Onlineretailers are on a roll, but many of their sites aren’t performing well due to some rather basic technical limitations.
According to a recent report from NCC Group, the top 50 online retail sites in Britain exhibited poor website performance last quarter and much of the problems were caused by ancient internet connections.
The end result was that fancy sites with plenty of flash content offered a less than stellar shopping experience, as they were simply too slow. NCC Group tested the sites and found that the average download speed was 6.7 seconds on a 2Mbps connection. The average speed in Q1 was 6.27 seconds, but research has shown that load times over 3 seconds tend to drive customers away.
It seems that online retailers are sparing no expense when they develop their sites, so they end up with elaborate and relatively “heavy” websites that take too long to load. Average internet connection speeds aren’t keeping up with the trend.
Worse, the top 50 retail sites averaged a downtime of 4 hours and 17 minutes, which is also up from last quarter’s 3 hours and 23 minutes. It seems that feature packed sites are not only slow, they tend to be less reliable as well.
“It’s a worrying trajectory and one that retailers need to address quickly. If a website is slow to load, consumers will simply go elsewhere, while any downtime will lead to a direct loss of sales,” Bob Dowson, director of NCC Group’s website performance division said. “The potential within the online retail space is massive. In 2012 the value of online retail to the UK was ￡78bn*, and that’s only going to grow. Retailers that prioritise their website performance will put themselves in a great position to fulfil their potential in the market.”
The financial performance of the UK e-tail market has been largely positive in Q2 2013, with shoppers spending 18.3 percent more in June compared to 2012. However, this report indicates that it could have been a more successful quarter if retailers had prioritised consumer experience through web performance.
The EU is looking for ways to help the retail sector and one of its tools could be a new cap on credit card fees. Although the European Commission has a chequered record in such matters, the new plan appears to resemble the EC’s roaming caps, which were a success.
Calls for the introduction of a new online sales tax have been growing louder and unsurprisingly online retailers are having none of it. They believe any additional tax burden imposed on their businesses would be detrimental for people, for jobs and investment.
In an open letter, signed by the CEOs of Ocado, Shop Direct, N Brown, Boden, Appliances Online and notonthehighstreet.com, the plans for the introduction of a new tax were branded as “nonsense”, as online retailers are overburdened as it is.
“Online retailers already pay tax on many fronts. Customers pay VAT while other taxes include fuel duties, employment taxes, corporation tax, as well as business rates on their warehouses and offices. Just because the online business model does not require as much property does not mean that other areas should be taxed more heavily,” the execs said. “A popular view has been that bricks and mortar retailers have a high tax burden whilst a few very large international online businesses pay a small amount of tax here, therefore the tax system for all online players – big and small, UK and international – should change. But this is a red herring, an issue of domicile not online retail.”
The retailers believe that a new online sales tax would kill entrepreneurial spirit, making it harder for small retailers to get started. It would also have a detrimental effect on supporting industries and exports abroad. They noted that SMEs would be hit by the unintended consequences of the law, along with people that buy stuff.
“The idea is vague and ill thought-out. Does it include just those retailers which operate online-only, or those with stores too? Should online travel agents be wary? Could it also capture online financial services providers? There is no logic to penalising companies that provide consumers the convenience, efficiency and value online shopping offers,” say the e-tail execs. “Online is a rare and precious success story for the UK and one that we should take pride in. We support our high street counterparts in their call for lower business rates, but hitting online businesses by replacing lost revenue with this type of tax will hamper growth, slow the economy, impact jobs and reduce investment whilst not achieving a significant uplift for the Treasury.”
Ye ancient Tablet has already taken a toll on PC sales and now they appear to be changing the online retail landscape as well.
According to the British Retail Consortium and Google, retail search volumes grew by 15 percent in the second quarter, but tablet search volumes were up a staggering 132 percent. Smartphone growth was 66 percent.
So what are mobile users searching for? It appears many of them enjoy DIY and gardening, as mobile searches for the two categories were up 170 percent and 81 percent year-on-year. Obviously, much of the growth is seasonal. Clothing is also popular and unsurprisingly it appears that most mobile searches are coming from consumers making their purchases while soaking in the sun, or tinkering around the shed.
Helen Dickinson, Director General, British Retail Consortium, said the results also show the changes the internet is bringing to the international retail market.
“The considerable increase this month in the number of UK consumers searching overseas retailers show that barriers are increasingly being broken down. UK retailers are already responding well to these changes and will be keen to continue seeing equivalent increases in overseas customers searching them out,” she said.
Peter Fitzgerald, Retail Director, Google, said the new data merely backs up seasonal trends seen in previous editions of BRC’s Retail Sales Monitor.
“Pureplay retailers in particular regained their growth, responding to the pressure of multichannel retailers in the online space. International interest remains a strong lever for our homegrown retailers,” he said. “UK interest in overseas brands however, has really peaked this quarter driven in particular by interest in US brands.”
Total search volumes from UK consumers searching overseas retailers increased by 51 percent in Q2 compared with the previous year.
A research report released by TransFirst and ControlScan has found that small merchants need to step up their game in m-commerce and optimise their websites for mobile. Otherwise they might be missing out on some serious dosh.
The survey, called Small Merchants and Mobile Payments: 2013 Survey on Technology Awareness and Adoption, found that a staggering 82 percent of e-commerce merchants don’t even know whether a purchase on their website came from a mobile device or a PC.
This is a rather alarming figure, since data from those that do distinguish between PC and mobile shoppers indicates that mobile visitors account for a significant portion of online sales, and mobile is growing fast. A survey conducted last year found that 10 percent of respondents used tablets and smartphones to accept credit card payments, but the figure has shot up to 17 percent in less than a year’s time.
Another key finding of the survey shows 49 percent of e-commerce merchants know their websites are not currently optimised for mobile devices and an additional 17 percent say they don’t know or are unsure about their site’s current status. This indicates that as many as two thirds of these merchants may be putting up roadblocks to the growing number of mobile consumers.
“The mobile consumer is knocking at the small merchant’s door,” said Craig Tieken, Director of Product at TransFirst. “Business owners who aren’t already up to speed with mobile payment acceptance need to have a viable plan of action to get there.”
Dave Abouchar, Senior Director of Product Management for ControlScan, said the survey shows that small merchants have a real business need to adopt mobile trends. He stressed that now is the time to embrace the new trends if they don’t want to miss out.
It sounds counter intuitive, but according to a survey commissioned by UPS, retail apps might actually cause consumers to do less price comparisons and more shopping. The vast majority of shopping apps do the exact opposite, they are designed to find the best deals and pinch pennies.
However, the survey revealed that 46 percent of US online consumers are less likely to “comparison shop” once they are immersed in well designed apps peddled by the retailers, reports Business Insider. It sounds like good news for everyone who ever tried to justify the expense of developing a proper app for their business.
Interestingly, the survey also found that shopping satisfaction was better on a tablet than a proper PC. The experience on smartphones lags behind both tablets and regular PCs, which probably has something to do with screen size.
Of course, this doesn’t mean that retailers with good mobile apps should try to gouge consumers. Most people still like to browse and compare prices. There is no substitute for good deals and good service.
According to research from OC&C Strategy Consultants and Google, British retailers could see their overseas online sales soar to £28 billion by the end of the decade.
Researchers concluded that growth in online sales will outpace domestic growth and eventually account for 40 percent of total online sales by 2020.
British retailers are already doing quite well abroad. In fact, international consumers spent £7.4 billion on British online retail sites last year, making up about 14 percent of total online sales. This year British retailers are expected to net £10 billion from cross-border sales.
OC&C Strategy Consultants and Google found that growth will come from multiple regions, with western Europea leading the way. Sales in western Europe are expected to hit £9.8 billion by 2020, up from £1.5 billion last year. Central and Eastern Europe will see plenty of growth as well, with sales reaching £6.9 billion by the end of the decade, up from £400 million last year.
Sales in Asia are expected to hit £4.5 billion by 2020, while North America will lose its position as the top market for British online retailers. The North American market is currently estimated at £800 million and it is set to expand to £2.7 billion in 2020. The American market is simply more mature than the rest of the world, which translates into slower growth.
“We have seen a significant increase in the volume of searches for British retailers and brands coming from overseas,” Peter Fitzgerald, director at Google, said. “The majority of non-UK searches are currently coming from Europe, followed by North America and Asia, driven by the increased popularity of British brands abroad. Retailers can use search data to identify pockets of demand and move quickly to meet the needs of customers.”
Anita Balchandani, partner at OC&C, said e-commerce has already transformed the retail game, which was once anchored in local markets.
“There are a number of reasons why growth in e-commerce is changing the rules of internationalisation. Firstly, geographical proximity no longer determines which market is best suited for expansion – the internet allows customers seek out the best offers from around the world,” she said. “Secondly, the nature of risk has changed. International expansion is much less capital intensive and this is creating growth opportunities which have a more controlled exposure to risk. Thirdly, the speed with which companies expand has also accelerated – over 40 of Britain’s top-100 etailers serve customers in more than 40 countries.”
Best Buy has decided to unload its 50 percent share in Best Buy Europe to its joint venture partner Carphone Warehouse in a deal valued at £500 million.
Under the terms of the agreement, Best Buy will receive £420 million in cash and £80 million in Carphone Warehouse stock, subject to a 12-month lock-up restriction. Best Buy also agreed to pay Carphone Warehouse £29 million to settle obligations stemming from existing agreements, some of which will be terminated when the outfits close the deal.
The transaction has already been approved by the boards of both companies and it should be finalized by June 2013.
“After reviewing the business and spending time with our partners, we concluded that the timing and economics were right to enter into this agreement with CPW,” said Hubert Joly, president and chief executive officer of Best Buy.
Joly went on to say that the transaction will allow Best Buy to simplify its business, improve its return on invested capital and strengthen its balance sheet.
“Each international market is different and the sale of our European operations should not suggest any similar action in our other international businesses,” said Joly.
The joint venture was launched in 2008, with Best Buy paying $2.15 billion for its share of Best Buy Europe.
Mobile shopping is the new black and a recent survey carried out by Conlumino indicates that it will continue to grow at an impressive rate for the foreseeable future. M-commerce has already risen 55 percent compared to a year ago and it is now estimated that it will grow another 115 percent over the next 12 months.
Online sales are booming and taking their toll on brick and mortar shops, but another interesting trend is starting to emerge. Cross-border sales in Europe are expected to hit £36 billion this year. As much as 10.6 per cent of all online purchases will be cross-border affairs.
It might be a worrying trend for some, but not for British retailers, as they are the most successful in doing business across borders.
According to IMRG data, international consumers dropped as much as £7.4 billion on British online retail sites and the figure is expected to hit £10 billion in 2013. The UK online retail market is second only to the US in terms of overall value. IMRG concluded that cross-border markets are becoming increasingly attractive for UK retailers, as they offer multiple opportunities for sustained growth.
Andrew McClelland, Chief Operations & Policy Officer at IMRG, commented: “Cross-border is the future of e-commerce, and the opportunity is particularly strong for UK retailers due to the advanced state and sophistication of the market here.”
However McClelland warns that expanding internationally is a complex business and retailers need to carefully identify markets that are appropriate to them rather than just attractive in terms of value and growth. Basically, they have to do their homework.
“Research is everything when it comes to cross-border; there have been several instances of retail brands finding success by selling product ranges that they are not well-known for by consumers in the UK,” he said.
In order to facilitate cross-border growth across Europe, Trusted Shops and IMRG came up with ‘Internet Shopping is Safe (ISIS)’ schemes in 2012. Their goal is to create a standard European trustmark that supports UK retailers in their international expansion strategies.
M-commerce has come of age and according to fresh IMRG Capgemini Quarterly Benchmarking figures, it has already gone mainstream. Last year, mobile sales accounted for 12 percent of overall e-tail revenue compared to just 4 percent in 2011.
M-commerce sales in 2012 reached £7.5 billion, tripling in a single year.