Retail industry on the net
By Anirban Biswas | 24 Jun 2004
As the second-largest industry in the United States, both in terms of number of establishments and number of employees, the US retail industry generates $3.8 trillion in retail sales annually, approximately $11,690 per capita.
Wal-Mart is the world's largest retailer and the world's largest company with more than $256 billion in sales annually. The chain employs more than 1 million associates in the United States and more than 3,00,000 internationally. The second largest retailer in the world is France's Carrefour.
From the mid 1990s, the retail industry started showing interest in selling products online. And today, the best online selling products include flowers, gifts and greetings. As per the 'comScore media metrix' of the United States, in December 2003, the US internet population totalled 152.1 million users who spent an average of 27.6 hours online, an increase of 6 per cent when compared with the figures in November 2003. The reason being consumers who were preparing for and celebrating the holidays.
Among the different subcategories of retail industry, flowers, gifts and greetings' websites drew 42.4 million unique visitors. Apart from the flowers and gifts, online retailing of video games has shown a substantial growth in the recent past. According to the latest sales figures from a leading market information company, the total US retail sales of video game hardware, software and accessories grew 10 per cent in 2002 over 2001. The video game industry generated $10.3 billion in record-breaking sales, surpassing the previous record high of $9.4 billion in 2001.
The jewellery, luxury goods and accessories category was the third largest gainer in the last couple of months. In holiday times, many lucky gift recipients wore or carried the spoils of 100 plus per cent gains in shopper traffic at BlueNile.com, Coach.com and Zales.com. OmahaSteaks.com, from the retail — food category has seen a leap of 500 per cent in viewership.
But in spite of all these great viewerships and freebies, the online retail store managers are bogged down with some other issues. According to BizRate.com, the number one retail mall on the web, 75 per cent of online buyers abandon their shopping carts. "Imagine if your local store had aisle after aisle of shopping carts filled with unclaimed goods. It's a disturbing problem, but represents the reality facing many online merchants today," said Seth Geiger, vice president of professional services at BizRate.com. "In order to reclaim these lost sales, e-tailers must address the obstacles that prevent window shoppers from becoming customers."
Consumers get easily frustrated with online shopping. More than 40 per cent of shoppers blamed their abandoned carts on expensive shipping and handling charges while 31 per cent stated that they had changed their minds. Another 21 per cent cited slow-loading pages as their cause for terminating the sale.
The buzzword should be 'technology', which can really make a big difference to online retail. According to research by the NRF Foundation (NRFF) and BearingPoint, Inc., the study, "Retail Horizons: Benchmarks for 2003, Forecast for 2004," found that 83 per cent of retailers expect replacing or upgrading point of sale software systems to provide real-time customer information at the time of sale. In analysing the survey data, NRFF and BearingPoint observed that the three currents of change of last year — moving toward greater customer-centricity, traveling along the data-knowledge-action continuum and shifting toward a boundary-less business model — were reaffirmed with the addition of a fourth current: the need for retailers to be on a greatly accelerated path to differentiate themselves from the competition.
The study suggests several approaches retailers can use to differentiate themselves from the competition, including:
- Leveraging a robust understanding of the consumer to create unique, differentiated merchandise assortments.
- Build a brand in an integrated way that resonates.
- Provide a seamless, multi-channel shopping environment.
- Build and sustain a high performance workforce.
Retailing online in India is still in a very nascent stage. Though there are some multinationals that are setting up their Indian operations in the metro cities of India, but very few initiatives have been found on the online front.
In the last quarter of 2003 when German company Metro AG, one of the world's leading merchandisers, recently set foot into India, it found the traditional Indian greeting namaste was missing. The reason is big-box merchandising has come to India for the first time, bringing with it the fears of dislocations that have emanated across the world from retailers like Costco, Wal-Mart and Carrefour.
There are some initiatives found in the country like yamini-stores.com and nalli.com, but most of them do not put up their complete product range online, and fall short of making their sites customer-friendly.
Either their pages are too slow to load or they do not have any secured payment system. Therefore, the Indian online retail industry has to grow up with an 'e'-vision, which is strongly surrounded by proper technology manifestation.
