Top ten online retail strategies for 2010
UK retailers have another highly competitive year ahead of them with market forecasts predicting an overall increase in retail spending of only 1.1% during 2010, which will force retailers to reassess their marketing priorities and budgets, according to Michael Ross of eCommera.
High street retailers' online retail marketing strategies are likely to play a pivotal role in any increases in market share, sales volume, and bottom line profits, with the impact of the integration of online and offline offerings being increasingly significant.
Consequently, eCommera has compiled its top ten recommendations for a successful approach to online retailing during 2010 and beyond:
- Do establish the right KPIs Online retailers must focus on the right key performance indicator (KPI). Perhaps the most important of all during such highly competitive times is profit per order. Just as 'profit per foot' in the physical world dominates retailers' thinking, focusing on the profit per order gives them a qualitative and quantitative metric for success.
- Don't focus on conversion rates Too often retailers look at a web site's conversion rate or average order value (AOV) - which, while being important, actually shows very little correlation to profit. For example, a free delivery offer may increase AOV but often negatively impacts profit per order.
- Do think beyond the store Tempting as it is, thinking of e-commerce as "just another store" demonstrates a great misunderstanding of the nature of online retail. At best, such retailers will miss the potential opportunity and competitive advantage that online has to offer and, at worst, they may fail to recognise the extent of the new competitive landscape, exposing themselves to a very challenging or even disastrous future.
- Don't apply the same trading tactics online as offline Given that online margin structures are completely different to their offline counterparts, why assume that the same marketing tactics will work online? Marketers have lots of online levers to pull (such as increasing marketing spend, running promotions, flexing delivery charges, flexing free delivery thresholds, as well as the traditional retail toolbox of prices and promotions). The challenge online is to understand how to use these levers in an integrated way to maximise profit margins.
- Do understand that 'proposition' is the new location Just as geography used to dominate retail in the physical world, online retail demands that marketers think about their product, price and promotion in a new way. They need to relate to their customers with a tailored proposition that differentiates them from the competition. (If Amazon isn't already a competitor, think what would happen if it enters your market.)
- Don't build your own social networking site Reaching out to customers through new social media is a sound marketing tactic, but not if you're trying to run it yourself. Home-grown networks seldom work, and they get lost in the noise of more popular global offerings such as Facebook or Twitter. Instead, reach out through fan pages on Facebook, or start a concerted campaign of informative, relevant and entertaining 'tweeting'.
- Do continuously evolve your web site Marketers must continually refresh and evolve their brands' web sites, and understand that new technologies are a constant driver of change. New web browsers, operating systems, devices, screen resolutions and web technologies are constantly evolving, and all of them are shaping new online consumer behaviour patterns.
- Don't think that technology will create success for you Not keeping abreast of technological developments is not an option, but don't assume that a shiny new e-commerce platform will double your conversion rate. Technologies are ever-evolving means to an end, not the end in their own right.
- Do focus on the basics of online retail There is a reason why Amazon and Play.com were recently voted second and third as the UK's favourite retailers: product availability, high quality customer service and delivery on promise remain the key factors that drive retail success. And the 'delivery on promise' factor can only increase in importance as retailers increasingly rely on drop-ship vendors and just-in-time suppliers. Systematically measuring the distribution of orders that arrive before, after, or as promised may seem obvious, but it is alarming just how many retailers actually fail to track orders after they've been shipped.
- Don't worry about the next new thing Finally, Twitter will not make or break any e-commerce business in 2010, and neither will the 'next big thing'. It is time to go back to the basics of marketing, and focus not only on profit but also on what will make a real difference to your customers and your brand.