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Market Research


Retailers struggle to get into e-commerce

A study reveals that the retail world is facing hard times to expand online sales preserving their profit margin

  • Key4Communications

Despite the efforts of retailers to adapt to e-commerce, a new study based on a total of 1,000 online surveys US consumers, conducted by JDA Software Group Inc., indicates that the current strategy is not working with all perfection. With a model of “Buy online, pickup in store”, retailers are trying to reduce costs, although, according to the study, 35% of consumers who opt for this payment method, half have problems picking assured products.

This data, according to the Wall Street Journal, indicate that retailers are facing hard times to expand its online sales if they want to preserve their profit margins. And to offer online products and make a delivery can pose extra costs; so many retailers have thought that by collecting products at the point of sale can reduce expenses.

Failure to pick up the product
Wayne Usie, senior vice president of retail at JDA, explains a practical and dynamic store always makes easy customer access to find what items purchased. However, a chaotic warehouse requires the consumer to seek help if orders are misplaced or messy. “In the store, you’re asking store labor to do more services for the customers than they had to do before,” said Usie.

Also, companies like Target Corp. and Urban Outfitters Inc. have been able to report rapid growth in online sales rather than sales made in the store. However, still they struggle to handle the high costs of this provision of home delivery: only the shipping can cost from $ 4 to $ 10 per package (depending on the company).

Investment in Technology

According to a survey of retailers conducted last December, also by JDA, the investment to be made in technology and infrastructure to handle the implementation of e-commerce also has its weight in profit margins: only 16% can say that respondents made a profit on demand through e-commerce. “Profitability is the biggest challenge because costs are rising faster than revenue,” the report said.

“They’re struggling with managing the task and additional work that’s required without making a difference in their labor expense, and that’s affecting customer service,” Mr. Usie said. “It’s indicative of a lot of the challenges these retailers are facing.”

The consumer becomes demanding
Experts still don’t dare to say how they will evolve consumer habits in the future, however, the price will be an important factor. Half of those surveyed for the study has been able to state that the costs are a key factor in the online order, lie that 60% of consumers have stated choose to collect your articles in the shop to avoid paying additional postage.

However, competitive offers such as free shipping on the same day as some companies like Amazon.com Inc. made consumers have become less tolerant of mistakes that may arise in service. The study by JDA has been confirmed as half of the respondents who had a problem with delivery during the past year have said not to buy in the store during the holiday season.

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