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Last week at the Retail Week Conference , I was so pleased I wasn’t in the corrugated roofing business, because no-one was talking about it. Everyone, on the other hand, was talking about multi-channel retailing - and it was great.

From the opening remarks to the close, a gruelling 33 hours later, e-commerce, its impact on retailers and on the high street was the main talk of the auditorium, the breakout sessions and the coffee queue.

Everyone wanted to know what another record online peak had meant for retailers and what the future holds – especially those who haven’t yet begun their online journey. The delegates were hungry for sales numbers and predictions for the future from the industry giants who graced the stage – three of whom happily obliged.

John Clare started the whole thing off by revealing that online now accounts for 12% of DSG International’s total sales, with significant growth coming from the reserve online and collect in-store services of PC World and Currys and the group’s push into pureplay under the Pixmania and Dixons brands.

He also told us that 75% of his customers now conduct research online before making a purchase offline.

John was bullish about where this was all going, predicting that online sales would account for 20-40% of total retail sales by 2010 and that high street retailers would need to work harder to attract customers to their stores. Yet more in-store coffee shops no doubt.

Interestingly though, John expects further growth in reserve and collect services, which makes a great deal of sense given the degree of pre-purchase research his customers are doing online. He also sees the potential for pureplay brands to open offline collection points – so it’s a multi-channel rather than simply an e-commerce future we face.

To drive this point home, Indira Thambiah from the Home Retail Group, outlined an impressive picture of the current multi-channel offering from Argos, with the website, SMS services, call-centres, in-store kiosks, home delivery services, returns collection services and - oh yes - the catalogue and the stores as part of the mix.

This is compelling, true multi-channel retailing that puts the customer in-charge and offers them an array of choice and therefore convenience.

With Argos so far ahead, it was really interesting when, a bit later in the conference, Terry Duddy gave us some numbers.

According to Terry, sales completed online for home delivery currently account for 4% of the Argos total and the value of goods sold instore, that have been reserved online, represent 11% – so that’s 15% of total sales originating online.

When pressed for a prediction about the future, Terry believed that online sales (excluding food, ticketing and travel) would reach around 15% by 2015, and not a great deal more. This suggests that some of the predictions for significant growth in e-commerce were clouded by the scale of online grocery and ticketing sales.

Stuart Rose , now practically retail royalty, gave an inspiring picture of what he and his team are doing at M&S, saying he has high hopes for the new e-commerce infrastructure being developed in conjunction with Amazon Services, due to launch in the Spring.

When it came to numbers time, Stuart revealed that he had challenged his ecommerce team to deliver online sales of £0.5bn. He didn’t give a timescale for this, but we can assume he means fairly soon.

Putting this into context, turnover at M&S was just under £8bn last year and has grown 11% this year, so £0.5bn is around 6% of total sales. However, if you allow for the fact that around half of their business is food, he is looking for online sales of around 12% of his non-food business. Not far from where Terry Duddy thinks Argos will be in 2010.

These various predictions were enthusiastically debated by delegates, with many believing the online sales figures from Argos and M&S were too low, agreeing with John Clare that the number would be 20-40% within a few years. I concluded otherwise, as it seems to me that by continuing to focus on online and offline sales in this way, we were missing the point entirely.

I say this because retailers who offer multi-channel choice, such as Argos and DSG, are allowing their customers to decouple the steps of product purchase and choose the most convenient channel for each step.

For example:

1. Product Selection
The retailer’s website is becoming the channel of choice for product selection – it’s the new shop window and retailers need to make sure everything is on display and well merchandised. This has been understood for a while in toys and electricals, but is fast becoming the case in fashion and luxury goods.

2. Product Purchase
Having selected their goods, customers can complete their purchase online or visit a store to pay. Where they choose to do this is immaterial, although a purchase in-store reduces fraud risk. Success is measured when a customer completes a purchase, wherever this eventually happens.

3. Product Fulfilment
The method of product fulfilment is no longer tied to the channel in which goods are selected or paid for, so the customer can choose the most convenient method, whether it’s having the goods delivered to their home or office, or visiting a store to collect. In a multi-channel world, the latter is still by far the most popular option amongst customers and the cheapest for the retailer.

In this context, the old measure of online sales as the value of orders placed online for home delivery is only a very small part of a far bigger, more complex and much more important story.

The truth is that, a multi-channel retailer’s online channel is becoming critical to the health of their offline businessand their offline presence is crucial to providing convenient product fulfilment to both offline and online customers. It’s going to be increasingly hard to pinpoint the channel from which a purchase actually originated and harder to separate what each channel brings to the party.

New measures that track channel performance and customer preference need to be developed to reflect these changes.

These will inevitably place a far greater emphasis on the part the online channel plays in the mix than the old measure of online sales - these are the measures we’ll be talking about and predicting at next year’s conference and they will be far more meaningful.

Steve Borges is Founder of Biglight, a specialist e-commerce consulting business.

Contributor

Published 7 March, 2007 by Contributor

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Comments (1)

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bigmouth

I have received by post a Polaroid E700 digital camera that I bought online on a website called BigPocket.
And, I must say, I am very, very unhappy, upset and disappointed with such purchase, for several reasons:
The package, when I received it, it had been already opened, as I was able to find just by looking to such an inappropriate sealing.
After several attempts to switch on the camera (which I do not think it is normal), I managed to finally switch on and make some pictures, but it only lasted for few pictures.
I replaced the batteries but, again, I had to try more than once to switch it on, and when I did it, once more it did not last more than a few pictures.
I have read the instructions twice and I did not find anything related to this problem, and so I assumed one thing only: it was FAULTY.
I contacted the BigPocket`s customer services, reporting the faulty camera and my wish to return it and be refunded.
According to the customer services, I would have to repack the camera, send it back by post (on my own expense) or, if I wanted them to collect it from me I would have to pay them £10!!
Worse than that, they would have to check if the camera was faulty but to do that, they would charge me a £25 fee, and in case they would not detect any fault, they would not refund me the amount I had paid for the camera, or the £25 fee.
I paid about £35 for the camera (including delivery), and now they want me to pay them £10 to collect a damaged item, plus £25 just to check if the camera is faulty!
I do not believe they would say the camera is indeed damaged and, not only they just want me to keep a faulty product, for which they were already paid but also getting more money from it!!
I am a regular online shopper and very often I buy electrical, computing and electronic products on the internet in very high quality web sites like, Tesco, Currys, Dixons and choiceful.com, who have high standards quality of customer services.
After all this, I decided to keep this camera to myself and show to everyone I know what NOT to buy and especially where NOT to buy from.
BigPocket is nothing than a company of unprofessional and purely amateur people!!!

over 8 years ago

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