Companies have been warned to be more realistic about e-commerce,
after two leading UK retailers scrapped or scaled down online
operations just a year after announcing ambitious plans to increase
online sales.
Health and beauty retailer Superdrug and high-street store
Woolworths said they were cutting back their e-commerce operations
this week, a year after former parent company Kingfisher said it
planned to boost online sales from £40m a year to £1.5bn a year by
2004.
Jacqueline Hendriks, research director at G2, an offshoot of
analyst firm Gartner, said plans were "far too over-ambitious". She
said companies would have to be more realistic in the future.
Superdrug announced it will no longer offer any transactional
facilities on its Web site, just days after Kingfisher announced it
had completed the sale of the company to Dutch pharmacy group
Kruidvat.
In a statement Superdrug said, "Having been operational on the Web
for a year, we are reassessing the online offering within our
portfolio and are currently undertaking a thorough review of how
the Internet can best meet the needs of our customers and our
business. All orders placed online until now are being fulfilled,
but no more online orders will be taken."
Superdrug.com will now act as a store finder, directing users to
their nearest outlet and indicating which stores have a
pharmacy.
Meanwhile, Woolworths announced it is scaling down its online
operations, after a reported £15m annual loss on e-commerce. The
retailer, which is also in the process of demerging from
Kingfisher, will offer only entertainment products, such as CDs and
videos, on its site after the end of this month.
"Running costs were unsupportable, particularly as Woolworths is
going independent," said a company spokesman, who added that all
ongoing customer orders will be honoured.
In July 2000, Kingfisher created a business unit aiming to expand
its online sales - through the Internet, interactive TV and Wap
devices- from £40m in 2000 to £1.5bn a year by 2004.
Hendriks said companies may need to reposition their online
business rather than just focus on e-commerce to best exploit the
Web. "Companies firstly need to concentrate on their core business
and then use Web sites as a way to enhance this," she said. "Web
sites are good for improving brand awareness, giving customers
information and offering samples."
The type of product a company sells should also influence
e-commerce strategy, according to Hendriks. "Woolworths and
Superdrug generally offer low-end products, of the type which
people do not generally buy online," she said.
Kingfisher said changes to these two Web sites would have "no
bearing whatsoever" on its other e-commerce operations, which
include Comet and B&Q.