Online is a Retailing Bright Spot

Apr 10, 2009

By George Anderson

It’s good to be in e-tail. While many brick
and mortar retailers were finding solace yesterday in posting less severe
losses than analysts expected, a report by Forrester Research and
says online dollar sales were up an average of 11 percent for the first three
months of the year.

"It seems that consumer confidence
is getting better," Sucharita Mulpuru,
an analyst with Forrester, told Bloomberg News. "There is so
much price competition out there that you can find great deals. Hopefully
the worst is behind us."

Separately, new research from Opinion Research Corporation (ORC) concludes
that a growing number of consumers are going online to shop, although many
(45 percent) are spending less on shopping trips. Twenty-four percent of
respondents said they went online only to buy necessities, with the same
number of people saying they went online in search of the best deal.

our data indicates that people are spending less, it is equally clear that
shoppers are increasingly turning to the Internet as the channel of choice
when they do buy," said Linda
Shea, senior vice president and global managing director of ORC’S Customer
Strategies Practice, in a press release. "This underscores the need
for merchants to realize that even in a self-service environment, customers
need enough information to make a purchase decision and validate that they
are making the right decision."

to Ms. Shea, "The
most successful online merchants are investing in tools and technologies
that facilitate the shopper’s entire purchasing experience, from comparison
shopping and bargain hunting to effective use of coupons and credits to
easy return policies."

The biggest
frustrations that consumers reported having with online shopping included
not being able to speak to someone to answer questions (25 percent), learning
items are back-ordered or out-of-stock after they are put in a shopping
cart (11 percent), receiving an item that doesn’t look like its depiction
online (11 percent), websites that malfunction during the payment phase
(9 percent), not being able to find an item (8 percent), unclear shipping
information (5 percent), uncertain return policies (5 percent) and
not receiving acknowledgement that an order has been placed (2 percent).

Discussion Questions: What are the biggest
factors you see behind the continuing growth of online sales, even as
physical store sales lag? Where do you see the greatest opportunities
and challenges for e-tailers as they look to
grow their businesses?

Please practice The RetailWire Golden Rule when submitting your comments.

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13 Comments on "Online is a Retailing Bright Spot"

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Dick Seesel
13 years 1 month ago
The reported growth rate of 11% is actually slower than it’s been for awhile–more evidence of a recession–but at least it’s showing an increase. We’ve all talked about the share growth of e-commerce being triggered by 24-hour convenience and improved execution by web retailers (in-stocks, assortments, ease of navigation). These are all factors continuing to drive e-commerce sales, but there may be a couple of new issues at play: 1. The search for value: With the proliferation of online sales and special offers, e-coupons and the like, it’s become a more efficient process to “find a deal” online after comparison shopping. 2. The need for time: Consumers dealing with other pressures in their lives, including the need to secure themselves economically, have less time for discretionary shopping. The web becomes the beneficiary of the “search for essentials.” 3. The shrinking store base: Think about the number of nameplates that have disappeared just in the past six months, including Linens n’ Things (I know they’re still online), Mervyns and Steve & Barry’s just to name a… Read more »
Bob Phibbs
13 years 1 month ago

Let’s face it, the bricks and mortar shopping experience is terrible for many retailers. Why anyone, myself included, put up with the rotten experience 9 out of 10 times is astounding. But ever hopeful, we return. I found a great one at Finn in Portland who understood trends in a way no online site has; read more here.

Liz Crawford
13 years 1 month ago

I believe we’ll continue to see online sales increase throughout the year, regardless of economic conditions.

Shoppers are re-learning retail. They are comparison shopping across channels, finding the lowest prices on commodity-type items and locating hard-to-find merchandise (off sizes, things not displayed on store floors). Price comparison sites and digital coupons may be the initial motivators for many shoppers, but online shopping will persist in rosier economic times. Once behavior is grooved, it’s hard to change. Shopping the net will simply be habit for many after this era of transition….

Len Lewis
Len Lewis
13 years 1 month ago

The future for online retail is the same it’s always been–keep building trust with consumers through easily navigable websites, quality merchandise and reliable customer service. If you built it, they will continue to come.

W. Frank Dell II, CMC
13 years 1 month ago

Online consumer buying will continue to grow for years to come. Internet retailers have a clear cost advantage which will support their growth assuming they improve the shopping experience.

One real-world factor is that internet retailers are in competition with many more competitors than retailers operating from a store. This minimizes regional price variations.

Another advantage for internet retailers is the greater product offering. A picture and description is cheap display when compared to stocking product on the shelf.

Another factor driving online shopping is the depth and range of product offering. On more than one occasion, no store in our area stock the item I was looking for. The only solution was to buy online.

Kenneth A. Grady
Kenneth A. Grady
13 years 1 month ago

Trends favor online shopping. The shopping pool is being refreshed with more customers who are computer comfortable. As devices like the iPhone increase device acceptance, they break down barriers for those who have been less comfortable with the online experience. Time pressures (increased workloads as there are workforce reductions) make online shopping an improved option. All of the other factors: price comparison, availability, depth of assortment, etc, also favor online shopping.

There just isn’t a great reason to go to many stores in the current environment–though some astute retailers are standing out from the crowd by taking advantage of the situation to drive more reasons to be in stores.

Max Goldberg
13 years 1 month ago
Even though online sales grew by 11%, it was the smallest increase online stores have ever experienced…still it represented growth. This success can be attributed to convenience and value. Almost everything ever made is available online in a myriad of shopping formats. It is convenient to shop at a number of stores without having to drive from store to store. The other day I went to Staples to buy an ink cartridge for a printer. They wanted $40 for the cartridge. I came home, looked at 5 online stores and bought it for $3.25 on eBay. I won’t shop Staples for ink again, in spite of their rebate and rewards offers. That leads to value. While having the convenience of shopping for the same item at a number of online stores, consumers can compare prices and delivery options. Unless you must have a product right now, you can often find it cheaper online. With more online retailers offering free shipping, value is built into the convenience. I expect online sales to continue to grow at… Read more »
Mel Kleiman
13 years 1 month ago

Why online sales are increasing:
1. Better service (you do it yourself)
2. Faster
3. Usually cheaper
4. More convenient (24-7)
5. Easy to compare.
6. They deliver (you do not have to carry it home)
7. You can shop many merchants for the same item at the same time.
8. Saves time
9. Impluse shopping you see it you want it they make it easy
10. They know who you are they know what you like and they make suggestions. (When was the last time you had a salesperson who remembered what you bought yesterday, let alone 6 months or a year ago?)

Anne Bieler
Anne Bieler
13 years 1 month ago

Expectations are that online retail sales will continue to grow as retailers capture and respond to different purchase patterns. As an example, groceries offering online ordering with scheduled pick-up are finding that some shoppers select the larger, heavier, bulk formats–then conveniently load them in the car–saving time and hassle. The same shoppers hit the aisles for perishables and to keep current with offerings, but reduce in store visits significantly. The search for value will continue–but online retailers who keep selections/formats current will keep their core shoppers and attract casual visitors to the site.

Lee Peterson
13 years 1 month ago

Online retail is the future of retail PURCHASE, not experience. Purely functional, ‘long tail’ driven, easy and convenient to do, nothing has been more obvious than that fact over the last 10 years. We’re just slow to adapt because of our innate security fears and because people still like to shop (some way more than others).

But now that price is front and center and the best way to search for price is not on foot, the clear advantage of online retail for purchase has dawned on millions and will continue to do so for the foreseeable future.

I see online retail getting to a tipping point of 20% sooner than later. And from there, it’s downhill; meaning cooler (and fewer) physical retail experiences and very easy/convenient online purchasing advances.

Janet Dorenkott
Janet Dorenkott
13 years 1 month ago

I think Mel put together a great list. I would define his #10 a little more specifically to say “pro-active and individualized marketing.” I would also add a couple more:
11. A new generation of shoppers. The kids who grew up with instant messaging and on line social networking are now graduating from college. They do not have the fear of shopping on line that the older generation has/had.
12. Cheaper to advertise. As the old newspaper business is fading out, the online advertising is getting hotter. That’s because it’s far more affordable and environmentally better. When you can put a banner on a web site for $2k for an entire month with higher exposure, versus buying a full page add for $100k, it’s a no brainer for companies to move toward advertising online. It will continue to grow.

Gene Detroyer
13 years 1 month ago
The BrainTrust fairly unanimously predicted that online retailing will continue to grow. I will go one step further. I believe any retailer that does not build an online foundation will be left in the dust. That foundation must include integration with the brick and mortar stores. And, that integration must be driven by the online side of the business. It must be considerably more than an alternative for the shopper. The brick and mortar retailer must restructure their thinking to recognize that even customers that come to the store will start their shopping trip online. There is only on thing standing in the way of the online retailing and that is confidence by the consumer. That lack of confidence is only a result of lack of experience. As more people become computer/internet savvy, more will try online shopping. If they start with Amazon or Zappos, their experience will only be good and will give them the confidence to shop more and more on-line. Mel Kleiman’s ten reasons why in this discussion, says it all. Every… Read more »
Edward Herrera
Edward Herrera
13 years 1 month ago

I think there are some other social factors that will keep growing online retailing:

1. Have a smoke and/or a coffee while you shop.

2. Watch your favorite show while you shop.

3. Never need to load the car with children who act out and make you crazy.

4. No drive time or getting flipped off in traffic.

5. No one trying to rob you or hit on you while you shop.

6. No getting into a fist fight over a parking spot at the mall.

7. Have a glass of wine and shop in your undies.

8. Put shopping on hold to answer a text message.

9. Cancel an order after spouse blows a gasket.

10. No waiting in line while the customer in front of you argues every price tag.


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