Profiting from internet sales

As online retail becomes more popular, should garden centres cash in on the opportunity?

Wyevale's relaunch of its website this week, offering a range of products online to broadly match its in-store offer, suggests "multi-channel" selling is becoming the norm in garden retail.

The proportion of gardeners with access to the internet rose from 36 per cent in 2001 to 62 per cent in 2006, according to the HTA, whose in-depth Omnibus Survey assessed attitudes to web use among the gardening public in both years.

Not only that, but the way people use the internet has changed. The rise of broadband access, now accounting for over 70 per cent of all home internet connections, has extended the range of online attractions, with music and video downloads, online gaming and voice-over-internet phone calls becoming much more widespread.

But the most striking rise has been that of online shopping, from 30 per cent in the 2001 survey to 60 per cent in 2006. Indeed, this figure was significantly higher for those who rated themselves as keen gardeners, three-quarters of whom bought products or services online.

Gathering information, both on hobbies and interests and on products and services, remained second only to email as the most popular online activity. This was also a particularly popular use among the keenest gardeners - suggesting that there is strong potential for websites to translate providing information on gardening into sales during a customer's visit to its site.

Last year was by common consent a tough one for the high street. Yet total online sales amounted to £46.6bn, a rise of more than 50 per cent on the 2006 figure, accounting for around 15 per cent of all sales, according to the Interactive Media in Retail Group (IMRG), which reckons this figure will rise to 40 per cent by 2020. And according to HTA figures, home delivery sales in the garden sector, whether online, by conventional mail order or telephone, rose by 22 per cent in the year to October 2007, and now account for 11 per cent of all sales.

Yet there is still some debate in the industry on whether garden retail will inevitably follow the shift from high street to online, or whether it remains a special case.

HTA commercial services director Andrew Maxted says: "So far, the majority of people in the gardening world are being cautious. But it's something the industry needs to keep an eye on. People are experimenting with it, including many new players, but it's still relatively in its infancy in terms of technology, order processing and delivery."

Successful order fulfilment is likely to be key to the success or failure of the model. The IMRG has found that customer satisfaction remains stuck at around 78 per cent - in other words, more than one customer in five is unhappy with the purchase or service they receive.

But Maxted points out that the sector already has a head start. "There's a long history of people buying gardening products such as seeds and bulbs by mail order, and companies like Thompson & Morgan have successfully migrated that onto the net," he says.

And it has the potential to grow. HTA figures show that not only do the majority of gardeners have web access, but also that internet use is particularly high among marginal gardeners, identified as the key driver of future growth in the sector.

Noting this, many web-only retailers have sprung up in the past two years, aiming to undercut traditional bricks-and-mortar retailers. But they have concerns of their own, Maxted points out. "If you're only selling online, you still have the costs of delivery, and returns pose a major problem that has to be factored in. And the majority of people are looking for something that will last. There are a lot of cheaper products around, and customers will be asking, 'how does the quality compare?'"

The customer has to trust the retailer, and this is where established gardening brands have the edge, both locally and nationally, he says. "But it's also a challenge - people expect the same quality of plant from a website as they would buying it in person at a garden centre."

The difficulty in delivering garden centre products, particularly plants, is often seen as an obstacle to the online model, but the cut-flower trade has already shown how this can be overcome. "They have led the way with courier delivery and bespoke packaging," says Maxted.

Capitalising on the web will form a part of the HTA's next garden retail marketing workshop in early summer. "The HTA has a role in sharing best practice as well as providing data and research," says Maxted.

Garden & Leisure Group (GLG) has been running its internet sales arm for just over a year, in addition to its seven garden centres in the Midlands and the South West.

"We are trying to do the full range this season," says IT director Grant Davies. While the online range broadly mirrors the in-store offer, some deals such as a current range of bare-root trees are only available online.

The company has got round the problem of order fulfilment by outsourcing this to a specialist company, which dispatches products such as plug plants in specially designed packaging.

But the website itself has been developed in-house. "It means we have overall day-to-day control and it cost a fraction of outsourcing it," says Davies.

The real-time system automatically adjusts stocking levels once a customer has made a purchase. But vigilance is required to ensure out-of-stock products are not offered for sale, he says.

The system allows customers to pre-order lines such as bedding plants, which are only dispatched when ready. "We offer high value - better quality than Argos or B&Q," Davies says. "The biggest problem is to drive customers to the website."

Most new customers find the site through Google, and to that end GLG has engaged a third-party company to manage its "Adwords" - the paid-for terms that yield prominent positions in search engine results. "We have 10,000 to 15,000 words registered," says Davies. "It drives customer growth and shows a good return."

The company also promotes the site in-store and even on its till receipts. "Customers will buy from the website even if they only live 3km down the road," says Davies. "They find it especially handy for larger items that might not fit in the car."

It is the larger, higher-value items that the company most wants to promote, he says. "With the more day-to-day products, you want to get the customers in the store, because even if they only came in for one item they often leave with three or four."

Nonetheless, the company is confident of expanding online sales this year. "It's still in its infancy," says Davies. "But we're hoping it will really kick in this Easter."

A cautious approach to online retail

But not all are convinced that the industry should be ploughing resources into selling online. Garden Industry Manufacturers' Association (GIMA) director - and now owner of Worcestershire garden centre Fresh at Burcot - Neil Gow says: "It has a part to play, but it's unclear how large. It's not a route we're interested in going down."

There is still something of a "wait-and-see" attitude among many GIMA members, he says. "They are asking themselves, is this the way it's really going? After all, the vast majority is leisure spend - people see going to a garden centre as part of their leisure life. A lot of garden products are bulky, low-value items like bags of compost. And plants are not the easiest of products to handle, with the soil liable to come out of the pots."

He also points to the relatively high rate of failed or unsatisfactory deliveries as an obstacle. "If you order six CDs, they all come together," he says. "But if you order a table, six chairs and a parasol, that's eight different packages - the chances of one not arriving are much higher."

Another problem arises for those supplying to web-only retailers, he says. "A lot of them want the best prices but because they have no shop, they are not prepared to commit to quantities."

Gow's concern is not that online retailing will displace all garden centre retailing, but that it will "cherry pick" higher-value items like tools that are the most profitable to sell via home delivery. "That could take 15 per cent out of your turnover," he says.

Assurance schemes

Many garden retailers rely on their good name to gain the trust of online customers. But how can smaller retailers win that trust in areas where their name is not known?

A number of schemes have been developed to ensure online retailers' compliance with best selling practice. These include SafeBuy, which is supported by the Institute of Directors and the Institute of Direct Marketing, and the IMRG's Internet Shopping is Safe (ISIS).

Few garden centres have yet signed up to the schemes, though they are common among web-only garden retailers.

"We check for compliance with the ISIS code, which largely corresponds to (the Office of Fair Trading's) Distance Selling Regulations," says IMRG administration manager Ruth Mathieson. These regulations include providing a registered address and an undertaking to respond to email queries within 24 hours.

"Once you subscribe, you have to be approved," she says. "You can then be withdrawn if customers find your service falls short."

Annual subscription to ISIS is from £125 ex VAT, while SafeBuy charges £111.63 ex VAT.

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