The key to Successful E-tailing is Understanding Why Individuals are Reluctant to Buy Online.

By: Michael Francis

When the commercial potential of the internet was first realised there was much speculation that traditional retail would not be able to survive. Many investors believed that established retailers were unable to respond to the changing environment and they would be powerless to compete with internet based companies, who benefited from lower overhead costs.

Early predictions of the decline of the high street were based on overly optimistic projections of consumer’s willingness to adopt the new distribution channel. However, in reality online sales only accounted for an estimated 3% of total retail sales in 2006. It appears that experts underestimated the factors that make individuals reluctant to buy online. These include: high delivery costs, problems returning items, difficulty judging product quality and security concerns.

A more recent concern is that by buying online consumers are contributing to the amount of delivery vehicles on the road and thus contributing towards global warming. This issue has received attention in a number of national UK newspaper and across the world.

However it is not all bad news for e-tailers, research suggests that online sales are growing rapidly. The author suggests that this may be because e-tailers are taking action to overcome the issues that make individuals reluctant to buy online. Amazon for example has taken the following action:

• High delivery costs – Offers free delivery for orders over £15 in the UK.
• Problems returning items- 30 day return policy
• Security concerns – communicates the company’s security policy across the website. Amazon will also cover the maximum liability fee that consumers might be charged by their bank in the event of the unauthorised use of their bank cards.

E-tailers should consider how they can implement any of the above examples of best practice. If they can do this successfully they may find that the conversion rate on their website increases significantly, increasing the likelihood of business success.