The high-street bargain store Poundland, has decided to pull the plug on their on-line shopping service, is there a lesson to be learned here?
The main reason they added this channel was to expand into a multi-channel operation in line with other retail businesses.
What were the factors that prevented the success of the ecommerce channel?
It is generally accepted that for the ecommerce model to be successful, convenience and savings need to be a large part of the benefit to the customer, but its customers enjoyed the experience of finding new bargains at each visit, and at bargain-basement prices already, cost savings could not easily be made. These low-value, inessential items do not fit this criterion, and trying to stay in line with other retailers is not a valid reason to add this channel.
Hellena Crompton, Director of Client Development at XCM commented “Poundland probably underestimated the human experience of seeking a bargain. Anticipation of a reward releases dopamine, which are feel-good chemicals that transmit signals between the brain’s nerve cells. Replicating that feel-good experience online is challenging, plus customers had to spend £50 to get free delivery. That’s a lot of Toblerone and hand-soap “
Hellena continued “I understand they intend to keep the website as a window into their stores, and are focussing on investing in their Pep & Co fashion outlet “
Hellena concluded “Of course, if the business model does fit the criteria, and skilled analysts such as ours at XCM are involved in the development of the traffic to a site which offers desired benefits, success should almost be a ‘given’ ”