Online retailer survey: Digital marketplaces are in demand, need to catch up with AI and customer loyalty

Consolidation set in for the first time in Swiss online retailing in 2022. Looking ahead to the first half of 2023, it is also clear that the days of double-digit growth seem to be over for the majority of Swiss online retailers. This development is reflected in the current mood of the industry, as this year's online retailer survey conducted by the Lucerne University of Applied Sciences and Arts (HSLU) on behalf of Swiss Post shows. When asked about the three most important strategic topics, process optimization and automation (61 percent), growth (60 percent) and cost reduction (46 percent) were named most frequently. "The market environment in online retailing is currently challenging. So it is not surprising that efficiency and cost reduction are in the foreground in many cases," says Thomas Wozniak, study director at HSLU. Nevertheless, for two-thirds of the 217 online retailers surveyed, the relevance of their own online store has increased since the Corona pandemic.

Marketplaces: come to stay

Digital marketplaces like Digitec Galaxus offer retailers the opportunity to offer their products on an additional platform with a large group of buyers. Almost half of the retailers are already active on such marketplaces, and a further 13 percent are planning to do so. Among those active, six out of ten sell on Digitec Galaxus, followed by Ricardo, Amazon and Tutti. The strongest driver for a presence on marketplaces is additional sales (76 percent), followed by greater reach (63 percent) and higher visibility (60 percent). The majority of respondents argue against a marketplace presence on the grounds of excessively high commission costs and the protection of their own online store. "Overall, the study results show that marketplaces will continue to set the pace in e-commerce in the long term," says Philippe Mettler, digital commerce expert at Swiss Post. 95 percent of respondents give marketplaces a relevant role in the commerce of the future.

AI is little used

Artificial intelligence (AI) also holds great potential for online stores. AI can be used to tailor product recommendations as precisely as possible to the preferences and buying behavior of customers. However, many companies are still holding back on using it. Around half of the online stores surveyed do not use AI-based product recommendations. 23 percent rely on simple data-based recommendations, while just under a quarter use more elaborate methods that promise greater relevance. Six out of ten online stores consider data competence in marketing to be at least "important". However, only one in ten online stores say they already have very good skills in this area. "There is certainly still a need to catch up here in the next few years," says Thomas Wozniak.

The art of customer loyalty

There is also a need to catch up in the areas of customer retention and loyalty programs. According to co-study author and e-commerce expert Matthias Schu, this appears to be an effect of the mostly double-digit online growth rates of recent years. There was too little pressure to retain customers in the long term with targeted measures. "At the same time, long-term customer relationships would actually be more beneficial than the constant acquisition of new customers," says Schu. Around three quarters of online retailers rely only on product suggestions to retain customers, and more than half still focus on discounts. More elaborate methods of customer retention and interaction - such as community building, a loyalty program of their own or regular customer surveys - are only used by around a quarter of Swiss online retailers. Around ten percent of those surveyed stated that they currently do not take any active customer loyalty measures. "Overall, the majority of online retailers are failing to encourage customers to buy again - unfortunately a missed opportunity in the current market environment," says Schu.

Sustainability: current situation and future prospects

Seven percent of online stores offer their customers the option of offsetting the greenhouse gas emissions caused by their purchases. A good half of the online stores also use packaging made from recycled materials. Just under half also optimize the size of shipping packaging by adapting box sizes. This allows transport capacities to be used more efficiently and filler material to be avoided. Three out of ten online stores ship in original packaging and thus dispense with outer packaging altogether; reusable packaging is only used by just under a quarter. When asked about the three most important sustainability issues, the online retailers state that better information for customers about sustainability aspects, a more sustainable product range, and more sustainable transport and logistics would be a priority in the next twelve months.

Source: www.hslu.ch