LONDON, 29 SEPTEMBER 2008 - By failing to optimise e-commerce strategies, the UK retail industry is losing out on over £2.3bn revenue per year, says a new report produced by Verdict Consulting for Webloyalty (www.webloyalty.co.uk) the leading provider of incremental revenue for online businesses, who owns and operates Shopper Discounts & Rewards (www.shopperdiscountsandrewards.co.uk).
The report says that too many online retailers are allowing shoppers – literally – to slip through their nets. It calculates that an e-commerce site converting just one per cent more visitors into paying customers could generate an additional £678m in revenue.
The report, entitled ‘How to pull customers online’, assesses strategies for ‘winning’ shoppers in the intensely competitive online environment. It examines six key stages of building successful online relationships, including how to attract customers, how to sell to them and how to increase their loyalty.
Identifying key barriers to purchase, such as concerns over delivery of goods and dissatisfaction with delivery charges, Verdict says can contribute to £992.4m in missed or lost sales every year. Understanding, anticipating and breaking down these barriers is key to maximising sales, says the report.
Rising ‘cart abandonment’ is an obvious symptom of dissatisfaction, and the fact that customers are increasingly utilising shopping comparison sites. Verdict calculates that 25% of online shopping carts are abandoned, resulting in £2.3 billion of lost sales every year. So businesses that employ strategies designed to reduce shopping cart abandonment, have the opportunity to claw back significant revenues.
Online retail set to grow 129% in next five years
The rewards for winning over online shoppers are getting bigger all the time. Internet sales currently represent 6.7% of all retail spend in the UK, equal to £19.4bn. By 2012, Verdict forecasts this to reach 13.6% of all UK retail sales, with a value of over £44bn. This equates to 129% growth in online sales from 2008 to 2012, compared to only 5% on the high street.
The research shows that levels of online loyalty are 10% lower than in physical shops. In the food and grocery sector, where Verdict calculates a typical consumer will spend £33,000 online over a lifetime, this lack of loyalty carries a high price. Looking at the lifetime spend of just 100 customers, it translates to a loss in sales of approximately £1.2m. Low prices, good service and ease of navigation are the three main factors boosting loyalty in e-commerce.
Neil Saunders, Consulting Director at Verdict, says, “Standing out from the crowd on the internet has become more of a challenge. Online retailers have to work harder than ever to attract consumers. This is not a challenge restricted to smaller sites - big players face the same issue. They all need to be more creative about customer acquisition. Old methods of driving traffic still have their place, but are increasingly being replaced by new strategies.”
Affiliate marketing, Eshots, downloadable widgets, cash back promotions and viral marketing are all on the rise, according to Verdict, which also notes that consumers are now far more likely to find retail sites via search engines and word-of-mouth recommendation, both of which have grown rapidly since 2003.
Incremental revenue to play key role
In this highly competitive environment, generating incremental revenues through ‘monetisation’ strategies are predicted to become increasingly important for retail sites. Monetisation models, which allow third parties to pitch their offers to a retailer’s web traffic are currently worth over £192m, according to Verdict, rising to nearly £870m in 2012.
Martin Child, Managing Director Europe of Webloyalty, which operates highly successful monetisation models, such as Shopper Discounts & Rewards (www.shopperdiscountsandrewards.co.uk), says e-retailers have much to learn about generating incremental revenue from bricks and mortar stores. “Offline, retailers have become sophisticated at utilising space in their stores to generate incremental revenue. It is all about leveraging their high levels of footfall. The same principle applies online, where web traffic can help generate much-needed incremental revenue for retailers. We believe monetising retail websites will become an important additional revenue stream.”
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Webloyalty provides more than 150 e-commerce sites with solutions for generating incremental revenue by driving traffic, minimising site and shopping cart abandonment, offering alternative payment methods, cross-selling additional merchandise and encouraging repeat business. Headquartered in Norwalk, Connecticut, Webloyalty has more than 450 employees in 8 different locations across the US and in Europe.
Founded in 1999, Webloyalty was recently rated one of the 200 fastest-growing technology companies in North America by the Deloitte & Touche “Technology Fast 500” awards program.
Additional information on Webloyalty is available at www.webloyalty.co.uk. Programmes in the UK include Shopper Discounts & Rewards (www.shopperdiscountsandrewards.co.uk)
The customer contact centre can be reached at: tel: 0808 234 1539 or email: firstname.lastname@example.org
Verdict Research is the leading authority on retailing. The firm has privileged access, at the highest level, to key executives working within the top 200 retailers. Its research and publications provide executives working in a wide range of business sectors - retailing, manufacturing, advertising, marketing, professional services, property, finance and the media - with unrivalled independent analysis of the retail sectors, key trends driving each, insight into the major players and forecasts. Verdict Research (www.verdict.co.uk), is a wholly owned subsidiary of Datamonitor plc (DTM.L)
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Neil Saunders, author of the research and Consulting Director at Verdict, is also available for comment. To arrange an interview or for further information about the report, contact Anne Bourgeois at the Verdict press office:
+44 (0)20 7551 9412
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