Monday 20th June 2005
e-commerce – living the online dream
With website trade accounting for seven per cent of total retail sales, there’s never been a better time to be online. But to really succeed you need to ensure your e-commerce strategy is built around consumer convenience, trust and simplicity – not the latest technological wizardry.
Until he went on the web, Adrian Lee had a happy-go-lucky existence fitting floors at American military bases all over Europe. As part of a two-man band trading under the name of Keswick, his sales were ticking over comfortably at £100,000 a year. In 1998, he had a go at posting the company on the web. All he got back were questions about holiday cottages – consumers were mistaking him for the holiday town in Cumbria. Undeterred, he changed his trading name to Flooring Supplies and registered ‘wooden flooring’ as a domain. Enquiries have not stopped since. This year, Flooring Supplies will have sales of nearly £7 million with operations in Germany, France and Spain, as well as a satellite site in Shanghai. ‘We have gone from a single page to 9,000 products and 100,000 pages,’ says Lee. ‘Last bank holiday, we took £60,000 with people spending an average of £750 each. ‘Along the way, we have had loads of hiccups, such as customers not being in and us sending the wrong colour wood. It’s a never-ending learning process.’ Wooden floors are heavy to move around, so guaranteeing free delivery next day on orders of over £350 is a hard promise to keep. ‘We have tried every courier company and they smash more wood than they deliver. So we now hold £1.5 million worth of stock for delivery into the customers’ hands with our own dedicated couriers.’ While the group has thrived, the spend to gain sales is high – both on- and off-line. The group sponsored the last three Big Brother houses and has just promoted itself for the first time at an England football match. Lee is also thinking about offering a slot on Richard Branson’s first commercial space flight for all purchases over a certain value. But, even though competition for customers is high, lucrative positions in the market can still be found. Last year, Lee set up a trade section on the site, offering competitive pricing directly to builders. ‘We now have 5,500 accounts with no reps at all and are currently doubling sales month-on-month.’ Mass-market phenomenon
Shopping at sites like Flooring Supplies is streaking ahead, according to the latest figures from IMRG. In April, the value of online transactions was up 30 per cent year-on-year. At the same time sales on the high street were falling 1.3 per cent, their biggest drop in a decade.
‘Consumers are voting with their keyboards for the convenience of shopping online with brands they trust that consistently give value and service,’ says James Roper, chief executive at IMRG. In April, more than seven per cent of all retail sales were on the web, as the 22 million Britons who shop online bought goods worth £1.4 billion, spending an average of £60 each. Commenting on the figures, Laura Wade-Gery, CEO of Tesco.com, said that it was good to have confirmation that internet shopping is becoming a mass market phenomenon. ‘We see this shift everyday. Whether it is a pensioner logging on for the first time, a family taking out a monthly DVD subscription or a mum signing up for a personalised online diet.’ By 2010, IMRG’s Roper expects 36 million Britons to be shopping online. Sales will be approaching £60 billion, he believes, accounting for 20 per cent of all retail sales. Extra holiday
In some sectors, such as travel, online purchases are already much higher than average, helping to make 2004 a bumper year for companies like Coast & Country Cottages on the west coast of Wales. It sold 2,500 holidays through its site, taking a total of £1.2 million.
The business has been running for 15 years and at first it looked as if the web would have little impact. When company founders Rachel Thomas and Liz Davies spent £5,000 setting up the site five years ago, they had no responses for three months. ‘It was a lot of money to invest if it was not going to work. By the end of September though, we had sold 50 extra holidays and taken £250,000, so we knew we were on to something,’ says Thomas. She admits it has been a steep learning curve since then. ‘Don’t be taken in by the technology. Find out what works best for you and never assume that you have got it licked. We test everything out on our husbands, who are not technologically minded at all.’ So far, business has been slower this year than in 2004, in line with the overall decline in the number of people taking their holidays in the UK. However, Coast & Country’s website is the one sales channel that has held up and it now accounts for 70 per cent of business. To catch late bookings, Thomas is building a second site, lastminute-wales.com, with offers not just on her own properties, but a thousand other attractions around Wales, which is helping to drive traffic her way. From the start, Coast & Country has accepted payments by downloading details of credit cards. Thomas would like to upgrade her payments system, but is held back by the lack of broadband in her part of Pembrokeshire, which means any changes on the site can only be dialled up every hour instead of happening in real time. Huge catch-up
Once broadband is properly available, Adam Wellings expects there to be a ‘huge catch-up’ is using the web for business solutions. As well as advising rural SMEs across the north of England, he is chief executive of an animal health company, where he has struggled to develop an effective online presence for six years.
For sites to work effectively, he has learnt, you should always put your business case first. ‘Technology can run away with you. You can be led down the road to a solution that doesn’t work. You have to be certain that the technology is applicable to what you are trying to do, so people can do what they want to do with it.’ Make sure too that your technology can be developed, he says. ‘Every time you go back with a new shopping list of requirements, you want to be sure you can accommodate them. I’m fearful of companies that say they want to develop it all by themselves.’
Adam Jolly
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