Retailers wasting resources on online marketing

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By: Wise Marketer Staff |

Posted on March 22, 2002

Linking online channels with off line channels is the ultimate key to success and buyers will desert those companies that don't get this right, warns a new GartnerG2 survey.

Retailers should carefully review their online investment plans, says GartnerG2. The survey warns that too many companies are wasting resources competing for direct sales from what remains a relatively small total market potential. According to the survey, online sales in Europe will reach US$85bn in 2002, from US$57.6bn in 2001, a 48% increase. However, online sales will still only account for 2.3% of total retail sales in Europe.  By 2005, the European online retail market will grow to $225bn: 5.6% of total retail sales.

The true opportunity comes from using real time interactivity with consumers to drive customers to the most convenient sales channel for them, whether it be online or off line, and to drive loyalty, branding and customer satisfaction. Retailers can do this, Gartner says, by developing a focused multi-channel strategy using the right combination of PCs, mobile access devices, digital TV and the physical store itself. GartnerG2 forecasts that by 2005, 73% of online shopping will be conducted over the PC, 17% through Digital TV and 10% through mobile devices.

Measure and revise
GartnerG2 advises companies to continuously measure and revise their investments in an online strategy to ensure that the right results are being achieved and that company objectives are being met. It said European retailers are currently reluctant to develop a multi channel approach, finding it too costly, having returns that are two low or simply not understanding the benefits of the different platforms.

Gartner G2's recommendations

  • Don't view each individual online initiative's success by its sales revenue alone.
  • Use a multi-channel strategy to make the buying process more convenient and more pleasing.
  • Get the balance between online and off line channels right - this continues to be a major challenge for retailers and it must be fixed.
  • The commercial benefits of customer retention, loyalty, branding, incremental sales and driving consumers to physical stores should be included in the business case.
  • Conduct focused trials to understand better how new platforms can be utilised.

  • Consider partnerships with network operators and content providers to spread the costs and risks of low adoption.
  • Track the customer usage of each channel as part of a CRM strategy. Make sure that qualified analytical staff are there to interpret and advise the business on actions to be taken on a real-time basis.
  • Make sure that the target channels across the demand chain are strategically supported in real time.

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