Portugal: Digital Market Analysis.
Although 19% of Portuguese companies market online, which is higher than the EU average, in 2013, Online Retail Sales in Portugal accounted for 1.4% of total retail sales, which reveals a very low conversion rate when compared with the EU average (5%) and the UK (10.4%)
With this in mind, we may wonder about the following:
- Portuguese do “Shopping” Online?
- If Portuguese companies have presence and online stores, what is the reason for the low conversion?
- How to increase conversion?
- Only 44% of Portuguese (16-74) do Online Shopping, compared to 65% in the EU, despite of 90% of Network Connections are of high quality (broadband).
In other words, they do, but not as much as the European partners. Because? We’ll see.
- What motivates this behavior are varied issues that are attached from the online medium to the physical reality itself.
Portugal has one of the highest rates of Stores per 100Hab, being surpassed only by Greece, which makes it even more convenient for many to go to the physical store to make purchases and carry the item at the moment, with all the guarantees and security of pay and receive the good physically in that moment.
Connecting to the digital media, the main factor people do not buy online is security-related: whether to receive the product, customer support issues, or the (personal) information provided online (this is minimized for companies that have a physical store scattered across a large number of geographies or with relative size that can address this objection).
Adding to this 1º Objection, also the fact that most websites are not yet user friendly, damages the sales, making it difficult to search for the intended object, features, images.
Also, lack of stock updates and pages with discontinued products increase the fear of the costumer purchasing online.
The non-adoption of live interaction tools to help consumers also was a key feature discovered in the study.
Prices that are identical to those of physical stores or are even higher due to shipping costs, also kill the intent of purchasing online.
Lack of Investment in Digital Marketing Tools, not using available advertisement technologies and analysis tools, for example, only 12% of Portuguese companies use social networks to be in contact and develop relationships of trust and proximity with customers and the community.
There is no harmony in the different touchpoints of the consumer.
- How to Increase Conversion?
Investing more in Digital, Portuguese companies have a digital expenditure of around 6.9% well below the EU average of 19% and 40% in the UK.
Although Portuguese companies have already understood the potential of the digital market and even invest in the realization of virtual stores, the same investment is not done continuously or in conjunction with the other tools to support online conversion, which makes the values to be so low (1.4%).
So, instead of a beautiful harmony, we have a solo and not even this solo is made with “distinction”.
Mitigate traditional objections, creating a structure that shows trust, building secure websites guaranteeing the client that their personal and banking information will be private and not shared with 3rd parties besides those involved in order processing.
Bet on a more user friendly construction of websites and app’s in order to facilitate the search of the desired product, install Live Chat systems in order to give a personalized and real-time customer service, closer and faster than a physical trip to the store and even to a “tradicional” customer support line.
Increasing Consumer Confidence in the company translates into an increase in the number of customers and an increase in the average purchase value of each of them in our company, which is the most important aspect to develop.
Offer more competitive prices than physical retail and ensure a fast order processing and without increased costs for the consumer.
Increase the effort of online communication on the different touchpoints of the brand (Desktop, Mobile and APP) as well as increase the effort of Email Marketing, Display Adds, SEM, SEO, Social Media and combine all this with the support of analysis tools to get the best outputs out of the communication effort.
Digital means of communication offer a better utilization of resources compared to traditional ones, since we can better segment our audience by making an offer aimed at each type of client of the company and each type of potential client.
Conclusion: We are facing a real OPPORTUNITY, for those who know how to take advantage of the great advantages that the digital world offers, because the digital terrain in Portugal is still quite underappreciated, being the first to become aware of this competitive advantage will be who will have greater gains in the present and future, guaranteeing the sustainability and growth of their companies.
PS: Knowing from empirical studies that companies with above-average digital revenue values grow 1.5% faster than the industry average, in addition to reducing costs and recording productivity gains, it is estimated that, in 2020, the digital corresponds to 25% of the GDP of the World Economy.
| Accenture: Insight Digital Disruption Growth Multiplier |
What are we waiting for?
Joao R Freitas