At the end of 2015, Poundland embarked on an ecommerce trial in a bid to transfer the success of its bargain stores online.

However, it’s just been reported that the retailer is to call time on the venture after failing to ignite much interest.

So, why exactly did it fail? Here’s a bit of insight into the story.

Failure to convert existing shoppers

Having opened its first ever store over 25 years ago, Poundland is built on a tried and tested formula. The reason behind its success is that it knows exactly what its customers want and it unashamedly delivers it. 

Its stores – a mainstay on most UK high streets – boast bargain multipacks of everything from batteries to fizzy sweets. Though it famously uses tricks of the trade in order to keep its prices so low, such as ‘re-engineering’ products to shrink the size or quantity of items, faithful customers appear well aware of this fact, maintaining that it offers better value than other stores or budget supermarkets.

With the arrival of its online shop, Poundland failed to recognise that most existing customers do not typically use it like a standard or large supermarket. 

The buying process seems much more fractured – people are likely to pop in simply to check out what bargains are in that week or to pick up a specific item. Meanwhile, Poundland's appeal also surely lies in the joy of coming across a surprise find.

Further to this, new research from Shoppercentric has found an increase in the ‘little and often’ trend, with 16% of grocery shoppers rarely doing a main shop – a figure 6% higher than it was in 2016.

All in all, it seems unlikely that consumers would be able to replicate this reliable experience online. 

Delivery costs

As the likes of Sainsbury’s and Tesco launch new initiatives to offer one-hour delivery in London, shipping remains an important sales tactic for most of the big supermarkets.

Most consumers are prepared to pay for this convenience, as prices typically fall in line with the supermarket’s wider positioning. In contrast, Poundland’s online delivery costs are somewhat at odds with its overall approach to value, coming in at £4 unless a customer spends over £50.

With the average spend in Poundland said to be around £4.72, it seems unlikely that consumers would be willing to pay double for the privilege of getting their goods delivered. What's more, it seems even unlikelier that shoppers would ever be able to reach a £50 shop.

Without enough of an incentive in this area, it's unsurprising that existing customers remain satisfied with shopping in-store.

Lack of focus

Lidl was named as the fastest-growing retailer in 2016, with Aldi and Lidl accounting for 10% of the total supermarket spend in the UK. Both have famously avoided venturing into the online sphere, instead choosing to focus on physical expansion with investment in stores and warehouses.

It’s certainly been a successful strategy, with some suggesting Poundland could have similarly benefitted from this laser-focus on its physical presence instead of forcing a multi-channel approach.

That being said, with the recent launch of dedicated clothing stores for its Pep & Co range, it does appear to be investing somewhat in this area. Again, perhaps herein lies the problem, resulting in a fractured or shallow focus across the board.

Mixed user experience

Finally, while the online user experience is somewhat irrelevant now - with a lack of interest in the overall concept overriding design – it is still interesting to note a few errors. 

On the positive side, the site appears to be very simple to use, with intuitive navigation and guest checkout facilitating an easy experience.

Conversely, certain features like the ‘Shuffle’ tool are a bit baffling.

Attempting to replicate the experience of finding surprise bargains in-store, this ‘new, fun way to shop’ on-site offers up a random selection of items.

However, instead of providing users with a novel or entertaining experience, it negates the way people naturally want to shop online, making the whole process much more time-consuming and muddled than it should be.

In conclusion...

The aforementioned shuffle feature is perhaps a good reflection of why Poundland's ecommerce venture failed to work. Ultimately, it’s just a bit misjudged. 

Poundland’s expansion into ecommerce was done in spite of the needs of its core customer. And while a multichannel approach is undoubtedly the goal of many big retailers – it’s no use if the demand isn’t there in the first place.

Related reading:

Nikki Gilliland

Published 13 February, 2017 by Nikki Gilliland @ Econsultancy

Nikki is a Writer at Econsultancy. You can follow her on Twitter or connect via LinkedIn.

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Comments (3)

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Sally-Ann Burgon, Customer Experience Manager at Boots UKEnterprise

Though the article points out all the major points of how the proposition missed the mark it fails to highlight a small but significant UX reason the sites experience was unpopular. As most customers browse as guests reaching the free delivery had a threshold of £40 took time however guest baskets were cleared down every several times within an hour making the attempt to get to free delivery with multiple items (as opposed to multiples of the same item) almost impossible.

4 months ago

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Grahame Palmer, Marketing Director at All Things Ecommerce Ltd

The profile of the "Poundland" shopper is also a consideration. Mostly people looking for a specific item that is "cheap", they generally comprise "opportunity shoppers". They favour places like eBay, Gumtree and Amazon Shopping, seeking out the cheapest possible seller of a given item. None of these places is a good place to sell in the context of a "retailer" (only if you have a garage, shed or loft full of stuff you'd otherwise take to the dump).

Also, I believe that people who frequently look for cheap bargains have much more time on their hands to do so, and can spend lots of time finding a whole host of online sellers who are prepared to part with goods at (stupidly) cheap prices. They will buy from many online stores - favouring those who offer free (or very low-cost) shipping, and will spread their purchases to as many stores as they see fit to accommodate their price thresholds on a given item.

"Conventional" supermarkets may be increasing their "share" of online, but it's extremely costly for them. The logistics of compiling each shopper's "basket" is time-consuming and has to be done by a person, who needs a salary. It's like walking round your local Sainsburys with a staff member in tow, who picks what you point to. Imagine 60 shoppers in your local branch of Sainsburys - each with a staff member in tow!

Poundland may see an opportunity in trying a "Bulk Seller" approach (like Makro) where stuff is cheaper - but you need to buy it by the case-load.

4 months ago

Carla Nadin

Carla Nadin, Director at Renew Interiors

This reminds me of Primark that has decided to remain trading in physical stores only and not opening out an ecommerce channel. It understands its audience and what works for them and their customers. If you're spending £1/£2 on one thing, you are unlikely to want to pay for delivery... Amongst other things.

4 months ago

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