The Truth About Online Retail

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The Truth About Online Retail

In a recent report that was produced by SAI Global Online Retail was rated as the 3rd least trusted industry in Asia Pacific. This aligns with similar reports that have been done internationally.

To some consumers this does not come as a great surprise but online retailers are asking why?


Do we really understand online retail?


This may seem like a daft question however the real answer in general is, no we don’t.

There is often a real lack of understanding of who the consumer is in online retail, what are the demographics and why do they buy online. This knowledge gap means that very often online retailers make all the wrong decisions when it comes to design, user experience, customer support and marketing. The mistakes lead to deeper mistrust of online retailers.

Interestingly similar surveys, and even the SAI Global survey, generally rate traditional retail in the top 5 most trusted industries.

So why do two lines of businesses which perform the same purpose end at different ends of the trust spectrum?


Understanding the customer


Baby Boomers highest revenue onlineIt would seem that many online retailers really do not understand who the customer that they are serving is or why they are buying.

Global services company KPMG recently released a report, The Truth About Online Consumers, based on over 18,000 consumers that provided some surprising insight. Most pundits of the online retail market will tell you that Millennials drive online retail sales. But in reality the Baby Boomers are the highest spenders online. This same conclusion is born-out by many similar surveys of the online retail market.

So focusing on the Millennials to shape your online retail strategy and approach may result in businesses that ignore key buyers. When people feel ignored or frustrated the result may be a loss of trust.


Website and Online Store Trust


Trust is not just about your website it is about the whole business, but ensuring that you have covered off the most important content can help to make your website trusted. You can find more information at eCorner’s Blog – Do Consumers Trust Your Online Store.


Online versus Offline retail


So let’s do a quick comparison of the areas that impact trust in online versus offline (or traditional) retail.


Who am I buying from?


When we walk into a bricks and mortar retail store there is an immediate determination of safety and security and “will I buy from you?”. You can engage with staff and that interaction will tell you if they are knowledgeable and assist with “can I trust you?”. There are many subliminal signals sometimes called “gut feel” but many buyers rely on it.

Online retail does not allow that same engagement that occurs face to face in traditional retail. So the buyer is searching for signs of trust. This often will end with a phone call, live chat, ratings and review or social media. However over 50% of online retailers do not want to have personal interaction. There are many causes such as the seller is part time and has a primary job, they sell on multiple channels and want to avoid conflict, they are not people focused, they don’t actually understand or have even seen the product that they sell. The list can go on unfortunately. However it is this attitude that impacts on the whole online retail space.


What am I buying?


In a traditional retail store the expectation is that you can touch, feel, use or sample the product that you are buying. The retailer has products on sale that they know and have researched. If something goes wrong then the store is there and should be able to help.

Online retail is very different. Of course there are very professional and competent online retailers who know and research products. But we have also entered the era if drop shipping and 3PL. So it is possible that a new online business can be started and sell a range of products which the business owner has never seen or used. Although the online store might be in Sydney, Australia the products may come from anywhere in the world and be delivered straight to the consumers door step. What can result is poor quality products and after sales services that is non-existent. Again this mismanagement of customer service tarnishes the whole online retail sector. What makes this worse is that there are online retail services providers that recommend this approach without consideration for the consequences.




How do I pay?


The question of payment is generally a source of concern for all online retailers and consumers alike. From Credit Cards, Digital Wallets such as Apple Pay, Visa Checkout and MasterPass, as well as Buy Now Pay Later – the different payment methods available are growing, with the aim to provide consumers with a more seamless and frictionless online checkout experience. Payment in store can be accomplished face to face. Services such as “tap and go”, traditional EFTPOS or even cash. Although fraud exists offline in general there is a feeling of safety watching the card being processed.

The online landscape however is an entirely different ball game, where fraud for Card Not Present (CNP) transactions are generally high and increasing. This is due to online criminals becoming more and more sophisticated. Banks, card providers or PayPal and payment providers will in general favour the position of the consumer if there is a challenge over a payment. However, there are plenty of fraud management options available for merchants to help protect themselves, whilst still remaining competitive.

We spoke with our payments partner, eWAY, about the state of online fraud for both consumers and retailers alike. Tony McGrath, Business Leader at eWAY, said; “CNP fraud losses are growing each year by over 70% YoY, meaning there is a growing need for online retailers to invest further into security tools to both protect themselves and combat fraud. At eWAY, we’ve recently launched anti-fraud management plans, enabling merchants to have access to more advanced fraud management tools. Investment in such tools, allows merchants to strike a balance between security and customer convenience“.

If you want to know more about protecting online payment the check out the eWAY Fraud Management Tools.


Don’t follow me out of the store.


Have you ever gone to a traditional retail stores and then been stopped on the way out and asked to complete a survey or leave information about what you want to buy? Or has someone from the store followed you home and then they pop up around town recommending you come back to the store?

Generally, of course, the answer is no. This kind of activity would be harassment and maybe ever a little psychotic.


Shopping cart abandonment, remarketing, pop-up forms!


Online retailers however think nothing of following the consumer around and popping up when least expected.

While these tools can be quite powerful for increasing conversions, they need to be used carefully and sparingly to not overwhelm the consumer and drive them away from online retail altogether.

It is also important to consider pop-ups can impact the mobile experience for consumers. Earlier this year, Google confirmed that they will be applying penalties for intrusive mobile interstitials including popups that cover main content, displaying standalone interstitials that the user has to dismiss before accessing main content or using layouts where the above-the-fold portion of the page similar to a standalone interstitial.

Ethical online retailers will generally have some controls in place with opt-in and opt-out options. But unfortunately the vast majority of online retailers just think it’s OK and as a result consumers do get harassed and do lose trust in online retail.

As technologies have been developed in the remarketing marketplace new ad blocking services have also arisen. Consumers do not want to be spied on, and seeing recurring information that they haven’t agreed to will often be seen negatively rather than positively.

Unfortunately, the providers of these services often get their revenue through click through fees and the like, so push retailers to maximise their spend rather than considering the impact that these forms of tools have on consumer perception.


Can Online Retail ever be Trusted?


In my opinion the answer is yes it can, but it will take education and a mindset change for some (maybe even a majority) of online retailers.

Online retail is a business and to succeed in any business you need to be and act professionally and ethically. Without an industry-wide perception change that online retail can be trusted and is a safe, hassle-free shopping experience, Online Retail will continue to score in the lowest rankings of consumer trust.


eway-logo-300Special thanks to our payment partners, eWAY, for the informative contribution to this article.

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