A recent report published by the IMRG predicts that the UK’s online retail industry will double in size over the next ten years, but this could still be falling short of the actual growth figures. Current forecasts are based on the perception of the take-up of online retailing in respect to the existing technology we use, however the reality is that new technologies will be coming to market that will make shopping online even easier, particularly within the FMCG sector.
The UK currently boasts the strongest and best-developed FMCG online retail market in Europe, driven by the likes of Tesco, Sainsbury and Waitrose offering regular timed home deliveries. In other markets such as Germany, France and Italy this area is not so well developed. However, even in the UK, the percentage of online grocery shopping is still small in comparison to its physical store counterpart. We believe that this is because, ultimately, grocery shopping online is still a time-consuming process.
But this will change. And so will the market.
For one thing, there is tablet technology, such as the iPad. This will affect the market in two ways: firstly, as they can be switched on in a second, when a purchase impulse comes to mind it is easier to just order than to write a note on the fridge. Secondly, tablets will open new customer groups for online purchase – people who today are not even online. This will increase as tablets get cheaper, and industry analysts say they could be below £200 soon. We believe that eCommerce sales via tablets might be larger than those via PCs as early as 2013/2014, thus it is important to keep investing in research for search/navigation usability on these platforms.
While this technology is already making the online retail environment more accessible and easy to use, there are other technologies coming that may have an even greater impact on online retail. For example, we have just recently bought shares in a German start-up that has designed a handheld barcode scanner for the kitchen.
It needs no computer, and is even easier to use than the iPad. When you empty a bottle of orange juice, just scan it, and the replacement will be delivered by your local grocery store. If required, the handset allows you to easily edit your item list, and is also able to display alternatives for non-deliverable items. We believe it is technologies such as this that will fuel a far faster take up in internet shopping than the IMRG is predicting.
However, one area we certainly agree with the IMRG study is in its predicted growth of cross-border trading. Of course, taking an eCommerce offering to an international audience won’t be right for everyone, but it’s not just something for the big guys, either. If you are the number five bookstore in the UK, and you are doing everything like Amazon, just on a smaller scale, try to find a niche first, don’t waste your money and time on internationalising. You should only go international when you have a unique position in your target country.
When you do go international, trust and usability will become major issues. People in the new country will have heard little about you, and if anything on your website appears dubious, people might be put off purchasing from you. Most large retailers have made considerable investment in usability, experience and processes, as well as search and navigation. This will drive shoppers’ perception of reliability and set the benchmark for their expectations, even with smaller online stores.
On top of this, retailers will need to have a greater understanding of international data management, this has particular relevance to how easy it is for customers to find products. If people are shopping in a language they are not familiar with, then they are likely to make errors when searching for products, either in terms of spelling or construction – certain languages such as German, Dutch and the Scandinavian languages allow concatenation (linking words together), so a product like “short leather jacket” might be “Lederjacke, kurz” or “Lederkurzjacke”, both of which are equally correct translations. Your search function needs to be able to handle all these issues.
Another point is that customers might switch to navigation at this point. Most shops do still stick to hierarchical navigation, but not so the bigger ones. You should offer a dynamic, attribute driven navigation, which allows filtering on multiple attributes rather than going just top-down.
It should generate results ranked in the same way as a search, taking into account stock, margin, revenue and, most importantly, which items customers do buy and which they don’t. And this learning should be applied individually by country.
An unforgiving internal search engine and unsympathetic navigation will mean that products may become difficult to find, which will result in lost sales. And lost customers. Fortunately, there are systems on the market that take these requirements into account producing more reliable product location.
As the online retail market opens up we predict that more brands and shops will explore niche propositions in order to compete with the leading online retailers. However, the reality is that whatever your niche offering is, if you don’t handle the issues above then your e-commerce shop will not work. And when it could be simply a case of people not being able to find products on your site, it is something that could easily be remedied.