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Growth for online retailers doesn’t have to come at expense of margin


Growth for online retailers doesn’t have to come at expense of margin


This guest post is by Christopher Tia, principal of Lean Prototype Machine.


Many retailers are seeing more and more of their dollars coming in online. Not surprisingly, pay-per-click (PPC) advertising is proving to be a popular way for retailers to take advantage of this rapidly growing $14.7 billion Australian market.

While each click may be low in price, some are, however, finding that the number of clicks required to get an actual sale is sometimes really adding up. With research also revealing online price transparency is here to stay, a lot of retailers are quietly wondering if investing in online growth is ultimately going to be a zero sum game.

Is online retail growth ultimately a zero sum game?     

Sacrificing margins for the sake of online growth doesn’t have to be a fait accompli – especially if retailers are willing to better understand the consumer mindset. The fact is that by the time products are purchased online, customers have already made several key decisions about a retailer, the brands they represent and the product itself. Rather than rely on one medium, retailers should be thinking more strategically about how best to harness the strengths of each online channel throughout the consumer decision making process. These typically comprise several stages.

Online consumer decision-making process

STAGE 1: Stimulated interest and awareness  

Online campaigns are now pretty stock standard. With so many new flavours of social media now freely available however, retailers should consider how they are incorporating them into specific campaigns. Visual platforms like Pinterest may for example work better for campaigns that showcase products like posters and prints.

STAGE 2: Product research and selection 

Helping people decide what to purchase is just as important as getting them interested. Retailers need to think carefully about what, how and where they present information. This includes review sites and past customer interactions on social media. In today’s multi-device world, the mode of customer access should also be considered. On the mobile for example, people expect to be able to access short, sharp information specific to their location.

STAGE 3: Triggers for product purchase 

Having done all the hard work upfront, retailers should consider what potential mechanisms are available to accelerate actual product purchase. This can be something as simple as a coupon code.

STAGE 4: Easy sales transactions 

Closing a sale can be just as tough online as it can be offline. With online transactions though, it is all about minimising the number of distractions. This includes everything from making sure people are taken to the most relevant product category page when clicking on an online ad, to presenting only what is necessary throughout the checkout process.

STAGE 5: Post-purchase follow-ups 

Repeat customers generally cost a lot less than new ones. They are also a good source for word of mouth referrals. It thus pays to re-engage with customers post purchase. Retailers should look for ways to harness their fan base by ‘helping them help you.’


The bottom line doesn’t have to be sacrificed when pursuing online retail growth, but retailers need to spend time better understanding the tools at their disposal and how it can best be used to win the hearts and minds of their customers. Much like traditional retail, do it well and price won’t be such a deciding factor.


Christopher Tia is principal of Lean Prototype Machine, a firm dedicated to helping companies with rapid innovation and online growth strategies.


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