Thursday, February 22, 2007

Dixons' boss: ecommerce heading for 20% of UK retail sales

Hot on the heels of the Toys 'R' Us CEO's prediction that ecommerce growth will level off when it represents 10% of total retail is much more bullish statement from John Clare, the CEO of DSGi (a group which includes Dixons and Currys). They already get 12% of turnover online and expect this to rise to at least 20%.

The percentage of goods sold online varies by product category; both electrical goods and electronics are categories with fierce price competition and strong manufacturer brands so in some ways it is not surprising that DSGi is getting far more online sales than Toys 'R' Us.

Toys 'R' Us boss: ecommerce to rise to 10% of retail

At the recent ETails 2007 conference and exhibition, Jerry Storch (the CEO of Toys 'R' Us) predicted that ecommerce would top out at 10% of retail spend. His argument seems to be based on the idea that the cost of driving to a store is much less than the cost of shipping items to homes.

But this is only true if customers place a minimal value on their own time. It is hard to spend less than 15 minutes in a shop and if the trip entails driving, parking and then searching within the store it can easily stretch to 45 minutes. Even at the minimum wage of £5.35 per hour, 45 minutes is 'worth' £4 - a figure that is close to a typical P&P charge. Add in more time, petrol and parking (not to mention other car costs) and costs can easily exceed P&P.

If the item you want is out of stock then you either have to come back or find it somewhere else, adding even more time to the transaction. Buying online can also remove risks from the process - research is easier and you are much more likely to find your item in stock.

So perhaps ecommerce will go well beyond 10%.

Wednesday, February 07, 2007

US survey: bad websites drag down high street stores

A recent email survey of 638 US online shoppers found that 41% said yes to the question "When you have a frustrating shopping experience online, does it make you less likely to shop at that retailer's physical store (if they have one)?"

This is markedly up from the 29% with the same answer last year. The increase in respondents saying that a bad site negatively affects their opinion of the brand was up from 55% to 59% and the number claiming that a bad site means they're less likley to return to the site stayed level at 82%.

So it seems that - as one would expect - bad sites don't just waste money and leave money on the table. A "frustrating shopping experience" also makes it less likely that a shopper will visit a brand's high street stores. Given that online shoppers are getting more demanding and expecting ever more complex functions on ecommerce websites, it is clear that high street retailers need to work hard just to stand still.