Can eCommerce Help Beat The Economic Meltdown?
We have been seeing some interesting trends over the last few months and they seem to indicate that online shopping and eCommerce offers some great opportunities in the global economic crisis for small to medium enterprises; but also for consumers looking for a bargain. The key indicators for us are the volume of traffic to our stores, the monthly revenue in online sales and new businesses going online.
In the USA since 2005 the Monday following Thanksgiving has been termed Cyber Monday. comScore (www.comscore.com) reported that e-commerce spending on Cyber Monday was up 15 percent to US$846 million year over year. You can read the full story at http://www.comscore.com/press/release.asp?press=2607. In general we are seeing that online sales are hold or growing marginally. But they are certainly not in free fall like many of the traditional off-line sales channels. At eCorner year over year from November 2007 to November 2008 we have seen an over 90% increase in traffic volume recorded by unique visitors, number of hits and number of pages viewed of our customers web shops. More importantly we have seen more than 70% increase in total online sales recorded by our customers.
eCorner runs multiple environments with different types and sizes of business in each. In our Australian SME cluster with over 170 online stores representing almost 80,000 products and 68,000 consumers, we saw a growth of unique visitors of over 25% in the last quarter and 17% in the month of November 2008. Visitors for December exceeded more than a 20% increase over December 2007 and a 25% increase over November 2008. The average order value has increased year over year by almost 30%. Conversion rate has increased by over 50% in the same period. Of course our customers sell a wide variety of products from home theatres to glass beads. But the general trend that we are hearing is all positive.
A further indicator is the total volume of monthly data traffic has doubled so far during 2008.
What this all adds up to is that more people are browsing and buying online from our customers online stores than ever before. We have seen this same trend carrying on onto 2009.
Why do we see this trend in difficult economic time?
We believe that as more consumers are challenged financially or even just fear what might happen they will look for alternatives to traditional shopping methods. Most of us know that there are bargains to be had but you have to look for them. So searching and buying online has become an attractive and a realistic alternative.
Online retailers in general have much lower overheads then their traditional “bricks and mortar” rivals and this can easily be passed on to consumers as cheaper prices or maybe a unique offer like free shipping.
The trend also is for all of us to be busier and our work consumes more of our time available. Family units very often see both partners in the work force so less time is available to browse the shopping mall. Shopping is often delegated to whatever time is available thus making online shopping the best alternative. Some large retailers, at least the smart ones, can also see this trend occurring and are establishing better online shopping capabilities. It is not unusual to find special offers that are only available online from the more traditional retail chains. Why? Because the total cost of sale is lower and the offer can get to a much larger consumer audience much faster.
Are more businesses going online?
The trend that we are seeing is that there are more traditional businesses moving to improve their online presence. We also see new businesses starting with online sales channels only and growing successfully.
Most of the large traditional bricks and mortar businesses have had some form of web presence for many years. However there was always a view that if you sold online you competed with your own stores. That view has begun to pass and retailers are seeing that online channels add new opportunity and don’t steal from the in-store sales.
New businesses that are starting online are different from what we were seeing just a few years ago. These businesses are starting with solid business plans, capital for growth and professional attitudes.
Success is based around the quality of our customers’ online stores and available products and services. To be successful online you need more than just a sexy website and a geeky programmer.
Success today online is a formula that can be replicated. It is all about a professional approach, safe and reliable technology and quality of goods and services. It required many channels to market and professional partners for technology, payments and marketing.
Many businesses have considered an online store or even a website as an afterthought and really not essential. In today’s economic climate and based on real data that we are receiving an online store or eCommerce website is essential to be a successful business. An online webstore is another channel to market and should be the face of your business on the World Wide Web.
The next 12 months will be turbulent for many families and businesses around Australia but at least we can see some small silver lining around an otherwise very worrying financial storm cloud.