Benchmarking Report: E-Commerce in Trends and strategies among European online retailers from mobile to international commerce.

Transcription

1 Benchmarking Report: E-Commerce in 2014 Trends and strategies among European online retailers from mobile to international commerce. A white paper from idealo internet GmbH Berlin,

2 Foreword In e-commerce, competition is ever-growing and always just a click away. Staying informed on present developments and trends within the industry is crucial to ensure long-term success with your online retail business. In this white paper, we will be providing you with an overview of the current European E- commerce landscape, including the findings of numerous studies, covering various aspects of the online retail industry. In our research, we analyse the most popular shops on the idealo price comparison sites in the UK, Germany, France, Italy, Spain and Poland 1. Developing an international strategy for your shop is proving increasingly important, especially for retailers in a mature market such as the UK, where expansion potential lies further afield. Equipped with the right internationalisation measures, there is profit to be made and customers to be gained from abroad for UK retailers. According to a Global Shopping Behaviour study 2, 40% of consumers have made purchases from abroad and the UK is amongst the top 3 most desirable international shopping destinations. The analysis is based on 300 online shop and covers the following range of topics: What is the mobile strategy of the retailers? How is customer service and checkout handled? Which social networks are favoured by online shops? Which internationalisation measures should be implemented? In addition to the studies, you will also find background information as well as links to further sources on the focus areas We hope you find the guidance in this white paper beneficial to help appraise your own shop s activities and strategies. We wish you every success going forward. Kind regards, Your idealo e-commerce editorial team. 1 For this purpose, the 50 shops with the highest national Alexa Traffic Rank were identified from the 100 partner shops with the most clicks on each idealo site: idealo.co.uk, idealo.de, idealo.fr, idealo.it, idealo.es and idealo.pl. If the methodology for a study differs from this, we have marked it as such within the white paper

3 Contents Foreword... 2 Contents Shop design and mobile presence: Responsive Design, mobile sites and apps Online Shopping: from customer service to returns Advice & help: service channels on offer Checkout: Payment Methods Delivery and returns: who pays? Social Media Presence: popular platforms Internationalisation: Cross-border activities in Europe Conclusion Table of figures List of sources

4 1 Shop design and mobile presence: Responsive Design, mobile sites and apps The future is mobile. That much is clear but to what extent is it mobile? As well as serving as a replacement for the desktop PC and used by many as a second screen, over 85 million Europeans 3 now also use their smartphone or tablet to shop online, and the trend is on the up. In order to ascertain in which country online retailers have most successful adapted themselves to the needs of their mobile users, we have analysed the mobile presence of the top 50 shops on idealo. The results indicate to what extent the online shops are optimised for mobile browsing on smartphones and tablets, and show how many retailers have produced an app for ios and Android. UK online retailers lead the way in mobile shopping In the comparison, it is clear that countries with a well-established e-commerce landscape such as the UK have a more substantial mobile offering than the aspiring online markets of Italy or Poland (see Fig. 1). Figure 1: Percentage of European shops with a mobile offering 3 4

5 The strongest mobile presence is seen from UK retailers: 86% have a mobile-optimised site and/or app. However, it s not just the British retailers, consumers too are leading the way in mobile use and make up 40% of the entire European mobile revenue. 4 A third of German retailers do not have any form of mobile offering. In terms of mobile presence, Germany is still very much in the developmental stage ahead of Poland and Italy, yet behind France, Spain and the UK. However, the German shops which do have a mobile presence are on the whole ready to offer the complete package: mobile site (responsive or optimised) and an app. In the other countries, a single-track approach is favoured. In France, the number of shops with a mobile offering is higher on the whole, however many retailers decide to offer either an app or a mobile site rather than both. Mobile sites dominate, Responsive Design is still rare Europe-wide, the most popular option for online shops is a self-developed mobile site, relatively few have implemented responsive design (see Fig. 2) Figure 2: Mobile site or Responsive Design? When it comes to optimising their online shops for optimal display on various devices, UK retailers remain in first place, with British consumers enjoying an optimised site from 80% of the shops in our 4 5

6 study. 64% of German retailers and 60% of Spanish retailers were also keen to optimise their sites to include mobile users. In France, Italy and Poland, only around half of the retailers in our study offered a mobile-friendly site. For mobile users, it makes little difference if the online shop has responsive design or is mobileoptimised, as long as the usability and user experience are consistent. RESPONSIVE DESIGN ODER MOBILE SITE? BOTH HAVE THEIR ADVANTAGES Mobile Site Responsive Design Custom solution: A mobile-optimised website is developed independently from the desktop version of a shop. Thereby, it can be specially designed for mobile use (eg. Features, page layout, navigation etc.) Consistent Corporate Design: Responsive Design ensures that all sites are uniform and adapt to meet the requirements of the screen size of different devices (desktop, tablet, smartphone). The mobile version reflects the same structure, functionalities and design of the desktop version which creates a seamless user experience. Fast-loading: Mobile sites benefit from quick page loading on mobile devices. With responsive design on the other hand, the whole site code must be loaded which can lead to slow loading on complex page structures. Less Maintenance Required: Despite the initial amount of development work needed, longer term, it means that just one site needs to be updated. With mobile sites, each version of the shop needs to be maintained individually. Quick to launch: In contrast to responsive design, no reworking of the existing page structure is required. The development of the mobile site is an independent project that can be launched relatively quickly. Beneficial for search engine optimisation: Google recommends 5 a responsive web design for smartphone and tablet-optimised sites

7 Shopping apps less widespread, ios more popular than Android Europe-wide, the shops analysed are more likely to offer a mobile site than an app, despite the fact that shopping apps harbour strong customer retention potential. Figure 3: Shopping apps: ios vs. Android In France, 56% of the shops in the study offer a shopping app, which puts the French retailers out in front in the European app comparison. The UK retailers aren t far behind with 52%, whereas the Polish shops are particularly reticent when it comes to app offerings, with just 10% of shops in the study creating an app for their mobile customers. In France, the UK, Germany and Spain Apple users are at a slight advantage. In the study, there are is a greater number of ios shopping apps on the market than Android. ANDROID USERS GENERATE MORE CLICKS, ios USERS MORE REVENUE In a further m-commerce study 6, we analysed the user behaviour on idealo app users and determined some clear difference between the Android and ios user groups: Although Android users click on more products on average (click percentage Android vs. ios app: 61% vs. 39%), ios users across different countries 7 click on more expensive items. The results based on European averages from the study, the products clicked on by ios users cost 20% more than those clicked on by Android users In the study, the analysis took place on idealo s price comparison portals in the UK, Germany, France and Italy. 7

8 2 Online Shopping: from customer service to returns 2.1 Advice & help: service channels on offer Consumers are coming to expect an equivalent level of customer service that they enjoy instore, when shopping online. According to a recent study by Zendesk 8, just 7% of online shoppers surveyed were extremely satisfied by the level of customer service brands provide across their channels. The following findings from our study show to what extent online retailers offer customer service, more precisely which channels are used and which contact options for customers needing advice are on offer. Service Channels: Ranking When ordered according to use by the idealo shops analysed, the average European ranking is as follows: (see Image 3). First Place: The written word Advice by or via a contact form is offered by 91% of all online shops in the study, and makes up the most widespread customer service option. Second Place: It s good to talk 82% of the European e-retailers we looked at offer their customers a phone number for customer services. Third Place: Remember your FAQs On 67% of all online shops in the study, customers can find a list of Frequently Asked Questions (FAQs) which give details on the buying process or delivery options. This option is most popular in France with 88%, whereas here in the UK only 48% of the top 50 idealo shops display FAQs. Fourth Place: Live Chat Real-time advice via an integrated live chat function is offered on average by just 18% of the shops looked at. Fifth Place: Forum In last place in terms of the customer service channels are shop forums in which users can ask and swap questions according to topic, under guidance and help from moderators. The setup and careful management of such a web forum is time-consuming. Possibly one reason why only 10% of online retailers in our study offer this service. Nevertheless, the results vary widely from country to country. While forums are used as service tools in nearly a quarter (24%) of Spanish shops analysed, only 2% of the idealo top 50 Polish shops offer this particular service

9 Figure 4: Customer Service Channels of idealo shops Italy and Spain: The Exceptions In the country-specific ranking of the online customer service options, there is for the most part a correlation amongst the Europe-wide rankings. However, Italy and Spain show the most deviation in terms of customer service channels. Service hotlines are rare for Spanish online shops All of the Spanish shops analysed offer their customers a written contact option by or contact form, but a telephone number in just 34% of cases. This makes Spain the only country in our analysis in which FAQs (70%) are more common than telephone contact for the top 50 idealo shops. Italy prefers to telephone Italy too, proves to be an anomaly in the study. In contrast to all the other countries in the study, contact does not take first place in terms of contact options. Instead, it comes in third place in terms of customer contact channels with a proportion of just 56%. With a clear majority of 98%, telephone support is the most popular. Next in line are FAQs, which can be found on 66% of shops in the Italian study. As for fourth and fifth place, the Italian customer service channels are in line with European results in the study. 9

10 RARELY USED, DESPITE HIGH POTENTIAL: LIVE CHAT Live chat acts as a promising advice channel. The customer can interact and receive advice in real time to problems as and when they occur unlike in requests made by or a contact form. In contrast to telephoning, the medium of communication does not have to be changed, nor does the phone need to picked up and a number dialled. The service can occur completely within the shopping experience. Of all the online customer service options, live chat comes the closest to offering the same service as in a real-life shop: as the customer navigates through the virtual store, he or she can be advised easily and directly by staff who are on hand to help. Live chat is a service which is viewed favourably by online shoppers: According to an in depth survey by customer experience providers LivePerson 9, 51% of online customers would rather make purchases through an online shop which offers a live chat option. Thus, there appears to be at this moment in time a high discrepancy between supply and demand

11 2.2 Checkout: Payment Methods Alongside sales strategies, marketing channels and customer service, providing the appropriate range of payment options is one of the most vital ingredients for running a successful online retail business. Customers who can t find their preferred method of payment at the checkout are more likely to abandon their basket. 10 idealo analysed the payment methods accepted by top online shops in Europe. Alongside the Europe-wide prominence of standard payment methods such credit cards and e-payment providers (mainly PayPal), we can observe some interesting differences between the countries. Leading European Payment Methods: Credit Cards and E-Payment Providers Of the payment methods analysed in the study, there are only five which are found in all countries: credit card, debit card, e-payment provider, advance payment and payment in instalments. The prevalence of these payment methods varies from country to country (see Fig. 5). Europe-wide, credit cards and e-payment providers are the most popular methods of payment. These service were offered by more than 70% of shops in all the countries in the study. Figure 5: Payment methods in Europe Mobile Payment is not a standard method for the majority of the shops in the study. The main reason for this is that the contactless payment via NFC, BLE or QR-code is rather designed for inshop purchases

12 Credit Cards: Visa and MasterCard dominate the European market The most-widely accepted credit card in Europe is Visa. Similarly popular is MasterCard. Overall, Visa and MasterCard were taken by at least 72% of shops in each country analysed. In third place is American Express. (see Fig. 6). Figure 6: Credit cards according to popularity Country-specific differences in online payment Despite the European prevalence of credit cards and PayPal, there are noticeable differences between the countries. UK consumers trust credit cards and PayPal British online retailers offer the least varied selection of payment options. This is partially due to the fact that credit and debit cards have long been established as the common payment method for both on- and offline purchases. 100% of UK online shops in the study accept payment with a credit or debit card, as well as 70% of them also accepting e-payment providers mainly PayPal. 12% of shops gave the option to pay in instalments, although this would most likely still be done by credit or debit card. Germany: bank transfer enthusiasts The variety of payment methods of offer in Germany is larger than in all other countries in the study. Overall, 10 different payment types are used by the shops analysed. 12

13 Credit cards are less widely-used than in Germany than other countries 11. Every tenth German shop (12%) does not take credit card payments. More than half of German shops (64%) in the study offered invoice payment. Even cash payment on collection or delivery is relatively common (22%) - a sign of the increasing popularity of combining online and offline channels. A German peculiarity is payment by direct debit offered by 19% of the shops. Poland most popular for cash on delivery Invoice payment is also found on offer from around two thirds of the Polish retailers. Payment by credit card (76%) or debit card (16%) is relatively low compared to the other European shops. Poland leads the way in payment in advance and cash on delivery. Cash on delivery is offered by 58% of Polish shops much more than in other countries. Poland shows a huge variety of e-payment providers. Alongside PayPal, there are six further payment providers on offer. aly postal orders in e-commerce Italy postal orders in e-commerce Payment in advance (84%) and cash on delivery (72%) are the most popular payment methods in Italy. A payment method still very much alive in Italy is the postal order. Consumers place their order online, and pay the amount at a post office, who in turn transfer the money to the shop. Bank transfers are the third most common method offered by 84% of the Italian shops. France still checking out with cheques Whilst the rest of Europe has resigned it to an old-fashioned payment method, 68% of French shops in the study still accept cheques. France is the only country in the study, apart from Italy, where payment by postal order is still possible. More than three quarters of the French shops in the study accept payment in instalments, considerably more than the other countries. Spain Bank transfers in e-commerce 84% of the Spanish retailers accept bank transfers, however the option of payment on delivery is much less common Despite PayPal being very popular, other providers not seen elsewhere, such as Giropay and Alipay are found amongst the Spanish retailers payment options _behaviour_in_germany_in_2011.pdf? blob=publicationfile 13

14 2.3 Delivery and returns: who pays? A number of factors decide whether a customer completes the checkout process, or abandons their basket, and whether they are content or disappointed with the transaction. Alongside prices and product availability, customer friendliness of the shop is a deciding factor. Online customers who have has a positive experience with a shop, are much more likely to return. Our study on customer-friendliness reveals how customer-orientated online retailers in Europe are, and looks at guest checkout, delivery and returns. Guest Checkout Polish shops are guest-friendly The combined irritations of having to create an account and permanently sharing personal data with a shop, or trying to remember the password set several months back is a major cause of cart abandonment. 12 Especially for new customers, the option to checkout without registering is very attractive. Figure 7: Guest Checkout in Europe In the European comparison (see Image 6) the shops with the most guest checkout options (70%) are found in Poland. Close behind are Germany with 60%, and the UK with just 42%. A lack of guest

15 checkout can be seen in Spain and Italy with just 32% and 18% respectively. The real late runner is France, with a mere 4%. CUSTOMER-RETENTION STRATEGIES AND SOCIAL LOGINS The pros and cons of offering guest checkout must be weighed up. A quick and efficient checkout process can in some circumstances be worth more than having another customer signed up to your shop. Our recommendation: Encourage guest-checkout users to set up an account after their purchase, using the information they have already entered, in order to save them time in the future. As well as guest checkout, social logins can also work as an effective conversion booster. Customers are able to efficiently log-in to a shop using an existing social media account, such as Facebook or Google+, meaning they need not remember another password. Read more on the topic of social logins in our 2013 study, which revealed a reticence amongst retailers towards social logins. Social Logins footloose and fuss-free e-commerce

16 Delivery: UK shops are most generous When it comes to delivery options, customers are looking at two things: speed and cost. Ideally, customers want free delivery, and if possible, express. A look at the findings (see Fig. 8) from the analysis shows that the UK leads the way 96% of shops analysed offer express delivery although this usually comes at a higher price. Figure 8: Delivery options from online shops Unlimited delivery is offered only by very few shops, solely in Germany, France and Spain. To benefit from this service, the customer pays a one-off price annually. A particularly interesting case for delivery is provided by Poland. While a sizeable 70% of the Polish retailers analysed offered free delivery, a mere 4 out of 50 shops provided the express delivery option. DELIVERY COSTS MAKE A DIFFERENCE Some retailers choose to set a minimum order value before offering free delivery. This method can provide a further incentive to buy, as when the basket value is just under the minimum order value, some customers will be tempted to add another couple of items to save the delivery cost. Current research has looked at age-defined preferences when online shopping14. While younger shoppers prefer special offers, older customers would prefer free delivery

17 Returns Policy: Who offers more than the standard 14 days? Since the Distance Selling Regulations evolved into the Consumer Contracts Regulations15 in June 2014, online retailers are now obligated to accept returns on products up to a minimum of 14 days following delivery, as opposed to the previous requirement of 7 days. Retailers can choose to extend this period further, in order to offer further advantages to their customers. UK retailers are again the most generous, this time when it comes to return costs (see Fig. 9). Just a third of UK shops insist on sticking to the mandatory 14 days, and six retailers have extended the returns period to beyond 100 days. Figure 9: Cooling-off periods For German online retailers, it is common to keep to the 14 returns period, although 32% extended this to 30 days. Italian shops are bringing up the rear in terms of returns policy, 87% of those analysed offered just the minimum 14 days html 17

18 Free returns Most common in Germany According to the Consumer Contracts Regulations, it is the consumer who is required to pay the returns costs of an unwanted item, however certain retailers absorb these costs in order to offer further benefits to customers. Based on the results, (see Fig. 10) Germany is clearly the frontrunner when it comes to customerfriendly returns. A huge 90% of German retailers in our study claim to pay the return costs when a product is not to the customer s liking. Figure 10: Return shipping, who foots the bill? UK and Spanish shops don t fare too badly, with around 50% offering free returns, sometimes according to the situation. It is in France, Poland and Italy where the customer must be most prepared to foot the bill for return costs, with only a small number of retailers prepared to offer free return shipping. 18

19 3 Social Media Presence: popular platforms Any shop keen to keep up in the competitive world of online retail cannot afford to ignore the value of social media. 57% of internet users in the UK are active on social networks 16, meaning the UK has the second highest proportion of social media users in the EU. We analysed which social media channels are popular with online retailers, and how this differs across Europe. Facebook is the forerunner, Instagram is in last place Europe-wide, Facebook is the most prominent platform in terms of social presence of online shops (see Fig. 11). Competition is increasing from the likes of Twitter and Google+, especially in the UK where Twitter just overtakes Facebook. Despite the recent announcement that Instagram has overtaken Twitter with 300 million monthly users17, retailers on the whole do not seem to be amongst them. Figure 11: Social Media Presence of Online Retailers in Europe

20 Online consumers increasingly expect e-tailers to offer varied customer service options, and social media is playing an increasingly bigger role in this. The flipside for online retailers is that a huge number of potential customers are just waiting to be interacted with. Different areas of the e-commerce industry have been shown in our study to see potential in differing channels (see Fig.12). Over 40% of the shops from the Fashion and Kids & Toys areas are visible on Pinterest. YouTube, although not yet widespread amongst retailers, is predominantly used by the General Goods and Kids & Toys retailer sectors to share content such as adverts, product presentations as well as expert advice. Traditionally more masculine sectors including Car & Automobile and Hi-tech tend to lag behind in the more visual mediums of Instagram and Pinterest. Figure 12: Social Media channels sorted by area 20

21 Company blogs, which despite opening up more in-depth possibilities in terms of sharing updates with customers, lack the natural reach and viral sharing potential of the traditional social networks, which is perhaps why they do not rank as one of the most predominant channels in any sector in the study. One sector of retailers which is not as strong on Twitter presence as on Facebook and Google+ in the study is the Kids & Toys retailers. Given the popularity and sheer number of parenting blogs in the UK blogging environment, many of whom are keen Twitter users, it would be advantageous for Kids & Toys product retailers to focus on this channel as a means of communication with their target audience. COMBINATION OF SOCIAL MEDIA CHANNELS AND NOT JUST THE MAINSTREAM ONES A well thought-out combination of channels is important to social media success. For example, the viral potential held by a tweet can benefit the promotion of content on a company blog. Another piece of advice is to set your shop apart from others by going further than just using the mainstream channels. Underdogs such as EyeEm and Vimeo could increase your visibility in areas your competion has not considered. 21

22 4 Internationalisation: Cross-border activities in Europe Purchasing across the borders of E-commerce is proving to be appealing for online consumers who are keen to access a wider range of products at better prices. The trend has the potential to be equally lucrative for e-retailers, if they are ready to pursue potential international customers by providing ready solutions to any logistical challenges that stand in their way. In the following study, we analyse to what extent online shops have adapted to meet the needs of customers abroad, most importantly overcoming the logistical and linguistic barriers that stand in the way. The following criteria have been considered: Does the shop offer international delivery? Are multiple languages available? Are prices shown in local currencies? International delivery: Germany and Spain leading the way 68% of German shops in the study deliver to other countries (see Fig.13). Linguistic proximity to neighbouring countries such as Austria contribute to the readiness in delivering further than Germany alone. A similar geographical advantage is enjoyed by Spain and France. Spanish retailers share first place in the international delivery analysis with Germany, as they often delivery automatically to Portugal and Andorra. In second place is France, (54%) where retailers tend to offer delivery to Belgium, Luxemburg and Switzerland. Figure 13: International Delivery 22

23 32% of UK shops in the study delivery internationally, despite the position English holds as the worldwide lingua franca. One potential explanation lies in the currency barrier posed by delivery even to neighbouring Euro-zone countries. Poland and Italy are in last place when it comes to international delivery. Since Italian and Polish are not spoken as an official language in many other countries, these two countries are at a disadvantage for reaching potential foreign customers. Language Options: foreign language versions most common on Spanish sites According to a 2013 EU commission study 18, 56% of respondents were not prepared to purchase goods and services in another EU language. The Spanish e-commerce sites in the study were the most eager to target consumers in their native language (see Fig.14), with 50% of those in the study offering either language or country-specific sites. 46% do this by offering a selection of languages on the Spanish site, the other 4% offer a dedicated country-specific shop with its own URL for each country. Figure 14: Language options in online shops Poland, being at an automatic disadvantage in terms of linguistic recognition and comprehension, has to strive harder to reach consumers in other countries, and is ready to do so, with 46% providing a translated version of their web shop

24 We found that in the UK, just 10% of the top 50 idealo partner shops provided product information in other languages, this is likely to be a direct result of the recognition of English as lingua franca. Currency options: very few foreign currencies on offer Currency is the area where the largest number of shops fall down in terms of internationalisation measures. Spain again is the country offering the most to foreign consumers, yet just 18% of them display product prices in different currencies. Germany, despite being a major playing in the European e-commerce market, sees just 2% of the shops in the study offering their wares in anything other than the Euro. Figure 15: Foreign currencies in e-commerce The main reason for the transnational reluctance to offer foreign currency options is likely to be that they are, for the most part, all EU-countries which can rely on just using the Euro. For UK retailers, this should highlight the potential number of customers which could be reached, simply by offering prices in Euros. PRICE VARIATIONS ENCOURAGE CUSTOMERS FROM ABROAD The biggest incentive to purchase from a foreign retailer for online consumers is a better price than is offered by in-land retailers. It is German retailers who are at an advantage, here as can be seen in our consumer-focused cross-border shopping study

25 Conclusion In this shop analysis, we are able to offer you an insight into the most common practices across idealo s top shops Europe-wide, highlighting various important areas of e-commerce from the retailer s perspective. Our 15 years of experience in e-commerce enables us to share an extensive understanding of customer needs and expectations, and the practicalities of acting on these for online retailers. The results of the studies published here highlight which measures contribute to a successful e- commerce business, and which measures are currently being overlooked by even some big players in European e-commerce namely guest checkout, live chat and mobile apps. In part, there are large similarities between online retailers in Europe, especially in the areas of shop design and customer service channels. Other aspects are handled completely differently, for example returns policies and costs, or are influenced greatly by national customs, for example payment methods. Nevertheless, our market analysis offers a grounding for your own optimisation process. The next step involves assessing the individual viability of measures and activities, taking into account and weighing up the benefits for customers and the effort involved in implementation. If you have found this whitepaper useful, please visit our press page, where we regularly publish our research and studies relating to a wide range of e-commerce topics. 25

26 Table of figures Figure 1: Percentage of European shops with a mobile offering... 4 Figure 2: Mobile site or Responsive Design?... 5 Figure 3: Shopping apps: ios vs. Android... 7 Figure 4: Customer Service Channels of idealo shops... 9 Figure 5: Payment methods in Europe Figure 6: Credit cards according to popularity Figure 7: Guest Checkout in Europe Figure 8: Delivery options from online shops Figure 9: Cooling-off periods Figure 10: Return shipping, who foots the bill? Figure 11: Social Media Presence of Online Retailers in Europe Figure 12: Social Media channels sorted by area Figure 13: International Delivery Figure 14: Language options in online shops Figure 15: Foreign currencies in e-commerce

27 List of sources