Online shopping has grown steadily over the past few years. One study found that “online sales grew by 15.1 percent in 2019 and accounted for 51.1 percent of all retail growth last year.” This year, more consumers than ever have shifted to online shopping as part of their regular routine. According to a recent report, “42 percent of consumers are using digital channels to engage in activities more often than they did before.” The U.S. Census Bureau also reported first quarter eCommerce sales to be up 2.4 percent ($160.3 billion) from the fourth quarter of 2019.
While economic and global factors have played a major role in this shift, some data suggests that consumers are planning to stick with online shopping for good. Further, of all consumers who intend to keep using digital channels, 38.1 percent earn $100,000+ annually. While the future is always uncertain, one thing is clear: online retailers are in a great position to sustain growth into the rest of 2020.
With more companies and physical stores offering products online, and with online giants like Amazon already in this space, the competition will be fierce. This means online retailers must do everything they can to capture more sales when visitors come to their sites. One study found that online shoppers are being faced with longer delivery times, limited stock, higher prices and limited customer service in recent months.
The Right Product Assortment is Key
In order to gain an advantage and further grow online sales, internet retailers and eCommerce stores must have a way to help consumers overcome these challenges. Similar to brick and mortar, online retail assortment is a great way for eCommerce shops to differentiate themselves. Offering the selection of products your customers demand is a key factor in growing retail businesses, both online and in-store.
Something that often occurs in a physical store environment is demand transference. This is the change or transfer of demand among items in a store once a change in assortment is realized by the consumer. Essentially, if a customer is looking for a specific brand of product among similar products, and the store doesn’t have that option, the consumer may buy one of the other options, try a new product altogether, or not buy anything at all.
Demand transference also happens in online shopping arenas as well ; except it only takes a few minutes and clicks for consumers to find substitute products on competitor sites. When a retailer’s assortment is not optimized for based on business objectives, it can result in missed sales opportunities.
What does this mean for online retailers? Having the right assortment and inventory in stock in the appropriate distribution centers are incredibly important. However, figuring out exactly what you need to have in your online stores can be a daunting task. There are many factors at play and the wrong choices will result in lost business.
4R has deep expertise in determining demand, driving the right assortment on-line and in your warehouse, and understanding customer shopping behavior down to product attribute preference. This data helps us empower both brick and mortar chains and eCommerce stores to see which products will sell best in their stores, even if those products aren’t currently offered. Learn more about our Assortment Optimization solution here.
Contact us today to find and let 4R show you how your online store can improve its assortment and increase sales.