E-tailers need to carefully find and maintain their balance cautioned a report by the Boston Consulting Group (BCG).
BCG observed that "brick-and-click retailers" who are attempting to drive commerce through both on & offline channels are busy replacing pure-plays.
In the midst of the ongoing downturn these retailers are operating in a new and largely untested playing field, noted Peter Stanger, vice president and leader of BCG's Business-to-Consumer division. "Consequently they will need to take steps to carefully manage the delicate balance between their online and offline retail channels," he counseled.
The BCG survey, conducted in collaboration with Shop.org, found that although per-customer acquisition costs had dropped significantly during 2001, customer conversion rates were falling fast. "Our hypothesis is that as retailers are upping their strategies to bring in higher profits, they are simultaneously putting off potential customers by raising prices or trimming back on the features and service levels they were providing in the past," asserted BCG e-commerce manager James Vogtle.
Like other analysts, BCG also cautions e-tailers to not neglect potential e-returns at the expense of profits. In this regard Vogtle counseled brick-and-click retailers to remember that a properly managed online presence simultaneously drives sales through offline stores.
With overall consumer retail spending in a current slump Vogtle cautioned online retailers to watch out for related sinks in offline spending. "General retail trends are beginning to have an impact on online channels," he warned, "especially in the case of discretionary items such as travel, books and computer hardware."
Online retailing has come a long way in an awfully short space of time, and the learning curve has been steep, noted Elaine Rubin, chairman of Shop.org. "Now the real excitement begins ... as online retailers gather more experience and develop more sophisticated techniques, the potential is there to delight consumers in new and interesting ways." Stanger agreed, adding that the eventual winners would be those e-tailers that "most effectively acquire or develop the capabilities they lack and integrate them with their existing strengths."
All in all, BCG and Shop.org were bullish about the prospects of e-tailers that have emerged intact from the dot-com fall-out. The survivors, they conclude, are "stronger, smarter and more competitive."
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