Aug 2008
Small business benefit from consumers going online
Online shopping is giving small retailers and suppliers an opportunity to flourish in the downturn. IMRG report internet shopping up 38% this year bucking the high street sales declines with the implication that consumers are using the internet to buy at the best prices.
The internet can be a playing field leveller for smaller retailers competing against the larger retail players as sites offer niche products can be set up and marketed at reasonable cost and reach a wide audience previously only accesable to those with huger advetising budgets or large high street sales channels. Online spending now represents 17% of consumer spending, and web shopping is expected to account for 30%-50% in the next five years.
Notonthehighstreet.com:
Holly Tucker and Sophie Cornish are struggling to cope with the rapid growth of Notonthehighstreet.com, the business they set up two years ago. Sales are up 350% on last year and are predicted to reach £3.5m this year.
Despite gloomy predictions for the economy, Notonthe highstreet.com is flourishing with sales predicted to reach £3.5M being up 350% on last year. So they have just secured £1m from a private investor for further expansion.
Notonthehighstreet sources clothes, gifts and homewares from small suppliers. Holly Tucker says: “We provide an opportunity for thousands of independent suppliers to sell their products.... Sites like ours are acting as a kind of shop window for the long tail of the internet.” Alison Wade at Butagift.com argues that small niche firms or those with an expertise will be well placed to flourish as suppliers to sites that act as virtual marketplaces. Buyagift.com had sales of £11.7m this year, up 30%.
Anyone wanting to grow beyond being a niche supplier or retailer must be prepared to inject funds, said Tucker. Growing fast involves a significant investment in pay-per-click advertising and search-engine optimisation.
“Driving traffic to the site is key,” said Tucker. “We spent £250,000 on search-engine marketing last year. The size of the average customer’s shopping basket, brand awareness and trimming overheads to a minimum are all key things to concentrate on.”
The time is ripe for those who can get it right, said Tucker.
“The writing has been on the wall for a while for smaller bricks-and-mortar retailers. They just can’t afford the rents and rates. When there are 19 mobile-phone shops on my road in London it destroys the things that once made shopping on the high street special,” she said.
“Women in particular get the chance to shop online without kids in tow. People used to talk about not being able to touch and feel goods but touch has been replaced by much richer experience now with video, striking photography and three-dimensional imaging. Superior returns policies and huge choice also make a difference. We really do believe the online boom is finally happening.”
Buyagift.com:
Growing a small-scale online operation into something substantial requires customer focus and effort. Buyagift has built a database of 400,000 customers and works hard on retaining them.
Getting the basics right is vital, said Wade. “Service, packaging and reliable delivery are all-important. Being able to buy in volume is important, too, so you can compete on price.”
Lighting Direct.co.uk:
Staying close to your customers and creating trust have been vital for Gary Berg, founder of Lighting direct.co.uk, which grew sales 20% to £2m in the last year.
“There’s a great chance to differentiate your business online by giving great service. Giving the customer confidence that their credit-card details will not be cloned is important and giving them someone they can talk to and keep them up to date if there is a problem can make a big difference,” he said.
Sourced from: The Sunday Times & IMRG