Internet shopping report draws wrong conclusions

Internet shoppers are spending more money than ever before and the trend is upwards, says a new report on online retailing. However, the report concludes that the future for Internet retailers is one of gentle growth, rather than the substantial rise in online shopping we have seen in recent years.

The report suggests that any rise in online shopping will come from existing customers, rather than new people starting to shop online. However, the authors of the report, Verdict Research, point out that the main reason for the existing growth in online shopping has been the availability of broadband. According to the study of 3,000 Internet shoppers, what held them back from shopping online was the lack of fast Internet access. Once they had broadband they started shopping.

The authors of the report also reveal that only two out of three people have broadband. So their conclusion that growth will come from existing shoppers misses the point. With broadband driving online retail activity and with a third of the population still to get broadband, there’s a clear opportunity for additional customers to be found. Hence growth will come from new customers as broadband take-up increases.

What’s also interesting in the report is the attitude of retailers. Some are not planning to set up shop online because it will stop people going to their stores. Indeed, in a report by McKinsey consultants suggested that retailers are making strategic choices between “bricks and mortar” and online. Some retailers are integrating online and offline worlds, but many are avoiding the Internet. The UK’s clothing retailer Primark is a case in point. This company has decided not to have an online shop. It’s web site is quite dreadful and doesn’t even tell you what the company does. According to Verdict, companies like Primark are staying off the Internet as they want people to go to their stores.

What companies like Primark do not appear to realise is that even shoppers who visit the physical bricks and mortars stores are now making purchasing decisions online. Many people are looking for products and services online and then going to the shop to buy them. Retailers whose “strategy” is to essentially ignore the Internet are playing a very dangerous game. Especially since the growth of broadband is going to drive even more shoppers online.

If you have anything you sell online the future looks much better than the Verdict report might suggest. However, your stores need to be set up to respond to the way people are now shopping online. No longer are they looking for complete “stores” – they are looking for individual products. And that is a huge challenge for traditional “High Street” retailers. Expect to see some major casualties in the coming few years.

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