Holiday sales in 2014 look set to bring a bumper harvest for online vendors.
Channel Advisor, a cloud company, surveyed over 200 online shops in the UK and US with each averaging out $3 million to $5 million in 2013.
Redshift Research, which conducted the survey, said 86 percent of those surveyed expected to increase those sales this year.
Over a quarter of those surveyed expect an 11 to 15 percent while half expect an increase between one and 10 percent. Not one forecast a decline in their online sales.
And Christmas gets earlier by the year. Many plan to push sales in September but 20 percent already started their holiday season promotions in August.
The online shops claim customer services are important to drive sales. 41 percent will offer free shipping and returns. Most – 67 percent – said offering free shipping increases sales.
And there’s a push towards the companies increasing their digital marketing and advertising budgets this year.
Megagrocer Tesco said it saw a 23.5 percent slump in its profits for the first half of its financial year to the end of August.
Its non-UK businesses saw bigger profit drops – European profits fell by over two thirds it said.
Profit margins fell from 5.4 percent to 4.9 percent but the sheer size of Tesco saw a £1.6 billion profit.
Philip Clarke, Tesco’s CEO, claimed that performance in the UK was stronger in the half, especially in its online food sales business.
He said: “The challenging retail environment in Europe has continued to affect the performance and profitability of our business there.”
Tesco recently released its low price Hudl tablet (pictured).
Online retail sales in Europe are expected to double by 2018, reaching €323 billion. This year online retail should hit €188 billion and some companies like Amazon are expected to see even faster growth, according to market research firm Mintel.
Mintel’s survey covered 19 markets in Europe and it was made exclusively available to Reuters. The survey found that Germany, Britain and France would remain by far the largest markets for online retail. However, the Netherlands, Spain and Poland should see fast growth, while Norway and Sweden already have the highest online per-capita spend.
Mintel analyst John Mercer said there is a big North-South divide in e-commerce in Europe. French participation levels lag Britain and Germany, but Portugal, Italy, Greece and Spain are even further behind, which is hardly surprising since they can barely afford Molotov cocktails now.
Amazon is expected to maintain its lead and double its market share in the next three to four years. Amazon currently has just five dedicated websites in Europe, in Britain, Germany, France, Spain and Italy. Mercer reckons Amazon would be better off with localised sites for the Nordics than Italy.
British grocers are doing surprisingly well. Tesco’s market share is 2.3 percent, Asda and Sainsbury’s have 1.1 percent and 0.9 percent respectively. However, online grocery shopping is not popular in the rest of the continent.
Morrisons chief executive Dalton Philips believes the Government should impose a new online sales tax to level the playing field with its rivals and e-commerce outfits. Philips told The Daily Telegraph that the tax imbalance between internet and high street retailers is illogical and it is taking its toll on Britain’s town centres.
Interestingly, Morrisons is moving into the online space right now, but it still feels it should pay its fair share. Last week Philips said Morrisons lost £700 million of sales last year because it lacked an e-commerce platform. Shoppers simply chose the convenience offered by online groceries instead. In response, Morrisons is entering the e-commerce space with Ocado and it believes the new platform should be able to break even in just four years.
But Morrisons’ online push isn’t about to change Philips’ mind.
“As a country, we need to look at how we’re going to tax retailers in general wherever they operate, because we’ve all got to contribute to society, but one can’t be disadvantaged over the other,” he said. “I’m not into intervention for intervention’s sake but you’ve got to have a level playing field. As more and more sales migrate online, it seems to me intuitive that you would tax the online channels as well.”
Philips added that there was simply no logic to the tax system anymore, as the rates keep going up, while at the same time town centres become ghost towns, as brick and mortar outfits find themselves fighting against the odds to stay competitive.
More often than not, they fail.
The British Retail Consortium’s data is out for June and online sales were up again, 14.1 percent compared to the same time last year.
With the weather taking a turn for the better at last, clothing and footwear were both up as well as increased footfall on the highstreet. Retail sales overall were up 1.4 percent on a like for like basis from June 2012, and on a total basis sales were up 2.9 percent, compared to a 3.5 percent increase in June last year.
Online sales did their best since July 2012, not including Christmas.
The BRC’s director general, Helen Dickinson, said that the weather helped retail sales along in spite of a generally bleak economic climate. There was a positive reaction to retail promotions as well as continued demand for essential items.
The weather helped along DIY and gardening products, Dickinson said, and there were other purchases that may have been postponed when the weather was more typically British.
TV sales are weak compared to last year – where they boomed thanks to the London Olympics. Electronics promotions did help the segment. Food growth grew in line with inflation.
“June saw another strong performance from UK retailers, with very respectable overall growth across the categories,” Dickinson said. “At this halfway point in the year we are able to see that sales are well ahead of the previous six month period, confirming that the retail recovery is continuing”.
Retail head for KPMG, David McCorquodale, said the statistics mark “another respectable performance”.
“Sales are moving in the right direction, albeit hard-earned and promotion driven,” McCorquodale said. “The statistics are all the more creditable as last year’s sales included a Jubilee boost.”