Natives beats traditionals in online retail

  • Jon Lund 

Traditional companies opening up departments on the Internet easily captures lots of users, but scores low on consumer-trust, finding it hard to gain confidence of their customers. This is one of the main conclusions from a new analysis I’ve just published, “Oldschool/Newschool: Top 25 Danish e-commerce sites evaluated”. The report walks through the 25 largerst Danish online stores, nine of those being “native” e-commerce sites; 16 being e-commerce departments of “traditional” physical companies. On a scale from one to ten the natives makes 7,0 in consumer-trust while the traditionals faces a 5,7 verdict from consumers.

While it’s not really surprising that native e-commerce ventures knows how to do deal with customers (if they didn’t they wouldn’t have made it to top 25), it is striking how the old warriors seems to have missed the mark. Especially as Danish consumers seems to be substantially understimulated when it comes to online shopping: they’re all there and shopping away the few places they’re really allowed to, like in telecommunications and secondhand. I’d say their money is virtually burning in their pockets.

Customer-service and logistics are key to building your online reputation

The typical sources of consumer dis-trust are the reaction time and accuracy of answers to customer inquiries. It simply takes much to long time for the merchants getting back with feedback to their customers – and when they do, the answers are sloppy. Slow and inadequate shipping is another complaint often heard, as are faulty information given on the website on prices etc.

Good news are that customer-service and logistics aren’t rocket science. On the other hand: if left broken, not only will customers be frustrated, also all the promises of rationalization entailed by e-commerce threatens to evaporate in the clear sky.

Tap into strategic advantages of the internet

Customer service and logistics, unfortunately, wasn’t the only shortcomming of the traditionals. Comparing their ability to tap into the strategic advantages offered by the Internet I found their product range to be limited (although shelf space is free on the internet), their prices to be high (although this sets them back in searches and price-comparisons), and I found their social tools for online dialogue with customer to be less elaborated (although dialogue creates trust and loyalty). Finally I found all of the investigated “native” online stores to have benefitted from disrupting one or more established business processes. The same can be said about only 64 percent of the traditionals.

This finding points to a problem somewhat more complex than just delivering the goods and getting back on customer inquiries. It points to a lack of engagement in the online presence on part of the tradtionals. Being vested in a physical world seems to tie your focus and limits your abilities to address the potentials of the digital age.

Download full report

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“Oldschool/Newschool: Top 25 Danish e-commerce sites evaluated” is in 15 pages and includes 6 illustrations.

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