Farooq Khan: Online Retail is Due to Skyrocket in 2014
Online retail is quickly becoming a preferred way of shopping. In fact, it's tied with discount stores as the favourite Christmas shopping destination. Furthermore, according to a Deloitte survey, 48 percent of consumers shopped online for gifts last Christmas. More consumers are shopping prompted in part by online companies offering incentives such as free shipping and other deep discounts. Here's what to expect in the future from online retail.
What to Expect in 2014
Every year, the number of people shopping online increases. According to a PwC report, nearly 53 percent of Australians shop online. This is why pundits expect Australian online retail sales to reach $31.7 billion in the coming year.
Taking a look at eBay, one of the most recognised online retailers – the trajectory of their sales over the last few years paints the picture for the future. In 2011, eBay earned $5 billion through mobile sales around the world – a 150 percent increase from the previous year. In 2012, they earned $14.03 billion. Every year, the numbers increase.
In 2014, mobile purchases, multi-channel commerce and traditional straight-forward online purchases will all contribute to the growth of the ecommerce market. More people are making online purchases,often after standing in a "bricks and mortar" retail stores trying a product.
The discounts offered are often worth the effort of first looking at something in a traditional store and then buying the product online. The online universe also affords a far greater product selection particularly if the store doesn’t have a particular size or colour in stock.
The logistics supply time from the placing of an online order to its delivery have also dramatically shortned, reducing the delayed gratification effect that was often an inhibiting factor in people placing orders online.
How Information Will Help to Facilitate Growth
The Australian Bureau of Statistics (ABS) tracks online retail spending to measure the progress of the market. The ABS tracking clearly indicates significant growth in online sales.
Retailers need to act quickly and responsively to this trend or face severe marginalisation from online competitors. The simple mantra needs to be that an online store needs as much attention as one would apply to a bricks and mortar store – make it as easy and enjoyable as possible for your customers to shop, ensuring their return business.
Particularly in large organisations with branches or franchise stores, it is imperative that employees at all levels are on-board with pushing, improving and making any necessary changes in policy or procedure to ensure that online sales can thrive. Whether or not their branch or store will lose out on a sale to the website should not be seen as a threat – it is for the good of the business as whole. This may require head office reducing the importance of branch-by-branch sales breakdowns, which is a common feature of chain stores and is sometimes the basis for employee incentives and bonuses.
Challenges of Online Business
Businesses must make certain that their online stores can accommodate their customers when they arrive to their website. This involves ensuring that there is adequate inventory and that the site is easy to navigate. The website's backend must be prepared to handle traffic demands and transactions to avoid losing customers. Online aspirants can very easily lose customers to competitors if a website isn’t up to the high expectations of online shoppers.
Timely and cost-effective delivery is another key challenge that must be considered. Offer free delivery if it’s a viable option for your company. If not then you may need to partner with a courier firm and negotiate prices that ensure highly competitive and timely delivery rates.
According to a McKinsey study, 70 percent of customers will make a decision to purchase an item based upon a review. A simple outstanding word-of-mouth review from a customer can yield amazing results, so it’s vital to ensure you can be proud of the service you offer at your online store.
The Importance of Mobile Website Development
Since mobile purchases are steadily increasing each year, it's important to ensure your website is compatible with mobile (either via a mobile site or responsive design of your full site). This means no excessive scrolling, thumb-friendly large images and icons and easy to select links. The page must load fast, and the font should be large enough to read. The more customers can accomplish in a single click, the better their experience will be. Customers will buy more on their mobile devices if they can navigate easily.
Online Retail is Due to Skyrocket in 2014
If your company is ready to jump on the bandwagon and capture a portion of the money that's available for online sales, you must be prepared to make changes. The adjustments won't be easy, but the returns will be significant. Be a part of the online revolution and prepare your company to accept online purchases.
Farooq Khan is an experienced investor, currently serving as Chairman of a number of companies, including Bentley Capital, Queste Communications, Orion Equities and Devisd. Farooq Khan has experience founding and leading a number of ASX listed companies in the technology, financial services and resources sectors in Australia. Connect with Farooq Khan on Google+, Twitter or LinkedIn. Not to be confused with this Farooq Khan or this Farooq Khan!
