21 Jan 2016
Cross-border Sales and Mobile Growth Dominate E-Commerce Expo
With mobile now a fact of life for most e-tailers, the winners in this sector are those tailoring their platforms to meet consumers need for simplicity and speed, while cross-border sales now look set to become ever more significant.
The phenomenal growth in mobile usage over recent years is finally slowing, according to delegates at London's recent E-commerce Expo. As online sales flourish and companies learn hard lessons about their web sites' usability, growth is now centred on mobile commerce, cash-less payments, improving delivery options and expanding cross-border sales.
Overall, some £104 billion was spent online in the UK in 2014, according to IMRG, a London-based body representing the UK's largest online retailers. This represents more than 10,000% growth since 2000, with the fastest period of growth occurring between 2000 to 2007. In total, e-commerce transactions accounted for around one quarter of all UK retail sales in 2015 and are forecast to rise to 33% by 2017.
According to Lynn Sutton, Senior Client Partner for E-commerce at Facebook and Instagram Europe, the value of transactions across its two sites have shown similar growth and are expected to continue rising at a similar rate up until 2019. The most successful merchants, she says, are those who tailor their platforms to suit their target audiences, rather than relying on cookie-led catch-all stats. She also believes that it is now consumers who are driving the market, as they seek increasingly seamless digital experiences, spanning usability, payment methods and ease of delivery.
Despite this growth, the sector still faces a number of challenges. David Pope, European Marketing Director of Jumio, a global identity management company, said that aborted m-commerce mobile transactions have become the biggest issuer facing many operators in the sector. In support of this, he cited figures that suggested £6 billion of transactions were lost or abandoned in 2014, a rate which translates into more than 55% of all attempted customer transactions.
It wasn't all bad news, however, with Pope maintaining that 68% of consumers return to their failed transactions, completing them via their desktop or laptop. The sectors that experienced the lowest levels of attrition, he said, were online gaming applications (24%), followed by financial services (25%) and electronics (around 30%).
The sector experiencing the highest level of abandonment was fashion (over 50%), with consumers often reconsidering and losing interest. Food purchases have the second highest drop-out rate, with travel coming in third.
Overall, female consumers account for 60% of all abandoned m-commerce transactions, with usability being cited in 68% of cases as the prime cause. Frustrations over slow load speeds were the next biggest irritation for users (32%), followed by over-complex processes (27%) and the challenges of dealing with data on a small screen (21%).
Pope's advice for those companies looking to enhance their m-commerce sales are to first seek out a UX (Usability Experience) expert and focus on making the process easy for customers. Building in 'satisfying' tools – such as a process bar that shows the buyer's progress in any transaction – is also said to result in a much lower drop-off rate.
In terms of streamlining the user experience, Pope said if location or date of birth are not essential for transactions, then don't ask for them, with it best to reduce the number of required data fields wherever possible. Highlighting the effectiveness of this approach, he cited success of one company when it reduced its required data fields from 11 to 4, only to see its number of successfully completed transactions rise by 160%.
This approach to content was echoed by Jonathan Bowers, Managing Director of UKFast, a Manchester-based managed hosting company. Bowers says that, apart from hosting, the other keys to keeping visitors on the page are to simplify home and lead pages, making them as quick to load as possible. Overall, he suggested restricting media-rich pages, complete with videos and lots of images, to specific product pages.
Explaining his thinking, he said: "Users now expect browsing pages to be fast and won't tolerate 'hanging' pages on their initial visits. They are, however, prepared to wait for detailed product information once they've decided what to buy."
This search for greater usability is also driving customers away from cash payments, according to Ray McDonnell, Vice President of Chase Paymentech Europe. Taking an historical overview, he said, in 2005, 60% of all UK retail purchases were on a cash basis. Fast forward to June 2015, however, and 60% of all such transactions were card-based, with the pace accelerating as new operators enter the market – most significantly Apple Pay, P2P, Amazon and Bitcoin.
Savvy companies, said McDonnell, recognise that mobile is now the primary way to capture attention in the digital age. He believes, though, that the decline of PayPal, a payment system increasingly usurped by new players, is symptomatic of its inability to communicate with the younger audience in the way that Apple has.
Moving away from the customer interface and the overriding conviction of many exhibitors was that cross-border is where the future lies. This belief certainly seems to be borne out by the latest research from McKinsey, the New York-headquartered global consultancy.
The research indicated that the cross-border flow of goods and services is now worth more than US$30 trillion. At roughly 40% of global GDP, this is an increase of more than 50% since 1990. Today, over a third goods sold globally cross national borders, with McKinsey forecasting that the figure will rise to $54 trillion over the next three years. By 2025, the figure will be $85 trillion, with this growth driven largely by online and digital technologies.
Paul Goldstein, Google's Industry Head for Apparel, emphasised that digitisation was now changing the ground rules for those companies with ambitions to grow beyond their domestic markets. To this end, he said digital platforms had reduced the cost of exporting by over 85% compared to traditional practices, enabling even modest concerns to look at cross-border sales.
Goldstein also recommended companies should invest more in evaluating their analytics, as these could show the number of potential overseas buyers already interested in their products. With potential markets identified, he said, companies could then start to prepare tailored foreign language web sites, while also bearing in mind such issues as local broadband penetration and any cultural sensitivities.
For companies with a fixed existing footprint, Goldstein advised building a multi-channel proposition as the logical next step. This is in line with current research showing that omni-channel customers typically spend 30% per head more than traditional customers.
Another major issue for many attendees at the event was the huge growth of the e-marketplaces, notably Amazon, eBay and Alibaba. Overall, these sites are expected to account for 40% of the value of all global ecommerce transactions by 2020 and an even higher proportion of volume.
Part of the reason for the growth of these online giants has been their response to customer concerns. Recent research into online purchasing behaviour by IMRG showed that customer retention rates have risen from 25% to 32% over the past five years, with online companies successfully adapting to meet customers' needs. Customers, in turn, have cited content and product quality as the key reasons for their loyalty to individual sites, followed closely by free delivery, a helpful ordering process and a no-quibble returns policy.
Keeping it as simple as possible is the approach advocated by Adam Warburton, Head of Mobile at Travelex, a London-based currency exchange business. Typically, he advises companies to try and not over-complicate sites and be very careful about introducing new content.
Travelex put this policy into practice when it asked its site visitors some basic questions – where were they travelling to, how long, with whom and the main reason for their travel. On the back of this research, the company introduced a money-slider related to individual countries' purchasing costs. This enabled visitors to work out likely spend and how much cash they'd need. The result was a marked increase in currency purchases and the delivery of content that site visitors clearly loved.
E-commerce Expo 2015 was held from 30 September-1 October. Just over 6,000 visitors attended and there were 169 exhibitors at the event.
Nick Jaspan, Special Correspondent, London