Saturday, September 29, 2007
Online Sales Slowing
byAfter considerable year over year growth since the inception of the Web, online sales growth in major sectors like books, computer peripherals, pet supplies and others have dropped dramatically. Online sales this year are expected to reach a respectable $116 billion or 5 percent of all retail sales. Nothing to slouch at, but it is becoming increasingly more difficult to maintain the growth rate seen in recent years.
Forrester Research and Jupiter Research, both market research firms, are projecting a continued drop in growth rate in the next decade. Jupiter projects overall sales growth will slow to 9 percent a year by the end of the decade from as much as 25 percent in 2004. Analysts also project that by 2011, online sales will account for nearly 7 percent of all retail sales with some categories being even more. These are still numbers most retailers would be envious of.
Analysts and research groups point to a number of reasons for the slow down, but I’m particularly interested in one-the idea that many customers look at shopping online as a chore. Let’s face it, online shopping is convenient because you can do it from your home without leaving the comfort of you Lazy Boy, but it does little to stimulate our senses. In fact many people equate online shopping with work simply because it involves a computer. Add to that the ever increasing shipping costs and having to wait to receive your merchandise, and there is little wonder why online shopping is loosing some of it’s luster.
It’s taken some time, but retailers who may not have a strong online presence have picked up on this and some are going to great lengths to turn your in-store shopping experience into an event to remember. In-store child care, free beverages and an inviting atmosphere all build on the experience that they hope will bring you back again and again. It’s similar to picking up your favorite beverage at the drive-thru at the local Starbucks. It’s convenient, you receive the same great product, but the experience of drinking your beverage in your car while traveling to your office just isn’t the same as sitting in the quaint corner shop sipping your latte with your best friend or business associate. It’s all about the experience!
Retailers are looking for ways to bridge the gap between their online stores and physical locations. Major retailers like Best Buy, Circuit City and REI have been offering customers the option of purchasing online with in-store pickup for years. Recent twists on this tactic have some retailers competing on the time it takes to have a customers orders ready. Circuit City claims all online orders of $24 or more will be ready for in-store pickup within 24 minutes.
Retail giant Wal-Mart put their own spin on this service in March of this year when they introduced their Site to Store program. The program offers thousands of items on their Web Site that may not be available in their stores for customers to order and have delivered free of charge to their local Wal-Mart store. This service increases the number of products available to the consumer without any additional cost or effort on their part since many of the users are already regular customers at Wal-Mart. Customers are notified via email when their order has arrived and they can pick it up during their next visit. Program acceptance has surpassed their expectations and according to Raul Vazquez, Walmart.com’s cheif executive, about one third of all online sales are now part of the Site to Store program.
In addition to convenience, retailers are reaping the benefits of customers buying additional items while they’re at the store for pick up. Mr. Vazquez, reports 60 percent of customers who purchase online and pick items up at the store purchase an additional $60 worth of goods during pick up. REI reports a third of all customers who pick their orders up in the store purchase and additional $90 worth of goods.
Still in its infancy, online commerce still has a lot of room for improvement. Retailers will continue to struggle to bridge the middle ground between online convenience and in-store experience. Those of us in the customer service arena will continue to watch and provide guidance wherever possible.
