Online retail faces its own challenges after High Street closures

"Who will buy?" is one of the more plaintive numbers in the Oliver! musical, but it might also be the theme tune for Britain’s retailers. The last few years have seen the nation’s High Streets suffering the most damage since World War II, with the collapse of Woolworth’s beginning a commercial crisis that has seen the demise of chains like HMV, Comet and Jessops.

The glib answer has been that the big bad internet is to blame and that everybody prefers to shop with the click of a mouse, at lower prices and with the convenience of quick delivery. That may only be part of the story though. Ecommerce analyst Graham Cooke argues in Wired that online retail is also under-performing.

Cooke points out that ecommerce enjoyed a natural upward curve simply because of the gradual take-up of the technology and the increasing acceptance of buying online from a conservative consumer base. That growth has limits though, and the pinch is beginning to be felt.

Mighty organisations like Amazon, that have established a near-monopoly with low prices and a smooth customer interface, prosper, but smaller retailers are facing the same sort of struggles as their bricks-and mortar equivalents. Part of the problem is the low conversion rate of many sites.

Conversion rate is the percentage of site visitors who end up spending money. For sites with huge amounts of traffic, a conversion rate of 2% is acceptable and profitable. For smaller retailers that conversion rate is as alarming as a butcher’s shop where only two in every hundred browsers actually buy any sausages.

For sites to improve that percentage, Cooke suggests that ecommerce needs to learn a few lessons from the shops that still prosper. He cites the example of the Apple stores, that have become hangouts for geeks and early adopters, and John Lewis, a paragon of trustworthiness and customer service.

It’s an intriguing concept, that the High Street can still teach the wired world a trick or two, although the nagging worry might be that the slump in retail has a more basic cause. In Bill Clinton’s phrase, it’s the economy, stupid.

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