Getting the Online Retail Formula Right

November 22, 2012 11:19 am

OPINION PIECE

Thursday 22 November 2012, Ijan Kruizinga: There are clear lessons to be learned from this week’s Click Frenzy failure, but if Australia’s online retailers don’t pay attention and learn them quickly, it will be a wasted opportunity.

Much has already been written about shoppers’ frustrations at being unable to access the Click Frenzy website during the over-hyped 24-hour bargain spree after the massive traffic volumes crashed their website.

Not only did the Click Frenzy site go down for several hours, but the click-through traffic generated when it was online crashed the sites of retail partners like Myer, Bing Lee and Dick Smith. Copycat sales by David Jones and Harvey Norman also experienced technical challenges as Australians showed up in droves to take advantage of the promised online deals.

This is an indictment of the slap-dash approach the big Australian retailers have typically taken to the digital economy. While bemoaning the impact of online retail on their bricks and mortar stores, many of the nation’s most prominent brands have failed to give adequate attention to establishing their own online presence or ensuring that their technology infrastructure is equal to the demand.

Lesson 1: Plan and Test – If Australian retailers want a slice of the online pie, they must do more effective planning and testing. Success in the digital economy will only come if vendors invest sufficient resources to ensure that the online buying experience they deliver is at least on par with their international competitors.

The traditional retail sector is founded on seasonal events such as Christmas, Valentines Day, Mother’s Day and so on, any of which will deliver a significant spike in sales and revenues. Of course, bricks and mortar stores will prepare for this by hiring additional staff and other resources. Click Frenzy was an attempt to manufacture a similar outcome online, but one that was carried out without giving enough thought to the level of resources needed to make it a success.

Not only were the large retail sites ill-equipped for the traffic generated by the Click Frenzy event, but even on the night, there should have been enough skilled engineers on hand to quickly implement contingency plans in the case of failure or over-subscription.

Andrew Fisher, founder of technology research lab, Rocket Melbourne, every aspect of this endeavour could have been anticipated. “A simple bit of maths by someone who understands traffic and retail customer behaviour could have told you that you’d need to do something special,” said Fisher.
Clearly, Australian retailers need to think more seriously about their online strategies instead of sitting back and demonising those overseas sites that are successfully servicing this market.

Lesson 2: Communicate – Many of the challenges experienced by the retail sites could have been avoided by better communication between Click Frenzy and its retail partners. Online promotions like Click Frenzy have been extremely successful overseas and Australian customers have now shown they’ll participate. However, retailers, e-commerce vendors and hosting companies need to work together to design and implement online buying experiences that are second to none.

It’s not enough simply to replicate the offline buying process online … the Internet offers unique advantages for shoppers such as price comparisons, global sourcing and friend recommendations. This means retailers must do their homework and leverage the best possible systems and processes to drive high levels of customer satisfaction.

Broken links (of which there were plenty!), insufficient information or offering only limited choices all create dissatisfaction and frustration for shoppers. And be warned, if Australian retailers don’t get the formula right, there will always be a host of offshore companies lined up and ready to take those customers off their hands.

Lesson 3: Make Authentic Claims – If Click Fail demonstrated anything, it was that Australians are happy to shop online and are relatively sophisticated when it comes to recognising good value. In addition to numerous tweets and Facebook posts about the sites being down, there were plenty of complaints that many of the deals being offered were no better than other prices available online.

Today’s online shoppers are sophisticated and increasingly comfortable with price comparison tools that allow them to locate the best deals. Retailers who misrepresent their sale prices can expect to get burned both in reputation and at the cash register.

Trust, once broken, is difficult to regain. The true cost of this retail experiment will only be felt in coming weeks and months as Australian consumers make decisions about whether to venture back online and who they will trust to deliver their online experience.

An overnight poll of more than 70,000 people by msn.com.au revealed that only 27 per cent would give Click Frenzy a second chance, with over 51,000 respondents saying they would not.

As Christmas approaches and present shopping for loved ones takes a higher priority, online retailers will again be tested. Their ability to deliver will determine their future success.

Ijan Kruizinga is the Sales and Marketing Director of Crucial Paradigm, one of Australia’s leading cloud hosting service providers.

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