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Stagflation set to strike e-commerce sector

~ Avail Intelligence warns online retailers to plan now and protect business from economic slowdown ~

May 19, 2008

UK online retailers without a robust business model will be hardest hit by the next two years of ‘stagflation’, according to e-commerce expert Avail Intelligence.

Stagflation represents the soaring costs and weak growth that are set to characterise the UK economy over the next few years. The e-commerce specialist is urging UK sites to address three key elements of their business model now in order to survive tough market conditions:

1. Reduce the cost of customer acquisition
Increasing customer numbers, while reducing the costs involved in attracting and retaining their business will be a critical survival tactic for online retailers. Ensuring the most effective customer journey through the site will encourage regular visits and repeat purchases. Social behavioural merchandising strategies must become a central focus - personalised offers, recommendations, reviews and relevant items of interest can help entice customers to develop an affinity with the site

2. Implement an effective and robust returns system
The one challenge all online retailers face is that customers cannot physically see or handle the products they want to buy. Therefore ensuring customers can easily return unwanted or unsuitable purchases is critical. From the retailer’s perspective, costs should be kept to a minimum, while maintaining the highest possible customer service levels. Additionally, utilising information from the site’s customer base on previous purchases can help increase the amount of knowledge available to help shoppers make the best purchase

3. Streamline manual labour processes and costs
An online business still relies heavily on the physical processes running behind the scene that ensure orders are shipped correctly and transactions are completed efficiently. Online retailers need to maximise the workflows in place at HQ and warehouses to ensure the trust customers develop through the website is reflected in the delivery procedures

Executive quote

“The credit crunch is hitting the retail industry hard. Both the High Street and e-commerce outlets are facing a tough time,” said Dr Rolf Elmér, CEO, Avail Intelligence. “Online retailers especially need to not only ensure short-term survival but also long-term success in a very crowded market, while customers expect a fast, hassle-free process for their purchases. The margin for error is extremely narrow.”

“E-commerce sites should do all they can now to ensure their proposition for customers is as compelling as possible,” continued Elmér. “Retaining customers who purchase regularly will only be achieved by building the same sense of brand trust that consumers have for the High Street’s big names.”

About the company

Avail Intelligence is the leader in maximising the value of visitor traffic to e-commerce web sites. The company’s technology harnesses the community intelligence from site visitors to deliver the most effective shopping experience for new and returning customers.

Using advanced mathematical techniques from its research arm Avail Labs, Avail Intelligence has created the Avail eMarketing suite. The suite comprises a set of tools, which improve relevance when merchandising to and communicating with individual visitors across the entire Customer Interaction Cycle™ of a single web site or across multiple web sites.

The results are significant, immediate and measurable improvements to conversion rates and average order values.

Avail Intelligence’s technology is being used by over 80% of the leading Scandinavian e-commerce sites. Key UK customers include GAME, Woolworths, Berry Brothers and DVD.co.uk.

Contact details

Account Manager at LEWIS, the PR agency
Tel: +44 (0) 161 601 7740 Fax: +44 (0) 161 601 7741
Email: avail@lewispr.com
Website: www.lewispr.com

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Stagflation set to strike e-commerce sector

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