Sunday, 29 July 2012

Why bother with multichannel? - answer #1: follow the money

A challenge I am often posed when I work in less developed internet-retail markets (Romania or Ukraine being recent examples) is "why should we bother with multichannel? It is organisationally challenging and expensive, and we are doing fine right now."

The simple answer is, that's where your customers' money is going, and if your country follows the trends in others, going quickly. This is 2011 data published by Ofcom for various European countries.

Much more telling is a look at the trend in retail spending in the UK. (Data sourced from the Office of National Statistics).

One observation is obvious: the growth in eCommerce sales has been spectacular. The second observation is probably more important: eCommerce does NOT represent "new money." Overall retail sales are either down (non-food) or merely on-trend (food). What we can see is a switch in spending, not additional spending.

This is the channel customers are choosing to spend their money. If you're not on it, your competitors will be, and your customers will go there.

eCommerce now represents over 10% of all retail sales in the UK, so it is genuinely meaningful to draw such charts. The interesting question for the next few years is whether it will soon become relevant to draw similar graphs charting the growth of Mobile. Countries with well developed landline broadband such as the UK or US may be less interesting studies than those such as India where over 50% of the population has access to a mobile phone, but less than 3% of households have landlines or broadband.

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