Retailers must adopt the mindset of a modern consumer
“The rise of e-commerce is challenging retailers: it’s changing the way consumers shop but on a more fundamental level, it’s altering our economy,” reports NZ Post.
NZ Post’s latest report on e-commerce shows that online shopping grew eight times faster than shopping in-store in 2018 (16 per cent versus 2 per cent) and showed encouraging trends for New Zealand online retailers.
The report, The Full Download 2019, was undertaken by NZ Post with Datamine because courier delivery has now surpassed mail as its largest source of revenue.
The report shows 1.8 million New Zealanders chose to shop online last year, spending a total of $4.2 billion.
The large growth in online shopping has mainly come from Kiwis shopping more often, with online shoppers now hitting that ‘buy’ button 22 times each per year.
The report also cites the emergence of ‘super shoppers’, with nearly one in 10 Kiwi online shoppers spending over $9,000 online.
This is good news for Kiwi businesses, says Bryan Dobson, chief marketing officer at NZ Post.
“Spending with New Zealand online stores grew at nearly double the rate of growth for international online stores – encouraging news for our local e-tailers,” says Dobson.
The report finds shoppers feel more satisfied when buying directly from New Zealand websites (88 per cent) and marketplaces (81 per cent) than buying from overseas based websites (66 per cent) or marketplaces (55 per cent).
“This is a point of difference that New Zealand based online retailers can turn into a real competitive advantage,” it states.
A lesson from cinemas
The report findings have prompted economist Cameron Bagrie to point out that, “So many New Zealand businesses need to reinvent themselves.”
“They will need to find better ways to connect and become meaningful to consumers,” says Bagrie.
The former chief economist for ANZ New Zealand, points to the cinemas which are doing well amidst market disruption.
He notes how a few years ago people were saying cinemas were finished with the emergence of another digital disrupter – Netflix.
The cinemas have repositioned themselves as entertainment, offering bigger seats and the ability to take a drink in.
“A lot of what we do simply comes down to mindset,” he says.
He says a positive development for Kiwi retailers is the closing of the GSP loophole that gives international retailers an edge.
From October this year, foreign companies will be required by the IRD to become registered and to collect GST on goods under $400, this will make overseas products less desirable.
Bagrie predicts this will be a boost to local New Zealand retailers and a windfall tax collection of some $57 million in the first year.
The report highlights two emerging trends retailers have to prepare for – the growing popularity of Buy Now Pay Later Payment methods and marketplaces.
Around 12 per cent of shoppers use Buy Now Pay Later Payment, as offered by Afterpay, PartPay, Laybuy and Oxipay.
The report notes over 228,000 Kiwis have already signed up to BNPL schemes and women, in particular, are loving it with 70 per cent of BNPL purchases made by female customers in 2018.
Marketplaces, on the other hand, are virtual shopping malls.
Trade Me is NZ’s most successful marketplace, and other popular local sites include GrabOne and NZSale. The big global marketplaces include Amazon, Alibaba, eBay and Wish.
Facebook’s recent move into marketplaces has given easy access to millions of products worldwide and opened up New Zealand products to billions of customers, the report states. “If this is where shoppers are congregating, then sellers shouldn’t ignore them.”
NZ Post reports the global trend is for more specialist niche marketplaces that bring like-minded buyers and sellers together. There is also a rise in localised marketplaces and more platforms trading services rather than products.
“Whether selling products or services, retailers seeking to grow their online sales must consider the marketplaces where their customers are hanging out and then find ways to integrate them into their business strategies,” the report advises.
Test, test and test again…Online shoppers are unforgiving
The report shares at least five areas every business needs to succeed at e-commerce.
First is to adopt the mindset of a modern consumer.
“The digital generation doesn’t just discover your site and press the ‘buy now’ button instantly. They’ve gone through a convoluted process that’s involved discovery, research, peer reviews, price scrutiny, receiving recommendations and comparing products. The more you understand that process, the more you can influence it and ensure your products are where they are looking.”
Second, is to ‘test, test and test again’.
“Online shoppers are unforgiving,” the report states.
“If your much-heralded online site doesn’t work, they’ll let you know by not coming back. This applies for changes to existing sites as much to startups. Make sure everything works smoothly, easily, and professionally before launching and never stop improving. Think mobile first in your design process as more consumers are shopping on a mobile device than desktop.”
Third is to remember that consumers are making a leap of faith when buying online.
“Anything that raises questions about the security, or the robustness or genuineness of your online site, is likely to put buyers off,” the report states.
Fourth is to consider the many ways to pay.
Businesses should pick up on the trends such as young female shoppers spending more and using a Buy Now Pay Later option. If your store is targeting New Zealand’s growing Asian population, consider adding familiar payment options like Alipay or UnionPay to your site, the report states.
Fifth is to provide fast shipping.
“We may not always be able to fight international e-tailers on price, but we can win Kiwi shoppers’ hearts through great delivery,” the report states.
Businesses can offer a same day or next day delivery, easy tracking notification and offering options of where and how customers would like their goods delivered.
Businesses are also advised to regularly review their website data to understand user behaviour and learn what is posing challenges for customers.
Continually make meaningful improvements to the site, and establish a customer feedback loop such as Net Promoter Score.
Businesses should also consider adopting AI technology such as a chatbot to help scale their service capabilities, the report further advises.
Sign up for CIO newsletters for regular updates on CIO news, career tips, views and events. Follow CIO New Zealand on Twitter:@cio_nz
Send news tips and comments to firstname.lastname@example.org @divinap