Why online sales isn’t for every retailer or business

December 29th, 2016

It may be the fastest growing retail market in North America and Europe, but e-commerce has not turned out to be the right choice for all retailers in the UK.  Even though, online shopping has allowed some small retailers to increase their numbers of customers and sales volumes immensely, for others, it has turned out to be an actual burden and profit drainer.

Statistics show that 73% of the consumers in the UK will buy holiday gifts online and will surpass the 24.4 billion pounds spent online last Christmas.

online sales

 

Why some retailers are giving up on online sales

According to a research done by Barclaycard, every 6 of 10 retailers reported to have been negatively affected by turning to e-commerce. The main reason being pointed out is the high costs for all the returned items purchased online. Those who had been hit the hardest were the online-only retailers – 1/3 of those asked claimed that their profit margins were seriously being affected by the costs of the return management.

This same study found that this is the reason why so many bricks and mortar stone retailers were stopping their online sales or are refraining from starting to offer online shopping options. About 1/5 of all the retailers chose not to provide online sales, due to the big costs of the deliveries and returns.

 

How the customers are changing with the advances of e-commerce

The reason is that the customers are getting so used to receiving shopping options such as free return when doing their online or mobile shopping, that if a store refuses to offer such an option they will be frowned upon. But at the same time, more people are simply overbuying and then returning part of the products for free. This though is not free for the retailers. The reason why this return tendency is growing according to some retail owners is that when one shops online, the actual results of the shopping arrive in a few days, when many people realize they were doing impulse shopping or really didn’t like the product once they saw it in real life.

But the research by Barclaycard found that 58% of the consumers claimed that the return policy of a retailer is crucial for their decision to buy from them, and that 30% of the consumers tend to over purchase, and then just return the unwanted items.

 

Other setbacks for small retailers and their online sales

Some small retailers complained that the money spent for the development and management of their online stores or shopping and cashback apps was proving to be a bad investment, and the results couldn’t cover these costs, so they gave up the online commerce options because of the poor value for money.

For certain types of retailers, especially those handling services, the amount of questions which need to be answered for the customers is massive, and requires quite a bit of interaction. Answering and communicating with them online can take up a lot of resources, time and money.

Also, a number of store owners have set a priority of human interaction with the customers and ensuring that they receive personal face-to-face attention and contact with the product or service offered.

 

Our conclusion is

So, turning to e-commerce is definitely a growing trend, but this doesn’t necessarily mean that it is a suitable option for every single retailer or business. Making such a move should be carefully planned as part of the business strategy.

 

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