Last Thursday the world of e-commerce was shaken to its core as Asos, the poster child of online retail, issued a profit warning and 40% was wiped off its share value.
The party-line from Asos is that currency fluctuations and a strong pound are to blame for its reduction in profitability. I’m sure this is true. But does this stumble from the online giant also signal another, larger concern for online retailers and digital marketers?
According to the Wall Street Journal, one in three online purchases are returned. This makes me wonder – have e-commerce sites just gotten too good at selling?
The e-commerce manager has an arsenal of sophisticated marketing weaponry designed to convert as many prospects as possible into sales: re-targeting, website optimisation, customised displays, triggered emails and more. Do these tactics ultimately push shoppers into making purchases they don’t really want? Leading in turn to the massive rate of returns.
Is this a problem for online retail? Do we need to get a little less persuasive online? Or can the return of one third of sales be taken into account in online business models and planned for?
I’m not sure there is a clear answer yet. At any rate this bump in the road for Asos is something that should give all online retailers pause for thought.