PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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Getting the money out
Retailers who use wish lists also see the value of doing more personalization to entice customers to buy the things they have stored on theirs and other people’s lists. Wish lists thus become a good tool for one-to-one marketing. Stacks and Stacks, a clothing web site, used WishList’s service to send 10% discounts to wish list customers, says Mel Ronick, president. Ronick says the click-through rate was about 5%. “We convert sales by having a wish list. If you’re serious about having a first class web site then you should have a wish list on it,” he says. The company, which operates four stores on the West Coast in addition to its web site, plans to do more of this type of marketing to keep customers buying from the lists, Ronick says. Stacks and Stacks sends information about its wish list to about 200,000 e-mail newsletter recipients. The retailer had about 1,600 wish list accounts as of the first quarter.
Before MuseumShop.com started target marketing to its wish list customers, the retailer was excited to get the industry average click-through rate of about 5%. “By basing marketing on the wish list information, we’re continually over that average. We’ve had e-mail campaigns with an average of 12% to 15% click-through rates,” Pulsifer says. “Now we get depressed if we get the industry average. We’ve been spoiled.”
Booksontape.com, which launched as WishList’s first client in April 2000, says it’s planning e-mail marketing and is determining how to do that and offer discounts it can afford. “We know we have a lot more money on the wish lists than people have made purchases for,” Coon says. “We’re figuring out how we can sell more and move more products in the wish lists.”
CDNow, one of the most experienced retailers using wish lists, says wish lists can help a retailer develop a relationship with the consumer, increase sales and give customers a reason to shop at a site. CDNow plans to adopt more advanced customer management techniques, such as creating more personalized discounts on wish list items, beginning in the third quarter.
Dana Lasher, vice president of sales and retail marketing at CDNow, which developed its own wish list technology in 1998, says convenience is a customer benefit. But she stresses that wish lists also generate revenue because CDnow runs sales on wish list items. Wish list-based promotions create a 20% to 25% lift in incremental sales. CDNow has different promotions for different types of music which are developed to build traffic, get rid of inventory or improve transaction size with a “buy more save more” theme.
CDNow believes following a wish list strategy is important for survival, especially in this economic climate where consumer sales are sluggish. “The wish list is the most valuable feature because it points toward revenue,” Lasher says. A wish list could be the hook that keeps customers coming to one web site over another. “Wish lists are a valuable asset and we’ll continue to put investment around that,” Lasher says. “Anyone who manages revenue cannot abandon that strategy.”
Plug and play
Merchants using wish lists say the software is easy to install and outsourcing saves on in-house programming time. Adding wish list capabilities to a web site typically takes only a few hours, depending on the system and the level of customization needed. The vendors typically offer either ASP services, where they host the wish list, although it appears to the consumer as part of the merchant’s site. Or merchants can license the software and run it themselves.
MuseumShop.com pays its vendor CloudPop 4% of the sale when a customer buys items stored on a wish list and 12% when shoppers click through from a hyperlink on the CloudPop web site. MuseumShop has a staff of only 20 so outsourcing the service was worthwhile so its staff could focus more on internal programming, rather than building a proprietary wish list function for the site, says Pulsifer. “The cost is extremely reasonable because these are sales we never would have had before. Consumers would have just abandoned their carts,” he says.
Even though retailers say consumers are increasingly using wish lists, consumer research studies are not yet showing their popularity. A recent PricewaterhouseCoopers Connected Consumers study says consumers turn to search engines and product information tools more often than to wish lists. However, 19% of consumers said they had ever used a wish list; 5% use them regularly. Among online shoppers who have used wish lists, 39% said they would eventually purchase a product on a wish list from that site. Only 8%, however, said that they buy more from sites where they have wish lists, although vendors disagree. Benjamin Shakin, president of WishList.com, has seen a different pattern with Wish List retail customers. He says that 40% of shoppers who return to the merchant to buy something from a wish list also buy other products.
Given the newness of the wish list notion, the fact that 19% of all online shoppers have used a wish list is an impressive statistic. Regular users have some way to go, though, and that may be where the challenge to increased usage lies. Some analysts say it will take time for consumers to catch on to benefits of wish lists beyond tagging items they want for future purchases. “The more advanced features, like sharing gift lists, are more than what most consumers need,” says Mary Brett Whitfield, director of e-retail intelligence system at PricewaterhouseCoopers. “It’s too much to expect consumers to change their behavior.” The PWC study showed that only 13% of those who had wish lists forwarded them to friends and family. But there is room for growth. Says Whitfield: “There is something to be said for giving consumers a place to park their ideas.” l