Strategy&: Online sales in the UK coming to a stand still

14 April 2015

The continued growth of online only sales may be coming to a standstill in the UK, says Strategy&’s James Walker in a recently released statement. According to Walker, this results from both logistical issues and customer behaviour holding back further e-commerce expansion. Developing a multichannel strategy and securing the delivery supply chain, may open up potential for further growth.

According to Strategy&, the UK’s e-commerce market could plateau over the coming two years. One of the key issues is that during the 2014 Christmas shopping period a range of retailers had problems keeping up with delivery from online sales. A YouGov poll finds that one in thee customers met with delays on receiving goods purchased on the Christmas period discount days, Black Friday and Cyber Monday. For some brands the delays were extensive, with the backlog at one high street store taking up to two weeks to resolve. With many shoppers responding to the delays by engaging in ‘multichannel click-and-collect’ services and having online bought products delivered to stores for pickup.

Online shopping - Strategy&

Way forward
Strategy&’s Retail Partner James Walker, says that data from the office of National Statistics (ONS) disclosed a ‘dramatic slowdown’ in the growth of e-commerce in terms of its eating into the retail market share over the past five years. “The e-commerce growth engine has run out of steam,” he says. The online commerce sector has now been flat in the UK for ‘about a year’ with growth in the ‘click-and-collect’ multichannel now evolving. The biggest development is in multichannel consumer engagements with retailers, Walker seeing room for improvements in multichannel sales if retailers ‘reinvent the role of the store.’ This would involve engaging customers to research products and look for deals online, but with the point of sale being in-store, or vice versa.

Solving supply chain issues too may be able to create a competitive advantage according to PwC’s Jacqueline Windsor, with most stores having similar online pricing – the delivery becomes a way of distinguishing one store from another. She remarks that: “If you can compare prices, you can compare products online, what's the differentiator? Can you get it quicker? Can you rely on that delivery? Are returns easier? It's actually all part of the product.”

Package truck

Care may need to be taken on demanding too much from delivery services, with recent going into administration of City Link highlighting issues with the current way delivery services are treated by both consumers and retailers. “Somebody has to pay for that ‘free shipping’ and at the moment that’s been the express parcels companies,” says John Manners-Bell, Chief Executive of Transport Intelligence.