With prices in the UK currently rocketing at their fastest rate for more than 40 years, the cost-of-living crisis will also have an impact on ecommerce. During this uncertain period, companies should focus on their brand, the technology they have integrated into their online journeys and getting the customer experience right.
Andy Mulcahy, strategy and insight director at IMRG, the trade body considered the voice of online retail in the UK, is in no doubt about the state of the market. “Lots of retailers provide us with their sales figures so we can benchmark performance, and right now, it’s in sharp decline,” he says. “It’s been extremely turbulent recently, but the difference in impact between the pandemic and the cost-of-living crisis is stark.”
The coronavirus crisis was, he says, “the most disruptive thing anyone has ever seen.” But from an online retail perspective, it was a huge accelerator. Lockdowns forced many businesses to enter the world of ecommerce for the first time. Those brave enough to embrace it reaped bountiful rewards. Now, however, with all the low-hanging fruit gobbled and consumers’ purse strings pulled tautly, it’s a different story.
“Today, the growth is low,” says Mulcahy. “It’s negative, year-on-year, and the market is shrinking.” Other metrics analysed by IMRG provoke alarm. “People are spending longer making purchasing decisions online, and looking at Q1 2022 – which is February, March and April, so includes the early fallout from the Ukraine invasion – compared to Q1 last year, the checkout completion has dropped by 22%,” he adds.
Paul Hornby, digital customer experience director at the Very Group, remains bullish about his employer and the industry’s longer-term prospects. “Yes, retail has clearly been impacted,” he says. “But we are confident about the outlook for online retail in the UK.”
Supporting customers in straitened times
As a digital retailer with over 2,000 brands that boasts almost five million active customers and a financial services provider offering its unique version of buy now, pay later (BNPL), the Very Group is well positioned to thrive in the ecommerce space. “As a multi-category retailer, our model is naturally resilient,” says Hornby. “Online is the place to be, and our flexible payment options are really popular with our customers.”
Very Pay, which most customers use, according to Hornby, allows buyers to pay for goods in three interest-free instalments over three months. There is also a BNPL option, enabling consumers to spread the cost over a year. In the current climate, the Very Group is adding value by providing visitors to the company website tips and tricks to better cope with the cost-of-living crisis.
“We’re helping customers by introducing content about money management,” Hornby says. “We aim to be customer champions and natural problem solvers, and so we will always think about different ways throughout the journey that we can help our customers.”
Matthew Parker, country manager of the UK and Ireland at Vonage, a company that builds omnichannel conversations and transforms customer experiences, stresses the urgency for ecommerce organisations to invest in technology solutions; and even more so in these straitened times, to stand out in an increasingly packed market.
“I’m seeing post-pandemic cost-saving initiatives, but in some areas, companies are doubling down,” he says. “For example, there has been an increase in technology around artificial intelligence and other tools that can bring a level of smart automation to the buyer experience, without losing the human involvement.”
Doubling down on smart automation
Hornby reveals that the Very Group was an early adopter of conversational AI. The organisation initially invested in a chatbot in 2016 to ease the workload on employees answering simple queries. “We very quickly partnered with IBM Watson to utilise its AI to help us understand customer sentiment, but also to generate the right answers,” he says.
The chatbot facility proved invaluable for the Very Group’s customers and its contact centre staff last Christmas as it was used almost 140,000 times, reducing telephone calls by 17% compared to the previous peak. Hornby states the maturity of smart automation makes it a compelling business case for those looking to boost digital customer experience.
The market’s only going to become more competitive, so speed to market is critical. That speed comes partly from the process and partly from technology. But, most critically, everything you do must truly serve your customers’ needs
“If a customer comes to the website or our smartphone app and asks a question that is more complex than the chatbot can handle, it will elegantly hand that over to one of our customer care colleagues so there is the appropriate level of human intervention,” he says. “We will definitely continue to invest in this technology.”
Mulcahy argues that ecommerce businesses don’t have to spend big on improving digital customer experience; sometimes, a little goes a long way. “If you took two websites and they both have exactly the same products at the same prices, one can generate more sales just by optimising certain bits,” he says. “You might offer free delivery, for instance, or it’s easier to navigate. There are many things you could do, and now with traffic expensive to pay for and conversion rates down, this stuff is essential to get right.”
Hornby agrees: “Having friction throughout the user journey is a surefire way to send the customer into the arms of a competitor, so we have to obsess about the problems on our site and solve them.”
Top tips to improve digital customer experience
Parker from Vonage believes the way to improve digital customer experience is by ultimately being a trusted retailer. “Trust boils down to four things: integrity, intent, capabilities and track record,” he says. “Brands that best demonstrate those four things, focus on customer needs, and don’t bombard people, will do the best.”
And for ecommerce players unsure about their future, or where to invest, Mulcahy offers soothing words. “Don’t panic. It is a very different time, but it’s rough for most businesses. Those who focus on building their brand and make the online journey simple will do well.”
Hornby stresses the importance of keeping the customer at the heart of any digital design. Forget futuristic and hyped concepts, such as shopping in the metaverse or non-fungible tokens; what consumers want today, especially during this cost-of-living crisis, is a retailer they can rely upon that serves them well.
“You have to embed the customer in all of your thinking, which is easy to say but difficult to do,” he says. “The market’s only going to become more competitive, so speed to market is critical. That speed comes partly from the process and partly from technology. But, most critically, everything you do must truly serve your customers’ needs.”
Retailers have had to face years of disruptive events. But, armed with the technology and the online know-how, they can now ensure they get the digital customer experience right for all their audiences.
