In its second-largest acquisition, Amazon buys the company for $970 million.
When Chicago-based consultants The E-Tailing Group Inc. asked online retailers to rank which technologies they would spend money on if resources weren’t constrained, site search popped almost to the top of list. It ranked No. 2, behind cross-sell/upsell and personalization, which were tied for No. 1. “It’s definitely on people’s minds,” says Lauren Freedman, president of The E-Tailing Group.
Effective site search has been a favorite cause of analysts and consultants, who have marshaled impressive facts documenting the importance of accurate search results. Jupiter Research Inc. last year reported that 34% of shoppers rely on search as the primary way to find products while 48% use search if their attempts at navigation fail. But Jupiter also reports that as many as 85% of searches do not return what the customer is seeking.
And that’s bad news, analysts say, because after an initial failed search, many consumers don’t search again-they simply leave. “In this MTV era, people don’t have the patience to sit there and not get what they want,” says Stefanos Damianakos, president of Netrics Inc., developer of site search technology. “People’s attitude is: I know what I want, just show me how to buy it.”
Start of a revival
If shoppers bail out of a site after a failed search, only a slight improvement would yield great returns. If a site hosts 500,000 visitors a month, and 34% of visitors search for a product and 85% of those searches fail, nearly 145,000 potential buyers will leave the site without being given a chance to even look at what they want to buy. And that’s not counting those whose navigation failed and who turned to search.
With a growing body of evidence that effective site search returns quick results, and research reporting that retailers rank search highly, it’s no surprise that the market for site search technology appears brighter than it has for a while. “We’re seeing the beginnings of a revival,” Damianakis says. “People are a lot more interested in what’s out there than they were before.”
Until now, many retailers have made do with search functionality that comes packaged with e-commerce software. But as they learn that specialized search is key to the success of e-retailing web sites, they are turning more to companies like Netrics, which bases its search results on mathematical formulas that don’t require constant updating of data to ensure accurate results. The fact that retailers are putting more weight on specialized search is underscored by Netrics’ recent agreement with web site designers Multimedia Live to offer Netrics search as part of the Multimedia Live package. “The agreement is an important statement recognizing the value of providing information to shoppers quickly,” Damianakis says. Multimedia Live has designed e-commerce sites for such retailers as Anthropologie, Coldwater Creek, Norm Thompson and Wilsons Leather.
But retailers also are realizing the growing importance of product presentation in search results. No longer content to simply present a list of search results based on some technological method of ranking, retailers want to present products based on their own criteria. Thus Netrics has built into its search engine merchandising functionality which retailers control, arranging results on such criteria as most profitable or most popular. Furthermore, results can be specialized to customer segments. And the two subdivisions can work together so, for instance, high-income customers can be targeted with highest profitability products.
Bridging the gap
Damianakis says Netrics’ prices make its technology particularly appealing to small and mid-sized retailers, although its technology can handle large sites as well. It sells its technology on a licensing basis, so there are no ongoing fees. The standard edition costs $10,000 per CPU while the enterprise edition costs $25,000 per CPU. The enterprise edition can process up to 3 million searches a month across a database of up to 300,000 products. It also can incorporate a number of the criteria on which to arrange results. One of Netrics’ big-name customers-BMG Music-handles 500,000 searches a day, Damianakis reports. Netrics also offers its product on an ASP basis at $750 a month plus a set-up fee.
Netrics’ mathematical base not only provides more accurate results, Damianakis says, but also does not require the customer to specify what she is seeking or to click on navigational links to refine her search. “The software does the work rather than the people,” he says.
And that’s crucial in returning the right results. “We bridge the gap between humans not being able to specify precisely what they’re looking for and computers designed to be strict and unforgiving,” he says.