Discount retailer Poundland launched its first transactional site this week, following rivals such as Poundworld into ecommerce. It's an interesting move, and the big question is whether the pound shop model can work online with such low margin products.
Discount retailer Poundland launched its first transactional site this week, following rivals such as Poundworld into ecommerce.
It’s an interesting move, and the big question is whether the pound shop model can work online with such low margin products.
While there are obviously costs involved in the standard high street retail model, the overheads are potentially higher when picking individual orders for online sales. Then there’s the cost of shipping goods.
With higher margin products this is less of a problem, but for customers buying three packs of Anglo Bubbly and some toilet roll, it’s hard to see how it can make a profit.
This means that the key to online success for Poundland is to increase customers’ average order values.
One way to achieve this is to have a minimum delivery charge, which Poundland has set at £4. This means customers need to spend a certain amount to get some value from their shop.
Another key factor is to make it nice and easy for customers to add multiple items to their shopping baskets. Poundland has a ‘Shuffle’ feature which is a apparently a ‘new, fun way to shop’.
Essentially, it randomly generates products, though it does make it very easy to add them to the basket, as there’s no need to head to the product page to do this. 
The navigation is simple and the ability to add items to basket straight from category pages like the one below certainly speeds up the shopping process.
Relevant cross-selling options should also help to increase basket values, think of the huge range of extra products you’re offered before you get to the checkout in the average Primark store, or the inevitable offer of large chocolate bars at WHSmith.
However, Poundland isn’t doing this at the moment online, which is a missed opportunity.
Here, rival Poundworld is doing this on every page. It’s obvious enough: if someone is interested in pens, they might like other stationery items as well:
A good user experience is also a big factor in visitor spend. If they can find items easily, navigate through the site without any major issues, and checkout quickly, this means happy customers who will be more inclined to come back to the site.
There are some good examples of commerce best practice here. On the shopping basket page for example, the overall costs are clear, calls to action stand out well, and security reassurances and payment options are prominently displayed.
The user experience carries through into the checkout process. First of all, Poundland doesn’t make new shoppers register before they enter the checkout.
Forced registration is something users don’t like, and it’s a common reason for checkout abandonment. It makes the process look like hard work to users, and it’s unnecessary as users will need to complete their address and payment details anyway.
The ideal solution is to offer sign-in to those users with accounts, then provide a guest checkout for new shoppers. This is what Poundland does.
The checkout is well designed in general, easy to complete and should ensure that Poundland’s customers can complete their purchases without any unnecessary pain.
The Poundland ecommerce site is well designed and easy to use, though small changes such as better cross-selling would improve its chances of maximising average order values.
The bigger question is how the model itself works online. Primark is one example of a discount retailer which, despite its success on the high street, has never moved into selling online.
It has sold on the ASOS marketplace before, with products selling very well, but this trial only lasted a matter of months.
The arguments against Primark going into ecommerce are the same as the pound shops: that the low-margin model would be harder to make a profit from online.
However, the counter argument is that Primark may be missing out on sales and that, ultimately, very few retailers can afford to ignore the growth of ecommerce in the long term.
Poundland’s management clearly believes in the opportunities that ecommerce offers, and it will be interesting to see how its model works online.
