Summer 2014: Rising Sales but Struggling Strategies

The dog days of summer drag by pretty slowly. Sticky heat takes over the east coast, families go on vacation, and everyone is just waiting for football to start. It’s been a slow summer, but there is some good news for online retailers going into the final stretch of the year.

Even though total retail sales remained relatively flat, online sales for July rose 14% compared to the previous year. Led by strong gains in jewelry (18%) and clothing (16%), July’s growth was buoyed by general consumer optimism. According to a
Deloitte survey, 37% of respondents said they had confidence in the economy’s prospects, an eleven point bump from last year. Still short of the majority, but hey, retailers will take any improvements.

With the economy improving, retailers recognized the need to focus on improving their own strategies with the back-to-school season almost over and the holiday season fast approaching. More specifically, retailers have focused on their omni-channel strategies, as the data from July outlines their increasing importance

omnichannel

Desktop orders fell from 84% to 80% while smartphones picked up the slack, accounting for 10% of orders compared with 6% in July 2013. With shopping on different devices comes advertising catered for different devices: email marketing has continued to prove its use in mobile marketing. Cost-per-click reigns supreme on tablets, while organic search tops all other methods leading to purchases on desktops.

As the rise of mobile and cross-channel shoppers shows no sign of slowing, retailers are trying to adapt, but implementation is always tricky. How are retailers’ channels meshing? And what strategies have proven effective? With the help of a RSR research report, we have found what July’s successful retailers implemented and what lagging retailers did wrong.

The first problem that many retailers face when incorporating their digital channels with the brick and mortar experience is deciding what role online should play. Obviously, the primary reason is to give customers another way to purchase goods. It’s still retail, after all. But the secondary motivations for investing in digital channels is what separates the successful retailers from the rest. The successful aim for their alternate channels to drive traffic, while the less effective retailers focus their digital channels on creating brand awareness.

laggards

Intuitively, that makes sense. Stores with a strong online presence ultimately want that to translate into real life; few major retailers integrate their online and physical stores like Nordstrom. Nordstrom not only offers free shipping and free return shipping for those who love trips to the post office, but also allows cross-channel exchanges to bring people into nearby stores.

nordstrom-free-shipping-site
They even sell the book on free shipping and free returns

Foot traffic has always been more valuable than online traffic, with higher conversion rates (~20% as opposed to 5% at most) and stronger customer loyalty. Arrange your online channels to convert clicking into walking (and vice versa) and see both channels succeed.

One other part of retailers’ cross-channel strategy that still puzzled some in July was inventory management. If you are a retailer with a physical location, following Nordstrom’s lead with cross-channel pickup and exchange is a good business move, but it creates an awkward inventory situation. Does that purchase come out of the distribution center’s allotment or the store’s own inventory? What about a good ordered online and returned in store? Working out the logistics of an omnichannel strategy is necessary to avoid chaos during your holiday season.

inventorycontrol

With the summer winding down, a couple of problems have stood out to retailers, and with the largest shopping season still ahead of us, a few tweaks to your omnichannel strategy can smooth out your operations. If July taught us anything, it is that even if things are getting better, there is always room for improvements.

 

Contributing WiseWorder: Jack Symington

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Min-Jee Hwang

Min-Jee is the Marketing Director at Wiser, a dynamic pricing and merchandising engine for online retailers. She has extensive experience working with SaaS companies and holds a BA from Carnegie Mellon University and an MBA from NYU Stern.