Morrisons recent acquisition of Kiddicare.com is the latest evidence that retailers consider a strong e-commerce offering to be a crucial element of future growth, according to Fredrik Holmén

Morrisons recent acquisition of Kiddicare.com is the latest evidence that retailers consider a strong e-commerce offering to be a crucial element of future growth, according to Fredrik Holmén

Fredrik Holmén, managing director of Keybroker UK, has explained to Retail Technology why the online channel is critical for long-term retail success. Holmén also addressed the challenges facing retailers who have adopted e-commerce - how they can improve overall performance and ensure that online trading makes a positive contribution to the bottom line.

"The recent acquisition of Kiddicare.com offers Morrisons an award winning e-commerce platform supported by an established distribution centre," said Holmén. "This move signals an intention to develop further growth from its 12 million weekly shoppers by using the online channel to harness greater value, initially with non-food products.

Exploiting multichannel opportunity

"Morrisons will also be able to leverage the Kiddicare.com offering across their customer base as well as promote the brand internationally."

Holmén said it was no surprise that Morrisons is making this move into the world of e-commerce. Online retail sales are growing at five times the rate of offline sales and can offer higher profit margins. "Furthermore, online interaction provides an invaluable means of harnessing customer behavioural insights and leveraging this knowledge to improve customer satisfaction," he said. "Many consumers use online searches to complete initial product research before subsequently buying, either online or offline.

"It seems clear that the future of retail is multichannel and those who harness its full potential will gain real competitive advantage," he added. Holmén also said there were a number of keys to success within any new e-commerce venture, which he has outlined here.

Focus on profitable online sales

The ability to generate profitable online sales is a key factor. A well executed search marketing campaign which uses relevant real time advertising can help a retailer reduce customer acquisition costs and increase sales of higher margin products. This combination can improve retailers’ bottom line results. Retailers should avoid simply aiming to increase traffic or sales volumes where customer acquisition costs and profit margins are not aligned – such an approach can be loss-making.

Understand customer behaviour online

In order for retailers to boost sales they need to offer bespoke responses to different search modes. Generic searches typically signal prospective customers are in ‘research mode’. This is an opportunity to promote a range of relevant products you want to sell, either because they have higher margins or to reduce stock levels on certain lines. Specific searches indicate a ‘buying mode’. This is a chance for retailers to sell a specific product based on price, availability and delivery terms. If retailers understand their customers’ buying mode they can use this knowledge to help drive relevant ad copy using targeted real time advertising – this approach can improve online sales.

Build brand engagement online

Retailers should use the online channel to build a strong engagement with customers. A multi-channel customer typically provides more value than those buying purely online or offline. The greatly enhanced shopping experience offered through the multichannel can be a key driver of more offline and online sales. In addition, e-commerce is borderless and allows retailers to promote their brands into new markets without a physical presence, which may further accelerate profitable growth.

Integrate your offline and online activity

E-commerce should be a fully integrated part of the business. Therefore, a retailer’s overall strategy and offline trading decisions should influence e-commerce tactics. By leveraging new technologies such as real time advertising, retailers can sell the most profitable as well as tactical products. This can be done by implementing shop floor strategies online and executing trading decisions based on product data, stock positions, physical location, market conditions and required margins.

"There will be challenges to overcome as retailers look to ensure that online trading makes a profitable contribution to the bottom line," he added. "However, this channel is clearly a key growth area that offers value to retailers at a number of levels. It will be interesting to see which e-commerce approach Morrisons take and how other retailers react."