Online purchases are set to top £1bn in the UK this Christmas, but
many firms could fail to make the most of it. Daniel Thomas
reports
This year is expected to be the biggest online Christmas to date by
some margin, with UK consumers set to spend more than £1bn on Web
purchases during December, according to estimates from Royal Mail
and trade body the Interactive Media in Retail Group.
There is no doubt that the demand is there from UK consumers, but
online retailers could achieve even higher revenues by ensuring
they provide a good user experience, new research has suggested.
A survey by technology consultancy Hewson Group, released last
week, estimated that a typical business can increase online sales
by as much as 64% by improving the user experience offered to its
Web customers.
The survey is based on a range of sources, including comments
received from 500,000 consumer opinion surveys completed on UK
retail and travel sites over the past two years; results from the
eDigital Research panel, which analysed responses from 10,000
mystery shoppers using UK Web sites during the same period; and
findings from the global eDigital panel of Internet users, surveyed
during July 2002.
By improving the online experience to match the best competitor,
the average online grocer, for example, could increase sales by a
minimum of 54% and increase online sales over its worst competitor
by 480%, the research said.
Online travel firms, meanwhile, could boost sales by 33% on average
and by 100% for those currently providing the worst online user
experience, it said.
Even in the highly competitive sector of books and CDs, the
businesses currently providing the worst online experience for
customers could improve sales by 19%, Hewson Group said.
As well as adversely affecting sales, a poor online service can
damage the overall brand, the research warned. Some 44% of UK
online shoppers said a bad online experience would discourage them
from buying from that company's high street store or catalogue.
There was some good news for online retailers in the Hewson
research, however. It revealed that online customers are more loyal
than their offline equivalents. The top 75% of UK online shoppers
are worth an average of £936 each in annual sales to their
favourite site, the research found.
Meanwhile, a separate survey, exclusive to Computer Weekly, has
revealed that UK online retailers need to improve the availability
and download times on their Web sites.
Network management firm Parallel monitored the Web site performance
of 51 UK-based online retailers for the three months to 1 November.
It found that the average amount of time a site was unavailable was
11 hours and 58 minutes. This equates to nearly 48 hours per year.
Tim Moore, director at Parallel, said online retailers need to
address the problem because consumers are becoming more demanding.
"As more people get broadband connections the expectations will
rise," he said. "It will not be a case of how well the [consumer's]
ISP is performing but a case of how the Web site itself is
performing. In a highly competitive sector this is very important."
The research also found that 72% of the sites had a page size over
the generally recommended 40Kbytes, meaning that only 16%
downloaded in less than eight seconds for home users connecting
with a modem - the maximum time most users will tolerate.
Keeping your site down to a manageable size so that downloading
time is kept to a minimum is perhaps more important than achieving
high levels of availability, according to Moore.
"There is no point having high availability if your have poor
performance," he said. "Zoom [clothing retailer Arcadia's online
store] is a case in point here - it has 99.97% availability but one
of the slowest download times overall."
Encouragingly, however, online retailers are beginning to take
steps to make their Web sites more manageable, Moore said.
"Retailers are beginning to learn the lesson that reducing file
size is important," he said. "Companies have started to address the
issue by, for example, compressing Web pages - they only become
decompressed in the browser."
Whatever technologies are used, it is clear that demands on IT
managers in this sector will grow with sales.
The UK's expanding online market
UK consumers will spend
more than £1bn online this Christmas, according to the Royal Mail
and trade body the Interactive Media in Retail Group (IMRG).
Internet spend in the four weeks up to Christmas will be double
that of the same period last year, their research predicted.
Royal Mail and IMRG also expect a 40% increase in the number of
online shoppers this festive period, from seven million to ten
million.
The research, based on a Royal Mail survey of more than 25,000
consumers and research from IMRG, revealed that home shoppers are
expected to increase the frequency of online purchases from an
average of 3.7 times per month in December 2001 to 4.2 times a
month in December 2002.
Rising consumer confidence is also reflected in the range of
products purchased by home shoppers, with bigger items, such as
electrical goods and clothes, showing significant growth.
Clothes are now the third most popular home shopping purchase
(behind books and CDs) with 20% of online shoppers spending more
than £100 a month on clothing. Expenditure on electrical goods,
such as hi-fis and DVD players, rose by 2% to 9%, taking the total
value of purchases to £150m a month.
The UK's Web-based retailers look forward to a bumper
Christmas
David McQueen Johnston, head of e-commerce, confectionery retailer
Thorntons
"The seasonal approach is always a taxing time for online
retailers, although Christmas orders are in line with our
expectations and our customers are demonstrating more confidence in
the direct delivery channels. This is manifesting itself in a trend
of early orders for delivery close to Christmas, leaving us with a
strong conviction that our early start indicates that we will
deliver a record Christmas."
Tim Lodge, managing director, online footwear retailer
Shoesdirect.co.uk
"I can confidently say that we are witnessing a huge upsurge in
consumers' confidence to shop online. Whereas our high street shops
are showing a modest 5% annual increase on like-for-like sales, our
online sales are showing an increase of 60% over the same period."
Rowan Gormley, chief executive, online drinks retailer Virgin
Wines
"Virgin Wines has experienced a huge surge in sales in the past few
months, driven largely by a sustained increase in repeat purchases
from existing customers, which bodes well for our key Christmas
trading period."
Jeremy Palmer, e-commerce director, online drinks retailer Majestic
Online
"For the second year running Majestic Online is seeing a marked
increase in its share of total company business in the run up to
Christmas. This ability to soak up extra demand without putting
extra pressure on our retail operation is a real benefit to the
company as a whole."
Howard Bryant, finance director, online lingerie retailer
figleaves
"Figleaves again achieved a fantastic 100% year-on-year growth [for
October], and increased margins on like-for-like sales. We are
confident that this performance will continue well into the
pre-Xmas period."
Julian Granville managing director, online fashion retailer
BODEN
"Boden customers are increasingly inclined to order over the
Internet. More than 25% of all our business is now taken on the
Internet."