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In our recent masterclass, we looked at the growing opportunity with online marketplaces. With 1.86 trillion spent globally on the top 100 marketplaces in 2018 and marketplaces accounting for 52% of global online sales, retailers are increasingly seeing the chance for growth through different avenues. We’ve rounded up some of the key takeouts from the day:
The biggest opportunity when it comes to marketplaces is in North America. 61 of the top 100 marketplaces are located there, with Europe trailing at only 14. It’s clear there is a big opportunity for retailers to tap into the USA eCommerce market and grow their online sales.
Russia, Indonesia, Turkey and Brazil all have fast-growing eCommerce markets, ranging from 8% to 20% growth. The Netherlands, however, is the fastest-growing. Dutch shoppers have spent around 20 billion Euros in the year 2016, showing a growth of around 23%. Add to that that the Internet penetration in the Netherlands is more than 90%, its an attractive eCommerce market with a lot of potential over the coming years.
Retailers may be tempted to sell on every marketplace going. However, it’s important to identify your priorities in order to decide which market will work best for your business. Consider the demographics, product availability, consumer culture, delivery, duties and compliance. Shortlist the potential marketplaces based on whether it suits your brand, and how much competition there is for your products. It’s also important to look at what kind of support you will get and how easy it will be to integrate with your technology and way of working.
As one of the biggest eCommerce websites, Amazon is usually the first thought when it comes to online marketplaces. However, there are many marketplaces out there, and more and more are emerging as rising stars in the industry. These include Catch (based in Australia) with 5 million monthly visitors, The Market (based in New Zealand) with 3.6 billion visits, New Egg, which is operating in 80+ countries with 49 million users per month. These are just a few of the emerging websites that are grabbing attention, with many more to choose from. Make sure you look beyond Amazon and get in at the ground floor with one of the companies that are growing quickly.
Delivery can be a barrier for many retailers when it comes to selling abroad. Logistically it can seem like a headache, with different customs and documentation needed for different countries. Where it might seem like a logistical problem, it’s also a marketing opportunity. Having quick and effective delivery globally means repeat business and better customer experience. Working with GFS can help you with reliable service, expertise on delivering across the world, and easy technology integration. Contact us to talk about how we can help you solve your delivery problems.
Finding the right delivery partner is key for your business. It requires trust that your customer will receive the experience they expect. Your delivery partner should act as an extension on your business and represent your brand, which means delivery performance is crucial. So what do you need to consider?
Make sure the partner you choose is readily available for you. Once you are ready to send the product, you want them to be able to pick it up in an efficient and timely manner. It sounds simple, but larger companies service multiple businesses so you want to make sure your parcels are just as important to your supplier as they are to you.
Communication is key. You need to know where your shipments are and whether they have been delivered in time. A partner that offers comprehensive and detailed tracking capabilities is valuable for your piece of mind, and your customer service. Make sure you have access to robust online tracking so that both you and your customers know exactly when a package will be delivered on a specific day.
As well as tracking, having updated and useful technology helps you to optimise your despatch processes and boost efficiencies. Delivery and logistics is teeming with innovative technology, so make sure your delivery partner offers more than basic tracking and is at the forefront of industry technology. Consider how the technology can serve your specific needs and scale with you as your business grows.
Low costs don’t always offer the best value and could mean you are cutting down on other value-added services such as tracking, customer service, communications, and delivery performance. Having a quality delivery service will give your customers a better experience which can lead to overall growth. It’s important your delivery partner can provide you with the services, tools and expertise to sustain this continued business growth.
The importance of customer service cannot be understated. 52% of customers have made an additional purchase after getting a positive customer service experience and 70% have made a choice to support a company who has great customer service. Having good customer service for both you as a company when you need to deal with them and for your customers can have a huge affect on your business.
Make sure you get more from delivery than just sending a parcel from A to B. You could have a full range of additional services including carrier management, labelling, warehouse automation, customer care and reporting. It may mean that you can outsource certain aspects to take the pressure off your business and help you focus on growth.
GFS offer a variety of services, including connecting up your different sales channels, access to different couriers, a wider variety of delivery options, track and trace, label production, and innovative technology to make things smooth and easy. Contact us to talk about your delivery needs today.
Bobbie Ttooulis, CMO Group Marketing, GFS
I was recently fortunate enough to take part in an engaging roundtable hosted by Internet Retailing, on the challenges and opportunities that come with meeting customer expectations of the online delivery process.
At a retail company, you can have anyone from front of house retail staff, to operations managers, heads of eCommerce to CEOs. It was both interesting and encouraging to see that a roundtable on delivery and customer experience attracted such a mix of logistics and eCommerce professionals. However, this should come as no surprise, customer experience is more than a logistics problem it’s also a marketing opportunity.
The conversation between some of the UK’s major retailers produced three main takeaways:
When you talk about eCommerce delivery, the word ‘Amazon’ is never far from anyone’s lips. And understandably so, there’s no doubting their reputation as a retail giant is largely down to being able to deliver a multitude of products quickly. So, surely every retailer should want to replicate their delivery model, right? Wrong. The overwhelming consensus from the retailers in our briefing was that choice and convenience trumps speed alone.
While next-day delivery is great for that urgent purchase, it may not be practical or financially prudent for every retailer to offer that option. What’s important for retailers is to offer delivery, and return options that best suit their customer’s needs. A recent IMRG survey highlights that 41 percent of customers have abandoned purchases due to a lack of convenient delivery options in the last year, showing that choice is just as important as speed. As long as your communication from purchase to returns keeps your customers updated, they will, for the most part, be understanding of the time it takes to deliver the product.
The concept of offering customers a breadth of delivery options was not a new one to attendees. They all knew it was key to the customer experience, the issue is having the structure in place to make it a reality. There were a mix of single-carrier and multi-carrier delivery strategies in the room but the agreement within the group was that a multi-carrier approach lent itself better to giving retailers flexibility and choice. This means less delays and fewer unhappy customers.
Ultimately, if you want to offer a wide range of delivery options, to numerous destinations, one carrier alone is unlikely to be the best choice for every occasion. Some carriers may be cheap for next-day delivery but not designated day, others may be able to deliver to one country, but not another. It’s all about serving up the right carrier, for the right region. Furthermore, there’s always the danger that if your single carrier encounters a problem, and is unable to deliver, you have no way of preventing dissatisfied customers.
Finally, our attention turned to tech, and how it can be both the cause of and solution to delivery woes. Without multi-carrier-specific software, retailers would need multiple separate integrations for every carrier service they bring on. Integrating online checkout, labelling and despatch systems is a drag on IT resources and budget.
Investing in delivery software, that can support all the key functions for a multi-carrier approach is the way forward for retailers. Easy-to-integrate software that can switch delivery options on or off quickly at checkout, accurately produce compliant delivery labels, and automate despatch are key for sustaining a strong, reliable delivery offering.
Retailers are often being accused of not prioritising or understanding the role of delivery in relation to their customers, but this roundtable proved the opposite. Retailers know what good delivery strategy and customer experience looks like; they just need the help on the how.
For more details on how to meet customer expectations with delivery, download the executive summary of the Consumer Home Delivery Survey here.
Cart abandonment is a problem for many online sellers, with up to 65% of shopping carts left uncompleted. So how can eCommerce websites reduce cart abandonment and capture those all-important extra sales? We talk through some of the common reasons for cart abandonment and how to tackle them.
Customers often cite a long and complicated checkout process as an annoying feature of buying online and it leads 28% of them giving up halfway through. There are many things that businesses can do to stop this by simplifying the checkout process. Make sure the checkout is as streamlined as possible, keeping it minimal and include only necessary data fields. Reduce the number of steps that a customer has to go through and number the sections so that it is clear how long the checkout process will take to complete. Make sure site navigation is straightforward to keep customers’ attention and ensure they can confirm their purchase quickly and easily.
In addition to simplifying the delivery process, guest checkout is another way to help reduce cart abandonment. 28% of customers will not complete a purchase if they have to create a new user account. Many customers don’t want the hassle of setting up new accounts, with new passwords to remember and more forms to fill in. Giving your customers the option of guest checkout, or offering the registration once purchase is completed, can help the customer feel more comfortable and help them buy more quickly.
8% of customers leave their cart if they can’t find a discount code and 46% leave them if a code doesn’t work. By offering discount codes for buyers, they are more likely to complete a purchase to snap up a good deal. Some companies use re-targeting emails when a cart is abandoned to remind people that they didn’t complete purchase. Reminding users of the offer codes when sending these emails will also help encourage them to follow through with their purchase.
Customers love choice. When it comes to payment options, 8% of customers abandon their cart because they can’t use their preferred payment option. Not only does having different payment options make it easier for the customer, but it can also help build trust. If you are selling a lot internationally and in specific countries or looking to target them for sales, researching the preferred payment method for people in that country can help build the trust needed to convince them to purchase from an international seller.
25% of customers specifically cited shipping costs as the primary reason for driving them away, and 49% of online shoppers abandon their purchases because of hidden fees that are only revealed upon checkout. 22% abandon the carts because the seller did not mention shipping costs at all. Cost transparency is clearly very important for customers. It’s the primary reason that people abandon their carts. By being transparent about all costs ahead of time you can give your customers a better idea of what is coming and avoid the shock that leads to cart abandonment. This can include the cost of delivery or the duties and taxes involved in international sales.
Customers care a lot about delivery – 40% of abandoned carts are due to a lack of convenient delivery options. It’s important to offer a choice of different options as what suits one person may be different from another. For example, for someone looking to buy a last-minute gift, an express delivery option will be a big deciding factor. Alternatively, someone commuting into London every day may prefer to use Click & Collect so they can pick up their parcel at a time that suits them. Putting the customer in control increases the likelihood that they will complete the purchase.
GFS Checkout can help you reduce cart abandonment by giving your customers more delivery options, and providing all the information they need to make an informed decision. The new Duties and Taxes add-on also gives customers the cost transparency they want when it comes to international delivery. Contact us to arrange a demo of our technology.
Selling internationally to grow your business can feel daunting. As well as handling cross-border delivery, you also have the complicated task of applying the correct duties and taxes. Duties and Taxes are a common logistical concern for businesses with sellers saying it’s their biggest barrier to international growth*.
Sales Taxes are financial obligations paid to the government on sales, and duties are a tax payable to the government on goods and financial transactions. Both of these hike up the price of buying from a seller in another country, but are there to protect companies from foreign competitors and enable the government to control the flow of certain products in and out of the country.
Taxes vary from country to country with different thresholds for when taxes apply to imported items. It’s best to research the tax thresholds for each country you plan to ship to and be able to let your customers know.
Duties and Taxes are calculated by multiplying the taxable value of the shipment and the tax and duty percentage of the country you are shipping to. Duty percentages do vary depending on the category of goods and taxable value and can change from country to country depending on the valuation method.
Duties are taxes are a legal obligation for your buyers. There are two ways they can be paid – DDU and DDP.
DDU shipments are paid on delivery, with customers being contacted by customs when their parcel arrives to settle any charges. This option means that you need to clearly communicate to your customers that the duty will apply to their shipment. Failure to effectively communicate this could lead to an unexpected surprise for customers on delivery, which can reflect badly on your brand.
DDP shipments mean that the sender is responsible for paying the duties. This usually means that they are included in the existing price or added at checkout. This option might make products appear more expensive upfront, but does mean that your customer won’t be contacted for any additional fees and the shipment will be delivered easily.
Communicating to your customers about Duties and Taxes is important. To boost the customer experience and secure repeat purchases, you need to make sure customers know how and when they will be paying duties and taxes throughout the delivery journey. This should be included on product pages, at the checkout, in your shipping policy and your FAQs. If this is left unclear, you risk cart abandonment, low customer satisfaction, refused deliveries, and more time spent on inbound customer queries.
In the modern age, there is more technology available to help online sellers deliver a seamless experience for customers whilst also making their own processes easier. This is also true when it comes to the complicated issue of calculating Duties and Taxes. We have now added a Duties and Taxes calculator to our GFS Checkout software. This provides a simple plugin that presents an array of different delivery options, and calculates the full delivery cost, making cross-border delivery easier than ever! Plus, you can decide if you want to combine Duties and Taxes with the cost of the order or let the customer choose whether they pay now or on delivery.
Find out more by watching our video, or sign up for a demo!
In August 2018 we partnered with Tamebay to conduct a survey in which we asked eCommerce retailers what their main concerns are for Brexit?
Watch our survey results video to find out where retailers see the biggest challenges and opportunities for international growth.*
If you are having trouble viewing the video, please allow all browser cookies or watch on YouTube
by Emma Herrod – InternetRetailing
Mamas & Papas sells baby and nursery items to consumers in the UK and internationally. A customer’s order can consist of items of varying sizes such as a cot and some new-born clothing, a pushchair or simply a soft toy.
The customer may also not want their order dispatched immediately preferring a specific time slot before a baby’s due date. They also may want their order delivered on the day their order is placed, the next day, delivered to the room of their choice or utilise other services such as “build,” explains Chris Greenwood, CIO, Mamas & Papas.
Orders therefore could be fulfilled within 30 minutes of the order being placed or up to 6 months later. “We pride ourselves on getting everything right and to the customer at precisely the right time that they want it,” he says.
The Mamas & Papas operations team therefore need to be able to cope with differing sizes of their own goods, a multitude of carriers and branded goods which could be cross docked to ensure that they reach the customer at the right time.
Something that’s being manufactured could be ordered by Mamas & Papas to arrive into the warehouse a couple of weeks before it needs to be dispatched to the customer.
A warehouse in Huddersfield is responsible for UK orders and store replenishment with international warehouses in Hong Kong and near Los Angeles, operated by a 3PL, handling the retailers’ international operations. The retailer operates a wholesale business too.
Mamas & Papas operates a single stock pool and this is controlled by an in-house built Warehouse Management System (WMS) which allows the company to deal with stock as efficiently as possible. The decision to build the solution itself was based on the range of products and services which the company offers.
With anything from booties to wardrobes needing to be delivered at the same time, the retailer struggled to find a solution that matched the requirements of what it needed to offer. “Around 75% of our systems are developed in house because those are the areas in which we can be really efficient,” says Greenwood. Much of it is specific to the nursery business.
“We can bulk pick for our wholesale customers and be picking a smaller parcel for our retail customers at the same time,” he adds.
The retailer uses different carriers to deliver the various sized orders to customers in the UK and internationally. Hermes, for example, could be selected to deliver a small parcel, DPD for medium parcels, Yodel for large parcels and 2-man delivery from other carriers, Greenwood explains. As well as the size of the parcel, the criteria for choosing a specific carrier for an order also includes the items within it, the location of the customer, whether a 2-man delivery is required and any services which the customer has chosen.
It’s therefore important for the company to be able to manage the labelling and requirements of the different carriers to ensure easy transition between the warehouse and the carrier’s processes. Mamas & Papas also needs to be able to onboard new carriers easily and link customers’ delivery and service requirements chosen on the website with its operations and carrier capabilities.
The retailer worked with GFS on the development of its GFS Checkout solution having already implemented the GFS Selector carrier management solution. As Greenwood explains, somebody who is already dealing with all the carriers means that we could onboard other carriers very quickly. “Sometimes that’s necessary if we get a new customer who has very specific requirements and needs a specific carrier and a specific label,” he says.
The GFS Checkout system, which controls the delivery options shown to shoppers when they place an order on the website, integrates with the WMS so that the website knows whether products are in stock. If a product isn’t available for 6 weeks, for example, the option of next-day delivery won’t be shown to the customer.
It doesn’t select the actual carrier but the attributes of the type of carrier based on rules set by the retailer. The order is then passed to the WMS, is scheduled for dispatch and the label system decides on the number of parcels and labels which are required. These are printed out at the end of the picking process.
The Selector system also sends the information to the relevant carriers so that they are aware of parcels for collection. “It also means we don’t have to worry about trying to match manifest to goods being ordered. It takes away the need for us to do separate interfaces,” says Greenwood.
A website order containing multiple items is grouped into one parcel based on size of the largest item in the order and the location to which it is being sent. The retailer then slots the order into a time scale when the order can be delivered in its entirety and at a time convenient to the customer.
Mamas & Papas worked with GFS in the early stages of the development of GFS Checkout so could influence what the technology did from a checkout point of view, so the company received exactly what it was expecting.
“It felt like a co-developed solution,” says Greenwood, “and it works to the exacting standards that we needed for our customers”. Implementation was “relatively painless” too but Mamas & Papas do a lot of testing of new systems. “There was almost no down time,” he adds.
The decision to go with an outside system rather than developing its own solution was down to the speed of implementation. Rather than having to develop solutions once the retailer started talking to a new carrier, 75% of the work that Mamas & Papas had to do had already been carried out by GFS, explains Greenwood.
“It makes life so much easier. Just setting configuration parameters is really the only thing we have to do development wise to onboard a new carrier,” he says. This can be carried out by the operations team.
Customer experience is important to Mamas & Papas as the accuracy and efficiency of its warehouse and fulfilment processes are driven by customer satisfaction. KPIs for the operations team include efficiency of getting goods through the warehouse and the speed of fulfilling orders.
The success of the GFS implementation, carriers and the retailer’s ability to ensure that things are in stock just in time are also measured along with the ability to move quickly, onboard other carriers as necessary and make changes and divert traffic as needs be. “GFS means we get things out of the door within a few minutes of the order being placed online and that is critical to us,” says Greenwood.
The next project for the IT team in linking operations with the customer-facing website is to increase the visibility of the delivery options earlier on in a customer’s journey so that they know how much they will be expected to pay for their delivery and when it can take place.
Another development for the hybrid-platformed website is development of the personal shop experience. These personal shops are bookable currently on the website but take place in store. They can take up to 2 hours with the potential customer being taken around the ranges offered by Mamas & Papas and helped with information about cots, pushchairs etc.
Greenwood explains that customers in this sector do a lot of show-rooming with items viewed in store and then ordered online so that the retailer wants to expand the number of personal shops that can be performed in store, and possibly online too. “There are no promises to when this will take place as its early days yet,” he explains.
You can view the original article here.
By Kirstie Pickering – Post and Parcel Technology International
Research by distribution company Global Freight Solutions (GFS) has found that online retailers are exploring growth opportunities in markets outside of Europe in response to uncertainty around trade regulations caused by Brexit. Despite these ambitions, retailers cite delivery as their biggest challenge after taxes and duties.
The USA is the most desirable e-commerce growth market by far, with 64% of surveyed online retailers ranking the nation as their number one market for growth opportunities. Australia comes in second with 17% and China third with 13%.
The American e-commerce market is very mature and consumers are price-sensitive, which makes it one of the most highly competitive for new retailers entering the market.
In 2017, retail e-commerce revenues from apparel and accessories sales amounted to US$93bn and are projected to increase to US$138.7bn in 2022. However, retailers could be missing out on bigger opportunities in faster-growing but less mature e-commerce markets such as Latin America, Russia, and the Netherlands.
The research found that British retailers are prioritising English-speaking markets and the USA and Australia came out on top as the most desirable growth prospects.
However, China secured the third place position with strong retail and consumer shopping profiles, despite the language barrier. Aside from the country’s e-commerce revenue potential – in 2016, almost a fifth of China’s retail sales occurred via the internet, compared to only 8.1% in the USA – the research shows that on the whole retailers are shying away from China more so than other culturally similar regions. This suggests a gap in local fulfilment and delivery knowledge of the region.
Regardless, in order to crack these markets, over half of respondents (52%) are looking to work more closely with external delivery experts and partners in the next 12 months.
At best, 1 in 3 retailers can attribute 10% of revenue to international business, with just 3% of British retailers solely attributing all of their revenue from international business outside the EU.
However, when carrier management and delivery is localised, this changes. In the years 2015 to 2017, GFS recorded a 638% increase in the number of international parcel deliveries to the USA within its customer base.
Neil Cotty, CEO of GFS, said, “The reality is that when retailers decide to take on responsibility for delivery on their own, whether domestic or international, multiple carrier overheads and the lack of robust parcel delivery functions are a real problem. Delivery is one of the most complex aspects of retail to get right on an international scale, so retailers shouldn’t be expected to add ‘delivery expert’ to the already many hats they wear.
“British online retailers need a partner that understands what ‘localised’ fulfilment actually looks like in order to accelerate sales growth and cultivate carrier relationships, while providing an understanding of cultural nuances and taxation.
“One GFS relationship gives you access to all of these services; but with the flexibility to tailor the services to your business needs, because ultimately, every retailer operates differently.”
You can view the original article here.
by Chloe Rigby – InternetRetailing
Online retailers are exploring growth opportunities in markets outside of Europe, in response to uncertainty around trade regulations caused by Brexit, research has found.
The US is the most desirable eCommerce export market, named by 64% of the more than 100 online retailers that took part in the Global Freight Solutions (GFS) study. Second-placed was Australia (17%) while China (13%) lagged behind.
But GFS says that retailers might fare better if they move beyond the English-speaking markets that topped its study. The US market, it says, is price sensitive, even though revenues are forecast by Statista to increase to $138.7bn in 2022, from $93bn in 2017.
More sales take place online, at around 17%, in China than in the US, where 8.1% of sales are made online. However, the 13% of retailers that want to explore this market suggests, says GFS, a gap in local fulfilment and delivery knowledge of the region. More than half of respondents (52%) said they were looking to work more closely with external delivery experts and partners in the next 12 months.
Three quarters (76%) of UK retailers said they expected to increase international revenue over the next few years. Currently most see growth coming from within the EU, and only 3% say all their growth in international revenue comes from outside the EU. As yet, however, it’s unclear what customs and tariff regimes will cover EU countries from the end of March.
Almost all (98%) of respondents said it was important, or even critical, to offer customers a broad choice of delivery options in order to reduce cart abandonment rates. Yet, only one in 10 retailers surveyed have more than five delivery options. That chimes with IRUK Top500 research that suggests the median UK retailer offers three delivery options.
Online retailers said the main reason they didn’t offer a greater choice of delivery at checkout was the time and effort it takes to manage multiple carriers and integrate them into their IT systems.
Neil Cotty, chief executive of GFS said: “The reality is that when retailers decide to take on responsibility for delivery on their own, whether domestic or international, multiple carrier overheads and the lack of robust parcel delivery functions are a real problem. Delivery is one of the most complex aspects of retail to get right on an international scale, so retailers shouldn’t be expected to add ‘delivery expert’ to the already many hats they wear.”
You can view the original article here.
By Will Gillingham – IMRG
When Black Friday became melded into the public consciousness in the UK in 2014 (it had been around for years before that, but 2014 was the year it exploded), many retailers experienced an upturn. Even some of those who didn’t participate in discounting saw a sharp spike in their sales owing to the general purchasing frenzy which seized the nation.
In 2017, however, this ‘halo effect’ had gone. While discounting retailers saw an average sales uplift of 11.7%, non-participants saw only a 3.7% uplift (in spite of a far bigger spike in site visitors).
In the competitive marketplace of UK retail, this rather sizeable gap (representing a potential divide of many thousands, even millions of pounds) could seem like it’s well worth getting involved in discounting for any retailer looking to get ahead. It could even seem like a boost which retailers can’t afford to do without, lest their competitors gain the upper hand.
But is that truly the case? Is it obligatory for retailers to participate in Black Friday, and dedicate a massive amount of resource to the month of discounting? Or is it an optional event, replete with as many drawbacks as it has benefits? We approached our community of experts for their insight on the matter.
The hesitant answer is: yes, Black Friday is obligatory. With a catch. And that catch can take a multitude of forms: the type of retailer contemplating participation, whether the delivery strategy is ready for the bottleneck, and the ultimate goal of the retailer. Each of these points will be delved into in further detail below.
But for the most part, it’s a sales period which retailers can’t ignore. As Adam Foster, Social Media and Content Marketing Manager at ShipStation, states, the answer is: ‘yes, no, and maybe. Retailers don’t have to participate in Black Friday, but if they don’t participate, they may be missing out on some enthusiastic Christmas shoppers.’
Foster continues: ‘Black Friday sales are expected to rise once again this year, so refusing to participate might not actually be an option. At least if you’re all about immediate ROI.’
Data provided by Tim Robinson, CEO of Doddle, supports Foster’s view: ‘YouGov research we commissioned in October shows that Black Friday is as inbuilt into the UK psyche as Bank Holidays, with 98% of the population now aware of the phenomenon and 7.5 million planning to change their behaviour around the day, either by staying up late or setting their alarm to get up earlier than usual. Any buying event with enough pull to change behaviours is too powerful to ignore in any climate, let alone in a climate as tough as the current one.’
But both Foster and Robinson concede participation should be influenced by the goal set by the retailer. As Foster mentions, Black Friday is a shortcut to immediate return on investment, but it has no real sway on the other 11 months in the calendar (although smart retailers will look at how new customers acquired could be put into marketing segments to convert them into more regular, profitable customers over the longer term). And Robinson argues those other 11 months can be as, if not more, valuable to invest in.
Robinson: ‘[Black Friday] is essentially no different to any customer acquisition or loyalty driver: a ‘try before you buy’ service, a subscription-based member delivery proposition or a delayed payment scheme. And once you see it that way the question and answer for any retailer becomes far easier. It’s no longer a debate about whether to jump on a once a year band-wagon. It’s a question of where Black Friday fits in your overall business strategy and whether it, or another sales device, is going to have more power in attracting and more importantly keeping the customers you want.’
A tale of two goals, then: an immediate boost to sales, or longer-term customer retention. Both have their share of attractive prospects.
Figures surrounding Black Friday are compelling, and the level of customer engagement is irrefutable. Data provided by Katie Woodhead, Head of Experience Optimization at ATTRAQT, demonstrates just how popular the event has become.
Woodhead: ‘2017 [was] the most prolific year yet in terms of the number of customer queries and requests that we managed for our retail partners. For 2017, in Europe alone, we handled 5221 queries per second, 323,214 requests per minute and 300 million requests in total, which was a record for us.’
Matthew Foo, Assistant Marketing Manager, AsiaPay, cites the huge participation in China’s standout sales event, Singles’ Day, as a prime case in favour of widespread discounting: ‘we encourage retailers to take part in such promotions. The achievement of the recent Singles’ Day event where a total of USD$30.8bn worth of sales was achieved within 24hrs (or a nearly 27% year-on-year rise) shows the potential for retailers.’
And previous events don’t take into account the potential novelty of this year’s peak period: a wage-earning, social-media savvy Generation Z. Padraig Slattery, VP Retail at SafeCharge: ‘Black Friday is playing such an integral role in the holiday season that customers expect it to be part of their yearly festive experience. Rather than driving all efforts to their home site, retailers must realise that they can maximise their sales conversions on other channels too, particularly on apps that are already an integral part of their consumers’ daily lives, which in itself increases their propensity to buy.’
What these indicators point towards is an almost definite sales uplift – though margin is perhaps another question – on Black Friday for any participating retailer. But it goes beyond this. Florent Maillard, Senior Manager Insight & Analytics, Criteo: ‘Client level analysis suggests that those who participated in Black Friday in 2017 increased their market shares not just for the event itself but for the following weeks. Many retailers who did not generate a surge of transactions in Q4 2017, also lagged behind in Q4 overall, compared to their competitors.’
Quite simply, not participating in Black Friday means missing a colossal chunk of shoppers: both bargain hunters and those buying for Christmas.
There are few cases in which retailers shouldn’t get involved with Black Friday, but those cases are palpable.
In frank terms, the colossal discounting of Black Friday can create a shortfall for retailers, rather than a profit. Unless the strategy and deals have been intricately worked out to ensure a profit, then on paper the event can be less lucrative than retailers might hope.
Gavin Masters, Industry Principal eCommerce, Maginus: ‘Consumers are very brand-blind during Black Friday and will often buy from businesses they have never bought from before, or would likely ever buy from again. If the deal is there, they will take it, and if you’re not in a position to compete on those deals, it makes little sense to jeopardise the profitability of your retail business by slashing prices if there is no commercial need to do so.’
Gary Winter, Parcels Director at PayPoint, agrees: ‘There is huge pressure to take part, even if it makes no sense from a business perspective.’ He argues Black Friday shouldn’t be an attempt at a massive sales volume, but rather one of increasing the returning-customer base: ‘it is important that retailers use Black Friday to deliver a more long-term business advantage rather than just a quick one day hit.’
This is what retailers need to investigate: whether a returning customer is more profitable than an uplift in sales on Black Friday. If the latter, then perhaps Black Friday is obligatory. But if the former, there is a case to boycott the event altogether (for new customers, at least).
Recent research from Ingenico gives particular emphasis to the case against Black Friday, showing that doubt has begun to creep into the minds of UK customers. Benoit Boudier, Managing Director, EMEA, Small and Medium Businesses at Ingenico: ‘Less than half of the UK’s 2,000 respondents (45%) cited discounts as the feature they desire most during the Black Friday online sales. Driving this surprising response is growing widespread scepticism from almost two thirds of respondents that the discounts are artificial (65%). Over a quarter (27%) of us would reportedly prefer other incentives such as unique products, loyalty and referral bonuses, an extended returns/ exchange window period or free next-day shipping.‘
Stephen Deverson, Sales Director at GFS, believes customer retention takes precedence over sales: ‘With 64 percent of shoppers acquired during Black Friday having a lower lifetime value than shoppers acquired at any other time of the year, there’s an argument to say that, if anything, Black Friday is decreasing in importance. For retailers, Black Friday means selling key products at reduced margin, which is compounded by the fact that these customers are rarely repeat customers; diminishing the value of the day for brands.’
Data from Mention Me further solidifies the need to create a loyal customer rather than sales on Black Friday. Andy Cockburn, CEO, Mention Me: ‘Over half (53%) of the 2,000 consumers questioned [in our survey] didn’t shop on Black Friday at all. And of those that did, almost a fifth (16%), based their purchase choices just on the brands with the biggest discounts on the day. This suggests that of those who do shop on Black Friday, loyalty and repeat purchasing is likely not front of mind.’
Either way, a campaign needs to be in place. Whether it be to benefit immediately from the Black Friday surge, or to use the influx of traffic to capture repeat customers, Black Friday can be a springboard event, so long as a long-term strategy is in place. In this way, the gravitational pull of Black Friday can benefit both participants and abstainers, and perhaps, in this way, Black Friday is obligatory.
Except for when it’s not.
There are three particular ways, as pointed towards by our respondents, in which participation in Black Friday isn’t necessary or advisable:
Luxury retailers operate outside the general UK customer base. Their premium prices appeal to a specific buyer, and even considerable discounting would leave the items at a price point far above what the average customer spends. Owing to this, Black Friday participation should be strictly optional.
Stefan de Jong, Retail Strategist, KEGA: ‘Companies operating in a market which is mainly price driven or which has many competitors probably have no choice. But I do not see why specialty stores or retailers selling luxury or premium items should join. Participating might lead to short-term high revenues but in the long-term it might do damage to the brand or lead to lower margins.’
It’s all well and good to establish an irresistible sales campaign, but if a retailer’s delivery connections don’t reflect the massive purchases made during the event, it could be a damaging experience.
Maria Morais, Industry Principal, Consumer Industries, SAP Customer Experience: ‘If the company is not ready to respond to the high demand of the coming weeks and the business supply networks are not prepared with clear, data driven allocation and replenishment plans then it’s best to not participate in events like Black Friday to avoid the risk of disappointing customers and have to manage severe consequences during the rest of the year due to lack of trust in the brand.’
As seen with the Netherlands, Black Friday is not all-encompassing. Outside of the US and the UK, the penetration of Black Friday can be lacking. In Australia, for example, customers are still more used to Boxing Day sales than Black Friday, as mentioned by Localz. In this way, Black Friday is only unavoidable for those retailers existing in either the US or the UK.
Louise Robertson, Marketing Director, Localz: ‘Black Friday hasn’t quite yet reached the level of notoriety that it has in the US. This year they are extending trading hours, but it hasn’t gained the full velocity seen at the start of the Christmas shopping season.’
Participation in Black Friday discounting is dependent upon the goals of the individual retailer. For those who have a strategy in place to profit, not getting involved could cause them to miss a substantial frenzy of shopping. However, for those retailers who have an ultimate goal of existing customer retention, applying heavy discounts to attract new customers could potentially be contrary to that ambition.
Early signs are that Black Friday certainly isn’t going anywhere quickly – the number of Black Friday campaigns that were live on Monday this week are testament to that. The question of whether to participate will be just as relevant in 2019.
You can view the original article on IMRG.
“I was recently lucky enough to be sat around the table from some of the UK’s biggest retailers. It was a varied bunch, spanning high street and luxury department stores to retail chains, all of which made for differing opinions and a lively debate about how British retailers see their brands developing over the next year or so.
An opinion that came through strongly from the retailers, is that many of them place online marketplaces like Amazon in high regard because of the breadth of delivery choice customers have. Amazon is one of those companies that’s admired for customisable, fast and free delivery, and lots of retailers are looking to emulate that in their own delivery function. However, if you’re representing a luxury brand, with luxury products, the same strategy may not align with your brand values. In my experience, delivery strategy needs to be led by three things: your customers, your brand and your product.
The perception is that Amazon is driving up expectations, when in fact it’s setting the bar low, by making it difficult for retailers and placing pressure on them to match something that is either not necessary, or not commercially feasible. Without using data from customer purchases to inform what kind of delivery options brands should have at the point of checkout, delivery becomes ineffective, it can also become difficult to manage if retailers try to do everything themselves.
When overhauling your delivery function in eCommerce, retailers need to ensure technology supports and integrates with their existing services. The process of onboarding carriers shouldn’t be a long one. Well, retailers can’t afford it to be, as an eCommerce business never stops.
Retailers have also formed quite a headache figuring out what to automate during the delivery and logistics process. For example, if you have a broad portfolio of products like we do at Mamas & Papas – we ship everything from cots, to baby booties – it creates complexity. Firstly, how do you match the right delivery type and carrier to individual items? And secondly, from a technology perspective, how can you automate that process at checkout?
The trick is to plug in an automation tool that’s preconfigured with carrier options and services. It needs to rely on a powerful rule-based engine in order to consider a number of things instantaneously, considering things like; what kind of product is it? What is the basket mix? What location are the items going to, is it remote? We ship far and wide, and for a location like the Channel Islands for example, we can only offer 3-day delivery. So, our rule-based system from GFS automatically shows the appropriate delivery options based on the rules applied. Similarly, if this is integrated with a supporting multi-carrier labelling system, this can automate the printing of carrier-compliant labels to reduce error and increase despatch time in the warehouse. The main barrier when online retailers are considering integrating solutions like these is the perception that integration will take too long and cost too much.
While Brexit was a word on every retailer’s lips, people don’t know what’s going on. And because of it a lot of industries are at a standstill. No one around the table could confidently say they understood or knew what they were going to do to combat the uncertainty brought around by Brexit. However, international growth is key for every one of them. The potential is outside of the EU, yet we still need to have a plan around all manner of trade deal eventualities.
We ended on a look to the future of retail. Particularly what delivery innovations are in store. Despite plenty of excitement about the possibilities of something like drone delivery, one has to take in to consideration health and safety laws and robustness of the solution. For now, the dream seems a way off. Today it’s all about being pragmatic, and having the flexibility to change with the market. Giving customers a relevant breadth of options, and enabling them to find the one that’s right for them. The bottom line is, online customers want convenience. Trends and tastes change all the time, and retailers need to match that. However, where delivery is concerned, where retailers are overhauling their functions and partnerships, it needs to be for the right commercial reasons as well. At the centre of any fulfilment project should be your customers, your brand, and your products.”
The uncertainty of what Brexit will bring means considering your options and planning ahead. eCommerce sellers who want to scale their business and accelerate their overseas trading will want to know the opportunities for international growth.
If you missed out, don’t worry! Below you will find the video recording, a link to the presentation slides and our latest eBook: How to grow global eCommerce sales with delivery.
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