Features

Three Trends of Online Retailing

By Sophia Mayengbam

Internet retailing is no doubt booming and has tremendous growth opportunity. Along with the boom, retailers continue to face new emerging problems too. Market research company GfK highlighted three surprising trends in its research conducted on internet retailing.

According to the study Gfk said that surprising products with more than 10 percent of sales on the Internet. There are many products where over 10 percent of all sales occur on the Internet, for instance MP3 players (20 percent), digital still cameras (18 percent) and smart phones (14 percent). However, there are many, less obvious, products which are also being bought in large numbers on the Internet:

Breadmakers – 20 percent
Coffee grinders – 12 percent
Dishwashers - 10 percent

The second point that the study revealed was that higher average spend on the Internet. The Internet allows consumers to become more price conscious than ever before, for example though price comparison websites. Consumers appear more likely to purchase high spec items on the Internet, in the knowledge that they are getting a better deal. An example of this is Plasma televisions, where there is a marked difference in the average spend on the Internet compared to the high street – 1800 euros and 1350 euros respectively.

The third point is -- expect to manage a faster product lifecycle in your online retail channel. GfK said the Internet effectively commoditises a product - enabling it to be simply assessed on price and function which leads to a faster product lifecycle. For instance GfK's price index comparison for a digital camera sold on the Internet versus the High Street. From an equal high street and Internet launch price in March 2005, the price on the high street had fallen by 16 percent by April 2006. However, the price on the Internet had fallen by 22 percent.

The implications to those retailers looking to cash in on the boom in Internet retailing are clear. Kervin Henry, Business Group Director at GfK, said, "Increased consumer access to high speed broadband Internet services, provides both an opportunity and problem for Internet retailers. This channel is likely to continue to increase in importance, but the decreased product lifecycle on the Internet means the key to survival means getting the product and price mix absolutely right."


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