A view from Steve Goodheart

Opinion: The fears which still blight online retailing

LONDON - "In times of retail trouble, stay close to your customer." This seems an obvious statement but why then, in 2008, are there still stores and brands seemingly afraid of taking the most obvious step towards securing the ultimate retail relationship?

Back in 1999 when I helped Littlewoods become groundbreakers by going online, you could understand and even excuse those who didn't buy into the concept.

The "we'll never sell clothes online" mentality of 1999 should not still be casting a shadow over the sector today, when clothing amounts to around 17% of online market spend.

But almost ten years down the line, just under half of the top 130 UK clothing retailers are still not trading online according to a survey by online retail specialist Zendor.

Why don't they want a direct relationship with their customers -- and all the benefits that go with it?

In a word -- fear.

Fear of unknown trading returns, fear of the cost, fear of the infrastructure, fear of the resource implications.

And that fear is putting some of the top clothing retailers in the country in a position where they don't have a relationship with their customer -- and have no contact with them at all unless they physically walk into the shop.

The good news is that if they face up to those fears they now have a wider variety of options open to them to springboard themselves into the online sector.

What retailer in their right mind would want to miss out on a system where they can communicate directly with thousands of their customers thanks to the data collected through online trading?

Our research has revealed that there are six myths preventing some of the biggest names in the high street from selling online.

1 - Going online will cannibalise my store sales and upset my distributors

Busted: Most major studies have concluded that going online creates a win-win situation, driving football into stores because overall brand presence is wider through online. Being online could also enable a better information and order flow with distributors.

2 - Without an experienced internal project champion I can't make it happen.

Busted: There are partners who can provide a comprehensive "planning through to delivery" service which can supplement your team on a project basis.

3 -We are unsure if there is a market for our type of product line. 

Busted: Currently, 17p in every £1 spent on retail transactions is spent online and we believe that in two years' time that figure could be 25p. Can retailers afford to miss out on this slice of the pie? They should be asking how they can make online work profitably for their business, for example, by incentivising or changing the product mix.

4 - It will eat up all my IT resources and put my core business at risk.

Busted: There are outsourced "IT light" solutions which can get businesses online quickly, using a separate warehouse and avoiding the IT blockage. This allows businesses to build up the scale of their online operation before investing in full integration.

5 - We won't be able to set ourselves up to deal with customers directly.

Busted: Through simple customer relationship management techniques it is relatively easy to start serving and marketing to the most powerful asset you will have: your own customer database.

6 - We have now fulfillment infrastructure and setting one up will be a nightmare.

Busted: You can keep it simple and buy a delivery service "out of the box", which takes and fulfills orders. You can even go into their call centre and train their people to your requirements.  

Steve Goodheart is a partner at online retail analysts Transaction Partnership.