Online retailers bullish as competition intensifies

Online performance market rocketsNext Directory may be suffering but 80% of SME online retailers are confident they will increase sales this year, according to Royal Mail’s annual tracker study into the market, despite half admitting competition is growing rapidly.
The confident outlook builds on the sales success of 2015. More than seven out of ten (74%) SME e-retailers increased their sales last year. This is the highest level in the last three years: 58% reported increased sales in 2014 and 49% reported sales growth in 2013.
Online retailers are also confident about their customer satisfaction levels: 63% believe their customers have become more satisfied in the last year.
The most common factor in driving customer satisfaction is on-time delivery, voted by two thirds (66%) of those surveyed, behind the quality of products (62%) and the price of goods (57%) as key drivers of customer satisfaction.
An easy payment process – particularly important for mobile commerce – leapt up in importance this year. E-retailers now rate the payment process as the fourth most important factor for customer satisfaction, up from eighth place in 2015.
The overall increase in confidence in the market comes despite 53% claiming competition is more intense this year. Many have already identified new factors for competition this year: the rise of smartphone shopping (47%) and price promotions which lead shoppers to seek out the best prices (44%).
However, the main drivers of competition remain the same this year, with consumers’ price sensitivity and an increased number of websites as the main reasons for increased competition (both at 52%).
To address increased competition and increase sales in 2016, seven in ten online retailers plan to increase the number of channels they sell through: 85% are planning to list on additional online marketplaces. Half of SME online retailers intend to launch their own website.
Royal Mail Parcels managing director Nick Landon said: “Confidence is continuing to grow this year and that technology is playing an ever more important role in the retail world. Technology is influencing how people shop, where they shop and what they define as an excellent shopping experience. Our research shows that SME online retailers are plugged in to the needs of the shopper and they are taking actions to enable them to meet the demands of the discerning online consumer.”

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