In the midst of the U.S. economic crisis, cautious spending and downsizing have left the retail industry in dire straits. The Commerce department recently reported that retail sales continued to fall in March — down 1.1 percent from February’s sales figures. March 2009 saw a 9 percent decline compared with March 2008.
Even as retail numbers drop, however, online shopping and total online sales continue to show steady growth in the face of adverse economic conditions.
Forty-six percent of the 117 online retailers that participated in a recent Forrester survey claimed they intended to spend as planned on their Web businesses. A quarter of respondents expected to spend more than they had originally planned. In January, Forrester forecast online sales would grow 11 percent to US$156.1 billion in 2009, following a 13 percent increase in 2008.
Given cautious consumer spending and tight credit, why is online retail continuing to surge while overall retail numbers drop? Retailers need look no further than the tremendous benefits and savings of selling via a multichannel e-commerce platform. As in-store retailers that haven’t embraced online shopping go out of business, orphaned shoppers are turning to the retailers that have.
Cross-Channel Strategies Increase Sales Conversion
The Internet has a distinct advantage over in-store retail: the presence of countless on-demand sales channels. Still, an e-commerce platform doesn’t simply offer a new sales channel; retailers are actually increasing in-store purchases using online platforms.
Very few in-store retailers with e-commerce platforms already utilize multiple channels and consolidate them through cross-channel retailing. Cross-channel retailing presents customers with the ultimate convenience in shopping, facilitating uniform and consistent purchasing options across all sales channels.
A cross-channel strategy might be giving customers the ability to order online and pick up in-store, or it could be as simple as honoring gift cards through all sales channels. By implementing a cross-channel strategy, retailers benefit in several ways: recapturing lost sales opportunities; improving customer satisfaction through convenient services and fulfillment of customer requests; taking advantage of cross-sell and up-sell opportunities when customers are visit stores to pick up orders placed online.
On-Demand, Self-Servicing Storefront
Naturally, when consumers cut back on their spending, they make fewer in-store purchases. Online retailers are able to leverage on-demand purchasing capabilities to increase sales conversion. You can’t always keep your physical retail locations open 24/7, but an automated online platform allows retailers to receive orders at any time.
Self-service doesn’t stop there; customers can check the status of their order at their convenience. By providing such an easily accessible option for consumers, online retailers are catering to all of their customers, no matter what their shopping habits might reflect.
Better Efficiency and Immediate Cost Savings
Increasing attention is being placed on green business practices these days, and an e-commerce platform helps retailers promote ecologically friendly business practices. From a business perspective, retailers can save significant costs by eliminating traditional paper marketing and distribution methods.
Retailers used to spend hundreds of thousands of dollars on printing and materials for paper catalogs; an e-commerce platform allows retailers to cut catalog expenses through email marketing, easily updatable online catalogs, and catalogs offered through multiple distribution channels.
Data Capture and Analysis
With the evolution of business intelligence, more and more companies — regardless of size — are recognizing that an efficient system for data capture and analysis is necessary to grow their businesses. An e-commerce platform simplifies raw sales data capture, as well as data for customer profiling and order-processing information — any data that is necessary to provide a greater understanding of the retailer’s business.
Cross-channel systems can also capture data on lost sales due to inventory shortages. This valuable information enables merchandisers to sharpen their merchandise plans, assuring that the proper merchandise and quantities are available for sale at the right time and place.
Advancements in Web analytics technology have made it simpler for online retailers to improve marketing efforts and conversion rates while bolstering customer retention. In fact, an April 2007 Aberdeen Group report found that 89 percent of best-in-class companies used or planned to use Web analytics solutions to evaluate their success in customer experience and other areas. The data collection capabilities of the Internet give e-commerce platforms a strategic advantage over in-store retail, where data is much more difficult to capture in a systematic, organized way.
Testing Products Before Stocking Them
As any retailer knows, launching a new product can return extremely unpredictable results. By testing product acceptance before booking large orders, some online retailers are able to gauge product order quantities much more precisely.
Especially in such a fragile economic environment, understanding your audience — getting a handle on what will sell and what won’t sell before you order inventory — can help immeasurably. E-commerce platforms can facilitate that process; gaining a little insight to make an informed decision can cut costs that amass from product surpluses.
Ultimately, the strength of online and cross-channel retailing in the midst of the recession comes down to effective use of the Internet and e-commerce platforms. As e-commerce and reporting technology continue to improve, more and more businesses are relying on e-commerce platforms to gain a greater understanding of their customers, cut costs, and run operations more efficiently.
Especially during a recession, these are key strategies to help retailers not only stay afloat, but also stay profitable.
Irwin Kramer is CEO of iCongo, a developer of cross-channel e-business systems and software.
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People are turning to online shopping in order to save. Promotion codes, discount coupons etc are made available in order to attract customers. As mentioned orders can be placed online 24/7 unlike the brick & mortar counterparts. Feasibility, convenience etc contribute to the fact that online shopping is burgeoning in times like these.
It could also be the fact that numerous apps/tools/software available today assist people in shopping online. These tools have been around for quite sometime now. I, for instance, have been using a toolbar called Billeo http://www.billeo.com/page/homepage.jsp?sitename=Billeo as it scores high on security. It is VeriSign secured and TRUSTe certified.
Retailers who are losing out on sales need to create a presence online and use an e-commerce platform.