The Value of Commuter Commerce; Retailers Aren’t Identifying Loyal Customers

RetailTechNews’ weekly roundup brings you up-to-date research findings from around the world. In this week’s edition: The Value of Commuter Commerce; Retailers Aren’t Identifying Loyal Customers; and The Struggle of International Growth.

The Value of Commuter Commerce

The value of on-train commuter commerce reached £2.6bn last year; and is predicted to grow by 75% to reach £4.6bn by 2022, according to a study by KBH On-Train Media.

The study shows that £1 in every £25 of total online retail spend is carried out by commuters while travelling by train. The average value of each transaction is £28.19, which equates to £4.87 every day they commute. This is projected to grow by just over 12% per annum on average over the next four years.  

Rail commuters make up 9% of the adult population, but they contributed 11% of total spending, meaning a greater spend per capita than the average UK household. This, therefore, indicates that the group has disproportionate economic importance. The research suggests rail commuters contributed £140.4bn to the UK economy last year across all areas of consumer spending.

A number of factors were identified as driving the rise of rail commuter commerce, including the increase in on-train WiFi connectivity, ubiquity of smart devices, and how consumers feel during their commute. The journey is taking on increased levels of importance as genuine ‘me time’, a convenient time to shop when they are not under any other time pressures.

Commuters were asked what motivated them to shop online on trains and found a mixture of factors such as ‘free time’ (26%), ‘convenience’ (25%), ‘boredom’ (17%), ‘don’t feel time-pressured’ (13%), and ‘enjoy browsing for products while on the train’ (11%).

Retailers Aren’t Identifying Loyal Customers

The majority of retailers do not know who their most loyal customers are; and cannot therefore know if their loyalty strategies are inspiring prolonged customer advocacy, finds research by Forrester and Collinson.

Nearly two-thirds (65%) of retailers are not actively leveraging their loyalty programmes to know which customers are in fact brand advocates. The study also finds that just over half (55%) of retailers track and analyse what happens when loyal customers interact with their brand, in order to improve the overall loyalty experience.

To support the improvement of loyalty initiatives, customer data is key. Yet almost two-thirds (64%) of marketing leads surveyed admit they only conduct loyalty-specific market research occasionally, to help build a greater understanding of who their best customers are. This suggests that loyalty is taking a backseat for many retailers, with a third (33%) of brands saying that their loyalty programme does not cohesively span multiple functions in the business and it is not a top strategic initiative with C-level support.

In a separate body of research conducted by Censuswide for Collinson, data shows that just over a third (36%) of British shoppers say they were offered to create a customer profile when purchasing online, rather than check out as a guest.

What’s more, their preferred brands aren’t encouraging further interaction after purchase, as only a third (34%) said they are typically invited to join a loyalty programme to benefit from future offers or rewards when making a purchase. Forrester’s research for Collinson confirms this issue, as nearly a quarter (23%) of retailers state outright that they do not have a balanced benefits package that rewards, recognises, or engages their customers.

The Struggle of International Growth

Online retailers are exploring growth opportunities in markets outside of Europe, in response to uncertainty around trade regulations caused by Brexit, shows data from Global Freight Solutions.

Despite these ambitions, retailers cite delivery as their biggest challenge after taxes and duties. The U.S. is the most desirable e-commerce growth market by far, with 64% of online retailers who were surveyed ranking the nation as their number one market for growth opportunities. After a large gap, Australia comes in second with 17%, and China in third with 13%.

There’s a clear ambition for retailers to want to grow international sales significantly – the research shows 76% of UK retailers expect to increase international revenue over the next few years. But they’re failing, with the majority of retailers driving revenue from within the EU – currently a high-risk region for trade growth and opportunities. At best, 1-in-3 retailers can attribute 10% of revenue to international business. With just a tiny proportion of British retailers (3%) solely attributing 100% of their revenue from international business outside the EU.

There’s a significant gap between where online retailers say they want to be and where they are. While online retailers know that a breadth of choice at the checkout impacts sales conversion – in fact, 98% of respondents state it’s important, to critical, to offer customers a broad choice of delivery options in order to reduce cart abandonment rates. Yet, only 1-in-10 retailers surveyed have more than five delivery options.