Consumers go multi-channel for retail

New research conducted by the Australian Centre for Retail Studies (ACRS) suggests that retailers could miss out on enormous sales opportunities if they do not market to their customers across multiple channels.

Titled ‘Value and Optimisation in Multi-Channel Retailing’, the ACRS report sheds light on how Australian consumers value different channels in terms of their pre-purchase, purchase and after-sales behaviour.

While online sales are expected to increase more than 13% annually over the next two years, the report indicates cross-channel sales are expected to grow by 17%.

The report also found that nearly half of all retail transactions are expected to be made by consumers crossing channels, with approximately 36% of Australians purchasing online at least once a month and 6% purchasing a product once every week.

Research fellow at the ACRS, Dr Sean Sands said, “Our results suggest that if a retailer is going to provide consumers with multiple channels, it is not sufficient to offer just a selection of traditional channels such as the internet and a catalogue.

“Retailers that engage consumers effectively across new and emerging channels (such as the iPad, iPhone applications and social media) have a greater impact on shopper behaviour.”

According to the study social media, SMS and iPhone applications are among the most popular ways retailers communicate with consumers – 68% of Australians have registered to receive emails from retailers and 19% opt into communications via SMS.

Additionally, Sands estmates 7% of consumers engage with retailers through an iPhone application and an impressive 23% of consumers engage through social media.

“Truly innovative retailers are increasingly offering additional channels for consumers to interact before the purchase, at the point of purchase and after purchase. Myer is a great example of an Australian retailer who is striving to make developments in each of these areas, and across multiple new and emerging channels,” explained Sands.

Local retailers under threat from overseas competition

Overseas web retailers are reaping sales from Australian consumers with little challenge from local businesses.

A US-based internet retailer survey has revealed that Australia ranks in top three markets for generating web sales outside of the US. Some of the 36.8% of web retailers who responded to the survey admitted to winning business without offering the necessary features and functions designed to cater for international shoppers.

Bing Lee head of ecommerce Peter Krideras says tech-savvy consumers are reluctantly buying from international businesses because they are starved of brand choice.

“The delay in Australian retailers embracing selling online has made it easy for overseas ventures to tap into the Australian market,” said Krideras.

“The quicker local organisations embrace the power of the web, the quicker we can capture this growing market before we lose more money overseas.”

Forrester Research has revealed that online spending is expected to grow to $32 billion in Australia by 2012.

Figures from IBISWorld show that online sales may reach $75 billion as more retailers increase the efficiency and reliability of their online channels. The figures also found that Australian online sales currently represent just 5.5% of the country’s total retail sales

However, research by the Australian Payments Clearing Association (APCA) found that in 2005, 86% of local online spend was domestic. By 2008, this had already plummeted to 57%, with close to half of total online sales being directed to overseas competitors.

Online Retailer Expo and Conference managing director, Mark Harvey, says more retailers need to ask themselves why Australian consumers are behaving this way.

“A whole new generation of consumers have taken control and are changing the game for the retail industry. With access to a wealth of information online, customers are speaking to us loud and clear by putting their credit cards on the line and transacting,” explained Harvey.

Loyalty wins online customers says Salmat Digital

Although Australian retailers have been slow to expand online they have a distinct advantage over web-only retailers, according to the executive director of Salmat Digital Paul Marshall.

In his presentation to the Online Retailer Conference in Sydney, Marshall asserted that brand awareness, loyalty and an existing customer base are key assets when ‘bricks and mortar’ retailers take their business online.

Combine that with the power of the store network to give their customers a true multichannel shopping choice and retailers have a strong playing hand.

“Despite being slow to adopt eCommerce, the history and level of trust retailers have built with their customers will pay major dividends when they expand online. Data from the US shows that consumers of multichannel retailers, or retailers with both a physical and online presence, are proven to be more loyal, buy more per visit, and have a higher lifetime value,” explained Marshall.

The US Internet Retailer website indicates that of the top 100 online retailers in the US, ‘bricks and mortar’ retailers make up the largest segment (circa 44%) and are also the fastest growing segment over web-only retailers, mail-order retailers and manufacturers. Fast movers include Costco, Wal-Mart, Sears and Best-Buy.

“Success in multichannel retailing is a marathon not a sprint. Making sure your house is in order is essential, develop the right strategy and invest where it matters,” says Marshell.

In 2009, ecommerce in Australia is expected to generate around $18 billion in sales.

Online retailer dStore builds a roof

Australian online retailer dStore makes a bold move from digital to physical with twelve stores planned for the Brisbane metro area.

Andrew Cooper, CEO, found that certain customers research online but still buy on the high street. dStore hopes to capitalise on this demographic, with a prototype physical store open by Christmas.

The online-to-physical move has been part of dStore’s vision from its beginnings, a decade ago. The stores will stock a select inventory with the full range available via in-store kiosks, for next-day delivery (to the store). dStore will mimic their online identity through the in-store fit out.

Cooper is firm that although the physical store is exciting, online is their core business:

“Were not going to bet the house on this. In fact he forecasts another 10% growth for this year, expecting a symbiosis between physical and online. Cooper believes, initially at least, the physical store will raise awareness of the online portal.

CEO of younger competitor DealsDirect.com, Simon West, commented that Australians are turning more and more to online shopping, especially in this economic climate of researching bargains.

One of the core drivers of growth has been retention with customers increasing both their spend and their frequency – its all about building trust.

CC Media launches as digital retail services specialist

CC Media launches this week as a digital company specialising in interactive advertising services for the retail sector.

The existing Catalogue Central and Stylehunter brands will be joined by two new digital marketing products, CC Mail and Catview, under the banner of CC Media.

Matt Berriman, general manager of CC Media, says retail marketers now understand the power of online. With 15 million Australians online each month and with the increase in consumers researching on the internet, its critical retailers can effectively communicate with them. Berriman is excited about providing retailers a ‘one-stop shop’ that will allow them to do this in a multi-channelled, accountable and cost-effective way.

 “The current market is primed to embrace a digital company that guarantees interaction between retailers and their target audiences. We have already proven through our Catalogue Central offering that we can provide marketers with strong ROI and CC Media is the next step in ensuring they can connect with consumers in a multi-channelled approach, no matter where they are online.”

CC Media will allow retailers to engage with consumers across multiple digital touch points including performance-based mediums such as display, email/SMS marketing and online catalogue solutions. Through the use of CC Media’s heat map technology and user analytics, retailers now have the opportunity to capture detailed customer data and valuable product insight that was previously unavailable to them through traditional media.

Catalogue Central will become CC Media’s flagship brand, with demand for the online catalogue business continuing to increase. The business is already tracking at 53% annual growth to date, on the back of 80% growth in 2008. This growth is driven by the success of its guaranteed catalogue reads and ability to target specific demographics by utilising its 260,000 strong active database.

Stylehunter is Catalogue Central’s sister site and lists a number of high-end fashion clients such as Barkins, Kookai, Wish and Sportsgirl. Stylehunter provides retailers with a cost-effective way of reaching fashionistas without the costs and wastage associated with traditional magazines.

CC Mail is a new addition to the CC Media offering, giving retailers the ability to utilise a performance-based email and SMS marketing services, designed to drive foot traffic and sales through integration with other marketing activities.

Catview focuses on providing the latest in marketing analytics through exclusive heat map technology. This gives retailers the ability to capture comprehensive consumer data which can be utilised to support and scrutinise the product focus of traditional retail marketing campaigns. Catview now gives retailers the ability to utilise this technology on their own website.

 “This is an exciting development for retailers who can now take control of their digital marketing campaigns with guaranteed performance, high ROI and in-depth analytics to make better informed decisions during and/or at the end of their campaigns,” said Berriman.

Is your shopping cart only half full?

The interest in the recent Online Retailer event held in Sydney highlighted that most companies appear to be still struggling to fully benefit from ecommerce and offer their clients/customers a new convenient sales channel.

A number of Australian retailers are working to refine their online strategies and understand that if they are successful they can potentially make tens of millions more in revenue. With many Australian retailers still learning the ropes, you competition may only be a few steps ahead and it’s not too late to catch up.

The common project questions are what platform, shopping cart and web analytics will be best suited to your industry and budget. What can often confuse business is the sheer number of potential store platforms and shopping carts available.

For simplicity we have listed seven of the most common solutions in typically order of cost:

  • Paypal
  • Amazon/eBay stores
  • Out-of-the-box hosted
  • Custom built by web developer
  • Open sourced solutions
  • Proprietary solutions, and
  • Enterprise solutions.

The store cost also varies from a small investment in time and possible ongoing charge per sale to enterprise solutions costing millions. The first three options are the cheapest and quickest solutions but are not suitable for competitive industries or large stores. Many custom built solutions by web developers while appearing cost effective can often have longer term limitations, can be inflexible, non-search friendly and make it difficult to track ROI.

The best solution for ecommerce stores is typically an open sourced solution, as they offer the most flexibility, support, plugins and customisations. Proprietary solutions can be suited to complex projects or need implementation within existing CMS platforms, they can prove expensive and not always the best solution. The enterprise solution is the type that Walmart, Amazon or Woolworths would select and can be a combination of proprietary and open sourced solutions.

The main factor that can rapidly increase costs of an online store is the addition of multiple solutions such as:

  • Back-end fulfillment
  • Customer relationship management
  • Email marketing integration
  • Geo targeting/personalisation
  • Multiple stores
  • Integration with custom applications
  • Onsite search engines, and
  • Usability testing and implementation.

The more advanced options can even replace other existing sales channels as they can offer more potential benefits allowing visitors to receive the best possible experience and better ROI for the business. While these can increase initial launch costs the benefit of many of these solutions can provide to your online store with better conversion rates, reduced processing costs and even increase visitor traffic.

In this current economy many projects don’t always have the budget for a complete website rebuild so there are two effective solutions to increase your ROI. If you have an existing website solutions such as SLI Systems offer intelligent search solutions which can improve conversion rates and can assist with improved search optimisation campaign results. There are also web usability firms such as Peak Usability that have advised my clients that typical conversion rates should be around 2% and websites should be aiming for around 5%.

The focus in a successful ecommerce business should always be on quality foundations supported by the ability to correctly measure ROI and success. The key to better understanding your visitors and behaviours is having correctly implemented web analytics running within your shopping cart that combines visitor data and revenue.

Around one third of websites are still not using web analytics software and rely on the basic web server logs to understand the success of their online marketing campaigns. The problem that many of these web server logs while free, do not offer business the necessary information required to track their campaigns or refine their online marketing spend.

If you are driving visitors to your online store you need correctly implemented web analytics so you can track how much revenue each campaign or medium delivers the best revenue. While most web analytics packages support campaign tracking some allow for advanced integration with email, video & social media platforms.

Most people understand that the leading web analytics solution is now Google Analytics based purely on the volume of websites, across all industries followed by Omniture. According to my extensive research of the world’s top 1,200 public companies a majority of the world’s largest retailers are split between Google Analytics and Omniture.

While enterprise solutions such as Omniture are often suitable for large ecommerce websites, its setup and costs can make it harder for business to justify. There are other web analytics solutions that fit between Omniture and Google Analytics, listed below with links to their clients/case studies.

If you are in a particular industry it can be a good guide to check the top few sites and follow their solution for web analytics as customised packages maybe available for particular industries. So using web usability testing, onsite search and web analytics you can measure how many visitors have their shopping cart half full and better help them fill it.

Case study success stories: