansion in the retail logistics industry has facilitated incredibly fast delivery turnaround times. This trend towards convenience is particularly evident amongst shoppers, who are notorious procrastinators.

Using physical dominance to boost your online operation

However, given consumers’ aforementioned concerns around shipping costs, retailers are looking to reflect their physical dominance with online cues. They play on a shoppers desire for instant gratification by driving offline action while users are online shopping; “Want it NOW? This item is in stock at a store X miles from you”. This alleviates the delay incurred by shipping times.

The brands leading the way in these connected experiences understand the value of connecting different facets of the experience and in fact, bringing the offline world online. Still, too many retailers simply have a mobile app or they have a mobile-responsive website. They need a digital strategy which incorporates all platforms in order to succeed.

Opting for omnichannel to deliver personalised customer experiences

Brands are moving slowly but surely away from multichannel initiatives into omnichannel or channel-agnostic initiatives oriented around the customer. For brands to remain relevant and keep up with ever-changing consumer trends, we’ll need to see a collective, industry-wide shift towards embracing omnichannel strategies that bring rich data from physical stores together with the abundance of available digital data provides a perfect case for this approach to be put into practice, and this year the best-performing online retailers factor the in-person experiences that help inform our shopping habits and shape our overall interactions with brands into their strategies. Marketers that do this will be able to create holistic buying experiences that drive and reward customer loyalty and induce customer retention for years to come. 

Discounting drives online purchasing decisions

Two thirds of Britons have made an online shopping decision based purely on a discount that was available, with 80% of 18-31 year olds admitting to the practice.

A study, by global affiliate network Awin, has found that found that 66% of Britons have used a price comparison site in the past six months, whilst 59% have used an online voucher code in the same time frame, with a further 66% admitting to using any form of affiliate service to make an online purchase.

What’s more, almost half of consumers (47%) see the importance of bloggers and specialist websites to help inform their online purchases.

The survey polled 2,250 people over the age of 18.

The report found that more than half of online shoppers have interacted with an affiliate service in the past six months, and the findings were echoed by the results of the survey, which found that as many as 66% of Britons have used an affiliate service in the past six months, predominantly though the use of online voucher codes or price comparison sites, used by 59% and 66% respectively.

Online voucher codes were most popular amongst 18-31 year olds, with 67% using one in the past six months, whilst price comparison sites were most popular for 32-45 year olds, with 75% visiting one in the last half a year.

In terms of the savings made by consumers through an affiliate channel, 90% of those that have used an online voucher code said that they saved money in the process, whilst 88% of those that used a price comparison site admitted to the same.

The importance attached to affiliate sites was also looked at, and it was found that 85% of respondents answered that price comparison sites were ‘somewhat important’, ‘very important’ and ‘extremely important’, whilst 81% answered the same in reference to online discount code sites.

Almost half of respondents (47%) said that they saw the importance of bloggers and specialist websites when buying online, and 52% answered the same in relation to cashback sites.

Consumer online shopping habits were also explored, with it being found that 67% of all respondents had impulsively purchased a product online based on the fact that it was discounted. 18-31 year olds were found to be the most impulsive, with 80% admitting they have made last minute purchasing decisions based on markdowns alone.

It was found that 72% of consumers first use a search engine to begin their online shopping journey, particularly older shoppers, with 80% of 46-59 year olds admitting to this. Conversely, 30% of 18-31 year olds would look on social media to begin with, compared to 10% of all participants. Consumers were found to be more likely to visit a comparison site first (9%) than they were to visit Amazon (8%).

Online voucher codes were most likely to be used when purchasing fashion products online, with one third (33%) saying they were ‘extremely likely’ to use one when buying clothes, whilst comparison sites were most likely used for travel, with 77% revealing they were ‘extremely likely’ to utilise them when booking a holiday.

The report found that 60% of airline sales on desktops are driven by price comparison sites, and users will visit an average of 38 different websites before committing to an online travel purchase.

Commenting on the findings of the study, Kevin Edwards, Group Client Strategy Director at Awin, said: “Whilst consumers might not even realise it, affiliate channels are often a core part of purchasing products online, and are a much more user-friendly way of advertising a product. Whilst those of us in the industry are already aware of its widespread manifestation, this survey shows how important affiliate channels are for online shopping and ecommerce.”

GUEST BLOG: How will Brexit affect eCommerce?

Brexit brings a wave of uncertainty and change to the UK business landscape, and since the day the UK voted to leave the EU, it’s been a whirlwind.

But what will the landscape look like leading up to, and after Brexit? What kind of impact will it have on eCommerce, especially smaller sellers just starting up?

With thousands of startups launching each year, will the looming shadow of Brexit threaten the livelihood of new businesses and discourage people from starting out?

Khaos Control delves into what the future looks like for both new and established eCommerce businesses, with the recent Brexit upheaval…

The recent rejection of the withdrawal deal has left so many (un)expected changes and regulations on the horizon. The public is left wondering what the next steps are, with the chance of a no deal impending. Although nothing can be predicted for sure, knowing what may be in store will allow retailers and businesses alike to prepare and adapt to a post-Brexit reality. Here are a few areas that eCommerce sellers will need to consider now and in the future:

Tariffs

The import of goods due to tariffs is an area predicted to be affected post-Brexit. As an EU member, Britain has always had the luxury of free trade with the EU, and other EU enabled countries such as Norway, Switzerland, South Korea and Africa. However, with Brexit underway, eCommerce sellers currently importing goods from the EU, or selling to customers in the EU, may see tariffs and additional taxes on goods occur. Business for Britain estimates tariffs costing British exporters £7.4 billion a year. SME’s shouldn’t see too much of an impact as fees would likely be the problem for the customer you’re sending goods to, unless you decide to pay these import fees beforehand (which isn’t recommended). If you’re a larger eCommerce enterprise, some consideration and planning will need to occur to ensure you’re ready for the tariffs and fees coming your way.

Increase of sales in Europe

With the value of the British pound dropping to become one of the worst performing currencies worldwide, imports to the UK have become more expensive, whilst  British goods and exports have become cheaper to shoppers in Europe. In the case of eCommerce platform XSellco, their UK clients boosted their sales by 49%, with European customers making up 15.5% of total sales a month, up from 12.8% the year before.

In light of this, UK seller’s, should consider European marketplaces and ensure their eCommerce store has auto-translation features, as well as the ability to support multiple currencies.

Order fulfilment

For UK eCommerce sellers who sell products to consumers outside of the UK, the changes in value-added tax will have an impact. If the UK leaves the EU with no Brexit deal, businesses would no longer have to collect VAT from sales to customers in the EU. No VAT means prices would most likely be lower for products, however, fulfilment and shipping may be slower. This is because of cross-channel trade disruptions like customs and product conformity procedures.

Deal or no deal, putting a solution in place to help with fulfilment is advisable, in order to make the process easier either way. A software system will implement structure and automation into day-to-day business, speeding up the packing and shipping process, as well as ensuring your business delivers to customers as quickly as possible, which is both advantageous in light of Brexit and also favourable by current and future customers.

Searching closer to home

With the overwhelmingly negative press surrounding Brexit, it’s safe to say a lot of UK shoppers may start to feel uncertainty with looking abroad for the best deals. As a UK eCommerce business, you may well see your UK sales increase as a result of Brexit, as customers are looking closer to home for deals in fear of tariffs or hidden costs that they may be forced to pay for themselves.

If you’re a seller located in the UK reevaluating your marketing campaigns to target British customers would be a valuable move. You could use key British holidays to attract customers to your products or use seasonal cues to encourage more of a British audience. Also evaluating your competitors is key, because while UK shoppers may be more inclined to buy products from those close by, they won’t be afraid to find the best deals and shop around.

Lack of skilled workers

Another possible consideration for eCommerce businesses is a shortage of skilled workers. Brexit could introduce new visa requirements and other limitations, which would make it much more difficult for businesses to outsource workers from the EU, with working visa requirements both a challenging and time-consuming process. This could be especially challenging for businesses that require staff to have skills such as speaking in more than one language. In 2016, it was reported that more than 80% of the adult working-age population within the EU, knew one or more foreign languages. With reported stats, it seems some changes may need to be made for those businesses that outsource workers from the Eurozone, as outsourcing multi-lingual customer service will only become more expensive. Increased labour costs will also contribute to the price customers will pay for a product or service, and in turn affect the supply chain.

For eCommerce businesses worried about Brexit, planning for potential pitfalls is key. Despite all we know about Brexit, there are still changes to come that can’t be predicted till they happen, so preparing for potential issues (or gains) is best to ensure when the time comes, Brexit doesn’t rock your business boat too much.

Marks & Spencer launches Style Finder photo search

Marks & Spencer launched Style Finder, a photo search feature on its mobile website, enabling shoppers to discover a desired look in what it says is ‘just a couple of taps’.

Customers can upload an existing photo or take a new one of any outfit to reveal similar-looking products available at M&S, offering a quick and easy way to shop online.

M&S says whether they are inspired by fashion finds on social media, an outfit in a magazine or a product in-store, the new feature helps them find what they’re looking for in less than 10 seconds.

The tool uses artificial intelligence to display results with the closest-match. Customers can add additional filters to help them find a product based on personal preferences, such as size, price and colour.

The initiative is part of M&S’s ‘digital-first’ strategy, which aims for a third of all Clothing & Home sales to be online by 2022.

The visual search technology has been developed with Syte and is available on M&S.com using mobile devices.

For the initial roll-out, Style Finder is available across womenswear and menswear and customers can easily navigate and filter through thousands of M&S products.

With 75% of all M&S’s online visits coming from mobile and tablet devices, the retailers says Style Finder offers a completely new and enhanced shopping experience for busy customers who seek wardrobe inspiration while on the go.

Jim Cruickshank, Head of Digital Product and UX at M&S, said: “We know our customers are busier than ever and are often most inspired when they’re out and about. Style Finder helps customers instantly find what they’re looking for, without the need to manually search and filter through our products.

“Enhancing the customer experience is central to our digital transformation journey. This is a brilliant example of how we’re becoming more relevant, more often, to our customers who are increasingly shopping online and in particular using mobile devices.”

Brits to spend £25bn shopping on their phones in 2019

Price comparison website uSwitch has found that Brits are likely to spend a whopping £25 billion pounds on their phones and tablets in 2019.

30 million Brits are predicted to use their phones or tablets for shopping over laptops or desktop computers this year – a massive rise of 66% – than in 2018.

Other stats reveal that half of those polled (58%) would buy online using a smart device rather than make a journey to a shopping centre (56%), with two thirds (66%) admitting shopping on smart devices was convenient and 36% saying it saved them money.

Clothes are the most popular item bought online (69%), followed by books (51%) groceries (47%) and theatre/cinema tickets (43%).

Amazon and eBay topped the polls for the most popular website destinations for shoppers at 89% and 63% respectively, followed by Argos (41%), Tesco (35%), M&S (25%), Asda (25%), Sainsbury’s (22%), John Lewis (20%) and Curry/PC World (17%).

Being comfortable is a major factor too, with 78% of those polled admitting to shopping on their phone in the living room. 14% admitted using the phone to shop at work, along with 8% on the daily commute.

Surprisingly, the bathroom is the preferred place of phone shopping for those under the age of 35, with 14% admitting they did so over the kitchen as a location (13%).

Ru Bhikha, mobiles expert at uSwitch.com, said: “For so many of us now, our smartphone is an extension of our hand and we have it with us at all times, meaning that we can shop whenever and wherever we like. Our handsets allow us to window shop all the time, and if we see something we like, it is right there at our fingertips.

“With smartphone and tablet shopping now a £25 billion industry, it’s hardly surprising that major retailers have long adopted a mobile-first approach to their websites and have even introduced their own apps to make the user experience as easy as possible. Cleaner user journeys and the ease of one-click purchasing will only add to the number of people shopping on their phones and tablets.

“Providing your phone has a decent connection to either a good broadband supply or 3G or 4G, you can shop any time and any place – and this year more Brits than ever look set to take advantage of that.”

BrandJump creates Amazon division

Los Angeles-based BrandJump has announced the launch of a new Amazon division as the ecommerce sales and marketing company continues its push into the home furnishings sector.

The company has built a reputation for enhancing the online presence of brands across more than 50+ retail channels, including Wayfair, One Kings Lane, YDesign Group and Overstock, specialising in home furnishings and décor, including furniture, decorative lighting, textiles, outdoor living and accessories.

“When we started BrandJump, we observed that most internet retailers were being fragmentally managed by manufacturer sales representatives and were not being serviced properly,” said Josh Walter, CEO.

“The opportunity for internet retailers to use technology to scale their efforts became apparent early on, and it quickly became clear to us that manufacturers needed to centralize the management of this emerging channel.”

With an objective of maximising brand awareness and revenue in the online space, BrandJump develops and implements customised ecommerce strategies for their clients’ brands and acts as an ecommerce arm for their respective businesses, recommending online channels that are an appropriate fit and works with them to elevate their positioning in the areas of merchandising, creative content, and marketing.

“What makes us most unique is our in-depth knowledge of the ecommerce channel derived from a team of experts who originally came from the likes of Wayfair, Target, Amazon, YDesign Group, and One Kings Lane, to name a few,” said Walter. “Our team has a deep understanding of how to align our clients’ brands and their respective voices with each retailer’s specific go-to-market strategy.”

According to Walter, having successfully created strong partnerships with many of the leading online retailers for the home furnishings space, creating an Amazon-specific channel was a natural progression for BrandJump. Amazon captures 50 percent of total online purchases in the US, and 80 percent of consumers research products on Amazon before buying anywhere else.

“Amazon is a complex and competitive marketplace, and only a thoughtful strategy will drive growth while minimizing conflict in other channels,” said Walter. “While Amazon may not be a fit for all of our clients, our expertise brings a thorough understanding of the channel that helps guide our clients in making the most informed decisions for their brand.”

Multiple retailers ‘out-perform’ over Christmas period

A significant number of retailers are posting upbeat sales figures during the Christmas period, including Selfridges, Next, John Lewis, Aldi and Dunelm.

Selfridges revealed what it called a ‘record-breaking’ Christmas trading period, with sales up by eight per cent in the final week before Christmas and up 10 per cent in its Oxford Street flagship store during the 24 days prior to Christmas, driven it aid by exclusive products.

Meanwhile, supermarket Aldi reported its ‘best-ever Christmas period’, with sales topping £1 billion in December as a whole, fuelled in part by 17 million bottles of wine, champagne and prosecco sold.

Homeware specialist Dunelm reported a 5.7 per cent increase is sales for the 13-week period ended December 29th, with total like-for-like revenue in its second quarter up a 9 per cent and online revenue up 37.9 per cent.

High street fashion retailer Next reported a sales growth of 1.5% for the last two months of 2018, with a spike in sales from the last three weeks of December, helping to save the chain and Christmas blushes.

However, there was a stark contrast between the store’s brick and mortar premises and online operation, with sales down 9.2% in the High Street, compared with a jump in website sales of 15.2%.

Lower profit margins have now been forecast as a result of fulfilling web orders, bringing annual profit down by £4m to £723m, with predictions of profits falling again Christmas 2019.

“Full price sales for the Christmas trading period have been in line with the guidance we gave in September,” the Next chief executive, Simon Wolfson, said. “Strong sales in the three weeks prior to Christmas along with a good half-term holiday week at the end of October made up for disappointing sales in November.”

Department store chain John Lewis also reported a strong finish to retail sales through the Christmas period as customers made late buying decisions, with an 11% rise in sales in the last week of 2018 compared to sales this time last year.

Attention will now focus on competitors Debenhams and Marks and Spencers.

“We think John Lewis and Next will have outperformed, however, so we still wouldn’t rule out some bad news from Debenhams or M&S,” retail analyst Nick Bubb said.

INFOGRAPHIC: How to build a ‘customer-centric’ e-commerce website

By SQLI

60% of purchase decisions are based on buyers’ perceptions and their confidence in a brand. Focusing on the UX design of your e-commerce website is key to attracting consumers and gaining their loyalty.

Check out our infographic for advice from an experienced UX designer and find out how to build a real “customer-centric” e-commerce website.

About SQLI:

SQLI is a service group dedicated to the digital world. It assists companies and brands in defining, implementing and managing digital systems for a redesigned customer, partner and collaborator experience. Its unique positioning at the crossroads of marketing and technology enables the group to meet the challenges of developing sales and reputation (digital & social marketing, customer experience, cross-channel commerce, mobile, data intelligence, etc.) and the challenges of productivity and internal efficiency (digitalisation of operations, collaborative company, connected objects, CRM, etc.) in a comprehensive way.

www.sqli.co

SQLI, providing digital solutions for businesses (for ecommerce website development and design). Magento, SAP Hybris and Salesforce Developer Agency UK, Platforms used include Magento, SAP Hybris and Salesforce Commerce. See our blog for latest updates and news on digital solutions.