Why Pureplayers Are Still Paving the Way for Innovation

While figures from January and February’s Capgemini IMRG reports paint multichannel retailers as the biggest winners of 2011 so far, with impressive annual growth of 30%, compared to only 8% for their pureplay and catalogue counterparts, the pureplayers still continue to dominate the online landscape[1]. In a recent poll of the UK’s top online brands[2], Amazon and eBay were the only retailers to feature in the top 10, suggesting that pureplayers are still recognized as the heavyweights of online retail despite the growth of multichannel.

With the UK’s internet economy valued at £100 billion, of which 60% is driven by consumption[3], light and agile pureplayers are well-equipped to respond swiftly and innovatively to ever-evolving consumer expectations. One heavily discussed area is m-commerce. With what we estimate is 18% of all UK searches conducted on mobile, it is not surprising that retailers must follow the example set by online sites such as eBay which is currently leading the way in design and functionality. Fashion e-tailers such as ASOS are benefitting from the receptiveness of younger audiences to new technologies by making their transactional mobile sites easy to navigate and replete with interactive images.

But is slick design enough to lure the loyal bricks and mortar consumer who has, until now, resisted the convenience, choice and cost-effectiveness of shopping online, in favour of a real-life consumer experience? The application of new technologies such as augmented reality into the online consumer experience is one of the responses offered by the pureplayers. Integrated into both their transactional and advertising operations, augmented reality has paved the way for the virtual shopping experience, simulating the very look and feel of actual products. An online rendering of the familiar ‘try before you buy’. eBay’s use of this technology is a further step ahead, allowing smartphone users in the US to discover deals and local listings by simply scanning the area around them.

Earlier this year, luxury fashion retailer Net-a-Porter adopted T-commerce by launching a TV channel on its website. By streaming latest trends and products directly from the catwalks with exciting reports from fashion designers running alongside, the luxury retailer enabled shoppers to purchase coveted runaway items in one click. T-commerce is therefore poised to be more immediate and interactive than most consumer experiences. Currently available on smartphone and tablet devices, Net-a-Porter TV will also be available on Google-TV enabled Sony televisions.

With new technologies such as augmented reality and T-commerce, and the levels of interactivity they bring, the online consumer is more active than ever, engaged in each step through to purchase. This could explain why pureplay retailers still have the best online conversion rates, with an average of 4.8% in February, compared to 3% for the multichannel group[4]. By ‘living’ the retail experience through new technologies, pureplay customers are arguably led on a more interesting and seamless path to conversion.

[1] IMRG January 2011 report, Feb 2011
[2] ‘Offline hits back in online chart’, BBC, 22 Feb 2011
[3] The Connected Kingdom Report
[4]IMRG February 2011 report, published March 2011

Posted by Farhana Bhula, UK Retail Team