Wednesday, January 24, 2007
Online retailers are doing it wrong
There's been a load of cheering recently for the success of online shopping. At Christmas, for instance, many High Street stores in the UK reported lower than usual sales with less footflow than the previous year. But their online counterparts reported record sales. So everyone was happy. What tosh. The average conversion rate of the top retailers online is a mere 2.5% - and they are ecstatic about that..! If only 2.5% of the people who walked into their bricks and mortar stores bought anything they would be out of business pretty sharpish. One of the reasons is that customers online are "cheap". It costs almost nothing to attract them; you can get millions passing by every day. The result is that the top retailers themselves perceive their online customers as ten a penny and treat them as such. Is it any wonder they don't form great relationships and therefore don't buy very much? A typical top retailer will tell you that their online store is worth about the same as one of their bricks and mortar stores. And, remarkably they think that's great. Cloud cuckoo land I say. They are happy with the profit in an online store that generates ten times the amount of footflow as a High Street store? Again, this is an attitude problem. It's highlighted today by a report on the way retailers use emails. This shows that few online retailers even personalise their emails to their customers. They don't even use the proven methods of getting returns on emails and the vast majority don't even promote their products in emails they send to customers. What? Say that again...! Yes, 77% of retailers who send emails to customers do not promote their products in those emails. Once again, this is evidence of major companies failing to understand the true nature of the Internet and how they can profit from it.
Labels: internet marketing, shopping
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Readers' Comments:
At
January 31, 2007 12:38 AM 
Zach Katkin - Florida Web Design said…
At
January 31, 2007 7:38 AM 
Graham Jones said…
Compared with what retailers would expect from their traditional bricks and mortar stores, 2.5% is very bad. A supermarket, for instance, would expect over 80% of footflow to buy something. Conversion rates vary between store types, but if a shop only returned 2.5%, a major retailer would close it down. Some online stores have achieved conversion rates of 50%, but these are from independent entrepreneurs, not major retailers. What this implies is that the small, independent online entrepreneurs who achieve high conversion rates are doing something which the traditional retailers are not doing.
Good post, but is 2.5% really that bad? Do you have something to compare it to? Personally I have been running Google AdWords accounts for years, and 2.5% conversion on average is great. Granted, this is a different sales process, a bit of an ad hoc method if you will. If 2.5% isn't great, what number would be, and how would you propose retailers attain those sorts of numbers, how would you alter or revise a site/marketing in order to convert more visitors?