2008 - The End of The Beginning 

January 2^nd, 2009
I think what we saw at the end of 2008 was the final stages of a five year explosion in online commerce, primarily driven by consumer purchases. Over the last few years tens of thousands of businesses have joined a 'goldrush' type of charge to get set up on the Internet selling their products and services. And each year millions more consumers have begun to shop online. This phase of growth was first predicted in 1999 when the dot com boom began but although it seems strange now, by 2002 many of the early e-tailers had failed and the predictions for e-commerce looked wildly unrealistic. I think the reason many of those companies failed was probably more to do with bad management than the Internet. They were given millions of pounds in venture capital, the cash was spent almost as quickly as it was raised, going on large staffs, fancy offices, and lots of banner advertising.

Today's successful businesses manage cash-flow tightly, aim for Just in Time stock management optimise their websites and take advantage of Pay Per Click advertising. In addition to traditional retail we've seen a huge shift to the web for insurance, transport and ticket purchasing. But the combination of the economic downturn and also simply reaching a natural saturation point makes me think that we're close to the point where the initial 'goldrush' is slowing down. In other words, most existing businesses that have the opportunity to sell to consumers over the Web are now set up to do so. So are we looking at slow, single-digit growth from now on? No I don't think so, but I think we can expect the next phase of growth to be different.

I heard of one prediction more recently suggesting that half of all retail spending will be online by 2015 (research from the beginning of 2008 showed 17 pence in every pound in the UK was spent online). I'm not sure that can happen given the unique experience of shopping in stores, but I do think there will be huge growth in e-commerce overall. In 2009 we can expect to enter into a phase that will be driven by different types of spending, including new mobile payment channels and the introduction of more alternative methods of payment. In particular, there is likely to be huge growth in paying for all kinds of services electronically and an increase in business-to-business e-commerce, which is currently in its infancy.

So if you have what now could be described as a traditional web shop, selling cosmetics or pet food or TV's, does that mean your high growth days are over? No, probably not, but you may not experience the huge increases we've seen each year in shoppers moving online for the first time. The shoppers will still be out there, but winning business will potentially become more competitive, and customer service, branding and value-add (forums, reviews, news etc.) initiatives will play a key role in attracting and retaining customers.


Simon Black
Managing Director of Protx

Discount in haste, repent at leisure?

December 24^th, 2008
Over the past week, I’ve been doing my own last minute Christmas shopping and I noticed that the widespread discounting in shops and department stores ahead of Christmas has spread to the online world.

In particular, companies that have a major presence on both the Internet and the High Street have suddenly introduced one-day discounts to match competitors. What's interesting, I think, is that the risk of a negative impact on shoppers is potentially much greater online.

If you pop into a store and realise that the sweater you bought just last weekend is now 20% cheaper, you wouldn't be at all happy and you're left with a little less trust in the store brand. Shops in the past have tried to make one day price discounts rare occurrences and treat them like a special event, often having activities or entertainment in the store at the same time. They seem to almost make these sales a part of their brand and consumers understand and expect them.

However, in the online world, the risk could be much greater. As consumers, we visit websites much more often than shops. Not just before the time of purchase, but significantly afterwards too – to check a delivery status or view our accounts. So we can easily spot whether an item we’ve just bought has been reduced by 50% overnight.

In some product areas consumers accept that prices are moving continuously and each company has to remain competitive. It is also a fact that some companies play the discounting game well to maintain an image of high price products almost always available at great value. But while we've come to expect low prices on the web, branding principles still hold strong - especially the element of trust. Most consumers accept that prices can go down, but one-off discounts that we weren't aware of can leave us feeling particularly disgruntled.

There is also, of course, widespread choice online and consumers are only getting savvier. With millions of websites and alternatives so easily accessible, it doesn't take much to lose a customer forever.

So where does that leave online retailers? Well, from what we’ve seen consumers are still buying online, even with huge discounts sweeping high street stores. But what remains to be seen is whether there will be any long-term brand damage.


Simon Black
Managing Director of Protx

Cyber Monday and the VAT effect!

December 8^th, 2008
Despite a very healthy continued growth in Internet spending so far this year, the economic outlook is a cause for some concern. So far with the credit crunch, pretty much everything that has happened in the US has hit us in the UK some time later, so I've been looking out for trends that may suggest a slow down in Internet spending. Here’s what I found…

The period immediately after Thanksgiving (always the last Thursday in November) is a critical period in the US for retail and generally sets the tone for what the entire Christmas season will be like. The day after Thanksgiving is known as Black Friday - a massive shopping day for stores, an unpleasant one for shoppers (hence the name). The Monday afterwards has become known as Cyber Monday as it typically sees a big spike in online sales. So far, things are looking positive - research company Nielsen are reporting a 10% increase for Cyber Monday and are now predicting that December 15th will be the biggest day of the year. So, as yet, no signs of poor sales.

This news will be welcomed by UK retailers too! Although from a Protx perspective we’ve noticed an upward trend in Internet shopping in general, we did see lower transaction volumes across our merchant base than were expected for the last week in November. However, this Monday, December 1st, the growth was significantly higher than expected, so we think that what we’re seeing is the impact of the VAT change.

Our records from previous years show that in the UK, people begin Christmas shopping in earnest in the last week of November. This year it seems a lot of people delayed so that they could take advantage of the VAT reduction... and joined the USA’s Cyber Monday shopping frenzy.


Simon Black
Managing Director of Protx

The other two will kill you! 

November 25^th, 2008
Hello and welcome to my first blog post. I’ve been thinking about doing a blog for a while, particularly since we’re in such a dynamic industry where there’s always something interesting to talk about. At Protx, I’m in a privileged position as I get a real insight into what’s important to our 20,000 customers as well as seeing the key developments in eCommerce. I’d like to share with you some of the thought-provoking topics that I come across from my experiences in the payments industry and as Managing Director of Protx. So for my first entry, I thought I would focus on what I believe is the most important element of any business or organisation - people.

Just as with any business, we are absolutely powerless without our people. I don’t want to get caught in cliché’s along the lines of “People are our greatest asset”, it’s just that it’s easy to forget amidst the focus on strategies, technologies, marketing and sales efforts that achieving anything, anything at all, just isn’t possible without talented people. You need good people, and you need to get them working together as great teams. Fortunately, I get reminded of this fact daily.

Last week our monthly business updates included some time discussing our values – what we refer to as our Guiding Principles. We have five Guiding Principles and across four sessions each was presented by a different member of our team. So that’s 20 people, presenting what either Innovation, Simplicity, Agility, Trust or Integrity means to them. Without exception the definitions presented were insightful, personal and in a way, inspiring. You need talented people to succeed and talented people in particular care about the environment they’re in. The values of the organisation they’re in are extremely important to them, particularly the values that guide them how to treat each other and how to treat customers.

One of our sales people presented a definition of Integrity. She included a quote from Warren Buffett which is definitely worth sharing:


This is an ethos I can completely identify with and when I look at the team that has grown Protx, this combination of qualities is in fact the bedrock of our success and it’s something we won’t compromise on when recruiting as we continue to build our team......


Simon Black
Managing Director of Protx