Stand out from the rest with security
Online shopping this Christmas was up 54% on 2006 in the UK, according to Capgemini and IMRG. High street retailers increasingly rely on the online channel for business growth. It’s a very familiar success story: e-commerce just keeps growing.
But accompanying this growth are some important challenges. Online fraud is rising at a much fasterrate than e-commerce. Fraud itself is a problem,of course, but a biggerchallenge is customers’perception of fraud. Media exposure of identity theft and fraud is reaching new highs, and a majority of consumers are worried about it – 63% in fact, according to Forrester.
Take the recent furore regarding the two data discs misplaced by a Government department. Yes it was a serious breach, but the likelihood of anyone’s identity being stolen is, in reality, small.
But this got lost in the ensuing media frenzy, which was totally overblown. The trouble for anyone in the e-commerce space is that consumers aren’t security experts. What they hear from the media sticks in their minds.
Those consumers that are worried about online fraud need reassurances, and that is a key point. Some consumers want extra security online, others don’t. However, additional security measures have traditionally been seen as a barrier to e-commerce, so a balance has to be struck.
The answer is simple: let your customers choose. Offer higher levels of security to all your customers, but let them decide if they want to adopt it. You may be surprised to learn that many consumers will actually pay more for the service they receive if it is more secure.
Online security is a differentiator for your business. It is a way for you to get closer to your customers; the more they trust your site, the more likely they are to give you their business. Then, when the growth in e-commerce eventually begins to slow, a more secure relationship will ensure that you retain those customers.
Mike Davies, regional marketing director EMEA
VeriSign UK, 2nd Floor, Waterfront, Chancellors Road,
Hammersmith Embankment, London W6 9RU.
t 020 8600 0740, w www.verisign.co.uk
Net lifts high street blues
The shopping channel is changing and high street giants are listening to consumer demand and moving online as the pressure to maintain profits increases. By Sonoo Singh
High street retailers had very little to celebrate in the new year as downbeat reports on spending started pouring in from across the country. And, with a few exceptions, the well-documented high street woes in the wake of a difficult Christmas of heavy discounting signal a tough time ahead for most bricks-and-mortar retailers.
UK consumers spent £15.2bn online in the three months leading up to Christmas, which is the primary reason behind the lull on the high street. Research from Capgemini and IMRG indicates that overall sales for the year hit £46.6bn, a rise of 54% on the £30.2bn spent in 2006. The growing success of internet retail is cutting into the sales of high street shops, according to Anthoula Madden, vice-president of Capgemini UK’s consumer products and retail team.
The sales index research by Capgemini and IMRG also reveals that online retailing reached 15% of total spend on retail and leisure over the whole year, while the latest figures from the Internet Advertising Bureau (IAB) show the Net boosted UK advertising economy with 41.3% growth in first half of 2007 and all major online ad formats surpassing expectations. But the outlook on the high street remains mixed, as some recent reports suggest that the fastest-growing e-tailers this Christmas were high street stores.
Marks & Spencer might have posted the worst Christmas figures for two years this year – a 2.2% decrease in overall sales in the third quarter of last year – but its Web transactions through M&S Direct were up 78%.
In fact, many big retailers including M&S, Dixons and Comet, ran online sales promotions on Christmas Day itself, attracting significant levels of business while the high street outlets were shut.
Though eBay remained the most popular internet retailer this Christmas, Asda and M&S experienced the strongest audience growth from the 2006 Christmas shopping period, up 68% and 54%, respectively.
“Retail online still tends to be dominated by the pure online players, but the high street brands have far outperformed their pure online competitors in terms of growth in the past year,” says Nielsen Online analyst Alex Burmaster.
Even for DSG International, owner of Currys and PC World, another retailer to announce hugely disappointing Christmas trading, its e-commerce division saw sales for the period increase 31% on a like-for-like basis. Similarly, Next’s high street sales were down by 0.3% in the last six months of 2007, while its Web business grew 2.2%.
Bruce Townsend, marketing manager for e-commerce supplier Actinic, says he is not surprised that although the high street names were slow to adopt e-commerce, it was inevitable that they would make a big impact. “The big boys have been much better placed to leverage the benefits of a multichannel approach, such as offering customers the ability to order online and pick up from a nearby store. And these stores have applied their extensive marketing experiences and budgets in ways that are not open to pure-play internet companies, such as using e-mail marketing and printable online vouchers to drive footfall to their stores.”
Uncovering the habits and motivations of consumers, research into the online behaviours on Christmas Day and Boxing Day shows the importance of a “seamless” shopping experience – one of the main reasons behind a merry Christmas online. Figures from eDigital Research show up to 22% of respondents went online on Christmas Day for pre-purchase research into products and prices. The figure was pushed up to 31% on Boxing Day. The research adds that 14% of respondents went online on Christmas Day, purposely to shop, and 23% logged on for the same reason on Boxing Day.
“As internet technology becomes second nature to the public, the pattern of consumer behaviour evolves, as is apparent when looking at the research which reveals just what people did online on the biggest holiday of the year,” says eDigitalResearch director Chris Russell.
“These figures, while only looking at Christmas Day and Boxing Day, are indicative of a general trend in society and how the boundaries between online and offline shopping are becoming blurred. Our research shows that shoppers go online not only to make purchases, but also for other activities revolving around shopping,” he adds. Those who went online for pre-purchase research were to a large extent searching for sale items (70%). They also went online to compare prices (59%), look up product information (50%), stock availability (33%) and opening tines (23%). Following this research, 42% of respondents went on to make a purchase online, while 25% went to make a purchase in a high street store. So it is no surprise that retailers now view e-tailing as an essential part of their business strategy, with the likes of John Lewis being seen as the clear beneficiaries from such an approach.
Sales at its department stores rose 6.2% in the five weeks to January 5, on a like-for-like basis, with Waitrose sales up 4.1% over the period. Sales were particularly buoyant in the Christmas week, when the upmarket supermarket saw a 28.5% jump in sales compared with last year.
John Lewis Direct head of Web selling David Walmsley says/ “Efficiencies in the John Lewis multichannel business stem from having single customer propositions that work well across our online and high street environments.”
E-retailing is becoming a central plank of many high street stores’ retail strategy, showing a real understanding of the value of customer insight says eDigital Research director Michelle Fuller. She goes on to list the likes of M&S and Tesco as brands that are supported by the “best in breed” customer service and many years of positive brand equity. “This customer focus becomes more important than ever as the economy slows down. If consumers are less inclined to part with their money, retailers need to ensure they provide what their customers really desire and at a competitive price,” she says.
Russell points out that the key to online shopping and increasing Web traffic is making sure that online shoppers do not experience any difficulties with security issues, deliveries and so on. “Research shows that vast majority of online shoppers did not experience any difficulties with delivery of Christmas gifts between December 10 and 24, in spite of the media hype, and based on their experience this year, 45% of our respondents said they will order more online.”
A survey conducted for Sterling Commerce says that while the surge in orders before Christmas poses enormous logistical challenges for the fulfilment of online sales, the multichannel returns and exchange challenge after Christmas is “just as complex”.
Although customers are increasingly shopping online, they may pick-up, return or exchange a gift through an entirely different channel than where they bought it. It is, therefore, channel experience that meets the expectations of today’s increasingly demanding, sophisticated and fickle consumers.
The research also demonstrated that online shopping experiences are affecting in-store expectations. Nearly half of consumers feel that they can obtain better product information online, and because they research products online, shoppers are increasingly looking for additional ways to further research products while shopping on the high street. So, rather than speak to sales personnel, 41% of consumers feel it is important to be able to research product prices online while in a store.
Fuller says: “The key to getting it right is delivering a seamless end-to-end experience across all channels, but unless you are providing what the consumers want and in a way that matched their expectations, delivery alone will not be enough.”
Walmsley at John Lewis adds: “Our customers are already sophisticated multichannel shoppers – researching online and buying in store, or researching in store to buy online. Our challenge is to make these transitions seamless and centre the whole experience around the John Lewis brand.”
These changes in the e-retail landscape are largely being driven by the dramatic change in the consumer behaviour over the past few years, say the experts. But if retailers want to have a share of the burgeoning online retail scene, they need to develop a robust online presence while balancing the increasing sophistication of the various channels and the rise in consumer expectations.
Sonoo Singh is deputy editor of Marketing Week