So what does the future hold in this new
maturity? In the plethora of detail in its February 2000 survey of the dot-com industry, the Economist featured telling image. Under the question ?The future of shopping?’, the magazine ran photograph of largely deserted bulk distribution depot littered with cases and orders to be sent off to eager e-tail customers.
It is the bleakest of images in the glitter of hope and hype which surround this new purchasing medium. It also seems unlikely to occur – at least to this extent – for one fundamental reason: human nature. Will people really discard their multimillion year history of socialising so they can shop privately in the glow of their computers? Will they ignore e-tail altogether to shop and socialise as they always have? Or will they, as veterans of mail order, simply add e-tail to their shopping menu when convenient, as companies seamlessly integrate the on and offline worlds?
Even the Economist hesitates over human nature in its otherwise enthusiastic sweep of e-business:
“On the other hand websites are not much good for replicating the social function of shopping, nor for browsing around, nor for producing the serendipity and impulse purchases that come from visits to shopping centre. Nor, because it usually depends on separate delivery, can e-commerce offer the instant gratification that today’s consumers have come to expect.”
The answer seems to lie in history, habit and in statistics, which show the growth of the industry. Yes, we will socialise through shopping. Yes, the data does show that some people will also e-tail and do so most emphatically for certain goods and services like books, CDs, and banking – the ?low touch’ end of the market.
But equally, Boston Consulting Group Data for US transactions show ?high touch’ items like clothes and shoes, are far less popular online.
The touchy feelies
Lisa Bellingham, the manager of Auckland fashion shop Double Exposure, sells high value recycled clothing and has an e-tail outlet, Designer Exposure. She estimates that one out of 10 of her customers buys online. Would she buy clothes that way?
“I think myself, probably not unless it was something special. People do enjoy shopping. They do enjoy walking around shops and the Internet sort of takes them away from it. They want to try them on before they buy – they like to see whether they are happy with it,” she says, adding that some might look at clothes online first.
“I think at the end of the day people always want to shop – it’s sociable thing and I can’t see it changing. It’s part of being human.”
Steaming up the revolution
She’s in the same company as the Economist, Stefan Preston the co-founder of e-tailer FlyingPig, which sells books and CDs Ñ and Woolworths. In fact as an old hand at retailing Preston couldn’t agree more.
“I have long legacy of running retail – I still do it. I don’t ever see Internet shopping becoming the dominant channel of retailing. It’s very low gratification experience and gratification is the major reason we shop,” he says.
“Let’s face it, most of the goods and services we consume we don’t need, so we are buying them for self gratification rather than satisfying need. So the experience of buying them has to be very important.”
From an e-tailer this is heresy, but while conceding the point, Preston also argues that we are in the steam age of this revolution. He points to our need always to look backwards, and predicts growth will come over time, and with improvements in technology and e-tailing nous.
“If in 1905 I gave you car, what I would be giving you is piece of expensive machinery. It would get stuck in the mud all the time because there were no proper roads; there would be no petrol because we didn’t have petrol stations and there would no mechanics,” he says.
“Well today the Internet is very much like that. You have people stealing credit cards, sites being downed because they are hacked, PCs that are joke. We are absolutely at that point in its evolution. But what you do notice is that there are fundamental elements of that technology which will make it superior over time.”
For the car it was speed and convenience coupled with an expanding roading network, says Preston.
The social experience
At Woolworths, e-commerce director
Richard Harrison shares some of his views.
“We subscribe to the belief that shopping is very much social experience,” he says.
He knows that research overseas has shown that shopping in supermarkets can sometimes be as much dating as shopping ritual. He also realises that for others it’s case of getting it over and done with as painlessly and quickly as possible.
Harrison says successful e-commerce ventures have introduced an element of community on websites to allow customers to talk to other customers and is aware of that need among his shoppers. However the ones who have high-tailed it to computers to cybershop at Woolworths are usually professional couples, both working and with pre-school children, he says.
“They are usually time-poor, very busy people.”
Their e-tail orders are processed and for $15 charge, fulfilment centres deliver to them in Auckland, Wellington and Christchurch, just as grocery boys once did.
Part of the problem, according to Harrison, is to cope with national supply – but the company is working on extending the service which has grown dramatically.
“We are about 140 percent up on last year. By the end of this year we hope to be higher than that, so it’s multimillion dollar business. We now measure our customer base in the tens of thousands,” said Harrison of the four year old operation.
He also believes consumers are benefiting through savings in time – and money. He points to the fact that an online total is always displayed in the shopping trolleys so shoppers know exactly how much they are spending.
Woolworths won over friend recently in the form of New Zealand Herald columnist Garth George. He wrote about his disenchantment about having to spend part of Friday supermarket shopping and his delight at discovering Woolworths’ e-tailing.
“Gone are the days of traipsing around the aisles, searching for one product stacked among hundreds of different others, having to backtrack for items missed, tripping over crotchety children and bumping into their harried mothers, all the time bombarded by every impulse buying trick in the book; then standing interminably in queue at the checkout before having the operator ask you what parsnip is so he or she can ring it up.”
Cost and convenience
George is convert, though that change in shopping behaviour does not surprise some. Ric Boven, vice president of the Boston Consulting Group in Auckland, believes we change our behaviour based on new definitions of cost and convenience.
“I’m not of view that social factors will be major impediment to the growth of this business,” he says, and offers some evidence to support his point.
“I once ran trial where I got 20-25 people to order by fax. Then I ran survey before and afterwards. In the first survey there was great reluctance by people to use this method of shopping for all the reasons you quoted [human need to socialise, shopping as social activity].”
Nevertheless the reluctant shoppers took part in the trial.
“When I went back to them later and said I was stopping the trial they said ?please don’t – we will pay premium, we will pay service fee’,” he recalls.
“They found it extremely convenient. When I said ?what about the social experience of the supermarket?’ The response was that they would rather have their social experience in coffee shop.”
The evidence for the speed and potential of this new retailing engine is certainly remarkable.
Boston Consulting reports that e-tail revenues reached $2.8 billion in Asia Pacific in 1999 with the leadi
