By Frank Reed
A recent study from Forrester Research and Shop.org that said that online shopping was up 11% for Q1 of this year. A very good number considering the economic climate.
Even a cursory glance at the numbers, however, showed a disturbing development of sorts if you are an online only retailer. 60% of online only retailers that took part in this study reported their sales were either flat or down. Quite contrary to the overall trend that shows the increase in online shopping. Why is this happening? I think it’s the economy and there may be a fundamental shift that may be occurring that will be a source of concern for the online only retailer if it pans out.
This economic climate and the fear that it has created has moved consumers to be more conservative in their spending but also who they spend with. Here are my thoughts on why.
Comfort level People want security and some level of control in this world that is rapidly spinning out of control. One way they can do that is not leave their house to shop but still shop at a place they trust.
Fear This is directly related to comfort level as all things are. Online only retailers, regardless of how well they present themselves or what savings they can generate are still an unknown quantity to most consumers. They never know exactly where they are getting product from and they often feel a twinge of “Will I actually get what I ordered?” even though it looks great. I know I do and I work in the industry. There is a level of fear of the unknown that can be alleviated by buying from the biggest brands without leaving the house.
Convenience of returns Everyone hypes convenience of shopping online but rarely discusses the nightmares of returns. If someone buys from a big box store and knows that if there is an issue they can go to the store to make a return they are comforted and thus more likely to do it.
Shopper’s Experience It’s not as easy as it used to be to look big on the Internet without being exposed as small in reality. Social media and just more time to learn about what is real and what isn’t has made the online consumer more savvy and thus more wary. Good for the big brands and bad for the little guy. Many will pay more knowing that they will be more likely to have a good experience overall than go through the potential hassle of dealing with someone with no infrastructure etc.
There are always more reasons but I can understand this shift. I ran a very small ecommerce site for a while and while it looked like there was a lot of infrastructure when you were at the site, the reality was it was just me for the most part doing everything. As a result, the experience of my customers’ was spotty at best. While I have no desire to ever do that again there are many who do especially in light of layoffs and other things that have stopped people’s incomes dead in their tracks.
So beware if you are an online shopper. What looks impressive online may just be a shell and yes you could have problems.
For you online only retailers it will be more important than ever to be fully engaged with your customers in ways that will gain and keep their trust so they won’t be tempted to go to the same stores online that they can drive to offline.