Marketing Week Round Table
Ecommerce and online security
Sponsored by VeriSign
Thursday September 25, 2008, Scott’s, London
Chair: Stuart Smith, editor of Marketing Week (SS)
- Nicholas Pothier, director of ecommerce at Arcadia Group plc (NP)
- Matthew Timms, director of ecommerce at Abbey (MT)
- Peter Julier, director of ecommerce at Legal and General (PJ)
- Angela Greenwood, online and direct marketing manager at Red Letter Days (AG)
- Mary Keane-Dawson, managing director at Steak Media (MKD)
- Mike Davies, marketing director for VeriSign in Europe, Middle East and Africa (MD)
In the wake of the credit crunch, have you seen much online growth and if so what has been driving it?
NP: There has certainly been growth in our online stores, particularly for Burton and Dorothy Perkins. However, it is fair to say that shopping for fashion online is still a big leap for some. It is more suited to the “impulse buy” audience, as you can’t try the item on. In a way, it’s as much a stab in the dark for most to buy fashion online as it is to buy a PC or a tower computer.
We are still seeing a big increase in online sales, though this is starting to slow, but the Arcadia Group is noticing good growth in this area. At the moment, it accounts for about 5% of business, which may sound tiny, but it does make a lot of profit for the company. Less tends to be spent online than in stores, and online retail is a difficult area to grow for the group. We see it accounting for roughly 10-15% of group profits at the most because there are stores in every town, where people tend to shop more.
AG: We are definitely experiencing online growth, with about 40% of profits from the last year coming from ecommerce sales. The order cycle dipped slightly in the last couple of weeks, but there was not much of a slowdown because we were running a sale offer at the time.
Our business runs primarily on the gifting audience, so we tend to see huge growth coming out from the big celebratory days in the year such as Valentine’s Day, Mother’s Day, Father’s Day and birthdays. These take place throughout the year, so our retail opportunities are huge.
Is the same true for the financial services sector?
MT: We have seen massive growth in certain products, a lot of which are offered through ecommerce. More and more of our customers are finding deals online, so there is a big shift to digital marketing at Abbey to drive demand. We see a lot of interest generated online, which our customer service staff are converting to sales.
Products most commonly bought online are general insurance and other products like savings. Around 20% of business is transacted online. The way you attract customers is how you leverage demand. General insurance is sold totally online. This is driving down costs; our promise to be much more price-driven than competitors helps us to win traffic, which is then converted into policies.
Mortgages are still very much face-to-face. There is lots of demand online, but also in branches. For such personal business, customers prefer the more personal experience you get in-store. Online is all about driving efficiencies to generate sales.
There is lots of excitement in the saving space. Huge amounts are shifting following the nationalisation of Northern Rock – let’s not forget that at the worst possible time, their website went down preventing worried customers from moving cash around. The technical challenge now is to ensure there are strong contingencies in place to avoid financial issues like this from happening again.
PJ: Confidence is everything. People are very confident to buy our life insurance product online, as it is one of the things you should only have to buy once in your lifetime. The challenge is getting people to stay online; people prefer to speak to somebody, which we also have to cater for.
One of the issues with our online service is that in the middle of the application, there is a list of questions – most of which have about 20 questions for each part. We have to ask these questions, there is no getting around it and some people online do find it quite daunting and prefer face-to-face. Either way, we have to ask them and making it comfortable for the customer is a priority.
It’s not necessarily a trust thing, but more a confidence issue. There are businesses that do this year in, year out but the challenge they all face is how to make it easy for their customers.
How can businesses ensure security measures online are as stringent as possible?
MD:There are a number of concerns surrounding online security, which have been led by Visa and MasterCard. Confidence has been created, but there is still a long way to go before everyone is happy. There is still a widespread fear of fraudsters in the public domain.
Some people prefer phone call ordering as a better way of doing business, as there is a relationship there. When you are online, you have to worry about security because it’s all virtual – there is no physical contact, so consumers stick to reputable sites they known and trust like eBay and PayPal. Looking at steps to protect businesses in a similar way to eBay can only benefit them and reassure consumers
There are systems out there already for this. One of the newest is Verified by Visa, which is an interesting system. It has the right principles in mind, but is not very practical. Consumers don’t realise it’s a real thing, and looking at it, fear it could be a fraudster, and so do not complete sales. The use of passwords also creates the risk of forgotten passwords, which could damage consumer confidence.
VeriSign is developing new systems to combat these problems and make ecommerce much more user-friendly.
MT: Security is an ongoing battle in ecommerce. We are only really at the first step in tackling this, but we must remember that fraudsters are very innovative. We are constantly working at ways to verify and tackle the battle we face.
The customer experience is crucial for us. The problem is customers are still a bit naïve. We try to tackle this through awareness campaigns, but there is no way of ensuring this. If customers knew exactly what to look for each time, this could change.
Technology is wonderful, but unless security fears reduce, confidence in it will remain behind. So many users are embracing the system and using it for their banking requirements, but we can’t push it forward unless it is as secure as it should be.
What will be the significant developments in ecommerce in the next five years?
D: We have experience of marketing products that are only available online. The websites are clearly defined and laid out, with a personal assistant to walk you through. The user is guided through what is available on the website and can purchase it exclusively from the site.
We have almost 50 clients in this space. It’s very much about the brand. Take John Lewis, for example. There is lots of trust and lots of confidence in the brand, and if you grow it online, the actual brand value will also increase. There are lots of challenges for new brands to develop with customers online. They have to see them as customers who don’t have time to go to shops and make it easy for them to find what they are looking for. If it’s not like this, it will have major implications.
Clients are looking for new ways to develop relationships online. You need a strategy for how to develop interaction with consumers. That’s very important for us and how we grow as an agency. Most technology will affect day-to-day existence.
AG: A customer relationship is imperative, so creating it and then ensuring it is maintained is essential. We are looking at using technology more, such as text messaging, to build loyalty and positive experiences for our customers.
MT: It’s more complex to integrate the human side of selling to the customer on the internet. Instead, we need to look at enhancing what we have already got, so we are building internet-based services and introducing mobile-based services. We should be able to enable customers to find promotions using application technology, such as location-based marketing.
NP: The mobile market wasn’t quite ready before, but with the introduction of more sophisticated handsets that are being used by more and more people, now is the time for retailers to start looking at it more carefully. It was a gimmick before, but people rely on it now.
Facebook also has a large part to play. People are used to seeing adverts on all internet sites and like ads suited to them. These are fast developing areas, and we are working to make sure we are compatible with these formats, especially as phone screens are getting smaller and smaller.
You can hardly differentiate between live TV and TV shows broadcast over the internet, and issues such as Google releasing a phone show that interactive advertisements are well and truly the way ahead. Brands must look at integrated ad campaigns in the future and strengthen their market position.
MD: Businesses must identify land-grab opportunities online to advertise their business and then ensure that all ecommerce is done as securely as possible. Web life is growing by the day, with the series of websites including Facebook, Microsoft Live, Bebo and MySpace.
The aim now should be trying to get everyone online secure. Security is necessary for consumers. They need to feel safe online as the move towards online presence continues to rise. This has been exemplified recently by the hacking into prospective US vice-president Sarah Palin’s emails.
There are many blogging experts and fraudsters who make a living out of cybercrime. These malicious people will make it their job to scare consumers and do bad things with the data they obtain. To discourage this, we must tighten up the security measures we take when we are online.
Confidence must be there. The very best of security must be available and noticeable. Consumers are not quite ready for this level of security, but over the next five years we will continue to work to ensure these fears are avoided where at all possible.