The Future of Internet Retailing is Doughnut-shaped (with No Middle for Jam!)

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Review of Digital Manchester Shorts – Digital Resolutions, hosted by Manchester Digital and E-Consultancy, presented by Ian Jindal – Editor in Chief of Internet Retailing

Date: 23rd January, 2008

Location: Manchester, UK

2008’s first Manchester Digital Shorts event provided an insightful review of key developments in e-commerce in 2007 and discussed trends for 2008.

A good number of people attended, mainly on the agency side. There were very few retailers which I thought was a great shame they would have benefited greatly from the information presented by Ian Jindal, who is a heavyweight in the world of e-commerce having worked with leading stores such as House of Fraser, Austin Reed and Otto UK.

Online businesses must get to grips with the doughnut analogy

The main theme of the Digital Shorts evening was that despite a 54% increase in online spend in Christmas 2007 as compared to Christmas 2006, and projections that Christmas 2008 will see a further 50% increase on top of that, consumers who spend online are becoming very selective about who they spend their money with. This is mainly due to the increase in mortgage rates and credit repayment levels which is making consumers more aware of their buying behaviour.

Hence the doughnut analogy! The future of internet retailing is doughnut shaped – there is no middle ground for businesses to play it safe. To succeed in 2008 any online service/product provider will need to be at the top of their game or else they will simply fall to the bottom.

The retailer that sets the pace for all other competitors by investing money in and being the first to introduce key products and services that will benefit their customers, will not only exceed their consumers’ wants and expectations but will also lead the customer to expect nothing less from competing websites. If competitors cannot provide the same level of service or product, they will be held in low esteem.

Businesses should already be building relationships with consumers through social networking sites

The rise of social networking websites such as Facebook and Twitter means that people/consumers are now communicating their thoughts, feelings, like and dislikes, with friends and acquaintances through profile updates and news feeds. When people log onto these sites to update their profiles and interact with others, they are presenting themselves as available to communicate and be communicated to at that specific moment in time.

Businesses should be taking advantage of this zero cost opportunity. By creating informative groups on social networking sites, retailer can keep their members updated with relevant news and information about new products or services or company information through news feeds or group updates.

In the long run this will prove much more cost effective and beneficial to both the retailer and the consumer than email marketing or SMS messaging. It also provides a form of viral marketing: once people sign up to your group, their friends will be notified and may be encouraged to view or join your group themselves.

The importance of “metadata” and consumer profiling

The third section of the Digital Shorts presentation drew together ideas about data collection in particular the collection of “metadata”, a term used to describe data collected about individual consumers buying or browsing behaviours on a website and using it to persuade other people with the same conduct to make a purchase or perform an action. An example is Amazon who already do this by recommending books or CDs that other people have viewed or bought to people browsing similar products.

All companies should be engaging consumers by asking them to provide feedback about products they have purchased such as how user friendly they are, what they have been used for, whether they would be willing to submit images or comments that can be used to persuade other potential customers to also buy the products.

Conclusion

I found the Digital Shorts presentations to be informative and entertaining. The three sections above outline the main points discussed at the event and provide food for thought for 2008. The key points to take away are that businesses must now strive to be the market leader; there is little room for market followers, or even market challengers.

Businesses should be including participation on social networking sites at the top of their agenda for their communication strategies. Social networking methods of communication can prove to be cost effective.

Companies should also think very carefully about how they spend their own money. They should be investing in means to make the collection of data easy for both the business and the consumer and also efficient means to clean the data and present it back to the users in a useful and persuasive manner.

I hope that you found the above summary of the presentations useful. If you have any comments you are welcome to post below or email me at sinead [at] azam.net .

Coming Soon: A review of Madeline Bunting’s expose Willing Slaves: How the Overwork Culture is Ruling our Lives. Click here to subscribe to RSS feed.