Why a quarter of the UK's top retailers don't do e-business

Big name fashion brands such as H&M and Gap are only just going live with their transactional websites, and 35 out of the UK's top 142 retailers still do not have an e-commerce site…

Websites form a normal part of daily shopping for many consumers, but a quarter of the UK's top retailers have yet to embrace e-commerce.

Big name fashion brands such as H&M and Gap are only just going live with their sites, and 35 out of the UK's top 142 retailers still do not have a transactional website - a figure experts say is surprising.

Start-ups such as Asos and Net-a-Porter have demonstrated remarkable sales growth, but it has taken years for many retailers to become convinced of the internet's appeal. Of the 142 retailers quizzed in Martec International's recent report on the UK's top retailers, 88% agreed it will grow in the coming years. And on the sales front, the web accounted for 6.3% of total sales this year, compared to 4.8% last year - a growth rate of nearly 50%.

Barriers to entry

With evidence stacking up to suggest online retailing is a must, why has it taken some brands so long? What are the barriers to entering a market whose benefits seem obvious to many?

For a start, it is not realistic to expect everyone to immediately climb aboard the bandwagon, says Frances Riseley, practice manager at Martec International. "A lot of it is related to the sector a company operates in. For discount stores, for example, the cost of ownership of a website makes it difficult to get a good business model," she says.

Launching a website is no small task either. It requires a big investment and companies need to be at the right stage in their own evolution to make the jump.

John Bovill, director of IT at Aurora Fashions, says, "For us, our website had to be a profitable channel from day one. The question for other companies is whether they believe it will be profitable. Companies with lots of franchise agreements might find it difficult, because the internet gives great transparency on price. If there are different prices in different places, that makes a transaction website difficult."

David Smith, managing director at e-retail industry body IMDG, agrees, saying, "From Gap's point of view, from what I understand it was to do with the platform they had in the US, and franchises."

Brian Hume, managing director at Martec International, says companies cannot always make a big investment simply because everyone else is doing it. "You have to look at individual companies and where they are in terms of their evolution. Some people will be desperate to do it, but I would speculate that maybe they are looking at the supply chain and they have certain things they need to prioritise before they do it," he says.

Learn from others' mistakes

Setting up an effective e-commerce site is not easy, but it is an increasingly unavoidable step. One big benefit of waiting this long to design and build a site is the ability to learn from other people's mistakes - the advent and growth of the internet has not been a smooth process for many companies. Learning that long introductions using memory-hungry Flash software are not popular, for example, or which kind of design keeps customers browsing, will be helpful boosts to the confidence of retailers coming late to the game.

But whatever reasons retailers have, it still seems a surprising oversight to leave it so late - especially in the competitive fashion industry.

"You can understand there are corporate reasons for the delay, but it must have been damaging to a brand not to have had a site all this time," says Smith. "Maybe a couple of years ago it would not have been so bad, but now it must have put them at a bit of a disadvantage."

He adds that online sales do not constitute a major portion of all revenue yet, but, "It is more about the perception of the customer, and customer loyalty."

Hume says the recent interest in e-commerce is partly down to the impact of Asos, which has seen extraordinary levels of growth in the last couple of years. This is especially impressive considering it mainly operates in the already-saturated womenswear market.

"The impact of Asos has been significant. It caused quite a lot of people to sit down and rethink. In some places, no one thought online was going to go that far," he says.

So what should those new to online retail aim for with their sites? The past 10 years have given companies ample opportunity to experiment, and Smith says decent internal search is one of the crucial things to develop.


What to include on your e-commerce site

Brian Hume, managing director at Martec International, advises retailers to include on their site:

• An easy way to review information about the product so customers know that it is what they really want to buy. This is especially true of complex products such as flat-screen TVs where there is a lot to know. Most electrical retailer websites, for example, provide the screen size (diagonal screen measurement) but do not reveal height and width to allow customers to figure out whether the product will look too big or too small in a room.

• The ability to compare products side by side so that if a customer gets down to a shortlist of three, say, they can see a direct comparison without having to write information down.

• Photographs that customers can click on to expand and rotate to see alternative views of the product - for example, the back of a sweater.

• The ability to drill down on the product image, so with a sweater you can see how the seams are constructed, for example.

• The ability to drag items such as sweaters, slacks, blouses, etc onto a "mannequin" to see what the whole outfit looks like.

• Recommendations for other products that complement the things on a customer's list.

• Clear presentation of product care and warranty information.

• Information to help people purchasing products as gifts or for others. For example, Camelot Music in the US used its CRM database so they could tell grandparents which CDs their grandchildren would find cool that did not contain offensive language or content.

• It should be easy to check delivery charges without going into the shopping basket.

• An easy checkout experience, not too many steps.

• Confirmation of secure payment.

• A system that remembers address and payment details to save repetitive typing.

• Multiple ways to pay.

• Easy to find return information policy.

• When you mail out coupons to customers via your CRM system, the ability to include a customer-unique barcode and link, so whether the customer redeems the coupon in store or online, the retailer's CRM system will be able to report and analyse the take up on individual promotions.

• For the grocery market, maintain the customer's regular shopping list by analysing their shopping baskets and then having a section of occasional items they buy from time to time.

• For products such as printers and fax machines, the ability to pull up details of previous purchases of ink cartridges, for example, to help customers make sure they are ordering the right model numbers.

• Occasional auto-suggestions. For example: "It has been four months since you bought ink cartridges, are you still OK for ink quality?" The "four months" can be tuned based on the user's past frequency of purchase.

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