The ten most prominent online retailing trends for 2010 and beyond highlight the most important actions that online retailers will need to take to grow their business during the global recovery from the current recession, according to a report by Webloyalty and Verdict Consulting.
The report, entitled 'Internet Retail Trends 2010: Ten actions for your business', predicts that the monetisation of retail web sites could be worth up to 949 million by 2013.
But despite growing by 13.3% in 2009, internet retail has been significantly impacted by the recession, costing internet retailers an estimated 1.6 billion in lost revenues that would otherwise have been gained had the economy not fallen. The report suggests that, while sales growth will probably not return to pre-recession levels very soon, online retail is expected to grow by an average of 11% per year during the next four years.
Consumers who shop online were found to be ever more demanding, looking for the best prices, the biggest discounts, and extra value from online retailers. This, the report says, offers a key area of opportunity for retailers to differentiate themselves from the competition.
According to Verdict Consulting's Neil Saunders, "The recession has certainly caused online shoppers to alter their purchasing habits, and online retailers are now also facing a severe slowdown in terms of new customers. This report suggests that retailers must turn their attention to driving repeat business, shifting marketing spend away from attracting new customers and focussing on adding value for existing customers."
In 2009 more than 60% of shoppers will have used the internet to shop and, by 2012, the report estimates this will extend to more than 66% of shoppers. This, Verdict warns, represents far lower growth in online shopper numbers than that experienced during the past five years.
However, there is significant potential for retailers to generate revenue from monetisation of their web sites. Verdict estimates that by the end of 2009 the potential value of the monetisation of retail websites, excluding any revenue from advertising banners, could be worth up to 220 million. As online retail continues to mature, this figure is forecast to increase to as much as 949 million by 2013.
Other significant findings from the report include:
- More than 2 billion worth of potential sales will be lost every year due to abandoned baskets;
- In 2009, Verdict estimates that around 18.7% of all retail sales were made using two or more channels - numbers that could easily double to almost 40% by 2020;
- If retailers lift their daily conversion by only 0.1%, unique visitors by 2%, and the average transaction value by 3%, this would contribute an estimated 10% increase in sales growth.
As a result of this research, the following trends and actions should be considered by retailers when setting out their online strategy for 2010 and beyond:
- Growth will be more difficult
The channel is slowly maturing and with many of the easy wins now maximised, further progress will be much slower. Retailers now need to think more strategically about maximising revenue online.
- The recession has impacted consumer choices
A critical lesson for the online channel will be to add value and persuade customers to trade up in what they buy.
- Acquiring new customers will be tougher
As acquiring new customers becomes more of a challenge, retailers should switch more marketing budget to maintaining existing customers and driving repeat business.
- There will be more mouths to feed
Deep knowledge of your competitors' online offerings coupled with sophisticated testing of different customer acquisition strategies will be crucial to stay ahead of the market.
- Expectations will rise
Retailers must focus on adding more value than they have done in the past. They must clearly communicate why customers should shop with them, and what extra benefits can be gained from doing so.
- Loyalty can be increased
Those retailers that offer a combination of one-off tactical deals to excite the customer, combined with long-term strategic programmes with extra value benefits to lock in customers, will have a winning strategy.
- Conversion will be critical
Web site personalisation is a key way in which conversion can be grown. If 'cherry-picked' products are pushed through to relevant customers when they visit a website they are far more likely to see a product which appeals to them, and therefore make a purchase.
- Basket abandonment is here to stay
Providing clear, accurate and detailed information on products, prices and additional charges is a key way to reduce basket abandonment.
- Customers will become 'channel blind'
Those retailers that offer multiple consumer touch points will see benefits; though branding must be consistent across all channels.
- It's about more than selling
To boost revenue, retailers should consider monetising their web pages by linking with third parties that offer products and services that suit their target market.
The complete report has been made available for free download from Webloyalty's web site - click here (PDF document; no registration needed).