Online retailers predict higher sales for 2013 as competition increases

Parcels

UK online retailers are predicting improved sales in 2013 despite a more competitive environment for share of consumer spending, reflecting overall growth in the online market, research by Royal Mail has revealed.

The study revealed that just over half of SME online retailers saw an increase in sales in 2012 and two thirds (64 per cent) are confident sales will increase this year. This is despite 70 per cent believing competition is more intense than two years ago.

The rise in people using Smartphones and tablets to buy goods increasingly means shoppers are using retailers they know and not shopping around, one third (31 per cent) of online retailers said.

To respond to the challenge of the changing ways people shop online, 35 per cent of SME online retailers are planning to develop mobile apps in 2013. Ten per cent said they have already developed them.

Almost six in ten online retailers (56 per cent) said the increase in the number of websites selling goods was fuelling increased competition for sales. Half of those surveyed said customers are more price sensitive. Four in ten (41 per cent) said the rise in price promotions mean shoppers seek out the best prices the majority of the time.

The study further revealed that 57 per cent of SME online retailers said attracting new customers is among their biggest challenges to increasing sales in 2013. Other key challenges are pricing goods competitively (49 per cent) and building customer loyalty to drive repeat purchases from existing customers (36 per cent).

In response to the challenges, the study revealed that as a priority, in 2013:

• Half of SME online retailers (48 per cent) said they will be increasing customer satisfaction by improving the range of products available
• 46 per cent said they will be pricing more competitively
• Three in ten (29 per cent) will be improving the quality of products they sell
• One quarter will focus on improved delivery and returns processes

Nick Landon, Managing Director of Royal Mail Parcels, said: "Our study shows that online retailers are responding to the needs of shoppers to grow sales in an increasingly competitive marketplace."