Partner Article

Getting the balance right – technology Investment is crucial to online retail success

The constant evolution of online retail – from multi-channel to omni-channel and beyond – means retailers have business-critical decisions to make on a day-to-day basis. Certainly, the opportunity for success and growth can’t be denied. E-commerce sales in Europe were €166 billion in 2012 and this is expected to rise to €188 billion during 2013. This represents 15.2% annual growth in 2012 (Mintel, E-Commerce – Europe – July 2013).

Many companies are getting their online retail strategy right, and despite the impact of several years of economic uncertainty affecting consumer confidence across the Eurozone, many retail brands are thriving.

But so too the stakes are high and the market is unforgiving. The range of devices which consumers use to search and shop are also increasing, compounding the challenge at hand. Consumers spend more time on a wider range of devices and expect a seamless, consistent experience across all devices and for this experience to be consistent both online and offline.

For brands that fail to invest in the technology platforms and offer a poor or inconsistent online experience to their customers, there is no hiding place. Investing in the right technology is paramount.

Technology Drives Business Innovation and Success

Like so many business sectors, technology has become critical to business performance, driving innovation and delivery of services or products to customers across the organisation. As a consequence, the role of the CIO has been evolving for some years now. IT is no longer viewed as a cost centre, making commodity-based purchases. Instead, the CIO – in many companies – is a core member of the board advising on innovation and future strategy.

But there are clear pressure points within any retail organisation that the CIO must contend with.

Those concerned with online sales, e-marketing and online customer acquisition want to see development of websites and mobile applications that are intuitive and cutting edge. They are primarily concerned with delivering marketing and acquisition strategies which drive users to the website or applications, that in turn convert sales. Those individuals concerned with performance, reliability of services and customer retention know that sometimes there are compromises that need to be made.

For retail CIOs and IT decision makers, the challenge lies in understanding where to invest budget and being able to strike a balance between investing in customer facing applications and solutions and investing in back office technology that ensures a seamless customer experience.

E-retailers are in fact sitting on a potential shopping time bomb. If investment in sales and promotion technology outweighs back room IT, customer satisfaction will drop and with it revenues. For example, recent research conducted by Loudhouse on behalf of application performance company, Riverbed Technology, analysed the emotional and behavioural attitudes of consumers across Europe to online shopping. The research showed that if consumers find themselves waiting too long for a web page to load, nearly half (46%) will consequently not pursue the purchase from that retailer.

Furthermore, the research found that 61% of consumers agree that if a website crashed whilst they were trying to make a purchase, they would think twice about buying from that website again. Following a bad experience on a retailer’s website, 44% of online shoppers in Europe would doubt the quality of that retailer’s customer service.

Retailers need to commercially prioritise the management of their customer demand, particularly during times of peak traffic, where sales are driven by promotions and other incentives. Attempts to harness greater volume of sales are likely to back fire if websites are ill-equipped to handle the fluctuations in customer demand.

Understanding Multi-Device Behaviour – The ’Browse to Buy Gap’

Online retail innovation paves the way for a more seamless approach to the consumer experience across all available shopping channels, whether this is via mobile internet devices, computers, bricks-and-mortar, television, and catalogues for example. The opportunity for retailers to exploit these additional channels is only beginning to be explored. The recent Loudhouse research highlighted the variety and sophistication of devices that consumers use to shop and browse online. 82% own a laptop, 70% a desktop computer, 68% have access to a smartphone and one in three (36%) own a tablet.

The shopping behaviour of consumers is therefore changing as a result of the growth in connected device ownership. Rather than relying on one or even two devices, consumers in practice use an array of devices and channels to conduct their online shopping. Shoppers may, for example, browse particular goods on their tablet, make the purchase on their laptop, but choose to return the product in store.

However, whilst access to a broad range of devices allows customers to have greater freedom, not all shoppers wish to convert their interest into purchases on particular devices. This ‘browse-to-buy gap’ is greatest with tablets, with only one in three device owners (34%), making purchases on this device. Both laptops (77%) and desktop computers (70%) have a smaller gap between browse and purchase habits among owners of each device.

The result of this is that retailers need to implicitly understand how their customers engage with their brand across multiple devices so that they can manage their IT investment in the areas that have greatest impact on their revenues. Consumers expect a consistent experience across all online formats and devices. And as their expectations of how a brand should perform grow, their frustration is heightened when they fail to receive the level of customer experience they expect. Worryingly, 36% of shoppers admit that they sometimes find online shopping quite stressful, and a third (33%) agree that online shopping can be more stressful than shopping in store. Performance issues such as websites freezing, slow loading pages and website unavailability rank amongst the biggest complaints consumers have when shopping online. These are all avoidable if the appropriate procedures, processes and technology procurement are in place.

No Time for Complacency

Brands cannot afford to be complacent about slow or poor website performance when consumers have high expectations of an online shopping experience and are empowered to take their valuable shopping money elsewhere.

Regardless of whether a customer is communicating with a brand through their mobile, desktop or face-to-face, there is an expectation for a consistent and seamless experience. While omni-channel provides a greater opportunity to increase sales, it also creates many challenges for retailers.

Building confidence in an online brand is vital and by removing the uncertainties that come with online shopping, retailers are taking the first step to building a successful long-term relationship with shoppers.

Online Retail Rage Report - 3,026 interviews were conducted online among online shoppers in the UK, France and Germany. All respondents had made an online purchase in the past three months. Read the full report here [insert link to report]. Research was conducted by Loudhouse, an independent research agency based in London.

This was posted in Bdaily's Members' News section by Riverbed .