It's been a tough six months for many retailers, be it pureplay, multichannel or marketplaces. But for Klika, the last half of the year has been pretty resilient. We spoke to Leo Zaitsev, Director of Operations at Klika about the challenges facing retail, and the ongoing changes in consumer behaviour.
Contrasting to the majority of retailers that have reported losses in the first two quarters of 2022, Klika’s sales have ‘bucked the trend’, exceeding its prior sales.
What’s driven this growth? According to Leo Zaitsev, the Director of Commercial Operations of Klika, it’s been about its ‘unrelenting obsession’ to exceed customers’ expectations.
“Whilst our competitors are trimming their staff numbers, we have been expanding our customer service and phone support teams, diverting more customer interactions to phones, improving our conversion and product upselling, and ultimately growing our AOV and repeat customer rate,” he tells Power Retail. “This has become even more critical as customer acquisition costs from digital marketing continue to skyrocket and customer retention and repeat customer orders have become more important than ever before.”
Additionally, Klika has been placing greater emphasis on its geo-targeted advertising and retargeting across its sites. With this comes greater foot traffic online and better conversions for its physical store presence.
But of course, the last 12 months have been topsy-turvy. With ongoing growth in the online markets over the last year, we’re facing an entirely different landscape in 2022. Last year, the confidence amongst shoppers who chose online channels exploded. As such, they became more comfortable purchasing high-ticket items via screens but have also understood that research prior to purchase is key.
“Whilst customers are more confidently transacting at higher dollar values, they are more rigorous with their research and interaction with the retailers, which means their journey through the sales funnel is longer than during pandemic when their options were limited, and tools such as digital retargeting have become even more important to conversion,” he explains.
Doubled by the supply chain shortage of 2021 and ongoing talent shortage, there has been a plethora of issues plaguing retailers over the last 12 months.
“Consumers are looking for better value online, given the abundance of choice with traditional retail reopening following lockdowns in 2021 and consumers mitigating some of the negative experiences they had with supply chain disruptions and delayed deliveries, as the courier industry continues to struggle with staff shortages,” Zaitsev says.
This has not gone unnoticed by the team at Klika. “Klika’s physical retail and phone sales have spiked over the last 12 months, which challenges the notion that consumer confidence is waning, but as noted previously, consumers are now weary of poor customer service they may have experienced during the lockdown phase.”
So, how have these issues impacted Klika? Commercial decisions to up its customer service offerings were made, making support available seven days a week. The business also began looking into further expansion opportunities in its physical presence. This is a multi-beneficial approach for the retailer and shopper, not only giving shoppers the chance to see items up close and personal but also providing a shorter delivery timeframe.
“We have also expanded our digital retargeting strategies, as we recognise that consumers’ shopping journeys are taking longer, especially with high-value items,” Zaitsev tells us. “We are also leveraging our existing relationships with national retailers and discussing opportunities to showcase our products in their physical stores, to further close the loop between digital and traditional retail.”
There have been a few changes in consumer behaviour that hasn’t gone unnoticed by Kilka. The expanded knowledge of online shopping has given Klika the opportunity to expand to over 30,000 SKUs. In turn, Klika is noticing that more female shoppers are visiting the site, as well as an increase in AOV across more categories, especially its home living brand, Sarantino.
But that’s not the only change they’ve observed. Changes in the way customers pay are shifting, thanks to newer BNPL services from legacy payment platforms like PayPal. “Since the launch of PayPal’s Pay in 4, we have seen a significant drop in other BNPL payments as we feel PayPal has regained significant market share,” Zaitsev notes.
A return to in-store shopping may not come as a surprise to many in the industry and is welcomed by many in the multichannel space. With ongoing challenges with delivery, shoppers are turning to brick-and-mortar once again to prevent lost deliveries or damaged items. “We are showcasing even more products in our showroom and using the live video technology to assist our customer’s shop even without the need to visit our store,” Zaitsev tells us.
With all of these changes facing retailers daily, has anything stayed the same? Yes, according to the team at Klika. “Consumer expectations regarding the speed of delivery and good after-sale customer support,” Zaitsev says.
With changes and consistent consumer patterns and behaviours, there is a lot for retailers to expect in the coming months. For Zaitsev, the future includes more Click & Collect, faster deliveries and an increase in the gig economy. “The pandemic accelerated the roll-out of click and collect services by many traditional retailers as a method to continue to trade throughout the lockdowns and mitigate the spread of COVID, and will continue to be offered as an alternative to delivery by most retailers,” he tells us.
“Express delivery options offered to consumers for parcel size orders, and the use of gig economy has become prevalent as consumers experience the speed and convenience of delivery from the likes of Amazon and food delivery providers. More traditional retailers and especially ones with a niche product or category offering, expanding their platforms to third party vendors to offer their customers complimentary products on a drop-ship model,” he continues.
And with these changes come challenges. As express deliveries become the norm thanks to the likes of Amazon and THE ICONIC, there are myriad issues that will face retailers and couriers along the way. “Speed and quality of delivery offered on a national level still need to improve as the carriers struggle with staff shortages on the back of the pandemic, especially with deliveries of oversized products,” he says. “I expect there will be further consolidation of some of the national courier companies either through acquisition by overseas entrants or local competitors.”
But for retailers, opportunities also lie ahead. For Zaitsev, it’s the erosion of barriers to entry for D2C brands and the future adoption of live shopping in Australia.
And what about Klika? What’s next in store for the retailer? Following the expansion of its dropshipping business, live customer support and a greater emphasis on geo-targeted advertising, the future is bright. “Later this year, we plan to enter new product categories under our private label brands, including a luggage category to capitalize on the resurgence in travel, and launch a standalone website for one of our existing child brands,” Zaitsev says.
The e-commerce landscape is changing. With a Power Retail Switched On membership, you get access to current e-commerce revenue and forecasting, traffic levels, average conversion rate, payment preferences and more!