According to recent research, a quarter of adults in the UK don't use the internet and have no intention of ever doing so. It's a remarkable statistic, not because the number of reluctant surfers is so high, but because it's so low. Most people are now online and many of them are already buying from ecommerce sites or soon will be.
With all the fuss being made about consumer ecommerce, however, the difficulties faced by suppliers have generated the most attention. Bad management, poorly implemented IT systems and weak or non-existent business processes, particularly in the area of order fulfilment, have been cast as the villains of the piece. Sort these things out and online sales will really begin to take off, market watchers say.
Converting visits to sales
There is plenty of evidence to show that ecommerce is failing to engage the customer. Attracting people to your site is one thing, but getting customers to buy is something else entirely. And getting a paying customer to come back is proving well nigh impossible.
Data from ebusiness software vendor ActionPoint suggests that the abandonment rate for web forms could be as high as 90 per cent. This means that nine out of 10 people who start to fill out a form online, give up before completing the transaction. These are not people who were merely browsing: they were ready to buy, but somewhere between the shelf and the till, the retailer lost them.
Even the most successful sites are having difficulty converting visits to sales. It's said that 70 per cent of visitors to Amazon.com never make a purchase.
Geek gossip site The Need to Know reports that one customer who made two separate purchases from wine retailer Oddbins' website with an interval of several weeks in between, noticed that only 513 points separated the order numbers. Assuming the company uses a sequential numbering system, it took an average of only 11 orders per day across a period of 46 days.
Horror stories like these are all the sceptics need to write ecommerce off as a non-starter. Online retailers respond, with some justice, that far too much time is spent analysing what they do wrong, when the real surprise is how much they're getting right.
Another way of viewing the Amazon statistic is to say that three out of 10 people who walk through the door buy something. How this equates to a real bookshop is anyone's guess, but it's conceivable that browser/buyer ratios in the high street are not dissimilar.
If Amazon and a handful of others are starting to try and address the problem of managing customer relationships, however, the vast majority are still failing spectacularly to do so. A new survey published by Rainier UK paints a dismal picture of big companies' efforts to use the web to communicate with their customers.
Rainier emailed the top 100 UK organisations and their counterparts in the US with a simple request for investor information. Or rather it emailed those that bothered to include an email address on their websites. Only a very few firms managed a prompt reply (interestingly, the best communicators among UK companies were banks and breweries), while about a fifth failed to reply at all, even after a second or third attempt at making contact.
To their credit, 20 FTSE firms managed to respond in under two hours, an achievement matched by only three of the US companies in the survey. Among the worst performers, however, were IT companies: Dell Computer took 23 days and the UK's Colt Telecom a shameful 27 days.
The customer is always right
Consumers have very little reason to care whether an ecommerce supplier is badly managed, whether its shares are vastly overvalued or whether someone forgot to connect their website to their back-office systems. They will forgive any of these things as long as they have no direct impact on the shopping experience. They will be much slower to forgive a company that ignores them. Even high street stores, with their surly, unhelpful staff, can do better than this.
The attraction of ecommerce for retailers is that by removing humans and manual processes from the equation, business can be conducted at lower cost and profits can be maximised. These firms are fast learning, however, that replacing human staff with automated processes is not as easy as it first appeared.
There are plenty of products on the market purporting to support customer relationship management (CRM), but even a cursory examination reveals that CRM is all about benefits to the supplier and the development of ruthlessly efficient methods of identifying and reaching prospective buyers. Few of these products have anything to do with improving the experience of shoppers.
Understanding the human dimension of internet shopping, and finding ways to apply that knowledge to website design and back-office systems, is the biggest challenge facing online retailers. Until they get to grips with the problem they will find that, while there is no shortage of customers out there, buyers are nowhere to be seen.
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