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ONLINE RETAILERS NEED MORE THAN TECHNOLOGY

Posted on February 18, 2000

      A recent study by Canada-based researchers Bristol Group found that encouraging customers to go online can lead to a decline in customer loyalty, referrals to friends and, over the long term, a decline in profits.

      The study concluded that retailers must develop online strategies that focus on more than just price, access to inventory, speed of shipping, and other seemingly important distribution issues.

      "Taking relationships online requires more than technical capability," said Dr Jim Barnes, Executive Vice President of Bristol Group and author of E-Business at the Speed of "Like": A Report From The Future.

      He said that it's still about how retailers make customers feel. The basic online strategy must reflect a commitment to genuine relationships, not just technology-driven transactional encounters.

      The study examined Internet business relationships in the United States, Canada, Ireland, and the U.K. The North American component of the study, which surveyed almost 1600 adult residents of Canada and the United States, concluded that over 60 percent of offline customers say that they are very likely to continue to buy from the retailer, compared to only 43 percent of online customers.

      Rather than focusing on the technology that makes e-commerce possible, retailers need to focus on the customer relationships that are at the heart of their business. Barnes said that, in the short term, many retailers are generating a lot of additional revenue because of their online customers; but if their customers don't feel any loyalty, they are just as likely to shop elsewhere the next time.

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