Sales boost for retailers on Net

Retailing on the Internet is finally yielding significant sales in the US, as access increases. John Shannon examines whether European retailers can now achieve similar success. John Shannon is president of Grey International.

Electronic retailing has now established itself as the most promising option for companies seeking a return on their Internet investment.

Until recently, a number of factors impeded the development of online shopping. Primarily, the new medium was limited by the number of people with access to the Internet. There were also widespread concerns about transaction security. Added to this has been the complication of actually finding relevant sites and of effecting transactions simply and quickly.

However, a recent report in the International Herald Tribune suggests that online retailers, at least in the US, are at last beginning to enjoy significant levels of sales.

The report says that during the past year, Internet retailers have seen dramatically increased volume levels as shoppers overcome their fear of credit card fraud and become better able to navigate the medium.

It also quotes Forrester Research, which predicts that some $2.4bn (1.6bn) will be spent online this year – twice last year’s figure. The researcher has also found that as many as 25 per cent of the US’ 40 million Internet users have made an online purchase.

Less advanced than the US, Europe’s electronic retailing market is nevertheless undergoing a similar shift. Security fears are diminishing for those already connected. At the same time, a steady stream of new consumers is coming online, swelling the potential market by the day. According to another researcher, International Data Corporation. (IDC), Web-based commerce could be worth as much as $220bn (150bn) worldwide by 2001.

Retailers and manufacturers which want to reap the benefits of this retailing revolution will have to move fast. But not so fast that they fail to establish a clear and detailed vision of their online aims and objectives.

A key determining factor in their success will be their skill in developing carefully targeted online retail operations that exactly meet the requirements of their new customers. In dealing with consumers for whom the electronic shopping process is new, it will be important that they ensure the shopping process is made as simple, enjoyable and efficient as possible. If new consumers are confused or disappointed on their first visit, they are unlikely ever to return.

Ultimately the winners in the battle to establish successful retailing operations online will be those companies that most quickly establish themselves as reliable, efficient and user-friendly online brands in the mind of new consumers, and which are able to build and retain a loyal customer base.

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