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Wednesday, 31 August 2011

Online retail trends to watch

Australia and New Zealand trail the market trends in many areas. It is sometimes due to seasonality but can also just be a consequence of larger markets overseas being more advanced. The interesting thing to consider is that consumers have similar behaviour all over the world.

We can use that information both as a strength and a weakness. Many successful online retail start-ups here in Australia have followed the lead of an overseas business. Failures have also been emulated in a similar way. If you are looking to start a new online retail business then cast your eyes over the markets in the USA, UK and Europe to see how similar business models have been accepted.

Two interesting articles caught my eye recently and I decided to investigate further.

The first was by Chloe Rigby, August 30 2011, InternetRetailer.net;

'Hard-pressed shoppers use online to count high street pennies'

Hard-pressed shoppers are using online retail sites to keep tight control of their household spending in the high street, according to a recent survey. Supermarket Asda carried out a poll through its Facebook page and found that customers are visiting its online site, Asda.com, to put together a shopping list that fits their budget. They then take the list to the store to do their shopping. You can find more information on this article at Internet Retailer.

Australian families and consumers are also feeling the budget pinch. Although our economy is in better shape than most we still have the effects of the GFC to deal with and the threats of bigger taxes and higher costs. 

To quote from Chole Rigby's summary; "It’s been said for some time that spending habits have changed in the financial downturn, with people looking online rather than on the high street for bargains. It could be that habits will change is further where money is still tighter – something that online retailers will need to be aware of when planning their customer experience."

 The same advice should be considered by both online and offline retailers in Australia. It reinforces the opinion that to be successful in retailer and stand your ground you need to be online.

Is the Daily Deal dieing for consumers?

Over the last year or so we have see a plethora of new "daily deal" or "Group buys" sites spring up, following the trends in the USA and UK. There have been a number of articles written both positive and negative. But have we just about had enough of the "daily deal"? Well it seems like the answer might be yes. If we look at the trends in other markets we can see the consumers are starting to reject the daily deals and coupons buying sites.

According to Hitwise, by the end of August traffic to the UK Groupon site was down 50% compared to it's peak in June this year.

Lightspeed Research interviewed 1,000 people about their use of daily deal sites. It found that 54% had made a purchase while 59% of those registered on deals sites had not used any of them, 22% just didn't like the deal financially and 10% cited location or geographic constrains.

“U.S. Interactive Marketing Forecast, 2011 to 2016,” by Forrester analysts predict that the daily deal will be dead by 2016. ”Consumers will grow so conditioned to micro-impulse offers that they’ll lose practice at considered decisions – in all walks of life, not just when buying spa treatments,” wrote Shar VanBoskirk, a Forester analyst and the report’s author. “Facing a cultural descent into maladroit judgment, employers (and spouses) will blacklist impulse deals to keep people intentional.” You can find more information on the article here.

Do we follow overseas trends and experiences? In my experience and opinion the answer is generally yes and not always in a positive way.

The best advice that I can give any new online retail start-up is to keep a watch on what is happening around them and be responsive to change. Your business can surf along on the crest of a wave and be extremely successful. But the important experience to understand if when to get off the wave.

Success in online retail is not about gimmicks and tricks. The most important aspect to understand and to deliver is customer service and a good user experience. When it comes to being successful online thinking 'simple' is very often better.