The strong online performance of the retail multiples over Christmas has reinforced the need for suppliers to raise the importance of e-commerce within their organisations or risk missing out on the channel’s further growth potential.
Many suppliers are still failing to address basic online requirements that will enable shoppers to find and buy their products. It’s the store equivalent of a product being in stock in the warehouse but not available on shelf.
On average, suppliers have only 60%-80% of products visible when shoppers are searching their brand or category. Too many fail to check what is happening online in the way they would in-store. The underlying reason for this seems to be a disconnect in roles and responsibilities within the supplier’s business, with multiple people involved in the ‘digital shelf’ process.
Although there are comparatively easy tactical changes suppliers can make to effect short-term improvements, there is perhaps an even greater requirement to create broader behavioural change. This involves elevating the importance of online within the thinking of suppliers’ senior management teams.
Online as a channel is still not featuring on enough senior stakeholders’ priority lists and, as a result, not enough effort or resources are being committed to it. This may come down to a lack of appreciation of the size of the opportunity. Too many senior teams are looking at online and judging that, currently, it equates to on average only about 6%-7% of sales. That’s true if you judge it purely on what is being purchased through specific retailer websites. However, some categories over-index on that, so suppliers need to ensure they are planning for this growth. Some categories are also more aligned to the online shopper than others.
With retailers thinking about e-commerce as a platform rather than just a channel, the halo effect is now accepted. So what you activate online has an impact on what people ultimately purchase in-store and vice versa.
We are in no doubt the size of the online opportunity is much greater than current market share suggests.
Nick Kirby is head of e-commerce at Bridgethorne