Who will enrich online commerce

Over the past year and a half, more and more mass market retailers have been striving to develop online sales. They believe that the additional distribution channel will allow them to significantly expand their target audience, attracting those who, for some reason, do not buy goods in physical stores, to online purchases. Esper Group analysts use their own research to argue about how reasonable these expectations are.

Hope is not in vain

The market of online commerce is not in vain considered a very promising direction of development. According to preliminary estimates of 2012 of the year, the average annual increase in online sales in Russia for clothes, shoes and accessories amounted to 10,4%. In the overall market structure, the share of online sales in these categories in 2012 was 8,1%. This is a fairly large indicator for Russia, where back in 2009, only 2,4% accounted for online sales of fashionable goods.

Today, the main players on the online market in the fashion industry are multi-brand retailers: Wildberries (sales turnover of $ 129 million in 2011), Boutique.ru ($ 42 million), Topbrands.ru, KupiVip.ru ($ 160 million) , Lamoda.ru, Butik.ru and TrendsBrands, which is built on the model of the foreign megastor Asos. The market is also formed by retailers known for catalog trade - the largest player that actually controls the market, the Otto Group, and significantly inferior to it in terms of LaRedoute and BonPrix. As for footwear, the most notable online store in Russia is Sapato.ru (sales turnover of $ 26 million in 2011), followed by Otto and Quelle portals, which belong to the aforementioned Otto Group, in terms of online sales.

It is easy to see how significant the difference is between the revenue of the leaders in the sale of clothes and the leader in online sales of shoes Sapato. This clearly indicates that Russian buyers are still afraid to buy shoes on the Internet, which is why there are not so many players in this market, and their sales are insignificant. Among the leading online retailers, there is also not a single player from the mass-market segment or monobrand store. This is quite logical, since multi-brands achieve particular success due to the fact that they only collect models that are easier to sell online, do not constitute a complete collection and sell goods with their own margin, which is lower than when selling in physical stores.

Look for a man

It is curious that in the assortment of the largest online stores, the shares of men's and women's shoes are almost symmetrical and make up 13% for all seasons of men's collections, and 11% for all seasons of women's collections. This is due to the fact that most online stores adhere to the mirror formation of the assortment, while physical stores are characterized by the ratio of men's assortment to women's 40 / 60, not only in clothes, but also in shoes. The equivalent shares of men's and women's shoes online are also explained by the fact that on the Internet men are much more active than in physical stores, which means that the bid for high sales is justified. It is also interesting to note that online sales of men's shoes have a relative advantage over sales of women's shoes, since they have a lower return rate (in women’s it is 22-24%). Paradoxically, the whole point is that men rarely try on things before buying: they only measure clothes in 40% of cases, and shoes in 63% of cases, that is, in 37% of cases they buy shoes “without looking”, just to size. What is the relationship with a low return rate? According to surveys, 66% of men are faithful to 2-3 brands or points of sale for more than three years, and 24% of men are faithful not only to brands, but also to the same model. This means that most male buyers simply do not see the point in fitting, since they know their “own” pair for sure and are not mistaken in size.

Other studies confirm the prospect of men as online shoppers. In August 2012, Esper group analysts interviewed 2000 people in large shopping centers in Moscow, St. Petersburg and Nizhny Novgorod in order to identify their Internet habits. Here are the results:

- 8% of the sample (160 respondents) spend all their free time on the Internet;

- 83,5% of respondents use the Internet to obtain information, and all men do this, and 82% of women;

- the most active use of the Internet is by groups of consumers aged 20 to 24 years and from 25 to 34 years;

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- 47% of men using the Internet to search for information earn more than 30 thousand rubles per month per person in the household;

- the higher the income of respondents, the more often they use the Internet to search for information and make purchases.

Based on this information, it can be assumed that the online store is more likely to attract men who are active online, but indifferent to print, television advertising and who pay little attention to outdoor advertising. In addition, an online platform can attract higher-income consumers, as they are more likely to seek information online. It is not a fact that these consumer groups will make purchases on the Internet, but at least here they are more likely to receive information about brands than in physical stores, because men and respondents with high incomes go to shopping centers much less often and do not pay attention to external communications.

Thus, the online store of mass market brands is better to focus not only on an obvious audience, but also on men who are not easy to sell products in this price segment, as well as on more affluent consumers. People with wealth do not want to go to shopping centers and, as indirect results show, do not want to be seen in certain mass-market stores, so an online store that takes into account their interests can be a successful enterprise.

Who can live well on the Internet?

Since well-known monobrands are increasingly opening online stores, it is worth talking about their prospects. As you know, stores of this format are forced to adhere to a single pricing policy both online and offline. But in this case, an online purchase does not have for the consumer the price advantages that he expects to receive. According to a survey conducted by Esper Group in November 2012, 82% of consumers believe that goods on the Internet should be cheaper due to lower transaction costs for rent and staff, as well as due to the risk of buying goods “by eye”, without trying. However, retailers launching online stores cannot set lower prices for their goods, as this will make buying on the Internet less attractive than in a physical store, because there you can get more service and features for about the same money. It turns out that for mass-market monobrands that are widespread offline, the online store serves only as a showcase: of course, it sometimes attracts new customers, but still does not become an important sales channel.

But for players of the middle-high segment, the opening of an online store is an important step forward in promoting sales. Demand in this segment in Russia is distributed extremely unevenly and is insufficient to ensure the profitability of physical stores in individual cities. Nevertheless, there are enough consumers of clothes and shoes of this price category in our country, and the online store can collect them all under one wing and satisfy their demand. Online sales for such a store can become just that desired driver, which will allow to bring sales of brands of the “medium plus” segment to a higher level, highlight new groups of consumers hitherto unreached by the brand due to the lack of a sales point nearby, and reduce the level of balances. The latter, by the way, is especially relevant during the period of mass overstocking of the market, affecting all segments. As sales slow down and conversion rates fall, and future deliveries were planned for a situation of growing demand, the overstock process will increase and reach its peak by the middle of 2013 of the year, when up to 40% of production in warehouses will be left over. In this regard, an additional source of their implementation via the Internet will be very helpful.

Zatovarovanie can serve as one of the incentives for the players of the mass market: the launch of the online store will get rid of regular sales in physical stores, where they negatively affect the image of the brand. The withdrawal of sales of residues in the online space will allow them to be carried out continuously, while creating a tangible difference between the range of physical and online stores.

Despite these opportunities, it is wrong to consider online sales as a mechanism for solving all the problems of physical stores and a universal growth driver. If you do not actively promote the online platform and deprive its offer of additional value for buyers, sales growth can be very conditional. Buyers will use the online store as a showcase and price indicator, coming to physical stores for the final fitting and buying things. Of course, in this case, the online store can serve as a good way to attract to the store, but is the benefit of this “store window” comparable to the costs of developing, launching and maintaining an online platform? Each retailer must answer this question for himself.