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Multichannel business on the upswing

Online shopping is eating an increasingly larger portion of the overall shopping cake. Here we’ll discuss what product sectors are growing the fastest and whether retailers should invest in multichannel business now…. or now…. or now?

Why customers go online

Most retail sectors are experiencing a growth spurt in multichannel business at the moment. The portion of online shopping is constantly increasing and no wonder - buying online is easy and effortless: the shop is open 24-7, "at home" and the goods will arrive to your front door or nearest post office. What could be more convenient?

The prices of the products are often lower online or at least it's easier to make price comparisons there than in physical stores. The fierce competition in parcel deliveries has pushed the delivery costs to a tempting level for the customers. Some online websites even offer delivery and return free-of-charge.

In Finland, men have found online shopping to be an excellent way to purchase consumer electronics, car supplies and spare parts. Not surprisingly, women shop mostly apparel items and books. But the home-coming queen of online shopping in Finland is the travelling business. Tickets, accommodation and whole travel package solutions are bought online. The second biggest individual group - traffic - includes everything from cars to tires and spare parts.

Online -shopping -in -finland ---pie -chart ---web

Join the club now or see where it's going?

When looking at the pie chart above, the apparel cake looks tiny considering it refers to women's most popular online shopping items. And women do shop… a lot. Well, the reason is that we simply spend more money on travels and traffic than we do on apparel items, which extorts the chart result somewhat. When it comes to retail items the following figures and facts tell us how big a deal online promoting and web shops actually are:

  • Today 10% of sales take place on the Internet. Economist Intelligence Unit estimates that this figure will grow to a third (33%) by the year 2022.
  • Among people who use the internet, almost one fifth (19%) of all European shopping is done via the internet
  • 96% of European internet users research online before purchasing and 87% shop online
  • The Visa e-Commerce Consumer Monitor Research 2012 found that nine out of ten (90%) people surveyed in eight countries across Asia Pacific, Central Europe and Africa, have made an online purchase in the past year and 92% indicate that they will do so the following year
  • Americans spent more than $200 billion on online shopping in 2011 and are expected to shell out $327 billion on Internet stores by 2016
  • More than 70% of online shoppers during the holiday season said they purchased on the Web rather than in stores because they thought the promotions were better online (Forrester Research)
  • 51% of European internet users say the internet helps them choose better products/services
  • 46% of European internet users say they often visit the website of their favorite brands
  • 79% of consumers at least sometimes seek online coupons before purchasing. Further, 65% of consumers would like to receive a weekly email alerting them of coupon offers
  • 91% of consumers indicate they are likely to register for deal sites

Looking at the figures above, we can all most certainly agree that it has been established - the question isn't whether retailers should invest in multichannel business or not. It's WHEN. And the answer to that question is of course, NOW. We are experiencing a paradigm shift in shopping behavior. And as we all know, "it's the customer's way, or the highway".

RFID supports multichannel business

As stated above, it's high time to go online. Already did that? Well, good. But, we also know that offering products on the internet isn't always enough to generate sales. 70% of shoppers entering a website with the intent of buying something leave empty-handed. Why is that? The most common reasons are:

  • Poorly designed website caused customers not to find what they are looking for (not much RFID can do about that)
  • Out-of-stocks (RFID comes to the rescue)
  • Lack of real-time information about stock levels (RFID solves this too)

So, what if the retailer had an RFID based system? As Jessica Säilä wrote in her blog post "RFID Helps Grow Multichannel Business", e.g. American Apparel and Van Vuuren Mode have gained remarkable benefits in their online operations thanks to the implementation of RFID. These are the most common benefits:

  • Stock accuracy of 99%
  • Reduced out-of-stocks thanks to real-time information in and between stores and stocks- Efficiency in operations (stock taking, item registering, packaging etc.) means more items are ready for shipping to customers faster
  • Improved customer experience e.g. through click & collect services

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