Merging clicks with bricks
Merging clicks with bricks
By Anita Arthur in London
Published: August 20 2001 10:33 | Last Updated: August 22 2001 09:47
Internet stocks may have fallen from grace but the concept of selling over the internet is still on solid footing. Until recently, however, only limited data were available to show the level of growth.
Interactive Media in Retail Group (IMRG), the UK e-tail industry body, has created what it claims is the world’s first e-tail sales index.
The UK is the largest e-tail market in Europe, worth £3.9bn in 2001, according to Forrester Research. Germany is the second-largest market, worth £3bn, and France, third at £905m.
About 54 per cent of the adult UK population use the internet and a third of those – about 8m people – shop online. The Post Office forecasts that online shopping is about to explode.
Tackling the fulfilment problem
Changes in shopping habits have so far failed to materialise as quickly as expected. The problem of fulfilment remains the biggest hurdle for would-be e-tailers.
Reports abound of internet shoppers waiting days and weeks for items to be delivered. Companies regularly fail to meet their promised two or three-day delivery times. To compete effectively with “bricks and mortar” companies, e-tailers need to speed up delivery or risk losing consumers who have become accustomed to instant gratification.
To address this need in the UK, companies like Bearbox, Bybox and Homeport are offering three different models for convenience consumer delivery: the secure box (outside a customer’s home); the local drop-off point (a delivery point designated by the customer); and the purpose-built collection centre.
Analysts at Forrester Research predict that by 2003 there will be two deliveries per household per week, thanks in part to the development of these new delivery methods.
Delivery companies are also forming affiliations with large retailers such as Tesco and Sainsbury.
James Bates, marketing director of Bearbox, says his product is a secure way of offering the delivery solution that customers want. Installed outside the home and requiring no wiring, the customer has control of who has access and anyone who goes into the box is identified by a unique PIN number.
In contrast, Homeport’s boxes are left outside the home for up to 12 hours. Mark Lunn of Homeport says: “Retailers pay a fee to use the boxes, which are cheap to install”.
Bybox has opted out of the box method and offers 24-hour secure lockers in designated areas. Customers can pick up goods at their own convenience. Dan Turner of Bybox argues that “consumers are fed-up with having to pay delivery costs and then more for a box”.
These delivery methods are not cheap however. Customers will have to pay a fee for installation and monthly charges – on top of what they have already paid to the retailer. And they will appeal mostly to the affluent and suburban population.
Richard Hyman, chairman of Verdict Research, says: “Just as physical retailers are moving online, it will not be too long before pure players [internet-only retailers] open a physical presence, making their brands better known and reaching more customers.”
Unless pure-play e-tailers can come up with a solution to the fulfilment problem and forge partnerships with “bricks and mortar” companies, their days could well be numbered.
