Part 2 - Will online retail escape the worst effects of the credit crunch hitting the high street?

NO - Just being online is not enough
By Trenton Moss, Director, Webcredible.

The outlook seems bleak for the high street in 2009. A victim of the seemingly unstoppable economic downturn, the dip in sales has accounted for the catastrophic troubles of established names such as Woolworths and Zavvi. There were 9.7 per cent fewer shoppers on the high street on 1 January 2009 compared to one year previous, according to figures from Experian.

Online retail on the other hand still seems to be booming. According to Nielsen Online, the ten biggest online shopping sites enjoyed a 37 per cent increase in visitors on average in the final three months of 2008, compared to the year before. In addition, IMRG’s Capgemini e-Retail Sales Index for December 2008 reports a 16.2 per cent year-on-year growth in online sales.

Taking these statistics into account, many would say that of course online retail will escape the worst effects of the credit crunch. But the answer is much more complex than that, and the immunity assumed by online retail will prove a myth for some!

That is a bold statement, so let me explain. There is no doubt that online shopping is totally outdoing the high street, and that having a successful online channel will probably shield you from the worst effects of the credit crunch. The point is that many retailers still feel that simply by being online and having a website to sell goods they are doing enough to save themselves. Unfortunately, just being there is not enough.

The rise of online shopping is certainly no secret, hence the market is a lot more competitive than the high street. The online retail market is an environment where consumers are exposed to such vast choice, are increasingly web-savvy and determined to find the best deals. A website that is well optimised for search engines is crucial to you being found by consumers, then there are sponsored links, affiliate networks, social media and numerous other online marketing channels that you need to use properly to attract visitors to your website.

However, in today’s online world you can do all this effectively and it could still prove insufficient if your website is difficult to use. The fact is, if a user finds it too hard to do something on your site, they will just visit one of your competitors to do it, and these drop-offs can be costly for any retailer. Many people say that the online only retailers will not suffer anything like the high street retailers. This is probably true, but companies like Amazon have put a massive amount of time and money into making their sites as usable as possible ever since their inception.

The bottom line is that retailers who put the necessary time, effort and money into making their websites as usable, optimised and well marketed as possible may well not suffer the worst effects of the credit crunch. But those who do not the make user experience a priority will see themselves lose out to the competition in the online market just as they have done in the high street, and this presumed online immunity will give way to the worst symptoms of the credit crunch.