Online retail sales hit £50bn

Posted on Jan 19th, 2012 Tags: Ecommerce, Conversion Rates

I came across an interesting article today that reported online sales had reached £50bn. This is great news for the online retail industry and very encouraging as the threat of recession once again looms over us. Here are some key points from the article (reference The Guardian and The Press Association):

Online shoppers spent an average of just under £1,500 on 39 items each last year, new report shows.
Online retail sales rose 14% last year, and a similar increase is expected this year, Kelkoo said.
Online retail sales increased by 14% last year to more than £50bn, with predictions that the growth will continue to hit high streets, according to a new report.
"We predict that British online retailers will enjoy an average rise in online sales of 14% this year."

"Over the last five years internet retailing has improved substantially thanks to the use of affordable 'always-on' internet connections, simple and secure payment systems and the increasing popularity of mobile devices, combined with the growth of mobile-based retail sites.”

"All of these factors should help online retail sales and retail sales via mobile devices to continue to thrive in 2012."

So, why has this happened? It’s fair to say that in recent years online retailers have become more creative, increasingly savvy and their service levels have improved (e.g. faster deliveries, better communication). Any online retailer will agree that competition is tough, so prices reflect that because consumers can so easily price check in modern browsers. Finally, the whole process has got significantly easier and the consumer is more familiar and less frightened to shop online than ever before.

So what's next and how can you possibly succeed in the world of ecommerce?

You've got two options:

Be niche - occupy a sales area that no one else does. Sales volume will be smaller, but your margins in comparison will be larger.
Take a competitive area and be, well, more competitive.

Both require a significant investment in online marketing to chase that all elusive page one listing in Google. This will get you the traffic and then you can make the sales. Once you've acquired the customers, you must treat them well and reward them for their loyalty.

Then you can work on the intricacies of conversion rate improvement and cost of customer acquisition. For example, we worked on one client's ecommerce website and reduced Google AdWords spend by 30% year on year whilst seeing a growth of 35% in sales – this had a huge impact on the profitability of the business.

Let's face it - online is going to play a massive part in the future of retailing - it's only going to go in one direction. Do it well and enjoy the rewards.

If you’d like to find out more about online marketing or ecommerce, you can contact me on 01482 337130 or Jonathan.Leafe@Strawberry.co.uk.

You can read the full Guardian article here.