How to navigate the online retail obstacle course

With online retail sales continuing to rise at double-digit levels towards the end of 2013, there will be an abundance of growth opportunities for online retailers in 2014, if they can handle the pressure.

Navigating your business around the challenges that this year will bring requires a focus on service, technology, stock and logistics – 2014’s holy grail of online retailing success.

There were a lot of online retailers last year testing the balances of investment and support across these areas, resulting in wins and losses and some that had no impact at all. The businesses that can fine-tune this mix and leverage it will reap the rewards.

Some of the obstacles that online retailers can expect in 2014 include:

Increasing logistic costs

Predicted growth will make it difficult for online retailers to efficiently manage inventory levels and increased delivery demand, as they scale up and attempt to meet the growth. Long-term investment in logistics is required to handle the more demanding times of the year without impacting other parts of the business and your bottom line.

Pressure on service levels 

Service is king in retail and ‘taking your eye off the prize’ will be one of the greatest challenges in 2014, as other priorities become more demanding. Service levels will be under pressure as online retailers bear the brunt of increasing overheads in the areas of logistics and technology. 

E-complicated 

Technology departments and resources will be stretched to keep up with the business model changes that the market will demand of online retailers to remain competitive and industry leading.

The agility of a business’s technology platforms and programs, in addition to the talent of its technology staff will be tested and online retailers that have been investing in customisation over the past few years will come off better than those who have been slow off the mark.

Being accurate with inventory

One of the biggest challenges any retailer has is ensuring that they have the right product mix and stock levels at all times. The pressure of being price competitive and having more competitors in the market in 2014 could lead online retailers to broaden their inventory in an effort to capture more of the market.

But there is a smarter way to compete. Online retailers that invest time and money in getting to know their customers will have the right product mix creating invaluable inventory.

Rising offshore competition

Australia’s strong economy will attract more international retailers to target Australian consumers. This could have a positive and negative impact on the industry – while the influx of offshore retailers will see increased online options for Australians, local online retailers who fail to stay ahead of the curve in regards to delivery and technology could also be left behind.

John Winning is CEO of the Winning Group, which includes Appliances Online, BigBrownBox.com.au, Winning Appliances and Handy Crew.