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23 November 2009

E-tail gives retail a helping hand

Online buoys both offline and rural business, according to latest Online Business Index

Thousands of small high street businesses have ensured a brighter outlook for 2010 by establishing a presence online.

The findings of eBay’s third Online Business Index demolish claims that online retail is responsible for the decline of the traditional high street business. In fact, the majority (79%) of bricks and mortar firms believe the introduction of online trade has saved their business. Furthermore four fifths (80%) of online-only SMEs believe that bricks and mortar businesses are rendered more sustainable by having an online offering as well.

The Index challenges perceptions of the online economy by showing a significant proportion (44%) of online retailers are based in rural areas. These businesses are providing a much needed boost to rural economies and generating income in a way that would have been impossible without the internet.

The online businesses surveyed in the report also call for improvements to the same infrastructure as bricks and mortar businesses including: enhanced postal and delivery services (42%), simplified rules on consumer protection (36%) and lower taxes for all businesses (53%). Investment in faster broadband (18%) or universal broadband access (13%) is considered much less of a priority, despite the considerable amount of attention given to them in the government’s Digital Britain report.

Mark Lewis, Managing Director for eBay in the UK, said: “There is no doubt that the internet has transformed the way we shop and has challenged retailers, both online and offline, to raise their game to meet ever higher consumer expectations. However, the assumption that the rise of the internet must mean the fall of the high street is shown to be a fallacy in our latest Online Business Index.

“Yet while internet businesses provide a significant lifeline to both the high street and the countryside, there is a strong feeling that the government does not sufficiently understand the needs of online retailers.”

Shaun Redhead manages a family-run shop selling musical instruments. The shop was founded in 1998 and he began selling online in 2007. Since then, Redhead has never looked back: “We began selling online because we wanted to sell our products to a wider market. In the short time we have been trading online, the income of the business has doubled. As a result, we’ve been able to invest more into our business and grow at an exciting pace. Most importantly, it has allowed us to expand our bricks and mortar shop; in fact we have now bought the store next door and doubled the shop in size.”

 Businessman Andrew Rowson took over his high street family business selling towbars, cycle carriers and roof bars in 2003. After a year of struggling to grow his business, he decided to open an online shop in addition to his bricks and mortar presence. He now has a turnover online of £1.2 million per year.

Rowson said: “We can have the best of both worlds – in fact, it’s very important that we do. Our business has been in the family for decades but was struggling to remain competitive. By introducing an online presence, we not only bolstered business but brought our offering to a global audience. Plus, it meant that we could retain the physical shop that is so essential to who we are.”

Conservative Shadow Business Minister Mark Prisk MP agrees with Rowson’s analysis of the relationship between online and bricks-and-mortar businesses: “We shouldn’t always assume that online and bricks-and-mortar businesses are different. Indeed, many conventional businesses are adding an online component to enhance their bricks-and-mortar offering. Our high streets benefit from the web because it allows many small shops to extend their reach to a global market.”

09 November 2009

Getting the measure of Innovation

What puts a brand at the cutting edge of innovation? According to the latest research, it must be a trustworthy business that simplifies the lives of consumers.

Making consumers’ lives easier is the innovation that counts above all else, according to research from agency Incite. While technology advances and pioneering new services are still important, it appears that the most innovative brands in 2009 are those which find ways to make their buyers’ lives that little bit more appealing.

The research claims that there are six drivers behind whether consumers consider a brand to be innovative. People take into account whether a brand is a “pioneer” in its products or services; whether it “makes life easier” by offering genuine benefits; if it creates “buzz” around its activities; if it receives the seal of peer “approval”; whether it is “trusted” and respected by its users; and if it demonstrates “understanding” by appreciating what is occurring in consumers’ lives and what role it can play.

Incite’s research conducted last year showed that being a “pioneer” was the most important element in consumers considering a brand to be innovative. But the need for a brand to be a pioneer has sunk by 16% in responses this year, while the perception that innovative brands “make life easier” rose 41%.

Elaine Kent-Smith, owner of Incite, explains: “In a recession, people are very careful about what they spend. It makes sense that they consider those brands that make their life easier to be the most innovative.”

Ivan Croxford, general manager of digital marketing services, BT

People choosing “makes life easier” as a measure of innovation is part of a general trend for simplicity and usability. It’s a positive sentiment to hear consumers say that what matters to them is the impact of technology on their lives, rather than just the technology itself.

At its worst, technology can confuse customers, rather than help them. Brands need to expose the benefits of innovation and work hard to almost hide that technology behind the benefit. That puts the onus on us and other companies to do this well.

There are no surprises for me about Apple taking the top spot in terms of innovation. I’m only surprised that Google wasn’t in the top ten last year too. Is Google a brand with such good, innovative technology that people don’t even notice it?

Another interesting trend picked up in this research is the rise of mobility, which is demonstrated by both Apple and Samsung appearing in the top ten. The iPhone has taken off and handheld devices are developing rapidly. It’s clear to see that lots of people’s perceptions of technology innovation are in the mobile space.

Alex Marks, head of business marketing international, eBay

Perhaps the reason why brands like Sky and Apple are seen as so innovative is that while they’ve always been developing new products, they are more mainstream than ever before.

Apple always appealed to “early adopters”, but millions of people now have an iPod. It’s similar for Sky. When Sky Plus was released, it was only used by a savvy few but now millions have it. So perhaps it’s about these brands getting greater distribution than ever before, which is why more people are aware of them being innovative.

I can also understand why consumers see a brand like Nintendo as less innovative than last year. It is inconsistent. When I was young, Nintendo’s earliest consoles were very cool, but Sony later overtook it. Nintendo then came back and had great success with the Wii but this year it’s been working on expanding its Wii ranges, rather than innovating with totally new products. That’s a perfectly good business plan but it may account for why consumers aren’t rating Nintendo as so innovative this year.

Some of the driving trends behind which brands are seen as innovative certainly ring true with me. As an ecommerce brand, areas like trust, value, depth and choice are all linked together and any innovation has to take those into account. “Making life easier” is certainly a theme that makes sense to me.

The 2009 League Table

 1 (2)     Apple

2 (1)     Sony

3 (3)     Microsoft

4 (4)     Virgin

5 (6)     Dyson

6 (-)     Samsung

7 (9)     Sky

8 (-)     Google

9 (8)     Tesco

10 (5)   Nokia

Figures in brackets show 2008 position