Online Growing Pains: Why Ecommerce Players are Focusing on Service

Online sales remain a ‘good news story’ when it comes to market forecasts. In the last few weeks WGSN has reported online retail sales in Europe will grow 17% this year (Mintel); US online and mail-order sales combined will grow 14% for the Holiday (Deloitte); and order volumes in the UK will increase 10% in the run-up to Christmas (IMRG).

This is good growth, but it’s certainly steadier than some of the mature-market early entrants into ecommerce are used to.

Speaking on a panel of pure-play retailers at the World Retail Congress in Paris, Olivier Mathiot, co-founder of PriceMinister (Rakuten) highlighted one of the growing pains for ecommerce pioneers. “During the first stage of the internet, the competition was on price. But in western markets the pace of year-on-year growth has slowed.”

At the same time, the cost of customer acquisition online via PPC (pay-per-click) has become too expensive.

The answer for Rakuten is a shift in focus onto service. “We need to take more care of our customer and retain that customer around service.”

This view was echoed by John Winning, CEO of Australia’s Winning Group and Ao.com.In a sector (electrical appliances) where product is all the same, Ao.com has focused on differentiating itself via service,” he said.

What this means is matching the service levels offered by – and expected of – traditional physical retailers. Ao. Com now offers free removals and appliance connections and makes sure its customer service helpline is available 24/7.

To build awareness among customers the retailer has worked hard to surface this service offer messaging within price comparison sites which often form part of customers’ purchasing journeys when buying electrical goods.

The trend for service in ecommerce has been building for a while. Last year there was a real surge of investment in ecommerce service technologies such as live chat, product reviews and social media tools (as reported here).

In mature markets it’s clear this trend will continue with Mathiou saying PriceMinister now “needs to make technical investments on data to leverage existing customers” and Ao.com’s Winning also stressing the need to invest in data that will allow the retailer to service its customers better.

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